Database vendors target SMBs for growth

Open source alternatives still in 'early adopter' phase, IDC says

One of the most noticeable trends in the local enterprise database market is vendors attempting to get into the SMB space, says IDC senior market analyst Louise Francis.

“Larger vendors are starting to set up products targeted at the SMB market,” Francis says.

“In the past, people thought of databases as being large and expensive. But the perception is changing and bigger vendors are bringing out pared-down products and showing their products are accessible to small companies that would previously have thought ‘this is way out of our range’.”

The top five database vendors by market share in this country are Oracle, IBM, Microsoft, Sybase and Teradata, which collectively hold 74.5 percent market share. IDC declined to disclose what each company’s individual percentage share of the market was.

The remaining 25 percent is “pretty fragmented”, Francis says, with vendors such as local player Jade, and others such as Informatica, Quest Software and SAS, in that space.

The overall market grew by just 1.4 percent last year, a more modest increase than in previous years. The slowdown was especially noticeable in the second half of the year, she says.

“That’s a direct impact of the recession and people cutting back.

“Projects that were underway weren’t cut back, but if a project could be deferred, it would be.”

One effect of the recession is to give a boost to open-source databases, which are still a minor part of the local scene.

“Open-source databases are still in the early adopter phase in the New Zealand market,” she says.

“However, the current economic crisis has given the market a slight boost as organisations, particularly in the SMB sector, look at ways of reducing costs, particularly licensing and maintenance.

“In New Zealand, public sector organisations are increasingly looking at this technology as a way to reduce costs, but the main inhibitor remains the perception that software support and quality aren’t up to scratch.”

The local impact of Oracle’s purchase of Sun Microsystems, which includes Sun’s open-source MySQL database, is yet to be determined, Francis says.

IDC expects growth in the local enterprise database market to pick up, with a prediction of an average annual growth rate from now until 2013 of 4.1 percent.

“Growth in technologies such as SOA and grid-based applications will give database investment a new lease of life over the next five years.”

Collaboration and business intelligence are driving the database market, she says.

“We’re seeing government agencies collaborating and putting systems together to create greater efficiencies, and integrating systems.

“The biggest example of that is District Health Boards collaborating together and using common systems.

“Organisations are looking towards interoperability and rationalisation of systems, and transparency.”

She cites electronic health records as an example.

“It is those types of projects, which involve making the information available to different providers, where having a common database is important.”

The influence of business intelligence on the database sector is clear to see, Francis says.

“There is an increased focus on analytical applications and the ability to access real time information will be a critical success factor, as the current economic crisis continues.

“This will continue to drive the growth in sophisticated data management needs and, consequently, database growth.

“The uptake of advanced business intelligence and business analytics is shaping the database landscape. Vendors need to be aware of this trend and create solutions that enable easy integration of analytics with all facets of the business.”

The adoption of self-service technologies by many organisations – seen in projects in the retail sector and Air New Zealand’s self-service check-in – is also driving the database sector, she says.

Such projects “will be happening more and more”, and will present challenges for database technology, “such as the need for extra data capacity, advanced analytics, and most importantly, security and privacy concerns”.

While the economic downturn has affected the enterprise database market on a global basis, huge growth in information predicted in the next few years will drive database uptake, Francis says.

IDC research states the total amount of data will increase by a factor of 4.5 over the next five years, and the number of user interactions per day within the digital environment is expected to increase 8.4-fold from the 2008 level by 2012.

The data explosion will be a critical factor in pushing growth in enterprise database spending over the next five years, she says.

“Organisations will need to invest just to keep up with this information explosion.”

Nonetheless, users will be looking at discounts and favourable payment terms.

“Vendors are increasingly looking at flexible payment solutions such as deferred payments and instalment payments, particularly when targeting the medium-sized vendors.”

While changes in the technology landscape mean many organisations will need new and extra databases, many will also be making do with what they have, and stretching their existing databases so they get the maximum possible use from them.

“End users will be looking at ways to maximise the use of existing database assets. They will take an approach of tweaking and fine-tuning existing database systems to delay or defer full-scale investment projects”.

This will benefit the database services sector, says Francis.

“It should positively affect the database development and management tools market.”

Many organisations will take the approach of blending the old with the new, she says. “It’ll be a case of ‘reuse and recycle where possible’.”

The use of SaaS-based databases is just beginning to happen, Francis says. “Going forward, people will be looking at it.” IDC has just started to track the SaaS database field, she says.

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