Introducing the Business Intelligence and Data Warehousing 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 BI & DW Index to keep tabs on the stock market and many of the companies impacting our industry.

Companies were selected in this index based on that company deriving a significant portion of its 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% yesterday, accompanying a 449 point drop in the Dow. This brought its 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, six stocks have positive returns YTD, while ten 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 a company's 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.

Disclaimer: The author has investments in ORCL, TIBX, TDC, NZ and INFA.

Comments

[Frank Xavier:]

From your list, I consider Actuate, Pervasive, Tibco, and Netezza particularly interesting companies to watch.

Jul 30 02:24 PM