The Magic Quadrant for Business Intelligence Platforms (see Figure 1) presents a global view of Gartner's opinion of the main software vendors that should be considered by organizations seeking to develop business intelligence (BI) applications. Buyers should evaluate vendors in all four quadrants and not assume that only the largest organizations can deliver successful BI implementations. In addition to Gartner analysts' opinions, the scores and commentary in this document are based on three sources: customer perceptions of each vendor's strengths and challenges derived from BI-related inquiries with Gartner, an online survey of vendor customers conducted in late 2008 yielding 480 responses, and a vendor-completed questionnaire about their BI strategy and operations.

In January 2008, SAP completed its acquisition of Business Objects and IBM completed its acquisition of Cognos. The acquired firms were two of the largest in the market and had, arguably, been the defining suppliers in the space. Their absorption into larger entities (along with Hyperion into Oracle six months earlier) seemingly marked the end of BI platforms as a predominantly stand-alone, best-of-breed, buying decision. In 2008, BI platform investment decisions became tethered more closely to strategic sourcing and stack-led factors, and more influenced by organizational relationships with application and infrastructure vendors than before. Conversely, however, based on the research conducted for this report and interactions with Gartner customers over the year, there clearly remains a demand for independent BI platforms. To understand this duality, it is necessary to consider a number of factors at play that are driving the BI platform today:

After the vendor merger and acquisition (M&A) turbulence of 2007, 2008 was a year of transition. And 2009 is likely to be a critical year in which the total cost of ownership (TCO) of BI comes under increased scrutiny, and its value as a decision-making tool in the toughest economic conditions is put to the test.

Gartner's view is that BI platform revenue will be less affected by the economic downturn than some other technologies because of the heightened need to make better, fact-based decisions — BI is a vital competitive tool of increased importance in an environment where doing business more smartly, in order to maximize share of the reduced revenue in circulation, is a necessity. That said, however, the recession, commoditization and consolidation are expected to put BI platform growth into the single digits in 2009 and beyond. As such, the BI platform market's compound annual growth rate (CAGR) through 2012 is expected to be 7.0% for stand-alone BI platforms and 7.9% for both stand-alone and embedded functionality (for details and an explanation of terms see "Forecast: Enterprise Software Markets, Worldwide, 2007-2012, 4Q08 Update").

Several demand-side factors indicate that BI platform revenue will continue to grow:

BI platforms are used to build applications that help organizations learn and understand their business. Gartner defines a BI platform as a software platform that delivers the 12 capabilities listed below. These capabilities are organized into three categories of functionality: integration, information delivery and analysis. Information delivery is the core focus of most BI projects today, but we see an increasing need to focus more on analysis to discover new insights, and on integration to implement those insights.

BI infrastructure — All tools in the platform should use the same security, metadata, administration, portal integration, object model and query engine, and should share the same look and feel.

Metadata management — This is arguably the most important of the 12 capabilities. Not only should all tools leverage the same metadata, but the offering should provide a robust way to search, capture, store, reuse and publish metadata objects such as dimensions, hierarchies, measures, performance metrics and report layout objects.

Development — The BI platform should provide a set of programmatic development tools — coupled with a software developer's kit for creating BI applications — that can be integrated into a business process, and/or embedded in another application. The BI platform should also enable developers to build BI applications without coding by using wizard-like components for a graphical assembly process. The development environment should also support Web services in performing common tasks such as scheduling, delivering, administering and managing.

Workflow and collaboration — This capability enables BI users to share and discuss information via public folders and discussion threads. In addition, the BI application can assign and track events or tasks allotted to specific users, based on predefined business rules. Often, this capability is delivered by integrating with a separate portal or workflow tool.

Reporting — Reporting provides the ability to create formatted and interactive reports with highly scalable distribution and scheduling capabilities. In addition, BI platform vendors should handle a wide array of reporting styles (for example, financial, operational and performance dashboards).

Dashboards — This subset of reporting includes the ability to publish graphically intuitive displays of information, including dials, gauges and traffic lights. These displays indicate the state of the performance metric, compared with a goal or target value. Increasingly, dashboards are used to disseminate real-time data from operational applications.

Ad hoc query — This capability, also known as self-service reporting, enables users to ask their own questions of the data, without relying on IT to create a report. In particular, the tools must have a robust semantic layer to allow users to navigate available data sources. In addition, these tools should offer query governance and auditing capabilities to ensure that queries perform well.

Microsoft Office integration — In some cases, BI platforms are used as a middle tier to manage, secure and execute BI tasks, but Microsoft Office (particularly Excel) acts as the BI client. In these cases, it is vital that the BI vendor provides integration with Microsoft Office, including support for document formats, formulas, data "refresh" and pivot tables. Advanced integration includes cell locking and write-back.

OLAP — This enables end users to analyze data with extremely fast query and calculation performance, enabling a style of analysis known as "slicing and dicing." This capability could span a variety of storage architectures such as relational, multidimensional and in-memory.

Advanced visualization — This provides the ability to display numerous aspects of the data more efficiently by using interactive pictures and charts, instead of rows and columns. Over time, advanced visualization will go beyond just slicing and dicing data to include more process-driven BI projects, allowing all stakeholders to better understand the workflow through a visual representation.

Predictive modeling and data mining — This capability enables organizations to classify categorical variables and estimate continuous variables using advanced mathematical techniques.

Scorecards — These take the metrics displayed in a dashboard a step further by applying them to a strategy map that aligns key performance indicators to a strategic objective. Scorecard metrics should be linked to related reports and information in order to do further analysis. A scorecard implies the use of a performance management methodology such as Six Sigma or a balanced scorecard framework.

Vendors were included in the Magic Quadrant if they met the following requirements:

*Gartner defines total software revenue as revenue generated from new licenses, updates, subscriptions and hosting, technical support, and maintenance. Professional services revenue and hardware revenue are not included in total software revenue. See "Market Share: Business Intelligence Platform Software, Worldwide, 2007."

No new vendors were added to the Magic Quadrant this year. However, it should be noted that IBM acquired Cognos, and thus replaces it on the Magic Quadrant.

Even though they do not meet the criteria for inclusion, there are some alternative vendors that are benefiting from the growth of the BI platforms market that may be worthy of consideration in BI evaluations.

There are a number of BI offerings from well established vendors that fall just outside the inclusion criteria. One example is Targit, a Danish headquartered firm that focuses on BI usability with its suite of reporting, dashboarding and ad hoc analysis tools, front-ending Microsoft, Oracle or IBM databases, usually for midsize customers. Targit's 3,000 customers, 288 certified resellers in 42 countries, and OEM channels including Microsoft and Ross Systems make it a strong contender for inclusion in next year's Magic Quadrant.

Other large enterprise application vendors also have BI platform offerings, but we opted not to include them as they are more of an augmentation to their existing ERP applications as opposed to independent enterprise BI platforms:

Other vendors with a traditional licensed software approach to BI include Bitam and LogiXML.

This year Gartner gave serious consideration to including open-source BI suppliers in the Magic Quadrant, and even altered the inclusion criteria to allow for this eventuality. As yet, though, no open-source BI platform supplier generates enough revenue to be included in the Magic Quadrant. However, while they don't meet the revenue requirement, Jaspersoft and Pentaho have emerged as viable players in the BI platform market and as such we invited these firms to take part in the Magic Quadrant user survey. Both open source vendors provide comprehensive BI platform capabilities that are comparable to traditional BI platform vendors. A key part of both vendors' strategy is to forge OEM relationships with commercial independent software vendors (ISVs) looking to easily embed BI functionality at a low price point. Jaspersoft and Pentaho enable ISVs to OEM open-source BI components without being bound by the GNU General Public License (GPL) terms and conditions. Given their subscription-based model, both vendors need to provide exemplary support. This was in evidence in the MQ reference survey, as both Jaspersoft and particularly Pentaho scored strongly on the customer support question — higher than any of the megavendors.

Jaspersoft's v3, released in mid-2008, significantly improved its offering in three major areas. First, it provided an extended metadata capability for full business-level abstraction of the underlying data models. Second, based on this extended metadata layer, it extended its ad hoc capability to create queries, reports and dashboards. Third, it improved its ad hoc query interface with an Ajax client and support for Flash/Flex. Much of Jaspersoft's early adoption has been through reseller and OEM agreements with Red Hat, MySQL, Ingres and Unisys. Despite this momentum, Jaspersoft did score lowest of all vendors on one MQ Customer Reference survey question, which asked about the ability to support a large number of users.

Pentaho, after just four years in existence, has put together a comprehensive open-source BI platform that includes data integration and data mining capabilities. In 2008, Pentaho was noticeably more aggressive, openly competing against traditional BI platform vendors. Like Jaspersoft, Pentaho is affordable and also offers a subscription-based model that avoids an initial large payment for the software license. Some of the significant features Pentaho introduced in 2008 include an automatic table designer that analyzes relational schemas and data patterns, performs a cost-benefit analysis of aggregation at different levels, and generates and populates those aggregate tables. Despite a handful of large customers, Pentaho reference survey respondents more frequently indicated that they had more departmental deployments (versus enterprisewide) and smaller data volumes compared with the other vendors.

Other providers are addressing BI from different angles. IDS Scheer, which has dominated the business process analysis market with its ARIS platform, is another emerging vendor in the BI platform market. Most of its traction in the BI platform space to date has been from combining metrics with processes and adding performance management and performance dashboard functionality to a company's process view. This builds on IDS Scheer's capability to generate and visualize the structure of existing processes, and positions IDS Scheer in the process-driven analytic application segment of the BI platform market. This market segment is smaller and more for advanced functionality, but as the customer base matures and begins to demand more closed-loop functionality, the need for root-cause analysis and what-if scenario modeling will drive adoption of IDS Scheer's platform.

There is also increasing interest in SaaS solutions in the BI platforms market. SAP Business Objects is perhaps the largest in this submarket with its OnDemand offerings, but there are smaller vendors, like PivotLink, Oco and LucidEra, delivering BI as a service. Moving BI off-premises may not suit all organizations, especially those dealing with highly sensitive data, but firms that find the SaaS value proposition of more rapid, lower-cost deployments attractive should evaluate these options.

Business Objects was acquired by SAP, and its BI platform products are now sold alongside those developed by SAP itself.

Vendors are judged on their ability and success in making their vision a market reality.

Product/Service: How competitive and successful are the goods and services offered by the vendor in this market?

Overall Viability: What is the likelihood of the vendor continuing to invest in products and services for its customers?

Sales Execution/Pricing: Does the vendor provide cost-effective licensing and maintenance options?

Market Responsiveness and Track Record: Can the vendor respond to changes in market direction as customer requirements evolve?

Market Execution: Are customers aware of the vendor's offerings in the market?

Customer Experience: How well does the vendor support its customers?

Operations: What is the ability of the organization to meet its goals and commitments?

Vendors are rated on their understanding of how market forces can be exploited to create value for customers and opportunity for themselves.

Market Understanding: Does the vendor have the ability to understand buyers' needs, and to translate those needs into products and services?

Marketing Strategy: Does the vendor have a clear set of messages that communicate its value and differentiation in the market?

Sales Strategy: Does the vendor have the right combination of direct and indirect resources to extend its market reach?

Offering (Product) Strategy: Does the vendor's approach to product development and delivery emphasize differentiation and functionality as it maps to current and future requirements?

Business Model: How sound and logical is the vendor's underlying business proposition? Note that this criterion has been given no rating because all vendors in the market have a viable business model.

Vertical/Industry Strategy: How well can the vendor meet the needs of various industries such as financial services or retail?

Geographic Strategy: How well can the vendor meet the needs of locations outside its native country, either directly or through partners?

Note that for the 2009 Magic Quadrant the Innovation criterion was not rated separately. Instead, it was factored into the Market Understanding and Offering (Product) Strategy criteria.

Leaders are vendors that are reasonably strong in the breadth and depth of their BI platform capabilities, and which can deliver on enterprisewide implementations that support a broad BI strategy. Leaders articulate a business proposition that resonates with buyers, supported by the viability and operational capability to deliver on a global basis.

Challengers offer a good breadth of BI platform functionality and are well positioned to succeed in the market. However, they may be limited to specific technical environments or application domains. Their vision may be hampered by a lack of coordinated strategy across the various products in their BI platform portfolio. Or they may lack the sales channel, geographic presence and industry-specific content offered by the vendors in the Leaders quadrant.

Visionaries are vendors that have a strong vision for delivering a BI platform. They are distinguished by the openness and flexibility of their application architectures, and they offer depth of functionality in the areas they address, but they may have gaps relating to broader functionality requirements. A visionary vendor is a market thought-leader and innovator. However, it may have yet to achieve sufficient scale — or there may be concerns about its ability to grow and provide consistent execution.

Niche Players are those that do well in a specific segment of the BI platform market — such as reporting — or that have limited capability to innovate or outperform other vendors in the market. They may focus on a specific domain or aspect of BI, but are likely to lack depth of functionality elsewhere. Or they may have gaps relating to broader BI platform functionality. Alternatively, Niche Players may have a reasonably broad BI platform, but have limited implementation and support capabilities or relatively limited customer bases. Or they may have not yet achieved the necessary scale to solidify their market positions.