It has become increasingly obvious to me recently that data discovery tool vendors are missing a trick. One that could prove very costly to their business, and is something that has to be rectified in order for them to have a successful business model over the coming years:
They are being slow to embrace the potential of the Cloud.
As IDC predicts the business analytics software market to grow at over 10% per year, and recent Gartner estimates for 2011 for BI spending at $12bn, the market for data analysis tools is huge, and it’s an opportunity that vendors can’t afford to miss.
Juxtaposed with the increase in data (2.5 quintillions pieces of data were created every day in 2011 according to IBM), businesses are finding budgets being slashed and that they can no longer justify the spend for large and cumbersome datacentres to analyze the mountains of data produced by their business (assuming they have the space for it). This gives vendors the perfect platform to update their offerings to match what customers are looking for, at a lower cost, and with more flexibility.
However, many vendors are cautious about dipping their toe into the cloud.
One of the many reasons for this is that their current business models will need to be significantly adjusted to incorporate the impact of this new delivery platform – and for many, this seems like an insurmountable challenge.
This doesn’t need to be the case – it should be seen as an opportunity rather than an issue. One which will shore up revenues, and bring in customers for a long time to come.
Currently, data discovery tools are delivered via a desktop/server applications that are used to potentially create web compliant versions of the finished product.
When talking with customers, we’ve found that they are hugely enthusiastic about the potential of having have a data discovery tool which is web-based, and one that they can develop their applications in without having to install any software locally, and then easily distribute said application globally.
Vendors don’t need to worry about a massive change to their ethos and business by transitioning to the cloud: By moving to a license-based revenue model, vendors will be providing a solid foundation for profits, with much lower overheads. Time-to-implementation is significantly quicker for customers, and the cost for vendors is relatively low.
Where traditionally vendors would have high costs for implementation, needing high outlay on servers and on-site implementation, by using the cloud, both are negated, freeing up much-needed business resources.
When moving to the cloud, vendors should also consider linking up with partners, enabling them to have access to new customer bases, and added manpower for sales and customer care.
The key is for a vendor to be the first one to make these opportunities available for analysts, and they’ll grab the lion’s share of the market.
Once established, all incumbents will need to adopt the same strategy to keep up, or be left behind.
The question is – which one of the data discovery providers is agile enough to lead the pack?