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Market for data warehousing tools surges

The data warehousing software market grew over 10% last year, driven by business intelligence projects, scalability and increased access to internal and external users.

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A need for faster data warehouses and to provide access to a growing number of users helped drive the growth of the data warehousing software market last year, according to a recent report.

According to the Worldwide Data Warehousing Tools 2004 Vendor Shares from Framingham, Mass.-based IDC, the market experienced an 11.8% growth last year. Dan Vesset, a research director at IDC, called it a positive sign. It's the first time that the market has experienced over 10% growth in several years. Still, he's not surprised at the numbers.

"There's a generally strong macroeconomic market, influencing the higher growth rate," Vesset said.

IDC sized the total market at $8.8 billion in software revenue in 2004, and expects it to grow at a 9% compound annual growth rate through 2009. The leading vendors in this market were also no surprise to Vesset.

Oracle Corp., IBM and Microsoft took the top three spots, respectively, and together have over 50% of the market share. The rest of the top 10 vendors include SAS Institute Inc., Business Objects SA, Teradata, Cognos Inc., Hyperion Solutions Corp., MicroStrategy Inc. and Informatica Corp.

Vesset said much of the growth can be attributed to companies moving to larger, faster data warehouses and giving access to more internal and external users.

"It's not just the storage of the data," he explained. "Access to more users is a big trend that's starting now … [businesses are] getting beyond the power user in the company and giving more access to more people."

With more people accessing more data, Vesset said issues like scalability and performance are also driving larger data warehouse investments from high-end companies. There's a lot of attention on BI right now, he said, and that requires sophisticated data warehousing strategies.

Vesset continued, "To some extent, the e-commerce vendors like Google, Amazon, eBay and Yahoo are changing the ways that organizations can use data … so much of what they present to vendors is data driven."

Vesset believes that many best practices, in areas like customer relationship management analytics, will come from these e-commerce organizations and will generate broader awareness of the potential of sound data management.

Of the total market revenue, data warehousing management tools represented the largest segment, with revenues of $4.5 billion. The data warehouse access market came in at $3.3 billion. Data warehouse generation software, which includes systems for integration and data quality, reported revenues of $1 billion.

The lower end of the market is heating up as well, Vesset said, as evidenced by Microsoft's enhancements to SQL Server 2005. It appears that companies of all sizes are seeking BI, analysis and reporting tools, all of which require accessible, usable data.

"There's generally more awareness that you can and should manage your business by the numbers," Vesset concluded.

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