Wondering whether your Business Intelligence (BI) vendor might be acquired? Or maybe they’ve already been acquired? Here’s how to hedge your bets to ensure that your BI capability doesn’t end up going down the tube.

For the past five years, Business Intelligence has been one of the hot buzzwords in CRM. While BI is not included in every CRM suite, the ability of a BI system to provide advanced warning of emerging trends, potential challenges, and new opportunities is completely dependent upon a company’s ability to track the progress of sales and post-sales activities. In fact, BI is the main way that companies can leverage the data-gathering investment that they’ve made with their CRM implementation.

Unfortunately for companies using BI to expand their CRM capability, the world’s largest high tech market research group, Gartner, is predicting that the days of strong double-digit growth for the BI segment are over. Instead, the BI market is entering a period of flux and confusion due to vendor consolidation, segment maturity, and price erosion. That means that some BI vendors are likely to go belly up, some are likely to get acquired, and the rest are likely to struggle to figure out exactly what’s going on before expanding or improving their products.

History shows that it’s the customers that often bear the brunt of these market shifts. Because of this, sales organizations using BI are justifiably worried that the market churn may result in delayed updates or even product cancellations.

Those worries are justified considering the volatility of the segment. In 2007 alone, Oracle purchased Hyperion, SAP purchased Business Objects (still pending), and IBM purchased Cognos (also still pending), creating a virtual exodus of leading products into the major vendors. Consider: once all those deals go through, there will no longer be ANY publicly traded BI companies. And since the large software vendors all have existing in-house BI products, there’s a real danger that one or more of the leading BI packages might end up in mothballs.

This is not to say that the BI market is a dead dog. There are several remaining BI powerhouse vendors, notably SAS, Microstrategy, and Information Builders, as well as several highly innovative small BI vendors, like Arcplan, Panorama, or Qliktech. Needless to say, they’ll be trying to take advantage of the FUD (fear, uncertainty, doubt) created by the merger activity in order to increase their market share and market visibility. However, it’s not clear how those smaller vendors will compete, long-term, with the likes of SAP and Oracle!

Gartner senior research analyst Dan Sommer recommends that BI customers remain calm during the transition, which will eventually result in a more stable market with better products. “Consolidation activities by SAP, Oracle, IBM, and Microsoft should help accelerate the value derived from BI,” says Sommer. “Large vendors will drive increased usage, while new BI vendors will emerge introducing innovative technology and products to demonstrate differentiation and fill the gaps in ‘mega-vendor’ product lines.”

The good news is that Sommer sees the period of consolidation driving renewed innovation in the BI segment. He notes that the vanilla BI capabilities – query, reporting, and online analytical processing (OLAP) capabilities – are relatively similar between product lines, which means that companies will need to innovate in order to remain competitive. Sommer predicts that successful pure-play BI vendors will incorporate emerging areas in BI such as dashboards, predictive modeling, enterprise search, interactive visualization techniques, and in-memory analytics.

Sommers advises those using BI solutions from vendors that have been recently acquired to hold strategic investments until a product road map has been clearly presented from the vendor. While there is no doubt that the acquired core products will remain highly strategic and supported by extensive research and development funding, overlapping products in a vendor’s portfolio may see some defocus in the mid-term. And that may mean some delays in new features. Hang in there.