The rise of self-service analytics, in 3 charts

I’m trying really hard to write less about business intelligence and analytics software. We get it: Data is important to businesses, and the easier you can make it for people to analyze it, the more they’ll use your software to do it. What more is there to say?

But every time I see Tableau Software’s earnings reports, I’m struck by the reality of how big a shift the business intelligence market is undergoing right now. In the fourth quarter, Tableau grew its revenue 75 percent year over year. People and departments are lining up to buy what’s often called self-service analytics software — that is, applications so easy even those lay business users can work with them without much training — and they’re doing it at the expense of incumbent software vendors.

Some analysts and market insiders will say the new breed of BI vendors are more about easy “data discovery” and that their products lack the governance and administrative control of incumbent products. That’s like saying Taylor Swift is very cute and very good at making music people like, but she’s not as serious as Alanis Morrisette or as artistic as Björk. Those things can come in time; meanwhile, I’d rather be T-Swift raking in millions and looking to do it for some time to come.

[dataset id=”914729″]

Above a quick comparison of annual revenue for three companies, the only three “leaders” in Gartner’s 2014 Magic Quadrant for Business Intelligence and Analytics Platforms (available in the above hyperlink) that are both publicly traded and focused solely on BI. Guess which two fall into the next-generation, self-service camp and are also Gartner’s two highest-ranked. Guess which one is often credited with reimagining the data-analysis experience and making a product people legitimately like using.

[dataset id=”914747″]

Narrowing it just to last year, Tableau’s revenue grew 92 percent between the first and fourth quarters, while Qlik’s grew 65 percent. Microstrategy stayed relatively flat and is trending downward. It’s fourth quarter was actually down year over year.

[dataset id=”914758″]

And what does Wall Street think about what’s happening? [company]Tableau[/company] has the least revenue for now, but probably not much longer, and has a market cap more than [company]Qlik[/company] and [company]Microstrategy[/company] combined.

Here are a few more data points that show how impressive’s Tableau’s ongoing coup really is. Tibco Software, another Gartner leader and formerly public company, recently sold to private equity firm Vista for $4.2 billion after disappointing shareholders with weak sales. Hitachi Data Systems is buying Pentaho, a BI vendor hanging just outside the border of Gartner’s “leader” category, for just more than $500 million, I’m told.

A screenshot from a sample PowerBI dashboard.

A screenshot from a sample PowerBI dashboard.

Although it’s worth noting that Tableau isn’t guaranteed anything. As we speak, startups such as Platfora, ClearStory and SiSense trying to match or outdo Tableau on simplicity while adding their own new features elsewhere. The multi-billion-dollar players are also stepping up their games in this space. [company]Microsoft[/company] and [company]IBM[/company] recently launched the natural-language-based PowerBI and Watson Analytics services that Microsoft says represent the third wave of BI software (Tableau is in the second wave, by its assessment), and [company]Salesforce.com[/company] invested a lot of resources to make its BI foray.

Whatever you want to call it — data discovery, self-service analytics, business intelligence — we’ll be talking more about it at our Structure Data conference next month. Speakers include Tableau Vice President of Analytics (and R&D leader) Jock Mackinlay, as well as Microsoft Corporate Vice President of Machine Learning Joseph Sirosh, who’ll be discussing self-service machine learning.

Microsoft throws down the gauntlet in business intelligence

[company]Microsoft[/company] is not content to let Excel define the company’s reputation among the world’s data analysts. That’s the message the company sent on Tuesday when it announced that its PowerBI product is now free. According to a company executive, the move could expand Microsoft’s reach in the business intelligence space by 10 times.

If you’re familiar with PowerBI, you might understand why Microsoft is pitching this as such a big deal. It’s a self-service data analysis tool that’s based on natural language queries and advanced visualization options. It already offers live connections to a handful of popular cloud services, such as [company]Salesforce.com[/company], [company]Marketo[/company] and GitHub. It’s delivered as a cloud service, although there’s a downloadable tool that lets users work with data on their laptops and publish the reports to a cloud dashboard.

James Phillips, Microsoft’s general manager for business intelligence, said the company has already had tens of thousands of organizations sign up for PowerBI since it became available in February 2014, and that CEO Satya Nadella opens up a PowerBI dashboard every morning to track certain metrics.

A screenshot from a sample PowerBI dashboard.

A screenshot from a sample PowerBI dashboard.

And Microsoft is giving it away — well, most of it. The preview version of the cloud service now available is free and those features will remain free when it hits general availability status. At that point, however, there will also be a “pro” tier that costs $9.99 per user per month and features more storage, as well as more support for streaming data and collaboration.

But on the whole, Phillips said, “We are eliminating any piece of friction that we can possibly find [between PowerBI and potential users].”

This isn’t free software for the sake of free software, though. Nadella might be making a lot of celebrated, if not surprising, choices around open source software, but he’s not in the business of altruism. No, the rationale behind making PowerBI free almost certainly has something to do with stealing business away from Microsoft’s neighbor on the other side of Lake Washington, Seattle-based [company]Tableau Software[/company].

Phillips said the business intelligence market is presently in its third wave. The first wave was technical and database-centric. The second wave was about self service, defined first by Excel and, over the past few years, by Tableau’s eponymous software. The third wave, he said, takes self service a step further in terms of ease of use and all but eliminates the need for individual employees to track down IT before they can get something done.

The natural language interface, using funding data from Crunchbase.

The natural language interface, using funding data from Crunchbase.

IBM’s Watson Analytics service, Phillips said, is about the only other “third wave” product available. I recently spent some time experimenting with the Watson Analytics preview, and was fairly impressed. Based on a quick test run of a preview version of PowerBI, I would say both products have their advantages over the other.

But IBM — a relative non-entity in the world of self-service software — is not Microsoft’s target. Nor, presumably, is analytics newcomer Salesforce.com. All of these companies, as well as a handful of other vendors that exist to sell business intelligence software, want a piece of the self-service analytics market that Tableau currently owns. Tableau’s revenues have been skyrocketing for the past couple years, and it’s on pace to hit a billion-dollar run rate in just over a year.

“I have never ever met a Tableau user who was not also a Microsoft Excel user,” Phillips said.

That might be true, but it also means Microsoft has been leaving money on the table by not offering anything akin to Tableau’s graphic interface and focus on visualizations. Presumably, it’s those Tableau users, and lots of other folks for whom Tableau (even its free Tableau Public version) is too complex, that Microsoft hopes it can reach with PowerBI. Tableau is trying to reach them, too.

“We think this really does 10x or more the size of the addressable business intelligence market,” Phillips said.

A former Microsoft executive told me that the company initially viewed Tableau as a partner and was careful not to cannibalize its business. Microsoft stuck to selling SharePoint and enterprise-wide SQL Server deals, while Tableau dealt in individual and departmental visualization deals. However, he noted, the new positioning of PowerBI does seem like a change in that strategy.

Analyzing data with more controls.

Analyzing data with more controls.

Ultimately, Microsoft’s vision is to use PowerBI as a gateway to other products within Microsoft’s data business, which Phillips characterized the the company’s fastest-growing segment. PowerBI can already connect to data sources such as Hadoop and SQL Server (and, in the case of the latter, can analyze data without transporting it), and eventually Microsoft wants to incorporate capabilities from its newly launched Azure Machine Learning service and the R statistical computing expertise it’s about to acquire, he said.

“I came to Microsoft largely because Satya convinced me that the company was all in behind data,” Phillips said. For every byte that customers store in a Microsoft product, he added, “we’ll help you wring … every drop of value out of that data.”

Joseph Sirosh, Microsoft’s corporate vice president for machine learning, will be speaking about this broader vision and the promise of easier-to-use machine learning at our Structure Data conference in March.

Microsoft CEO Satya Nadella.

Microsoft CEO Satya Nadella.

Given all of its assets, it’s not too difficult to see how the new, Nadella-led Microsoft could become a leader in an emerging data market that spans such a wide ranges of infrastructure and application software. Reports surfaced earlier this week, in fact, that Microsoft is readying its internal big data system, Cosmos, to be offered as a cloud service. And selling more data products could help Microsoft compete with another Seattle-based rival — [company]Amazon[/company] Web Services — in a cloud computing business where the company has much more at stake than it does selling business intelligence software.

If it were just selling virtual servers and storage on its Azure platform, Microsoft would likely never sniff market leader AWS in terms of users or revenue. But having good data products in place will boost subscription revenues, which count toward the cloud bottom line, and could give users an excuse to rent infrastructure from Microsoft, too.

Update: This post was updated at 10:15 a.m. to include additional information from a former Microsoft employee.

Hands on with Watson Analytics: Pretty useful when it’s working

Last month, [company]IBM[/company] made available the beta version of its Watson Analytics data analysis service, an offering first announced in September. It’s one of IBM’s only recent forays into anything resembling consumer software, and it’s supposed to make it easy for anyone to analyze data, relying on natural language processing (thus the Watson branding) to drive the query experience.

When the servers running Watson Analytics are working, it actually delivers on that goal.

Analytic power to the people

Because I was impressed that IBM decided to a cloud service using the freemium business model — and carrying the Watson branding, no less — I wanted to see firsthand how well Watson Analytics works. So I uploaded a CSV file including data from Crunchbase on all companies categorized as “big data,” and I got to work.

Seems like a good starting point.

watson14Choose one and get results. The little icon in the bottom left corner makes it easy to change chart type. Notice the various insights included in the bar at the top. Some are more useful than others.

watson15But which companies have raised the most money? Cloudera by a long shot.

watson18

I know Cloudera had a huge investment round in 2014. I wonder how that skews the results for 2014, so I filter it out.

watsonlast

And, voila! For what it’s worth, Cloudera also skews funding totals however you sort them — by year founded, city, month of funding, you name it.

watsonlast2

Watson analytics also includes tools for building dashboards and for predictive analysis. The latter could be particularly useful, although that might depend on the dataset. I analyzed Crunchbase data to try and determine what factors are most predictive of a company’s operating status (whether it has shut down, has been acquired or is still running), and the results were pretty obvious (if you can’t read the image, it lists “last funding” as a big predictor).

watsonpredict3

If I have one big complaint about Watson Analytics, it’s that it’s still a bit buggy — the tool to download charts as images doesn’t seem to work, for example, and I had to reload multiple pages because of server errors. I’d be pretty upset if I were using the paid version, which allows for more storage and larger files, and experienced the same issues. Adding variables to a view without starting over could be easier, too.

Regarding the cloud connection, I rather like what [company]Tableau[/company] did with its public version by pairing a locally hosted application with cloud-based storage. If you’re not going to ensure a consistent backend, it seems better to guarantee some level of performance by relying on the user’s machine.

All in all, though, Watson Analytics seems like a good start to a mass-market analytics service. The natural language aspect makes it at least as intuitive as other services I’ve used (a list that includes DataHero, Tableau Public and Google Fusion tables, among others) and it’s easy enough to run and visualize simple analyses. But Watson Analytics plays in a crowded space that includes the aforementioned products, as well as Microsoft Excel and PowerBI, and Salesforce Wave.

If IBM can work out some of the kinks and add some more business-friendly features — such as the upcoming abilities to refine datasets and connect to data sources — it could be onto something. Depending on how demand for mass-market analytics tools shapes up, there could be plenty of business to go around for everyone, or a couple companies that master the user experience could own the space.

Tableau CEO says the company’s biggest challenge now is talent

In an interview with Gigaom on Thursday, Tableau Software CEO Christian Chabot spoke about the company’s $100 million third quarter and the challenges it faces as it continues to grow. He doesn’t suspect Salesforce.com’s new analytics service will be one of them.

Tableau hits the $100M revenue mark in third quarter

Tableau continues to grow at a fast pace, hitting the $100 million mark for the first time in the third quarter. Although there are plenty of startups willing to point out its weaknesses, Tableau has lots of room to grow and the money to do it.

IBM goes freemium with new natural language analytics service

IBM is getting into the freemium space, targeting individual business users with a new data analysis service called Watson Analytics. It helps users analyze data using natural language queries, and could help IBM fend off the myriad products threatening its analytics business from the bottom up.