What's So Trendy About IT Operations Analytics Market

The global IT operations analytics market size is expected to reach USD 15.55 billion by 2027, according to a new report by Grand View Research, Inc., expanding at a CAGR of 16.9% over the forecast period. The increasing demand for transforming IT operations in the wake of the digital transformation of industries and reducing asset downtime has led to a massive increase in the demand for IT Operation Analytics (ITOA) solutions in recent years. The growing number of data storage centers and cloud computing technologies as well as the use of Artificial Intelligence (AI)-enabled analytics has increased the use of ITOA solutions in industries. Moreover, factors such as rising consumption of big data, emerging technologies such as the Internet of Things (IoT), and increasing focus of companies on reducing operational costs are anticipated to boost the growth of the ITOA market over the forecast period.

The introduction of ITOA solutions has enabled organizations to analyze operational data effectively and to gain meaningful insights. These solutions offer higher efficiency compared to traditional data analytics tools. Moreover, the impact of IT operation analytics is not limited to improving the performance and efficiency of operational processes. Several companies have started using these efficiency gains as an underlying basis to improve customer experience. For instance, Tesco PLC, a U.K.-based retail company, has been using analytics for improving its supply chain processes and has realized savings of around USD 125 million annually since 2013. Retailers also use the supply chain statistics model to predict customer behavior and understand stock holdings. The analytics capabilities have ensured an increase in the footfall of in-store and online customers, along with an increase in customer satisfaction levels.

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The analytics industry is witnessing an increase in the number of niche players compared to traditional players owing to the need for less capital investment and the dynamic nature of technological innovations. Although the market is characterized by the presence of prominent vendors such as IBM Corporation; BMS Software Inc.; and Microsoft Corporation, the growth of start-ups such as Splunk Inc.; ExtraHop; and SignalFx has been noteworthy. Moreover, the market is also witnessing a significant rise in the pay-as-you-go (SaaS-based solutions) delivery model for delivering ITOA solutions as it offers convenience for vendors and customers. However, concerns such as data security, lack of awareness among enterprises, and lack of investment are likely to be the key challenges in the IT operation analytics market. Additionally, the recent outbreak of the COVID-19 pandemic is expected to temporarily slow down the growth rate of the market globally.

Further key findings from the report suggest:

• The predictive analytics segment is expected to register the highest CAGR over the forecast period owing to the increasing penetration of high-speed internet services, increasing demand for automation, and digitization initiatives undertaken by organizations across multiple industries

• The log management segment is expected to gain momentum over the forecast period. The segment growth can be attributed to advancements in distributed systems, the rapid emergence of cloud computing technologies, and explosive growth in machine-generated log data

• The cloud deployment segment is anticipated to witness significant growth owing to the increasing demand for Software as a Service (SaaS) deployment model and its benefits such as improved scalability, flexibility, and security aspects

• The retail end-use segment is expected to register the highest CAGR over the forecast period owing to the growth of the e-commerce sector, an increase in online shopping, and an increase in the complexity of modern logistics

• Asia Pacific is expected to emerge as the fastest-growing regional market owing to the remarkable increase in the generation of IT data across numerous organizations. Furthermore, the growing demand for advanced IT infrastructures and the increasing number of data centers are expected to propel the regional market growth

The industry research conducted in 2014 demonstrates that by utilizing operational data, manufacturing companies can realize savings of up to USD 371 billion globally, with operations accounting for a large part of this benefit. Data-driven operational improvements account for USD 117 billion of the total manufacturing industry size, with consumer-facing processes accounting for USD 38 billion. The disparity between the two lies in the vastness of improvements that can be realized using operational analytics, such as better capacity utilization, improved productivity, reduced downtime, accurate forecasting abilities, and greater flexibility in response to external circumstances.

The growing popularity and demand for ITOA solutions can be reiterated from an instance where a renowned Asian steel manufacturer deployed ITOA to transform the competitiveness and efficiency of 30-year old business practices. It used data pertaining to process innovation to detect the most critical quality issues and analyzed them for root causes. By constantly monitoring the process data, the company was able to identify problems early on and re-engineer processes as required. As a result, it achieved a 50% reduction in lead time for hot coil production and around 60% reduction in inventory. Similarly, in the petroleum industry, with the help of operations analytics in asset maintenance, British Petroleum was able to save around USD 200 million in CapEX in reduced non-productive asset time.

The outbreak of the COVID-19 pandemic in December 2019 has drastically impacted the production, supply, and demand for goods and services across the world. It has created a market and supply chain disruption by financially impacting industries and governments equally. However, amidst this economic uncertainty, the ITOA market is likely to witness growth owing to enhanced internet connectivity, decreased cost of components, increased demand for connected devices, affordable cloud computing services, and an increase in IT expenditure by governments across the world. Moreover, with the relaxation of restrictions across the globe and the resumption of industrial operations, the market is expected to witness growth post-2022.

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The cloud deployment segment of the IT operations analytics market accounted for the largest revenue share of around 70% in 2019. Cloud-based solutions have become the standard in multiple industries as they help organizations in reducing physical infrastructure costs, effective monitoring of data, and improving accessibility. A reduction in the total cost of ownership has become the key factor fueling the cloud deployment of ITOA solutions. However, challenges pertaining to data security, regulatory compliance, reliability, performance, operational control, transformation complexity, and data governance may hinder the cloud deployment of ITOA solutions.

The cloud deployment model offers increased operational flexibility, reduced maintenance, low operational manpower requirement, and convenience to enterprises by provisioning hassle-free integration. The collection of data from multiple devices, internal applications, consumers, and online media networks and the extraction of actionable insights have become a time and capital intensive processes for organizations. However, cloud computing solutions integrated with big data and AI and ML have allowed companies to seamlessly consolidate information from various communication channels and resources and analyze the information to make informed and right decisions.

The BFSI segment held the largest market share of around 25% in 2019 owing to the increasing adoption of analytics solutions by banking and financial companies for their in-house operations. Operational analytics is likely to help banks in risk management, fraud management, and customer understanding to develop and retain a profitable customer base. Moreover, services such as digital wallets, payment gateways, online payments, and blockchain technology are likely to play an important role in automating complex workflow structures and facilitating the adoption of IT operation analytics solutions.

IT operation analytics solutions help in eliminating time-consuming redundant steps and errors that lead to low productivity and poor user experience. Operational analytics has become an important catalyst for ensuring digital transformation, increasing operational efficiency, and enhancing employee productivity in various industries. For instance, Consolidated Communications Holdings, a telecommunication company, asserts that operational analytics solutions helped the company in detecting all the main operational incidents that occurred, including silent failures, and also eliminated manual thresholds that resulted in cost savings worth USD 300,000 annually.

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North America accounted for a major revenue share of approximately 35% in 2019 owing to the early adoption of IT operations analytics solutions. The U.S.-based companies are the most successful and advanced in their implementation of operational analytics initiatives. The regional market growth is primarily driven by the U.S., which hosts 17 of the top 20 big data companies. Moreover, the U.S. government is instrumental in making concrete decisions in the domain. In 2012, the U.S. pronounced “Big Data Research and Development Initiative”, with six federal agencies and more than USD 200 million committed to making improvements in big data. Additionally, more than 45% of U.S.-based enterprises have made analytics a fundamental part of their decision-making process, compared to 28% in Europe.

The Asia Pacific region is anticipated to register the highest CAGR over the forecast period owing to the increasing awareness of operational analytics among enterprises in emerging countries such as China and India. The growing popularity of cloud computing and the adoption of IoT and smart technologies are the key growth drivers expected to boost the regional ITOA market. The regional digital landscape is expected to be shaped by an intelligent cloud and intelligent edge owing to government and private enterprise initiatives. The growing set of connected devices and systems that gather and analyze data is expected to help create a new class of connected applications and tools to boost the operational abilities and business outcomes for enterprises.