Gartner recently published the annual magic BI quadrant and it has quite a few surprises. There are some significant changes in positions of many BI vendors. Vendors like Tableau have clearly emerged as the leader while SAP and MicroStrategy have moved to the visionaries quadrant. Based on this movement, we decided to compare three important independent BI vendors and see if there is any relation between movement on the Gartner magic quadrant and the financial results of the companies. We think Tableau’s rise as a leader in the self-service BI market is not a coincidence, it reflects their increasing investment in R&D. Tableau has also done a great job marketing its product to the business users. The following are our findings.*
Trend in Revenue and Net Income
Revenues of Tableau and Qlik have grown significantly in the last four years, as can be seen in the graph below. In 2015 Tableau’s revenue is actually five times that of 2012. In comparison, MicroStrategy’s revenue growth has remained pretty flat. On the other hand, net income shows a very different trend. The net income for all three companies has gradually declined over the same years, with the exception of MicroStrategy in 2015 where there was a spike.
So why is the net income negative for Tableau and Qlik in spite of their impressive revenue growth? Are they spending more? If yes, where is this additional spending going? For that, we looked at expenditure in R&D and Sales and Marketing.
R&D and Sales and Marketing Expenditure
Refer to the figure below, where Tableau is green, Qlik is orange and MicroStrategy is blue. The left hand side shows the R&D expenditure while the right side shows the Sales and Marketing expenditure. The bubble graphs show the actual expenditure in dollar amount while the line graphs show it as a percentage of revenue.
Tableau shows an upward trend for both R&D and Sales and Marketing expenditure. For Tableau, there is a six-fold increase in the amount spent from 2012 to 2015.
Qlik has remained pretty consistent with significantly more investment in Sales and Marketing compared to R&D.
MicroStrategy shows a sharp drop in 2015 for both R&D and sales and marketing expenditure after steady increase in the previous two years. This may be due to the changes in leadership in the last year and the company trying to cut costs.
Although comparing actual dollar amounts definitely gives us a good idea that Tableau and Qlik are investing more in both categories than MicroStrategy, it’s still difficult to compare the scale of this change over the four years and how the changes in R&D and Sales & Marketing spending are reflected on their positions in the Gartner BI magic quadrant.
Ability to Execute and Completeness of Vision
Refer to the figure below. This is an interesting visualization where the area (size) of the square represents the expenditure on R&D and Sales and Marketing in the top two rows respectively.
Tableau spent in R&D approximately one third of what MicroStrategy spent in 2012. Tableau’s R&D spending increased over the years and in 2015 it spent approximately three times that of MicroStrategy on R&D. That’s a staggering increase in R&D budget in just four years! A similar trend is observed for sales and marketing expenditure.
Qlik has been increasing its R&D and Sales and Marketing expenditure steadily. Qlik’s R&D budget has increased by 87% compared to its budget in 2012.
MicroStrategy is the only vendor with decline in both R&D and Sales and Marketing budget compared to 2012.
The bottom section shows the movement of these vendors on across the two measures of the Gartner Quadrant: clarity of vision and ability to execute.
As can be seen here, the R&D expenditure has helped Tableau to improve its offering. Tableau’s clarity of vision score improved from 3.5 in 2012 to 6.8 in 2015. For MicroStrategy on the other hand, the clarity of vision score has gone down from 6.8 to 6.2. Tableau has maintained its lead on ability to execute score for all four years. Furthermore, with MicroStrategy heavily focusing on the self-service piece with its Desktop tool, it will be interesting to see how these efforts pay off and how it affects the position on the Gartner magic BI quadrant in the coming years.
The BI space is definitely getting more competitive as centralized BI controlled by IT and decentralized self-service BI are both becoming important for users.
1) Financial Statement from 2012 to 2015 for the following companies: MicroStrategy, Qlik, and Tableau.
2) Gartner's magic BI quadrant for 5 years from 2012 to 2016.
1) All content provided in this blog post is for informational purpose only.
2) All product and company names are trademarks™ or registered® trademarks of their respective holders. Use of them does not imply any affiliation with or endorsement by them.
3) The year over year comparison in Gartner's BI Quadrant may not accurately represent the movement on the BI quadrant as the methodology used to calculate rank may have changed from 2015 to 2016.