An Analytics Database Company to Watch

Vendor Profile Exasol: An Analyt ics Dat abase Company t o Wat ch

Philip Carnelley Erica Spinoni David Wells

IDC OPINION

Exasol is a Germany-headquartered analytics database management software company founded in 2000 in Nuremberg, with offices across Europe and the U.S. and recently growing rapidly on both sides of the Atlantic. With 20 years of experience in distributed database technology and a significant customer base, Exasol is becoming an influential player in the in-memory analytics database market.

IN THIS VENDOR PROFILE

This IDC Vendor Profile analyzes the success and the market positioning of Exasol, a Germany- headquartered analytics database management software company. From its foundation, Exasol planned to build database management software designed to take advantage of the increasing affordability of both parallel processing hardware platforms and RAM.

SITUATION OVERVIEW

Company Overview Exasol is an analytics database management software company founded 20 years ago in Nuremberg, Germany. In recent years, it has transformed from a small start-up to a company with an international footprint, principally in Europe and the U.S. In the nine months to November 2019, Exasol's recurring revenue grew over 45%, and IDC estimates it exceeded $23 million in 2019, with around a fifth of that coming from the U.S. Exasol's customer base consists mainly of large commercial enterprises with complex analytical needs from industries such as retail, financial services, media and publishing, and ecommerce — its entire range of customers is quite broad. The company has offices in both Europe and the U.S., providing support for its 165+ customers and over 500 installations.

Launched in 2008, Exasol's in-memory analytics data platform aims to enhance analytics productivity and performance, with features such as automated indexing and optimization. Part of the Exasol vision is to provide functionality for all the key analytics stakeholders — business intelligence (BI) analysts, data scientists, and business users — to maximize the value of its platform.

Exasol customers operate in several industries (details to follow). For example, retailers partnered with Exasol to improve customer experience and increase customer spend, involving complex, high data volume, and sometimes ad hoc queries along the whole supply chain to gauge changes in buying patterns in near real time to tune online marketing and for supply chain optimization. Fintech and financial organizations collaborated with Exasol for use cases such as analyzing customer loyalty and customer experience with the aim of increasing sales opportunities (cross- selling and upselling) and addressing customer churn and attrition.

April 2020, IDC #EUR146164120 Product Overview As shown in Figure 1, Exasol can slot in alongside, or instead of, other databases in an analytics architecture as an analytics one-stop shop (replacing the enterprise data warehouse) or as an analytics performance accelerator or sidecar. Exasol was developed as a parallel system based on a shared-nothing architecture. It is designed to operate without any dedicated "master node" that would constitute a single point of failure and a performance bottleneck. To ensure the cluster hardware is leveraged optimally, Exasol distributes data evenly and across servers.

FIGURE 1

Exasol's Context Diagram

Source: Exasol

The product was designed from the outset to run on distributed massively parallel processing (MPP) hardware as shown in Figure 2 with sufficient RAM, with most query processing taking place in-memory, even for high-volume analytics workloads. The main selling point of the product is query performance, and in 2019, the company achieved the best result for the decision-support benchmark TPC-H for both 3TB and 10TB scale factors (as documented on the TPC website).

Exasol uses a variety of techniques to achieve its performance levels. To maximize query performance, Exasol uses an intelligent caching algorithm that only loads blocks containing the data it needs and keeps hot data in memory while cold data resides on the disk, as shown in Figure 2. This means around 10% of raw data size is needed as memory (considerably lower than other in-memory databases). Exasol's data compression algorithm is optimized to provide the best compromise between data size and processing speed. Furthermore, internal indices are automatically created and maintained to guarantee fast query performance out of the box.

Exasol Performance Architecture

Source: Exasol

Compatibility with SQL-related standards (including JDBC, ODBC, and ADO.NET) and with leading visualization and extract, transform, and load (ETL)/ extract, load, transform (ELT) integration tools as well as support for R, Python, Java, and Lua means Exasol does not need to impose proprietary lock-in on its users despite its novel performance-oriented architectural features. The product — which runs on industry-standard hardware — also offers integration with HDFS (Hadoop), enabling existing Big Data stores to be queried along with data that resides in Exasol's database ; the associated data virtualization offering (Virtual Schema Framework) is maintained as an open source project on GitHub. Exasol includes autonomous self-tuning functionality intended to reduce manual database administration and total cost of ownership (TCO). Company Strategy Many organizations are facing the challenges of digital transformation (DX); IDC's CxO Survey, 2019, found that 80% of European CEOs are under pressure to execute a successful digital transformation. From a data perspective, this challenges organizations to manage increasing data volume, variety, and velocity while improving the range, quality, speed, and timeliness of analytics. It is crucial to have a state-of-the-art environment to respond to challenges, and IDC believes this should be an integrated technology platform that links companies with their suppliers and customers and inherently enables intelligence to be built into business processes.

Exasol has been self-funded (and profitable) for much of the first 20 years of its life. IDC believes the company should consider seeking external funding to accelerate its growth — particularly in the huge U.S. market — leveraging the position it has achieved to date and building momentum while the opportunity is hot.

©2020 IDC #EUR146164120 3 Pricing Strategy Exasol provides a free trial version, available for up to 200Gb and licensed for commercial and private/academic use. Exasol One — the standard commercial offering — enables users to scale up to 1TB on a single node and provides standard support. In addition, Exasol offers an Enterprise Cluster package that provides a higher level of scalability and enterprise-level support with different support plans.

Flexibility in Cloud Deployment IDC predicts that by 2022, 60% of European enterprises will integrate cloud management — across their public and private clouds — by deploying unified hybrid/multicloud technologies, tools, and processes. As users move in this direction, technology vendors must update their strategies and follow these new trends.

Exasol partners with the three major cloud platforms — AWS, Azure, and GCP — to provide customers with options when using analytics databases in cloud environments. It also offers a fully managed private cloud — ExaCloud — to offer data location security and compliance with data regulation. Exasol can be deployed in on-premises, hybrid, and cloud-only environments.

Partner Strategy Exasol has established two levels of partnership for integration/application services. Elite partners are chosen based on their capability to position and deploy Exasol-based solutions, focusing on developing an analytical data platform for clients. Exasol works with these partners on joint marketing (for instance, lead generation through meetups and webinars). Authorized partners largely focus on consulting rather than implementation, and they are tasked to work on training and education toward any aspect of the joint analytics platforms where Exasol plays a relevant role. Exasol stresses that its partners are not restricted to one business model but have flexibility on a per-project basis to either refer Exasol, jointly sell with the Exasol sales team, or resell independently.

Furthermore, Exasol considers technology alliances as critical in supporting its best-of-breed technology stack. Technology alliance partners include Amazon AWS, Alteryx, Collibra, Google GCP, Microsoft (Azure), MicroStrategy, Protegrity, and Tableau. Technical Features A key feature of Exasol's positioning is to offer what it terms "unrivalled performance" for analytic workloads. This is based on a number of technology features, built on the assumption that the database will usually be deployed in a massively parallel processing environment in which much or all of data being analyzed will be in-memory. Exasol's core algorithms are based on the assumption that data access will usually be very fast. A number of techniques are used to increase the likelihood of the in-memory assumption being realized in practice, including:

. Automatic hot data management in which frequently and recently accessed data is transparently kept in RAM . Predicting which data will need to be in fast storage for processing and pre-fetching into all storage tiers, including pre-fetching data from remote machines into temporary local buffers . Using a range of compression techniques to fit the maximum amount of data into fast- access storage . Executing user-defined functions written in R/Python/Java/Lua, which enable the execution of machine learning models inside the database

. Columnar storage, which is designed for analytical querying, in addition intelligent algorithms automatically create row-oriented tail blocks to accelerate small inserts . Transparent and automatic replication of data to boost performance, for example for joins involving relatively small tables . Automatic indexing and maintenance of statistical information about the database for query optimization . A query optimizer specifically designed to perform well on the basis of the "mainly in- memory" assumption. Exasol also supports a SQL extension (the "Skyline operator") to implement Pareto (multi-criteria) optimization for analytics within the database's parallel and "mainly in-memory" environment. Notable Customer Success Stories Exasol has customer references across several sectors and customer types. Key common features that demonstrate Exasol's expertise include the speed and scale of analysis and multiplatform capability. Notable case studies include:

. Revolut is a fintech providing digital banking with an increasing customer base; it considers itself to be a highly data-driven company. This fintech has been using Exasol on GCP since 2018 to enable query/analysis at high speed, at scale, and at reduced cost via Exasol's self-tuning features. . Badoo, a U.K.-based dating app that enables people to chat, share interests, and match with others has been using Exasol's solution in combination with MicroStrategy since 2014 to manage its data flows. Badoo is leveraging the Exasol-MicroStrategy partnership and Exasol's built-in data science functionality to improve matching scores between customers, evaluate customer retention and churn rates, and study A-B testing of new features. Badoo chose this partnership believing that a single-vendor strategy couldn't provide what it was looking for and would run the risk of vendor/technology lock-in. According to Badoo, its relationship with Exasol is more of a partnership rather than a traditional client-vendor relationship as Exasol is open to receiving suggestions and feedback to adapt its products to customer needs. . Zalando, one of the biggest Europe-based ecommerce retailers for clothing and footwear, sought to optimize the availability of its stock, considering the volatility and unpredictability of customer demand. In 2010, Zalando was looking for a database that could be easily integrated into its data warehouse as an analytic layer on top but without significant administration overhead. The retailer felt Exasol offered a combination of attractive pricing, good quality, performance, and ease of integration into the existing architecture and front- end BI tools. By enabling fast analytics results while freeing up resources in several departments such as purchasing, auditing, among others, Zalando is now able to run 24 x 7, real-time sales and stock availability for stock optimization. Exasol now is not only used to check stock availability and repurchase requirements, but also CRM and customer experience through email personalization and tailored offerings. . Adidas, a German manufacturer, is leveraging Exasol to better understand and serve its customers. First, Exasol enables Adidas to perform dynamic pricing for ecommerce and retail based on internal and external data such as inventory data, customer demand, and competitors' pricing and strategies. Second, Adidas is using Exasol to store semi- structured data from social media and complaint data, and with the use of Python to parse data, the manufacturer can drive complex decision making and improve customer service. Lastly, Exasol's analytical engine integrated into R enables Adidas to create a single view of customers throughout the entire customer journey, from targeting customers with personalized emails to personal experiences on mobile applications.

©2020 IDC #EUR146164120 5 . Monsoon Accessorize is a British company operating two different retail clothing chains — Monsoon and Accessorize — with more than 180 stores in the U.K. and several more across the world. In 2016, Monsoon Accessorize started a customer-centric project with the motto "Data and analytics available anytime, anywhere, through the eyes of the customers." However, Monsoon's infrastructure was old, siloed, and based on legacy solutions. Monsoon's new architecture strategy is to have MicroStrategy as the BI front end, Exasol as the enterprise data warehouse, Talend as the ETL solution, and Oracle as its source for operational data. With the new platform, enhanced by a close collaboration between Exasol and MicroStrategy, Monsoon is now able to promptly integrate data from the web with its own internal data and move from weekly snapshots to daily reporting. With Exasol and the new architecture, Monsoon is now able to obtain a faster and more accurate single-customer view, near-real-time marketing campaign, and KPI analyses.

FUTURE OUTLOOK

Exasol positions itself as a team of creative, forward-thinking technologists who are passionate about helping companies run their businesses smarter and drive profits by analyzing data and information at unprecedented speed, and as a European company with a global footprint. Its 2020 plans are to improve the cloud elasticity of the analytics solutions and to increasingly provide self- service software as a service (SaaS) for the database.

Self-service SaaS is becoming a mandate especially for cloud environments, and it represents a viable and profitable market opportunity for Exasol technology, both in Europe and abroad. This aligns with IDC's view of the self-service priority worldwide. IDC expects cloud and self-service solutions to grow strongly in the future. Self-service capabilities for cloud deployments potentially enable greater scalability and adaptability for current and future needs as well as downtime reduction.

As IDC forecasts a five-year CAGR of 30.8% growth for cloud-based analytic data management and integration platforms, the push for cloud strategy is a savvy move to maintain Exasol's leadership status in its field. Furthermore, Exasol plans to continuously integrate and support artificial intelligence (AI) and machine learning, which are core pillars for future growth.

ESSENTIAL GUIDANCE

Advice for Exasol Exasol is guided by strategic objectives including flexible deployment environments, open source integration, and the ability to use a wide range of languages with the system.

IDC recommends the following:

. Invest in and extend self-service and SaaS capabilities. End users are seeking to easily put into production technology solutions with reduced concerns around scalability and usability. Self-service and SaaS are the foundation for agile organizations with specific requirements around scalability and flexibility of architecture. . Further integrate AI and machine learning technologies. The integration of AI and machine learning into products, services, and technology solutions is a core pillar to maintain competitiveness and innovation. Self-driving databases are increasingly benefitting customers by reducing the time spent to perform manual tasks — data quality, data preparation, backup/recovery, among others — freeing up time to be dedicated to high- value activities. AI and machine learning can lead to fast and accurate insights, which are critical to customer success and competitiveness.

©2020 IDC #EUR146164120 6 . Continue paying attention to customer experience. Exasol is proud of its success in creating customer loyalty (its annual customer churn rate is 4%–5.5% between 2016 and 2018), and IDC advocates doubling down in this critical area. The design of a customer journey from first contact, to proof of concept (POC), scalable deployment, and assistance and education is key to customer satisfaction and retention. The customer can be at the heart of innovation; provide interesting use cases to further improve and integrate products. . Invest to enhance ecosystems. Standalone organizations will not survive in the current competitive landscape. Partnerships, alliances, cooperation, and collaboration are the minimum requirements to stay on the market, and IT vendors are constantly and urgently evolving their partner acquisition and development strategies. Solutions integration in the whole architecture/platform is the mandate. Providing solutions for a wide selection of use cases in multiple industries is important to create brand awareness and trust. . Support platform integration and focus on multiple environments. Analytics data management solutions and tools must be integrated with other components of the entire data platform and architecture. The integration has to be a mandate and needs to fit into any cloud, hybrid, or on-premises environment as increasingly cloud-resident and cloud- native data and applications require cloud-born or cloud-adapted/transformed architecture.

LEARN MORE

Related Research . European Analytic Data Management and Integration Platform Vendor Shares, 2018: The Evolving Battleground (IDC #EUR145727719, December 2019) . European Analytic Data Management and Integration Platform Forecast, 2019-2023 (IDC #EUR145727619, December 2019) . IDC FutureScape: Worldwide IT Industry 2020 Predictions — European Implications (IDC #EUR144691319, December 2019) . Western Europe Big Data and Analytics Software Forecast, 2018-2023 (IDC #EUR145601519, November 2019)

©2020 IDC #EUR146164120 7 About IDC International Data Corporation (IDC) is the premier global provider of market intelligence, advisory services, and events for the information technology, telecommunications and consumer technology markets. IDC helps IT professionals, business executives, and the investment community make fact-based decisions on technology purchases and business strategy. More than 1,100 IDC analysts provide global, regional, and local expertise on technology and industry opportunities and trends in over 110 countries worldwide. For 50 years, IDC has provided strategic insights to help our clients achieve their key business objectives. IDC is a subsidiary of IDG, the world's leading technology media, research, and events company.

IDC U.K.

IDC UK 5th Floor, Ealing Cross, 85 Uxbridge Road London W5 5TH, United Kingdom 44.208.987.7100 Twitter: @IDC idc-community.com www.idc.com

This IDC research document was published as part of an IDC continuous intelligence service, providing written research, analyst interactions, telebriefings, and conferences. Visit www.idc.com to learn more about IDC subscription and consulting services. To view a list of IDC offices worldwide, visit www.idc.com/offices. Please contact the IDC Hotline at 800.343.4952, ext. 7988 (or +1.508.988.7988) or [email protected] for information on applying the price of this document toward the purchase of an IDC service or for information on additional copies or web rights.