Impact Of Changing Trends In Business Analytics Industry On Qlik

-7.48%
Downside
30.50
Market
28.22
Trefis
QLIK: Qlik Technologies logo
QLIK
Qlik Technologies

Data discovery has been an emerging trend as the business analytics sector shifts its focus from IT administrative  requirements to broader departmental applications throughout the enterprise. Qlik Technologies (NASDAQ:QLIK) is considered a pioneer in the field of data discovery and the company is poised to benefit as trends such as data discovery and convergence catch on. We recently initiated coverage of Qlik with a price estimate of $33.01, which is roughly in line with the market price.

See our complete analysis for Qlik

Emergence Of Data Discovery

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Most traditional business intelligence platforms only help people answer predetermined questions. They are report-centric and focus on enterprise IT requirements. This mindset is changing, and data discovery is gaining strong traction in the market. Data discovery involves exploring data freely, discovering insights from a set of data and analyzing and presenting those insights in an interactive and visual format. Data discovery makes it easy for business users without any technical skills to run queries and analysis. Users can learn at each step of the process and can come up with next steps on their own. Qlik has been pioneering data discovery under its business discovery platform and has been featured as a leader in Gartner’s Magic Quadrant for Business Intelligence and Analytics Platforms for the last three years. [1] Qlik is also developing its next generation technology called natural analytics which is complementary to data discovery. Natural analytics is an approach to business intelligence that discovers and analyzes data according to human behavior and curiosity. It replicates the process through which the human mind interprets information and uncovers insights through connection, comparison and anticipation.

Convergence With Enterprise-Level Business Analytics

Emphasis on ease of use and visualization in business intelligence software has fueled growth for Qlik. However, that does not mean that enterprise requirements can be ignored. According to IDC, the worldwide business analytics market was worth $37.7 billion in 2013 and is expected to grow to around $59.2 billion in 2018. [2] This translates to a 9.4% compounded annual growth rate for the forecast period. Gartner introduced the concept of governed data discovery that refers to platforms that can address enterprise-level IT requirements as well as assist business users (non-IT) in data discovery. No vendor has addressed both these aspects so far, but there is an indication that this convergence will happen. Governed data discovery strives to find the right balance between allowing creativity so that end users can experiment with the data and maintaining just enough centralized control so that enterprise tasks can run smoothly.

In keeping with this concept, Qlik is introducing more enterprise related features related to reusing data, data governance and control, and scalability with its new product Qlik Sense. Qlik’s in-memory computing (IMC) technology is complementary to data discovery. It reduces the number of data transactions required while analyzing data by storing the entire database in random access memory (RAM) which is nearer to the processor. The IMC engine calculates aggregations rapidly and maintains associations in the data, which makes analysis faster and more real-time. According to Markets and Markets, the in-memory technology market will increase from $2.2 billion in 2013 to $13.2 billion by 2018, driven by the decreasing cost of semiconductor memory and the rising need for real-time data analysis. Qlik has also launched a cloud-based platform which reduces the complexities of infrastructure and storage space requirement.

Effect On Average Revenue Per Customer

Including new features that enable its product to handle a vast range of functions will allow Qlik to increase its pricing. We currently forecast that Qlik’s average revenue per customer will remain around current levels of $9,250 in the near future and will eventually grow to be just shy of $10,000 by 2021. There could be a 10% upside to our price estimate if revenue per customer starts to grow earlier than predicted and crosses $11,000 by the end of our forecast period. Conversely, if these additions do not help in raising the price of service and the average revenue per customer remains around $9,200 for the next six to seven years, there could be a 7.5% downside to the Trefis price estimate. This scenario is possible as the business intelligence market is becoming overcrowded and Qlik faces intense competition from traditional vendors as well as emerging players. These vendors are aggressively investing in their data discovery capabilities which could dilute Qlik’s pricing power.

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Notes:
  1. Magic Quadrant for Business Intelligence and Analytics Platforms, 23 February 2015, Gartner []
  2. IDC Worldwide Business Analytics Software 2014–2018 Forecast and 2013 Vendor Shares, IDC []