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The 451 Group: Text Analysis Is Becoming the Key Battleground for Software That Manages, Searches and Finds Intelligence in Unstructured Data

Posted on: Wednesday, 20 July 2005, 09:00 CDT

Vendors in Market Segments Such as Unstructured Data Analysis, Search, Databases, Business Intelligence and Business Application Suites Face a Critical Period of Opportunity and Competition in Enabling Text-Aware Application Intelligence

The 451 Group believes that integrating unstructured data analysis (UDA) technology directly into end-user software is key to the development of a new class of powerful text-aware applications. The future shape of a large portion of the software market - databases, UDA, search and applications - will depend on which companies manage to integrate the technology into their own applications and successfully deploy it first. These findings are contained in a report released today by New York-based The 451 Group, a technology industry analyst company focused on the business of enterprise IT innovation. The report analyzes the markets and companies that are influencing the way the software industry will handle text knowledge extraction in the future.

The 451 Group found that the future success of companies and organizations will increasingly be based on their ability to unlock hidden intelligence and value from unstructured data, and text in particular. But most suppliers of business applications such as business intelligence (BI) and customer relationship management (CRM) software have failed to seriously address the unstructured data problem. And many organizations have ignored the problem of handling text-based unstructured data, meaning that they are likely missing out on key pieces of intelligence that could help them make better-informed decisions. Those organizations that do attempt to mine intelligence from text today usually employ one or more of three high-level strategies to compensate, with many nuances existing in each:

-- Storing everything in a relational database

-- Using unstructured data tagging and information extraction techniques

-- Using search

"Businesses need applied UDA, where only basic configuration is necessary to unlock the value in text. Building custom applications each time is not going to work," said Nick Patience, Sector Head for Enterprise Software and Managing Analyst at The 451 Group. "We do not believe there is a viable future market for pure-play UDA companies in the long term. But we do think that UDA has the potential to become an important part of other types of infrastructure and application software, and we expect that UDA companies will increasingly see their technology co-opted by application, enterprise search and database vendors."

The 451 Group believes the ability to extract semantic structure from text will be a crucial differentiator for any application vendor involved in compliance issues such as Sarbanes-Oxley, as well as government intelligence, fraud detection, customer interaction analysis, failure reporting in manufacturing, risk management, and competitive and market intelligence. These are the issues most likely to spur demand for text analysis tools over the next 18 months.

The 451 Group also discusses in the report that suppliers of business applications such as BI and CRM software should avoid waiting for search and database vendors to deliver advanced text analysis tools. Instead they should build the functionality themselves, or license or buy it from UDA vendors. Integrating the technology will make their applications stand out from the crowd, and will offer a real differentiator.

These findings are contained in a 451 Special Report titled "Text-aware applications: the endgame for unstructured data analysis." This report was written by Nick Patience, with support from Martin Schneider, Business Applications Software Analyst. The 150-page report includes competitive assessments of numerous vendors focusing on this space, complemented by technology gap analyses, market taxonomies and an in-depth look at the role M&A activity may play in the development of the market for text-aware applications.

Other findings in the report include:

-- Search alone is not enough to solve the kinds of text mining problems found in the enterprise. Search vendors need to consider integrating elements of UDA to build applications based on their search technology that are aimed at specific business problems, in addition to pushing straight horizontally applicable search.

-- Given the need for integration with defined business processes, search vendors should focus more time and resources on their OEM business.

-- Relational database vendors need to adapt in order to accommodate changing business needs. The relational model served the old model of server-hosted business applications well, but now data must be assimilated from all directions and in all formats.

-- It is too early to make predictions regarding mergers and acquisitions in this area, but it is not expected that a market-defining M&A event will occur within the next 18 months. However, a substantial amount of partnership activity is expected - particularly between next-generation BI companies and stand-alone UDA vendors on the one side, and traditional application vendors on the other. This activity is more likely to occur than serious consolidation across all these sectors. But the next-generation BI vendors that exist now are going to become ripe acquisition targets within 18 months and beyond.

Key Companies Covered

The report includes in-depth competitive assessments of the following vendor companies (although this is not a complete list of companies covered in various sections of the report): IBM, Microsoft, Oracle, Sybase, Mark Logic, Progress Software, SAIC TeraText, Software AG, Autonomy, ClearForest, Inxight Software, Semagix, Convera, Endeca Technologies, FAST and Verity.

Report Orders

To learn more about this report, or to discuss developing a client relationship with The 451 Group, contact Simon Carruthers, Vice President of Research Services, via phone at 212-505-3030 x-103, or via e-mail at: simon.carruthers@the451group.com.

About 451 Special Reports

451 Special Reports provide a complete and comprehensive picture of emerging enterprise IT market segments - analyzing the technologies, the competitors, the marketplace opportunities and obstacles, and the implications for a variety of constituencies, including other vendor companies, the investment community and early-adopter IT end users.

About The 451 Group

The 451 Group is an independent technology industry analyst company focused on the business of enterprise IT innovation. The company's analysts provide critical and timely insight into the market and competitive dynamics of innovation in emerging technology segments. Clients of the company - at vendor, investor, service-provider and end-user organizations - rely on 451 insight to support both strategic and tactical decision-making for competitive advantage.

The 451 Group is headquartered in New York, with offices in key locations, including San Francisco, London and Boston. For additional information on the company or to apply for trial access to its services, go to:www.the451group.com.

Source: Business Wire

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