Frost & Sullivan - Companies Select Data Warehouses To Create Competitive Advantage

As Darwin once put it, only the fittest survive. Though he was referring to the natural world, the same holds true for Corporate America; if a company wishes to stay viable, it must do business smarter and more efficiently than its competitors. The emergence of data warehouses as effective solutions to streamlining and facilitating business decision-making has given managers a new strategy to make sure their companies are not the ones eliminated through natural selection.

Frost & Sullivan's strategic report U.S. Data Warehousing Software Markets analyzes the major segments in the industry, including the markets for design and modeling tools; extraction, transformation and loading (ETL) tools; data storage; and data management tools. This report offers its readers a privileged industry view by evaluating market drivers and restraints and by monitoring changing customer needs.

In the past, only large firms could afford to invest in data warehouses; but now, more small and mid-sized companies are realizing the benefits of data warehousing. Frost & Sullivan analysts expect data warehouses will be common in small and mid-sized companies by 2005. As data warehouse software vendors begin to target this new, larger customer base, they must make their solutions less expensive and more user-friendly.

According to the report, data warehousing's rise in popularity can also be attributed to the tremendous increase in raw data being generated in e-commerce transactions.

"The meteoric rise of e-commerce to mainstream status bodes well for data warehousing software vendors," the principal analyst says. "Since data created during e-commerce transactions is stored in databases, there is a natural increase in demand for data warehousing software."

Other market trends are expected to hold true as well. The market is still in the development phase, so Frost & Sullivan predicts revenues will rise well above the 1998 total of $1.12 billion throughout the forecast period (1999-2005).

Data warehousing software companies are beginning to integrate functionality into the core database engine. Some of the larger database vendors, including Microsoft, Oracle and IBM, have already begun to incorporate some basic design, modeling and ETL capabilities. These and other companies are expected to include even more sophisticated features, so tool vendors can expect to see heightened competition over the next 2 to 3 years.

Data warehousing companies are seeing the importance of the Internet and are incorporating Web capabilities into their software, thus alleviating many concerns of end-users and administrators. Also, programmers are working on a metadata standard that will facilitate manipulation and access of data across different platforms.

U.S. Data Warehousing Software Markets outlines several challenges that data warehouse software vendors must overcome to stay profitable: the growth of the Internet has spawned opportunities for tool vendors to exploit niches, the trend towards integrated solutions has left specialized vendors in jeopardy of falling by the wayside, squabbles over an industry standard for metadata has tempered growth of market, and the high failure rates of million-dollar data warehousing projects has created extreme caution among potential customers.

Consolidation is also a threat to the market. Frost & Sullivan analysts note that the large database vendors are either acquiring companies or making strategic partnerships in order to develop end-to-end solutions to satisfy consumer preferences.

The analysts say companies that are able to compete effectively on the basis of performance, scalability, reliability, fault tolerance, security, ease of management, price and availability of applications will thrive in this evolving market. Continued support for standards and interoperability will serve the market well. As the track record of data warehouses improves with respect to lower failure rates and higher return on investment and vendors move toward integrated solutions, more companies are likely to deploy data warehouses to improve their competitive position.

U.S. Data Warehousing Software Markets analyzes these and other trends by product segment. The report also provides strategic insight, competitive benchmarking and objective market forecasts - information necessary to survive in this ever-evolving market.

Frost & Sullivan presents Market Engineering Awards to companies that have worked hard to make a positive contribution to the data warehousing software industry.

The 1998 Market Engineering Leadership Award is presented to IBM for its strategy and actions in the marketplace, including developing strategic partnerships with tool vendors in the data warehousing space and creating solutions that customers truly need.

The 1998 Market Engineering Competitive Strategy Award is given to Informix Corporation for their strategic acquisition of Red Brick Systems that rounded out their data warehouse offerings and positioned them to be able to make a run for the high end data warehousing market in 1999 and 2000.

The 1998 Market Engineering Product Line Award is awarded to the SAS Institute for their development of a robust data warehousing solution that includes products in the ETL, management, data mining and OLAP tool spaces.

The 1998 Market Engineering Entrepreneurial Award goes to Teleran Technologies, L.P. for their tremendous strides in management tool space and making solid inroads in the market despite their small size.

The 1998 Market Engineering Product Innovation Award is presented to BMC Software for their introduction of a data movement product in late 1998 that can move data in near real time.

The 1998 Market Engineering Marketing Strategy Award is given to Ardent Software for their circumspect acquisition of Prism Solutions and for their strategic partnerships with several leading database vendors.

Frost & Sullivan is an international marketing consulting company that monitors the information technology market for market trends, market measurements and strategies. This ongoing research is used to complement a series of research publications such as U.S. Decision Support Systems Markets (#7066-70) and to support industry participants with customized consulting needs.