As an entrepreneur in the BI industry, I make it a priority to stay on top of news and trends in the space. The BI industry is experiencing a lot of transition at the moment, due in part to changes in technology, vendors, and macro events ranging from everything from the economy to the influence of millennials in the workforce. Specifically, industry leaders in the BI space are experiencing a lot of pain and are beginning to struggle, and VC funding abounds for up and coming BI firms. Both situations are shaking up the industry and I predict that there will be many changes in the upcoming years.
Major leaders in the BI space, such as Tableau, Qlik, and Microstrategy, aren’t doing too hot these days. Tableau has seen severe drops in its stock price and is planning serious cuts in future hiring to prepare for slower growth. Tableau has also announced that it will be allocating 25 percent of its capital to research and development, which indicates that its technology is becoming increasingly outdated (UPDATE: Oct 2016 Tableau is exploring a sale).
Additionally, Qlik is rumored to be positioning itself to be acquired (UPDATE: Qlik was acquired). Qlik (formerly Qlikview) also recently went through a rebranding and changed its name to Qlik while launching Qlik Sense, to make itself more competitive with Tableau. And finally, Microstrategy missed earnings and announced a decline in its YOY revenue.
The issues among BI industry leaders indicate that within the next year or two the BI industry will see a lot of consolidation and acquisitions, though I’m unsure who the buyers will be. Traditional buyers, such as Microsoft, have already heavily invested into the BI space and it would not make sense for them to purchase another BI company. In fact it can be argued that many of the problems exhibited by Qlik and Tableau are due to the feature rich, low cost, addition to the BI space by Microsoft Power BI.
The trends I’m seeing are similar to those that cropped up between 2006 and 2008. Within those two years, SAP acquired Crytal Reports, IBM acquired Cognos, and Oracle acquired Hyperion. These acquisitions left a void in the marketplace for BI solutions that served the small-to-mid market. At the time, Qlikview and Tableau filled this void. Fast forward to now, and Qlikview and Tableau have become industry leaders. Both companies are reaching points of unsustainable growth and development and are now in positions to be acquired in order to sustain their growth.
However, this time, there’s a big difference in the market regarding who will be able to come in and fill the small-to-mid market void. One of the most important factors for BI solutions that cater to this market is the total cost of ownership. Qlikview and Tableau were very successful in the small-to-mid-market because they were both affordable and reduced the amount of labor and expenses need to implement their solutions, in comparison with the larger players in the space at the time.
Over the years, Tableau and Qlik fell victim to the drive to seek larger deals by expanding their product, in many cases via acquisition, to complete with the larger, more traditional BI providers. Cost went up, technology became more complex, consultants and partners and education needs grew to implement the solution, and small and mid-sized businesses were left looking for an alternative.
Looking forward, when Qlikview and Tableau get acquired, there will once again be a void in the small-to-mid market. The major difference between the current state of the BI industry and the state of it in 2006 to 2008 is the large influx of VC funding for BI software vendors. When you look at the natural candidates who are marketing themselves to these smaller markets, such as DOMO, Looker, Sisense, and Chartio, you will find that they have already priced themselves out of most small-to-mid size businesses’ budgets. Though none of these companies are public, they have taken on so much VC cash that the pressure to land larger deals is already present.
This means that during the next few years, small businesses will likely struggle to find affordable BI solutions. Similarly to the New York mayoral candidate who ran with the slogan, “The rent is too damn high,” the slogan echoing throughout the BI industry is now, “The price of BI is too damn high!” Thankfully, this type of market condition is perfect for bootstrap BI solutions like Yurbi, or large enterprises like Microsoft that cater to both the small-to-mid and enterprise markets. Products such as Microsoft Power BI easily fill the small business void, though Microsoft Power BI can get expensive for medium-sized businesses.
I’m not able to predict exactly what will happen within the BI industry, but it will be interesting to see what happens during the next two to three years. Market conditions and trends are looking great for Yurbi as companies continue to raise prices and more difficult to install, our focus will remain on keeping software simple and providing the best customer support we can. Stay tuned for what unfolds in the BI industry in 2016 and beyond!
What are your thoughts? Leave a comment below and let me know if you think I’m on the mark or way off base. Want to discuss offline, contact me here.