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Data warehouse appliance trends: targeted BI, market consolidation

A combination of factors is driving increased interest in data warehouse appliances among technology users, which in turn has sparked a series of acquisitions involving appliance vendors.

The data warehousing market consistently offers technology advancements in the areas of performance, storage and analytics capabilities. With functionality increasing and price points slowly decreasing, organizations can get more for less when they buy new data warehouse systems – or they can get added value by upgrading to more robust technology.

One potential solution that can fit both purchasing scenarios is the data warehouse appliance. Consequently, user organizations are becoming increasingly enamored of choosing appliances over traditional data warehouse software environments. And data warehouse vendors are placing a heightened focus on expanding the appliance options that are available to customers.

In recent years, as data warehouse appliances have developed into a fast-growing niche market within the overall data warehousing and business intelligence (BI) industry, more and more vendors have shifted resources toward development of the combined data warehouse hardware and software offerings. Data warehouse database vendors have partnered with makers of commodity or proprietary hardware, resulting in packaged systems that can be deployed by users in a plug-and-play manner.

Much fine-tuning is still required to make effective use of data warehouse appliances. But in addition to offering quicker implementations and lower costs than traditional infrastructures do, appliances pave the way for companies to develop more targeted data warehousing and BI applications that address specific business needs. For example, the desire to implement data warehouse technology at the departmental level is helping to drive the growing popularity of appliances.

As data warehousing environments become more mature, efforts to move beyond the basic trend-identification BI model and apply a broader and more diverse set of analytics applications are also contributing to the growth of the data warehouse appliance market. The use of columnar and massively parallel processing (MPP) databases in appliances, along with support for technologies such as in-memory and in-database analytics, is prompting many organizations to install the devices in order to enable more advanced analytics capabilities. Another factor is the push to adopt agile BI development processes designed to accelerate deployments and deliver new functionality to end users on an incremental basis.

In addition, an ongoing industry trend involves specialized vendors of appliances being bought up by the giants of data warehousing and BI as the latter look to fill out their product offerings. Several deals have taken place since mid-2010, sparking a slow transition from independent technology toward appliances becoming components of larger product stacks. The market likely will continue to change over time, but it seems clear that appliances will become more powerful and better able to support advanced analytics due to increased research and development investments in the wake of the acquisitions.

Question time on data warehouse appliance acquisitions
However, the consolidation wave does raise some immediate questions for prospective appliance buyers. Although it's positive from the standpoint of market growth, the reality is that the current acquisition phase could leave data warehouse managers unsure of whether affected products – or appliances in general – are the most viable choice for their organizations.

With any acquisition, the transition process creates uncertainty among users and in the market over how the technology being acquired will be treated. For example, will standalone development cease in favor of full-scale integration into the acquiring vendor's own offerings, or will products be maintained as separate entities with new application programming interfaces for customers looking to adopt both? Ultimately, the acquisitions are creating an environment for data warehouse appliance vendors in which continued development and revenue growth are essential to maintaining customer confidence.

The bottom line is that as data warehouse appliances make inroads into the BI market at large, an increasing number of organizations are evaluating them alongside traditional data warehouses when looking at how they can enhance their data management infrastructures to improve business performance. Due to the nature of data warehouse appliances, they are well positioned to meet departmental needs within large enterprises and to support targeted analytics for individual business units or functions – sales, marketing, supply chain operations, etc.

Overall, the data warehouse appliance market is likely to continue to grow in terms of both product offerings and popularity, with the recent acquisitions creating more competition among vendors to develop systems that can meet the specified business goals of user organizations.

Lyndsay Wise is president and founder of WiseAnalytics, an independent analyst firm and consultancy based in Toronto that focuses on business intelligence and dashboards for small and midsized organizations.

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