The ‘Long Tail’ of the Business Intelligence Market

A newly published report from Harvard Business Review reviews the theory of the ‘long tail’ with recent data. The report is here. This prompted me to think about the ‘long tail’ of the BI market.

First I think there are several complications with their data and findings:

• In some cases the top 10% of products represents 100,000 titles. Most brick-and-mortar stores can stock less than 10,000. For these stores the `blockbusters` referred to by the researches would be considered to be a long tail by the retailers. The explosion of the online inventory means that looking at the top 10% of products is not useful any more, its the comparion between the top 0.5% and the other 99.5% that needs to be examined. In many cases the revenue from the top 1% of titles was less than 20% of the total, with the 99% long tail taking in over 80%. I’d say thats significant.
• Some of the comparisons look at data from 2000 to 2005. That is a long time on the web. The consumer demographic has changed during that period. The products available have changed during that period. Buying habits have changed during that period. As a result those data sets are hard to compare at a summary level.
• Most importantly for the BI market the data studied is extremely skewed by ‘new releases’. Most of the data analyzed is from retailers of books, music, and movies. The purchase and rental of new releases in these markets is a very large proportion of the annual sales. Most industries, including the BI market, do not have this situation.

Lets look at the BI market from the geographical perspective.

• The remaining independent vendors in our space (for example Actuate and Information Builders) have offices in about 20 countries. The proprietary BI companies cannot be profitable in the other countries so they have no presence there and provide no offerings in those markets. While the mega-vendors like IBM, Oracle, and Microsoft have a presence in more countries that this, I doubt that they are able to offer implementation services for their BI products in all of them.
• Like Actuate and IBI, Pentaho (the company) is focusing sales efforts on the same obvious markets. We do, however have something to offer in other countries. At Pentaho we currently have registered community members from 155 countries. The countries typically covered by these proprietary companies account for, demographically, 50% or less of our community-base. Since people do not have to register in order to download the software the total usage is probably higher. While we do not get direct revenue from most of these countries we still get value from them: these community members provide use cases, bug reports, bug fixes, feature ideas, translations, documentation and documentation fixes, platform testing, scalability data points, usability feedback etc. These contributions enable us to produce better software, faster than we would otherwise be able to do. This better/sooner software is the basis of the subscription that we sell in the mainstream markets. Based on data from the CIA World Factbook the countries with known Pentaho community members account for over 90% of the world’s population.

People talk about ‘BI for the masses’ and ‘BI everywhere’. I think 155 countries is a good approximation to ‘everywhere’ at least compared to the proprietary vendors. It seems that open source business intelligence software is able to meet the needs of, and get value from, the long tail of the business intelligence market.