Power BI – The Winner Takes it All?
February 2023: BARC Research Fellow Rüdiger Spies and Senior Analyst Robert Tischler examine the impact Microsoft Power BI has had on the BI & analytics market. Microsoft has gained a large market share in a relatively short amount of time with Power BI. But can it succeed in becoming to BI & analytics what SAP is to ERP?
The trigger
Recently, many of our customers have been asking whether it will be enough to focus only on Microsoft’s Power BI for dashboards, reports and BI in general in the future.
Microsoft’s success
It looks as if Microsoft has succeeded in pushing many of its competitors to the edge of (or even out of) the BI & analytics market, thus generating a lot of business for its own data & analytics offering.
Simply put, Power BI is an entry portal for analyzing, distributing and, above all, visualizing business data, and is also designed to put a stop to the rampant, uncoordinated proliferation of Excel spreadsheets. IT strategists and IT architects have liked the solution from the get-go and it has also become very popular among users. It has even been widely adopted in financial departments because the initial visible cost of using Power BI is comparatively low. Microsoft has thus succeeded in gaining a large market share in a relatively short amount of time. According to the BARC study The BI & Analytics Survey 23, almost 30 percent of companies currently opt for Power BI and almost 60 percent evaluate it.
Will Power BI become to BI & analytics what SAP is to ERP?
Although the functions and areas of application are very different, there are significant parallels between Microsoft and SAP, as well as some revealing conclusions.
One similarity lies in the respective technical and organizational complexity of ERP and BI & analytics. The new introduction of an ERP system is often about harmonizing a heterogeneous application landscape, while the introduction of BI & analytics software often aims to bring about a uniform view of the data available in the company. The initial motivation is therefore comparable. However, the markets for ERP and BI & analytics are still very diverse and, conservatively speaking, there are at least 100 providers in each market segment. Another common factor is the complexity of the business problems these market segments address. Depending on the individual company and the vertical concerned, they are tasked with solving a very specific set of issues.
Introducing complex analytics solutions is rarely straightforward. Even for larger midsize companies (with 1,000 – 5,000 employees), this is still a complex project (e.g., due to cost and lack of skills). Such users have often relied on reports integrated into business applications in the era of enterprise BI platforms, or they simply use Excel. This situation has changed with the introduction of self-service products (e.g., Qlik, Tableau) and, to a lesser extent, Power BI, which place a strong emphasis on visualization. Nevertheless, the introduction of such BI products requires preparation and potentially the harmonization of data from different data sources and a common data management system (data warehouse) independent of the operational systems and data quality management. At this point, the limits of the current version of Power BI are reached. Other products are required within more complex analytics solutions, especially in larger enterprises with lots of users. It is barely conceivable that Power BI can currently replace highly complex analytics solutions such as those from Teradata and SAS Institute. This would also mean that the specific advantages of Power BI (e.g., ease of use) are lost.
This returns us to the question posed above: As complexity continues to increase, there will continue to be a need for BI & analytics capabilities that go beyond the functionality of simple reporting, dashboards and especially visualization.
Although the importance of Power BI will continue to increase, we assume it will not be the only dominant solution in the overall market for BI & analytics because the range of requirements will continue to be too broad to map in just one tool. According to systems theory, it can be argued that complex tasks can only very rarely be meaningfully addressed with simple solutions. Complex tasks demand a complex response. In relation to the question above, this means that we do not expect a single tool from a single vendor – not even Power BI – will be sufficient to get complete answers from existing data and, increasingly importantly, also for business planning. Power BI remains a good starting option for simple data analysis, and also to build awareness of data across the business.
Conclusion and recommendation
Rather than using just one tool “because others do it too”, companies are still well advised to keep up to date with the ever-changing range of BI & analytics tools on the market. This is because the requirements of one company may differ significantly from those of others. To successfully implement BI & analytics, it remains important to focus on a broad skill set for in-house teams and not to depend on just one tool landscape. Ultimately, the selection of suitable tools and their use should lead to improved exploitation of the potential of enterprise data in order to keep ahead of the competition.
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