IBM's SPSS Deal May Spark BI Market Consolidation - InformationWeek

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IBM's SPSS Deal May Spark BI Market Consolidation

SAP will likely acquire a company specializing in predictive analytics within the next year, Forrester Research predicts.

IBM's planned acquisition of SPSS Inc. is likely to set off a new wave of consolidation in the business-intelligence market, as more software vendors look to beef up their predictive analytics capabilities, according to a Forrester Research report.

Forrester predicts that in the coming year, vendors will look to partner or acquire companies specializing in this area, including Accelrys Software, Angoss, FICO, KXEN, and Portrait Software. SAP, in particular, is likely to make a predictive analytics acquisition, the research firm says.

"Any BI vendor that fails to realign around a strong predictive focus will find itself on the sidelines of this new era of future-facing analytics," according to Tuesday's report, "Business Intelligence Polishes Its Crystal Ball," co-authored by James Kobielus, Boris Evelson, and Leslie Owens.

SAS Institute, a privately held company, is the clear market leader in predictive analytics, followed by SPSS. In a Dec. 2007 interview with InformationWeek, SAS CEO and co-founder Jim Goodnight said he wasn't interested in being acquired. SAS had "numerous opportunities in the last year [to be acquired] and a number of inquiries," Goodnight said in 2007, but he felt such a merger wasn't needed given SAS's strong revenue growth, and would negatively impact the company's culture.

It's unclear whether Goodnight still feels that way, but SAS continues to report strong revenues.

Two years ago, a big wave of consolidation hit the market for traditional BI tools, such as query and reporting. In Oct. 2007, SAP announced it would acquire Business Objects, and a month later, IBM said it would acquire Cognos. Now Forrester expects SAP to follow IBM's move in the predictive (also called advanced) analytics area, to mitigate the risk of depending on its existing partnership with SPSS.

Still, even with SPSS coming under the wings of a competitor, Forrester points out that SAP already has some relevant offerings, including the forecasting and market-basket analysis capabilities in SAP Business Warehouse, and some of the more advanced analytic and trend-projection capabilities in Crystal Reports and Xcelsius.

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