Introducing the Business Intelligence (BI) & Data Warehousing (DW) Index
The intent of this blog is to discuss industry trends in business intelligence (BI), data warehousing (DW), data integration and performance management. The economy and the stock market have an impact on budgets and what people – business and IT – are thinking about when approaching BI and DW.
We are introducing the Business Intelligence (BI) & Data Warehousing (DW) Index to keep tabs on the stock market and many of the companies impacting our industry.
Companies were selected in this index was based on that company deriving a significant portion of their revenue from products or services related to BI, DW, data integration or performance management. We have initially selected 23 companies for this index. These companies fall into four broad based categories: BI & DW software, DW appliances, high-tech titans and industry analysts.
The DW/BI Index was down 4.53% today accompanying a 449 point drop in the Dow. This brought it’s year-to-date (YTD) performance into bear category with a loss of just over 20%. This compares with YTD losses of the major indexes: Dow -19.96%, S&P 500 -20.60% and Nasdaq -21.48%. It is interesting that the iShares S&P North American Technology-Software Index Fund (IGV), another software benchmark, has sustained a loss of “only” 16.08% YTD.
On an individual basis, 6 stocks have positive returns YTD while 10 have losses of greater than 20%. The top two stock performances are from industry analyst firms: Gartner (IT) and Forrester Research (FORR).
Background
This index is initially composed of the following companies:
Category Name Symbol BI & DW ACTUATE CORP ACTU BI & DW DATAWATCH CP DWCH BI & DW INFORMATICA CORP INFA BI & DW MICROSTRATEGY CL A MSTR BI & DW PERVASIVE SOFTWARE PVSW BI & DW PROGRESS SOFTWARE PRGS BI & DW QUEST SOFTWARE INC QSFT BI & DW SPSS INC SPSS BI & DW SYBASE INC SY BI & DW TIBCO SOFTWARE INC TIBX DW Appliances NETEZZA CORP NZ DW Appliances TERADATA CORP TDC Titans EMC EMC Titans HEWLETT PACKARD CO HPQ Titans INTL BUSINESS MACH IBM Titans MICROSOFT CP MSFT Titans ORACLE CORP ORCL Titans SAP AKTIENGESELL ADS SAP Titans SUN MICROSYSTEMS INC JAVA Analysts FORRESTER RESRCH FORR Analysts GARTNER INC IT Analysts INTERACTIVE DATA CP IDC Analysts TECHTARGET, INC. TTGT
An index can be built using a weighted market cap or an equal weight formula. Using the first method the index is based on the amount of outstanding stock each company has with large firms often dominating the movement of the index. The equal weight approach allocates the same amount of hypothetical money invested in each company’s stock. This method provides a more representative sample of how the stocks are doing in aggregate. We have chosen to build this index using the equal weight approach. The index allocation is based on prices as of the close of business for 2007.
Remember stock performance is not always closely correlated to how well a company is doing from a business perspective. We may be in a bull market with all boats rising or in a bear market where seemingly everything falls in the short run regardless of their individual performance. In addition a company’s stock valuation may be over or under valued in relation to its peers based on the market’s perception of the company. In the long-run, the index performance will provide insight into the state of the industry.
The index can be viewed by clinking on the BI/DW Index icon on this blog’s sidebar. The index is updated with a 20 minute delay. We are using Google Docs and Google Finance to obtain the data for and to present this index.
The intent of this blog is to discuss industry trends in business intelligence (BI), data warehousing (DW), data integration and performance management. The economy and the stock market have an impact on budgets and what people – business and IT – are thinking about when approaching BI and DW. We are introducing the Business Intelligence (BI) & Data Warehousing (DW) Index to keep tabs on the stock market and many of the companies impacting our industry.
Companies were selected in this index was based on that company deriving a significant portion of their revenue from products or services related to BI, DW, data integration or performance management. We have initially selected 23 companies for this index. These companies fall into four broad based categories: BI & DW software, DW appliances, high-tech titans and industry analysts.
Disclaimer - I have investments in the following stocks included in this index: Oracle (ORCL), TIBCO (TIBX), Teradata (TDC), Netezza (NZ) and Informatica (INFA).
How would your index account for privately held companies Eg. SAS Institute ?
Posted by: VMK | September 18, 2008 at 02:38 AM
Excellent point. Although the index does track industry performance from a stock perspective privately held companies are excluded. For our industry that means that means established players like SAS Institute ($2 billion revenue), Information Builders ($300M) and Embarcadero Technologies (previously listed but went private.)
In addition to these companies that have been around for a while there are also many startups and emerging companies that are private that cannot appear on any stock index. Despite all the merger and acquisition (M&A) activity and so much publicity about the “top” BI firms, i.e. Business Objects (acquired by SAP), Cognos (IBM) and Hyperion (Oracle), the BI/DW industry is seeing many new companies. These firms are offering innovative products extending the BI/DW capabilities and/or providing their software through different channels such as On-Demand/Software-as-a-Service (SaaS) or Open Source Software (OSS).
Unfortunately from a stock perspective many of these companies will opt to be acquired rather than going through the IPO (initial public offering) route as their “exit” strategy. The IPO market is severely constrained currently but many high tech companies are still doing well from a business perspective and have the cash to acquire these emerging companies.
Posted by: Rick Sherman | September 18, 2008 at 10:51 AM