To survive in today’s dynamic digital world, every company must become a data-driven business. Yet many organizations lack the knowledge, skills, and resources to extract meaningful insights from the growing volume of operational, social and market data at their disposal and are increasingly turning to external specialists for help.
This is creating enormous potential for independent software vendors (ISVs). To explore the opportunities and challenges in more detail, IDC surveyed 350 ISVs from North America, the United Kingdom, and Japan that offer or plan to offer cloud-native, analytics-infused solutions and services to their customers.
Let’s examine the evolution of today’s analytics software and the benefits for ISVs and their customers.
Look forward, not back
Traditional business intelligence (BI) has been around for decades. And while immensely valuable, until recently it was limited to a rear-view mirror of the business. And as the small print in any investment advertisement will tell you, past performance is no guarantee of future results. This approach also meant that business users were dependent on BI specialists to access data and run reports, and often had to wait weeks for results. To avoid the wait times users began buying their own self-service tools to create their own reports – but in the process, created a huge governance headache for their IT department.
Now, these two paths have converged, and business users can leverage analytics to look forward rather than back. Robust, cloud-based platforms deliver both ease of use and governance while enabling more sophisticated capabilities, such as predictive and prescriptive analytics.
Build or buy?
The market is hungry for these advanced capabilities. According to IDC’s survey of ISVs, 60% of respondents said their customers wanted predictive analytical capabilities. Interestingly, though, there is less appetite among ISVs for building their own offerings. Although they could build their own solutions organically using open source tools, over two-thirds of ISVs have instead opted to partner with specialist analytics software providers.
The reasons are simple. Powerful capabilities like artificial intelligence (AI) and machine learning (ML)-based automation are traditionally the domain of sophisticated data scientists. The leading analytics platforms have these technologies built in, together with a rich set of APIs that can be used to integrate and embed analytics solutions and connect them to virtually any data source. That means ISVs can quickly and easily leverage this intellectual property and expertise to deliver rapid value for their customers, while avoiding the cost and risk of trying to develop it themselves. The software providers also help their ISV partners monetize new applications and offer ongoing support.
Differentiate and innovate
This agility and speed to market enables ISVs to compete more effectively. According to 47.4% of the survey respondents, differentiation is the biggest benefit of using analytics software, followed by improved decision-making and the ability to create value both internally and externally with their network.
This value could take the form of faster innovation, better collaboration with partners, or creating new revenue streams. As one of the executives interviewed by IDC explains, “As part of our growth and innovation strategy, we sought to create a new data-driven aspect to our services and business model. To do this, we needed an analytics platform that could take incoming sensor data and provide accurate predictions on which public facilities needed servicing so that resources would not be wasted, and we were able to improve customer satisfaction.”
In the age of the intelligent enterprise, success means having the ability to deliver on customer expectations and using data and analytics to drive deeper insights and better outcomes. IDC’s research shows that 73% of ISVs across all segments and industries believe that analytics is critical to their success, and this is borne out by results. The IDC survey confirmed that 80% of respondents attributed double-digit growth in revenue to their analytics offerings, and that software revenue based on analytics contributed significantly to their bottom line.
In the next blog in this series, we’ll look at some of the key considerations for ISVs when choosing an analytics provider and share some essential guidance from IDC.