OLAP market share analysis

The dramatic consolidation in 2007 makes market shares much harder to calculate

You can contact Nigel Pendse, the author of this section, by e-mail on NigelP@olapreport.com if you have any comments or observations. Last updated on July 3, 2008 .

Why was 2007 different?

The OLAP Report has been publishing OLAP market shares for each year since 1994, but the changes in 2007 make it increasingly difficult to do so. Consolidation in the BI market had been forecast and rumored for many years, but finally happened with a vengeance in 2007. This changes not only the OLAP market shares themselves, but the ability to measure them.

Oracle started the rush with its acquisition of Hyperion, followed closely by SAP buying OutlookSoft and then Business Objects a few months later (which had itself recently bought Cartesis and ALG) and finally IBM buying Cognos (which had recently bought Applix, which had itself bought Temtec in 2006). The Cognos deal only closed early in 2008, and so technically did not affect 2007’s figures, but as the deal was announced and was certain to proceed well before the end of 2007, it is best to treat it as a 2007 deal.

Obviously, there is a lot of interest in how the market shares in 2007 were affected by all this consolidation, but quantifying this is easier said than done. Indeed, we do not think it will be possible to calculate OLAP market shares from 2007 onwards with anything like the accuracy achieved in previous years.

Applix, Business Objects, Cognos and Hyperion Solutions, as independent public companies, were obliged to publish quarterly financial statements in a standard format. They also provided a limited amount of information about product revenues, though less in recent years than in the past. US private companies are not obliged to publish financial figures, though some choose to do so, and private companies in some other countries do release financial reports.

But after the acquisitions, no data for the acquired companies needs to be, or is, published. Indeed the final quarter as an independent company may also not be published, if by the time the results were due, the acquisition had become unconditional. With no remaining external shareholders, there is no need to publish results. This can then become a ‘lost’ quarter, as the revenues are also not consolidated into the buyer’s figures.

Of course, IBM, Oracle and SAP do publish their consolidated results, but do not separate out their BI, let alone their OLAP, revenues. Of the vendors in the OLAP market, MicroStrategy is alone in remaining a public, independent company. Others are either small and private, or not OLAP specialists. Infor and SAS Institute are neither OLAP specialists nor public.

Furthermore, there is a lot of disruption when a large company like Business Objects or Hyperion is acquired and integrated. Oracle lost no time in integrating Hyperion into its own operations, so no separate Hyperion subsidiaries existed after the legal transfer (which was later than the financial close). Some Hyperion employees and most of the top management left immediately, while those that stayed found themselves part of new, much larger sales, consulting, development, marketing and other groups. This process inevitably distracts people from their normal activities, and causes product releases and sales to be delayed, which is exacerbated by market uncertainty. For example, a SAP customer might have been happy to buy a consolidation application from Hyperion as an independent vendor, but less keen to buy the same product from Oracle. Equally, an Oracle ERP customer might have been happy to buy a reporting solution from Business Objects, but less willing to buy the same product from an SAP company. The level of immediate integration was less with Business Objects and Cognos than Hyperion, but employees were still more likely to be preoccupied with their own immediate futures.

One factor that is not always appreciated is that the date of integration in a single takeover differs by country, so the disruption is spread over an extended period. When the acquisition completes financially, the acquired company initially becomes a wholly owned subsidiary of the new owners, but is still a company in its own right. Then, country by country, the subsidiaries are integrated into the parent company, with staff and customer relationships transferred. The process is simpler and quicker in some countries than others, and the arrangements for terminating departing staff also vary considerably. This means that there is not a clean, overnight switch from the old to the new structure worldwide.

Another form of disruption occurs in the sales process. Sales people are obviously very keen to close as much business as possible after the acquisition is announced, but before it completes, to ensure that they collect the commission on their sales; after the acquisition and likely reorganization of sales territories, there is a good chance that, even if they stay, their territories will be different, so they have little chance of collecting commission on sales that they have not closed by then. This can lead to a bulge of sales in the quarter before the deal closes, some of it poor quality (sales people have little incentive to hold out for a higher price or a bigger deal, if they don’t expect to be rewarded for deals that close after they have lost the territory). Conversely, the revenues are likely to dip in the months after the close, both because of the depleted pipeline and the disruption and uncertainty.

Thereafter, a further problem arises: where there are overlaps within the consolidated product lines, potential (and even existing) customers are bound to be concerned about the future of some of the products. Even with vendors like Oracle that promise to ‘Protect/Extend/Evolve’ all the home-grown and acquired products, there must be inevitable speculation about which products will be put on the back-burner in favor of a more strategic offering.

For example, the former Brio product, which had become Hyperion Interactive Reporting, is inevitably overshadowed by the former Siebel Analytics in Oracle’s wide portfolio of BI front-end tools. These are direct competitors, but clearly Oracle’s momentum is behind the former Siebel product, rather than the former Brio product. The latter had done well under Hyperion’s ownership, where it filled a gap, but is now likely to fade away. Potential customers (or existing users) have to consider whether they would prefer to switch to a different Oracle product, or perhaps one from a different vendor. At the very least, this is likely to delay sales. There is much more overlap between products in the enlarged SAP BI and CPM portfolio, but very little in the IBM/Cognos/Applix portfolio, as IBM had so little BI business remaining before its acquisition of Cognos.

The net result is that the sales of Hyperion, Business Objects and Cognos products would have been disrupted in 2007, possibly rising above the trend line just before the acquisitions, and then dipping sharply, either temporarily or permanently if the acquisition goes wrong, as so many have in the past. So, not only were revenue figures not published for the full calendar year (if at all), but it would be unsafe to assume that previous trends continued unchanged.

Two of the top five OLAP vendors avoided all this disruption in 2007: Microsoft and MicroStrategy. Neither performed any acquisitions or had any major product releases, so it would indeed have been business-as-usual for them, and they are likely to have benefited from the uncertainty surrounding their competitors.

This is what the 2006 market shares look like, taking account of 2007’s consolidations:

So, what really happened in 2007? Quite simply, we cannot be sure. Microsoft certainly stayed in the number one position, with Oracle in the number two position and MicroStrategy in the number five position. But IBM may have caught and possibly overtaken SAP during 2007. The Cognos and Applix organic growth rates were higher than Business Objects, whose gross revenues were flattered by frequent acquisitions and the weakness of the US dollar. Both Cognos and, particularly Applix, had healthier core businesses. Therefore, in 2008, we do expect IBM to overtake SAP in the OLAP market, whether or not it achieved this in 2007. We estimate that the market as a whole grew by approximately 14 percent in 2007, to about $6.5bn.

It is unlikely that any other vendors can break into this top five, and apart from any swaps between the third and fourth positions, no changes in the order can be expected any time soon.

Background to the market analysis

Measuring OLAP market size and share has always been a lot more difficult than a casual observer might suppose. First, one has to decide which companies actually belong in this sector. We do not accept the assertions of all those companies claiming to offer OLAP products, and we do regard some products as being in the category even if the vendors have (for marketing reasons) chosen not to use the term. For example, ‘business/corporate/enterprise performance management’ is currently a more fashionable term, though it is often used to describe exactly the same products that were called OLAP a few years ago. We do include pre-built applications, as well as the toolkit products from which such applications should be built. Our guiding principle in this is the FASMI test.

However, this is not the end of the process. There are many complicating factors that must not be ignored (although we suspect that many other market researchers tend to gloss over them):

Many vendors of OLAP products and applications are also active in other areas, so we have to estimate the proportion of their total revenues represented by OLAP. Some vendors are unable or unwilling (especially if they are not doing well) to help us make these estimates; and even those that do try to help cannot always provide reliable information (if only because their own internal records do not clearly distinguish OLAP related from non-OLAP related revenues). Some OLAP-related products, such as BusinessObjects or Hyperion Intelligence, can even be regarded as only partially OLAP, especially if the OLAP capabilities are an optional or limited extension. As we try to estimate only the OLAP related business, the revenues used to calculate market shares in such cases are much less than the total revenues of these companies.

Many larger, non-BI companies have acquired smaller, pure OLAP or BI vendors, so these previously clearly-identified OLAP revenues are no longer reported separately.

Some vendors bundle their OLAP and non-OLAP products. For example, until Microsoft acquired ProClarity in 2006, it had no separately saleable OLAP products apart from Data Analyzer (launched in late 2001 and now discontinued) and the Business Scorecard Manager 2005, but bundles Analysis Services with SQL Server and PivotTables with Excel. The Excel OLAP add-in is a free download. Similarly, SAP BW is bundled as part of several solutions, rather than being sold separately. In such cases, where only a subset of buyers are likely to use the ‘free’ OLAP functionality, we have to estimate the proportion who use the OLAP component and assign part of the value of the total purchase cost to OLAP. This becomes harder as time passes, as the OLAP dividing line gets more blurred.

A number of the smaller vendors are US private companies who are not obliged to publish financial information. Some choose to do so voluntarily, but in other cases we have had to make estimates.

Some vendors concentrate on direct sales, so their own revenues are equal to what final customers paid. These figures are a good guide to market size and share. But other vendors make many of their sales through resellers, and the original authors’ revenues are only a fraction of the true market value. In order to treat all vendors equally, we do not want our figures distorted by differences in their sales models, so we try to gross up these companies’ indirect revenues to what we believe to be the ‘retail’ market value. This has become easier as public companies now disclose more information about the split between their direct and indirect revenues.

Most OLAP products require assistance in implementation. We include these estimated implementation costs in the market totals, to enable proper comparisons between the products that are sold as complete applications and those sold as toolkits from which applications can be built. Many, but not all, of the vendors have their own revenue earning services groups to provide this assistance and the resulting fees are included in their total revenues. Most products are also implemented by independent third-party firms, and the proportion varies by supplier. Again, for consistency, we have tried to treat all vendors equally, by making suitable allowances for external consulting. We only include services directly relevant to the implementation of the OLAP product, not the total data warehouse consulting costs (which may be much larger).

We include some third-party revenues when calculating the OLAP server market shares. For example, tools, consulting and training can all be regarded as part of the market share for OLAP servers such as Analysis Services, Essbase and TM1.

Many OLAP solutions are implemented using both OLAP and non-OLAP technologies. As far as possible, we exclude the latter from the figures (for example, we exclude all relational database and ETL costs, which often exceed the OLAP costs).

We believe that the results of all these adjustments give the fairest possible assessment both of the size of the OLAP market and the shares of the various vendors. Of course, great precision is not possible and it would be pointless to look at shares to more than two significant figures (this is, of course, true of almost all market surveys and opinion polls, but some people ascribe a spurious degree of accuracy to the results). For each product, we describe how its share was calculated in the individual product reviews.

Readers should not attempt to view the OLAP market in isolation. It overlaps many other markets, including analytical applications, performance management, data warehousing, CRM, EIS, decision support, query & reporting, enterprise reporting and even databases, so it is misleading to try to aggregate the figures of several of these indistinct sectors to calculate a total ‘business intelligence’ market size.

Note that a significant proportion — around a third — of Microsoft SQL Server revenues are now attributed to OLAP, so this and the smaller amounts attributed to ETL should be deducted from the total SQL Server revenues when calculating Microsoft’s share of the RDBMS market. Neither Microsoft, nor the other analysts who calculate database market shares, usually take this into account, so they include Microsoft’s large and growing OLAP revenues in its RDBMS market share, without being as generous to Oracle, IBM and CA. This exaggerates the size of the RDBMS market, and Microsoft’s share of that market, and is an example of why it is so important to analyze and adjust the figures before calculating market sizes and shares.

Market size

We estimate that the total worldwide OLAP market, including implementation services, was about $1 billion in 1996, $1.4 billion in 1997, just over $2bn in 1998, $2.5bn in 1999, just over $3bn in 2000, $3.3bn in 2001, $3.5bn in 2002, $3.7bn in 2003, $4.3bn in 2004, $4.9bn in 2005, $5.7bn in 2006 and $6.5bn in 2007. The market size in 2006 and 2007 as reported in US$ appears larger because of the fall in the US dollar, which enhances international revenues when expressed in dollars.

The market showed a 40 percent compound growth rate over the four years until 1997, but surprisingly grew by over 45 percent in 1998. We had been expecting a softening of the growth rate in 1998, but this did not happen, probably because Microsoft was late releasing SQL Server 7.0. However, as we expected, the growth rate did slow in 1999, to 20 percent, though it recovered slightly to almost 25 percent in 2000. Growth rates since then were in single digits until 2004, when it was almost 16 percent, and growth rates have staying in the mid teens since.

We estimate that the growth rate dropped slightly in 2007, but there has been little change since the recovery in 2004. The likelihood is that the 2008 figure will be lower, and the economic slowdown could also hurt the 2009 market growth.

Projections are always subject to change, but this chart shows the growth in the OLAP market in 1994-2007, and the expected trend for 2008. Even with the big drop in the growth rates in 2001 to 2003, and the continued falling average price trend, the market is likely to approach $7bn in 2008. But it will not be possible to confirm this figures, following the acquisition of most of the public BI vendors.

The return to double-digit growth in 2004 was very welcome, but growths of over 20 percent are unlikely to return; even the 16.4 percent seen in 2006 (and the approximately 14 percent in 2007) is probably above the long-term trend, and could easily fall sharply when the US dollar strengthens again. This lower trend is because of both long- and short-term factors:

• It is hard for multi-billion-dollar markets to grow as rapidly as they did when much smaller.
• There is now a degree of market saturation.
• Average prices have reduced sharply now that Microsoft is the largest vendor (though volumes are growing more strongly than ever). Many Microsoft OLAP sales are being made at the expense of pricier alternatives, and there is evidence of a slowdown in several companies’ growth rates from 1999. Microsoft has sold hundreds of thousands of OLAP seats in each year from 1999, many at the expense of far costlier alternatives. Many companies who buy the low cost Microsoft OLAP server also expect to pay less for OLAP clients, which further drives down average prices. Microsoft’s low-priced PerformancePoint shipped in late 2007 which, once it gets established, will put pressure on the expensive CPM products from other vendors. This means that as Microsoft’s share increases, the volume growth may remain strong, but the revenue growth will be depressed unless the market reaches the point where Microsoft has much more than a 50 percent share, which is not likely in the foreseeable future.
• Microsoft Analysis Services has put real pressure on other OLAP servers, whereas the leading client tool vendors continue to thrive (especially those specializing in Analysis Services). Indeed, most of the many OLAP servers that were on sale when Microsoft entered the market in 1998 have now died or disappeared into obscurity (eg, Acuity, Acumate, Gentia, Holos, Information Advantage, Media, MetaCube, Mineshare, Pilot, Prodea Beacon, WhiteLight). The disappearance of these products means that the overall market grows more slowly than the leading vendors.
• Open source OLAP tools are now available, and these join Microsoft in putting pricing pressure on the more expensive products.

The amount of consulting required to implement the new generation products and pre-built applications is also likely to be smaller per site (but more in total through the rise in volume). In fact, there is evidence that Microsoft OLAP sites use much less external consulting on average than users of most other OLAP servers do, which is also reducing the market growth rate. A boom in OLAP application sales has been predicted as the technology becomes more widely deployed. However, this long-predicted boom in analytical applications has been very slow to materialize; CPM vendors like Cartesis and OutlookSoft were generally growing well before being acquired by SAP, but analytical applications sales from more generic vendors like Business Objects and Cognos have remained very disappointing.

Total worldwide OLAP market shares to 2006

This section shows the shares to 2006, as published in 2007. It therefore does not take account of the consolidations which occurred in 2007, the effects of which are discussed in the first section above.

We rank vendors, not products, because many of the vendors supply multiple OLAP products and applications. As described in the background notes above, calculating OLAP market shares is quite an involved process, and these figures include OLAP server and client software, applications and OLAP consulting, whether performed by the software author or third-parties. Our resulting estimates for the top ten OLAP vendors are shown below. Improvements in market share or position are shown in green and declines in red.

Note that, despite occasional vendor claims of a 20 percent market share for Essbase, the Hyperion figures include all of Hyperion’s many products, and not just Essbase. Only a portion of Hyperion System 9 is treated as OLAP, however, with the former Brio product being largely excluded. The Essbase market share alone is less than 50 percent of the total for Hyperion. As such, the Essbase market share in 2000 was comparable to Cognos PowerPlay and Microsoft Analysis Services, but Analysis Services clearly overtook both Essbase and PowerPlay in 2001 to become the leading OLAP server. In 2002, Microsoft moved into the lead overall, even including the then Brio’s share with Hyperion’s. The gap widened further in each subsequent year.

As the Oracle acquisition of Hyperion did not occur until 2007, it did not change the 2006 or earlier figures, but from 2007, Hyperion’s share will be merged with Oracle’s (which was previously rather low). The joint share will show a declining trend, as both companies separately had declining OLAP market shares, though in absolute terms, it will push Oracle into a stronger second rank behind Microsoft, from its previous weak tenth position.

Our figures are sometimes questioned by consultants who encounter a quite different product mix in their target areas. The reason, of course, is that these are estimated worldwide shares — the shares in particular regions, industries or organization size vary significantly.

For example, Microsoft Analysis Services is typically chosen by smaller organizations, while SAP BW and MicroStrategy are much more likely to be found in the largest organizations. Similarly, Business Objects and SAP are relatively stronger in Europe, while the MicroStrategy and Hyperion customer bases have a North American bias (this is particularly true of the former Brio customer base). The large non-specialist vendors, such as Microsoft and Oracle, are stronger in the rest of the world than the smaller BI specialists, who tend to be under-represented outside the major markets. By vertical market, MicroStrategy is particularly strong in retail, Applix in finance and insurance and Microsoft and Business Objects in the IT industry.

When you combine these dimensions, distinct clusters emerge, such as large North American retailers where MicroStrategy has a disproportionately large presence, while smaller organizations outside the major markets are much more likely to use Microsoft. This means, of course, that individual anecdotal evidence will rarely be consistent with the world market.

Note that the Business Objects, Cognos and Hyperion figures include historic Crystal, Adaytum and Brio data, so the market shares for each of those vendors in 1999–2002 are higher than we originally published. The Infor figures include the former Geac/Comshare and Systems Union/MIS figures.

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