Market Demand for Business Intelligence and Performance Management in 2007

Spending continues to accelerate in 2007, with $23.8 billion budgeted for software, hardware, labor (both internal and external) and integration services. Modest growth is expected overall, with all categories advancing.

Overall BI/PM software spending is expected to grow 8.3 percent from last year to $5.9 billion. Spending on integration services will increase 10 percent to $3.9 billion. Spending for BI/PM hardware will remain flat, or slightly down 0.9 percent to $3.

Internal labor and headcount allocation is expected to shoot up 13 percent to $7.48 billion. But outsourced services will show the biggest decline, over 21 percent to $2.9B as companies staff internally.

BI/PM growth in all apps categories will increase 3.6 percent in 2007 to hit $23.8 billion. Analytic applications will bring the biggest growth, expanding nearly 9 percent. BI tools and dashboards will grow at a faster clip than the sector as a whole.

Apps spending shows some double-digit growth high performers.

• PBF +16 percent 2006: $982 million 2007: $1.135 billion
• Dashboards +14 percent 2006: $1.214 billion 2007: $1.368 billion
• Analytics +13 percent 2006: $759 million 2007: $

Core BI software is growing at the average for the market as a whole. Analytic infrastructure is flat to slightly declining.

More than one-third (37 percent) of respondents said they planned no BI/PM expansion in 2007. But the other 63 percent plan to push out more functionality to more users, led by PBF software and dashboards & scorecards.

Here are the top four reasons why BI/PM expansions may fall.

• Lack of resources to work on projects, 18 percent
• Perceived difficulty in using the products, 14 percent
• Getting management user attention, 14 percent
• Cost of sof

Add outsourced services and integration together–a proxy for all external staff work–compared to 2006. Aggregate spend is down by only 6.4 percent. Tally all people-related costs (internal and external spending) the budget is expected to grow 2.9 percen

More reasons BI/PM initiatives could stall:

• Lack of training, 10 percent
• Cost of hardware, 7 percent
• IT backlog, 7 percent
• No clear ownership of processes, 7 percent
• Competing technologies internally, 4 percent