Buyers, beware: The analytics field is consolidating

Most technology sectors go through a certain maturity cycle. At the beginning of the cycle a number of pure-play companies, flush with venture capital in their pockets, come in for the gold rush. Next, a few of them crash and burn while a few others gain revenue momentum and significant name-recognition. Meanwhile, the majority of companies tend toward the neither extreme and just “keep on truckin.”

Consolidation comes next: Some companies merge, a few get stronger and remain independent, and several more are acquired — often by established enterprise vendors.

Dance cards start to fill
The big data and analytics world is entering that consolidation phase right now. Just last week TIBCO Software announced it was acquiring the commercial open-source analytics provider Jaspersoft for $185 million.  Jaspersoft will join TIBCO’s analytics portfolio, established by the acquisition of Spotfire back in 2007. TIBCO has built out its analytics platform quite a bit since then, with the acquisitions of Streambase in June of last year and of Extended Results in September.

TIBCO may be in the enterprise integration and middleware business but analytics is ever more important in that sphere. The two fields intersect in the zones of operational analytics and what used to get called BAM (business activity monitoring), with machine data analytics as a close cousin.

There have been other important analytics acquisitions in the last year, including:

  • Actian’s 2013 acquisitions of ParAccel and Pervasive Software
  • Oracle’s buying BlueKai in February of this year
  • IBM’s acquisition of Cloudant

Data discovery, vendor inventory
This is just the beginning, of course. The number of vendors in the analytics space is, arguably, unsustainable. In Gigaom’s recent “Sector RoadMap: data discovery in 2014” report (subscription required), which I authored, my task of picking just six vendors to score proved very challenging. The summary of that scoring for the selected few (Datameer, Tableau, Splunk, MicroStrategy, SiSense and Roambi) appears below:

Screen Shot 2014-05-10 at 9.09.03 PM


Beyond those six players, in writing the report, I felt compelled to summarize offerings from no fewer than 12 more:

  • Actuate
  • Birst
  • IBM
  • Jaspersoft
  • Logi Analytics
  • Microsoft
  • Oracle
  • Pentaho
  • QlikTech
  • SAP
  • SAS
  • Tibco

Including these additional vendors wasn’t a matter of being obsessive; the report simply would have been incomplete without them.

Two of the vendors in the above list have already merged.  More such unions will follow; the only question is when, and which companies will hook up.  If the 2007-era consolidation in the Business Intelligence space is an indicator, likely acquirers will include the so-called “Megavendors:” Microsoft, IBM, SAP and Oracle.  HP, Teradata and EMC/Pivotal could go on shopping sprees of their own and many of the other companies in the analytics sector could be on their lists.

We told you so
Gigaom Research called out analytics’ inevitable consolidation in our “Big data 2013: key trends and companies to watch” report, in which we said, “There will no doubt be many big data acquisition . . . as the old-guard vendors embrace the new way of doing things or, more likely, stall it for as long as they can.”

In his article on the TIBCO-Jaspersoft deal, Gigaom’s Derrick Harris identified the analytics M&A phenomenon in the very title of his article (“Consolidation looms in business intelligence, as TIBCO buys Jaspersoft for $185M”).  Despite the deal’s relatively small size, Harris observed its significance in terms of the trend it foreshadows:

It’s not an earth-shaking deal, but it could be a sign of things to come in an analytics software market full of companies and products that have a hard time standing out from the crowd.

Be prepared
Buyers should beware of the coming consolidation and plan carefully. Sometimes acquisitions result in products being deprecated or removed from the market altogether. For example, Microsoft’s 2006 acquisition of ProClarity resulted in the namesake product receiving little investment and eventually being sunsetted.

Even when acquired products are not put out to pasture, they may be forcibly integrated with products already in the buyer’s possession. Consider Oracle and SAP, both of whom had their own incumbent BI suites when they acquired Hyperion and Business Objects, respectively.

Again though, most tech sectors go through these cycles. Sitting on the sidelines, waiting for equilibrium to settle in isn’t an option for most tech buyers. Real value can be derived from analytics technology now, despite what future product roadmaps may bring. Buyers can’t eliminate risk, but they should watch market consolidation in order to mitigate it and formulate contingencies.