Market Sizing – Business Analytics and Big Data
“Google, Facebook are really big data companies, not software companies. They collect data, process it and sell it back with value added extensions. They don’t have better algorithms. They simply have more data.” — Anonymous
The convergence of cloud, social, mobile and connected computing has sparked a data revolution. More than 90 percent of the world’s data has been generated over the last two years . And with a projected 50 billion connected “things” by 2020 , the volume of data available is expected to grow exponentially. This proliferation of data has created a vast ocean of potential insights for companies, allowing them to know their customers in a whole new way.
Data is valuable. Data is plentiful. Data is complex. Data is in flux. Data is fast moving. Capturing and managing data (Cloud, On-Premise, Hybrid IT) is challenging. It’s a paradox of the information age. The glut of information that bombards us daily too frequently obscures true insight.
Help people uncover, see, understand and visualize data presents a broad and momentous market opportunity….call this user-driven discovery. Take for instance, Facebook (like Amazon.com) builds a custom Web page every time you visit. It pores over all the actions your friends have taken—their postings, photos, likes, the songs they listen to, the products they like—and determines in milliseconds which items you might wish to see, and in what order. Is this the future for every firm…..
The opportunity is simply getting bigger by the day. Every customer interaction is generating a growing trail of data (“data exhaust”). Every machine that services the customer is generating data. Every conversation, transaction, engagement, touchpoint location, offer, response is a potential digital bread-crumb of opportunity.
Now let’s flip the context. A typical mobile user check their phone interface 150 times a day for updates. A Gen Y or Millenial user obviously much more than a Gen X user. The consumption patterns for information are changing continuously. Facebook style real-time updates which were revolutionary 5 years ago seem outdated in the mobile world. We live in an “attention deficit economy” where attention is the new basis for competition. The firms that create the evolving experience using data which can grab/hold your attention will attract marketing and ad $$.
As a result, the buzz and hype around data…small data, big data, machine data, social data, mobile data, wearables data….is relentless. As a result there are a lot of new initiatives and companies. I have been asked repeatedly by a lot of entrepreneurs and strategy teams about analytics market size and opportunity size. Product and services firms are also interested in opportunity sizing as they create new offerings in the data rich world.
I thought i would share a mashup of industry and market sizing data i have collected so far.
- How big is the overall market for Analytics, Big Data?
- How big is the market for Digital Customer Interaction or Engagement?
- How big is the market for Mobile and Social Intelligence?
- How big is the market for Wearables?
- What is growing fast, faster and fastest?
All good questions as services firms think about digital strategy, analytics and future state. You always want to be in the “hot” area… selling is easier, valuations are richer, revenue growth percentages exponential.
Mobile, Analytics and Big Data will be a multi-decade opportunity…. will be highly disruptive to some industries, affecting not only revenue and cost structures but also shaking up the core business and operating models.
“Information overload is not the problem. It’s filter failure.” – Clay Shirky
How Large is the IT Services Industry
According to Gartner 2013 Global IT spend expected to hit $3.7 Trillion. This includes software, hardware and services across multiple cycles of technology (many of which would co-exist in large corporations and governments).
According to IDC, the IT services market worldwide was estimated to be $855.2 billion in 2011 and is projected to grow to $1,071.9 billion by 2016, representing a five-year CAGR of 4.6%
Cloud services are growing the fastest… According to IDC, the global market for public IT cloud services spending is projected to grow from $40 billion in 2012 to $98 billion in 2016, a compound annual growth rate of over 25%. Cloud is changing the economics of data.
Mobile as a category is the fastest growing segment. Every decade a shift happens that compels companies to rethink every aspect of their IT strategy. Today, that shift is powered by mobile, social, and open technologies.
Think about some facts shaping the IT services size. There are 3 billion people connected to the Internet. And it is not just about people. Think about 200 billion devices from sensors to machines all connected to the Internet. And think about the pace. Every 60 seconds, there will be 1 million Facebook updates, 265,000 snapchats, 2.5 million Google searches and 204 million emails sent.
What does all of that mean for enterprise IT and the business? First, it is a connected world. Second, data is the currency of the new economy much like energy and natural resources in the industrial economy. And third, businesses and IT will be intelligent – marked by highly automated processes and artificial intelligence. In other words, business is changing like it never has before. It is a time of tremendous transformation for the technology industry and for our clients.
Addressable Spend: What segment is growing the fastest?
IT is becoming pervasive and user-driven in both Regulated (e.g., Health, Wealth) and Unregulated markets (e.g., Retail, Manufacturing). The accelerated adoption of the new technologies suggests that demand for IT services focused on these technologies is likely to grow at rates that outpace the growth of the overall IT services market worldwide.
According to IDC, worldwide spending on professional services related to implementing cloud services was $5.5 billion in 2011 and is expected to grow to $20.0 billion by 2016, a five-year CAGR of 29.2%. According to the same source, the mobile enterprise application platform market was $1.2 billion in 2011 and is expected to grow to $3.7 billion by 2016, a five-year CAGR of 24.1%.
According to Gartner, worldwide social media revenue (consisting of revenues from advertising, gaming and subscriptions) was estimated at $11.8 billion in 2011 and is expected to grow to $33.5 billion by 2016, a five-year CAGR of 23.0%. The growth in demand for technology services by enterprises seeking to adapt their business models to these emerging technologies and related market trends represents our market opportunity.
According to Gartner, Inc., of the $396 billion that businesses spent worldwide on software in 2012, the largest area of spending was Vertical Specific Software, constituting $110 billion or 28% of total software spending. In addition, the demand for cloud-based solutions continues to grow.
- The potential value of mining digital data is now expanding beyond commercial industry. In March 2012, the White House Office of Science and Technology Policy announced the Big Data Research and Development initiative, a $200 million program designed to help government agencies better organize and analyze large volumes of digital information, with the aim of accelerating scientific discovery and boosting national defense.
“Having analytical capabilities and the best data in the world doesn’t create competitive advantage. Changing the way the business uses it is the only way to create advantage.” Steven Udvarhelyi, MD, Senior Vice President nd Chief Medical Officer, Independence Blue Cross.
How Big is the Healthcare Solutions Segment?
See Healthcare Informatics or Analytics blog posting for specific details. Healthcare Benefits Administration market size is here.
- Of the $44 billion that IDC estimates life sciences companies spent on technology in 2012, $28 billion was on software and services and $16 billion was on infrastructure.
- Life sciences total addressable market, including the market segments for sales and marketing automation and related solutions for life sciences sales representatives, regulated content management solutions for life sciences companies, customer master solutions for life sciences companies, and healthcare professional, organization, affiliation and reference data, to be at least $5 billion.
“I’m not interested in data; I’m interested in translating data into information for decision making. . . . So you take data, you turn it into information, you apply it, and you make better decisions because you know more than anybody else. I think that’s real power —and that was our hidden advantage for years.” – Leonard Schaeffer, Retired CEO, Wellpoint
“To satisfy the customer is the mission and purpose of every business.” Peter Drucker’s words are as true today as they were in 1973, when he published Management: Tasks, Responsibilities and Practices.
But recently the gap between big companies and the customers who bought their products and services has grown only wider. The customer might be king, but often as a platitude supported by legacy technology.
Now, mobile technologies, cloud computing and real-time information are emerging that give firms an opportunity to rebuild an intimate sense of connection with customers—to really know them.
Yet those same technologies—big data, social media, cloud computing and the “Internet of things”— have empowered customers, too. They can share their brand disappointments and their stories of subpar service at an unprecedented scale. Likewise, they are able and willing to tell their friends and family about companies that have made them go “wow.”
This is the customer-led economy, an emerging world of bewildering strategic options that is upending marketing, sales, service and customer engagement.
How big is this market? I estimate that 70-80% of the new IT investments are customer facing investments. Support for this hypothesis…
- A large majority of companies are fundamentally rethinking their strategies for engaging individual customers (e.g. retail, financial services, healthcare). These changes have been largely driven from the top, with the CEO commonly taking personal responsibility for redefining how the company connects with customers and how it empowers employees and partners to improve the customer experience.
- Emerging technologies are the principal enablers of this new customer-centric thinking, as companies strive to follow their customers as they migrate across channels. Mobile and cloud-based applications are leading this trend, along with more intensive use of social media tools and connected products.
What is the Size of the Mobile and Social Market
The mobile phone industry is massive, with close to 2 billion devices shipped annually and total spending on wireless-related services of more than $1.6 trillion across the world. As mobile devices increasingly serve as the center of the consumer’s world, their importance to a range of companies is increasing.
Focus on the mobile user and all else will follow. The move to mobile is the most important trend in all areas of computing. As Mobile is replacing PC as the interface….did you know:
- Average mobile user checks screen 150 times a day. Average US adult spends 141 minutes a day on mobile devices.
- Out of the 5 billion mobile phone users in the world, 1.25 billion are smartphone users (world population is 7 bln…expected to be 9 bln by 2040)
- More than 91.4 million smartphones users are from the U.S
- Smartphone platform Android has the highed market share of 46.9%
- 89% of smartphone users use their smart phones throughout the day
- 92% of smartphone users use their smarphone to send text messages to other phones. Whereas, 84% of users use their smartphones for browsing the internet
- The age group of 25-34 has the highest smartphone penetration rate of 62%
- 50% of Android Smartphones and 43% of Apple iPhone users are younger than 34 Years.
- 53% of smartphone users are male and 47% are female
- Android Smartphone owners consume the highest amount of data at 582 Mbs a month, while iPhone owners on consume 492 Mbs of data a month on average
- Apple iPhone users download the maximum applications per month, which is 48
- Downloading applications is the most popular data usage acitivity for smartphone users
- Apple sold 33.8 million iPhones, September 2013 quarter, compared to 26.9 million in the year-ago quarter. Apple also sold 14.1 million iPads during the quarter, compared to 14 million in the year-ago quarter
- Social media sharing has doubled between 2011 and 2014 with Snapchat and WhatsApp taking a large share after only 1 year.
Source: go-globe.com, Mary Meeker Internet Trends, SEC filings and others
The wearable device market (wellness monitoring — Fitbit, Up, Fuelband etc.– watches – Samsung, Google etc.) is exploding. Wearable devices have grown 2x month over month since October 2012.
The connected home systems segment (powered by mobile devices) is expected to grow at compound rate of 50% year in the next five years. The underlying long term trend that made Google buy Nest home automation platform for $3.2 bln.
What is the Size of the BI and Analytics Market?
Three sub-segments in Analytics:
- Descriptive analytics refers to a set of techniques used to describe or explore or profile any kind of data.
- Predictive analytics encompasses a variety of techniques that analyze current and historical facts to make predictions about future, or otherwise unknown, events.
- Prescriptive analytics represents the final phase of business analytics, which mines data to suggest decision options to take advantage of a future opportunity or mitigate a future risk.
BI Market Size and Statistics – According to Gartner
- The market for traditional business analytics software is large and well established, with IDC estimating an aggregate spending of $35.1 billion in 2012 in this worldwide market sector.
- IDC estimates that the worldwide spending on business intelligence tools alone, a subset of the overall business analytics software market, was $12.9 billion in 2012.
- In addition, organizations also spend billions of dollars on hardware, support and services to implement and maintain traditional business intelligence systems.
- According to Gartner, Inc., organizations are expected to spend $81.0 billion on business analytics and related services in 2014.
According to an August 2012 Forrester Research, Inc., or Forrester, report, Forrester estimated that there will be 615 million information workers globally in 2013 and it predicts that number to grow to 865 million by 2016.
Additionally, a Forrester survey of information workers conducted in the fourth quarter of 2012 indicated that only 17% of respondents use a data dashboard or business intelligence tools as part of their job.
Accordingly, we believe a significant percentage of information workers are not accessing business intelligence software, and they instead use alternative approaches to meet their analytical needs.
What is the Size of the Big Data Market?
Research firm IDC in Jan 2013 extrapolated that big data market that will grow revenue at 31.7 percent a year until it hits the $23.8 billion mark in 2016. IDC segments its report and predictions into servers, storage, networking, software and services, predicting storage will see the biggest growth at a 53.4 percent compound annual growth rate. That’s a big number for a relatively new market when you compare it to BI.
When you factor in Hadoop, analytics, machine learning, machine-to-machine, data warehouse, NoSQL, data science, visualization, data management, cloud analytics — the numbers are going to be much larger. The business of capturing, storing, processing, analyzing and visualizing data, is big and growing.
In Data Centers alone… the volume of performance, availability and event data has increased 300% since 2006. According to Gartner, Global 2000 data centers spent close to $400M on analytics and big data storage technololgies in 2012 (an amount expected to double in 2013).
According to IDC, the amount of digital information created, replicated and consumed worldwide will grow exponentially from 0.8 trillion gigabytes in 2010 to 40 trillion gigabytes in 2020. Many organizations are expected to experience a doubling in the volume of data across their enterprises approximately every 24 months, according to IDC, and are investing heavily to scale their data storage and management platforms to accommodate this growth.
Segments in Big Data
Big Data marketplace is made up of multiple segments… Data Sciences -> Mathematical Techniques -> Computing Tools -> Vertical/Horizontal Analytics… so getting an accurate market size number is an approximation at best given the fluidity of vendors, categories and birth/death of firms.
Players in Big Data
Source: Big Data Universe v3.. Matt Turck, Sutian Dong & FirstMark Capital
“It took 50 years for organizations to fully leverage transactions systems, so it will time to realize significant value from knowledge, information and data.” — Peter Drucker
I believe that spending around Digital Customer and Digital Transformation is going to explode in the next 5 years as companies race to catchup or watch the business decline. Analytics in the consumer segment will be highly disruptive to some industries, affecting not only revenue and cost structures but also shaking up the core business and operating models.
Just look at this chart from Oracle.
Advice to Entrepreneurs or Managers — Market Size and Opportunity is proportional to the value at stake
The clear message from my work is that companies need to fully embrace data and analytics but should do so in line with their own unique opportunity. Why build a new analytical platform if more targeted data improvements will suffice? Conversely, why dabble with small-ticket data experiments when the analytics based value creation can radically transform your bottom line? To assess and act on the data, information management and analytics transformation opportunity, we recommend four steps.
- Estimate the value at stake. Companies need to get a clear handle on the top-line and cost-reduction opportunities available to them.
- Prioritize. Most organizations don’t have the ability, resources, or risk tolerance to execute on more than two or three big opportunities at any one time. Be selective. Figure out what areas are likely to deliver the greatest return on investment and the best customer outcomes and start there.
- Take an end-to-end view. One financial-services firm built a world-class analytics driven recommendation model but failed to update the legacy Siebel CRM and paper-based processes that supported it—processes that were manual and prone to error. That false veneer of speed and efficiency eroded trust and turned off customers. The moral? Although it may seem counterintuitive, over-investment in a slick analytically driven front end that is not matched with the corresponding high-quality data or data integration that customers now expect may actually lead to increased customer frustration.
- Align the business portfolio accordingly. In the long run, some lines of business will simply be destroyed by predictive or prescriptive analytics. Hanging onto old ways and tweaking them is futile. Companies need to act purposefully and divest where it makes sense, identifying what holdings are likely to be cannibalized or likely to underperform in the new environment and sloughing them off. Conversely, some areas will clearly need new capabilities and assets, which companies often do not have the luxury to build up slowly or organically over time.
The pace of change will also depend on Regulated vs. Unregulated market dynamics. Unregulated markets tend to change and evolve faster than Regulated markets.
One thing is certain… technology driven change is relentless. Faster, better, cheaper will happen whether we like it or not.
- The facts behind the hype: What the Gartner big data 2013 report means for the industry (itproportal.com)
- Big Data Will Anchor The Next Revolution In The Mobile Industry (businessinsider.com)
- Big data and analytics: You don’t want one without the other (itworldcanada.com)