Have Business Found BI
BI software deployments have gone up, and businesses are finding new uses for the tools every day. At the same time, consolidation is changing the competitive landscape, forcing CIOs to make tough decisions on purchasing. See how the experiences of several companies can help you evaluate needs, troubleshoot problems and plan a successful deployment.
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Next Page: Have Business Found BI's Benefits Yet?
IT managers are grappling with the continued expansion of applications and, subsequently, the growing amount of data coming out of the applications.
In the past, businesses turned to Excel and other spreadsheet programs to gather and analyze all that information. But those options only went so far.
Enter business intelligence. The software tools under the BI umbrella have quickly become commonplace in enterprises.
Advances in capabilities and usability, as well as integration with other key components of the IT infrastructure, have led nearly three-fourths of businesses to make strategic implementations of the tools, according to Gartner.
Worldwide revenue for business intelligence software in 2006 was $4.3 billion, and the market is expected to grow to about $5 billion this year, Gartner research shows.
"Business intelligence holds the promise of being able to mobilize your people's minds with information as they are making their decisions," says Bill Hostmann, an analyst at Gartner.
"Businesses realize the big, long reports and complex sets of disparate information they've relied on for years can no longer get the job done."
But obstacles must be overcome for business intelligence to reach its full potential. For one, use of the software often remains challenging for those without specific analytical training.
Deployments need close scrutiny and, in many cases, outside assistance for companies to achieve maximum benefit. And widespread use across a broad set of users in any business can require significant tailoring to meet the requirements and skills sets of a diverse workforce.
While 72 percent of IT executives in a recent survey by CIO Insight, Baseline's sister publication, say their business intelligence efforts have had a major and measurable impact on their companies' bottom lines, almost six in 10 also say users don't know how to analyze or interpret the associated data. (See the CIOI survey data and analysis.)
In recent years, IT managers— and BI vendors—have looked to expand use of business intelligence tools, once privy to a select group of analysts and executives (aka "power users") to a much broader set of decision makers.
Still, even in many businesses that have deployed significant business intelligence platforms, hands-on use of the tools often remains a function of the IT department or specific data analysts. Research analysts told Baseline they believe as few as 20 percent of workers who could use the tools take advantage of them, and those who do only use the tools in a limited capacity.
But a shift is certainly under way as more users continue to use BI tools. That's because the software's let susers capitalize on massive amounts of data by making it easier to understand. As end users find relative information and manipulate it to provide insight, businesses can improve efficiencies, sales and customer service.
The evolution of business intelligence has also caused a shift in how leading IT vendors interface with businesses, as the tools have begun to appeal to business decision makers and operations managers in addition to those managing the IT infrastructure, according to Hostmann.
Strategic adoption of business intelligence can require a significant shift in how both the IT department and its clients deal with critical information. When Steve Canter, CIO of Berlin Packaging, a leading supplier of rigid packaging such as glass and plastic bottles, jars and tubes, sought to expand BI throughout the organization, he found many users reluctant to give up old methods and try the new tools.
For years, the company's information services department had delivered canned Business Objects' Crystal Reports in response to requests for sales data. "We could never get the traction we needed to make those early business intelligence efforts really successful," Canter says. "The idea of slicing and dicing their own cuts of data I think overwhelmed some potential users at first." Canter kept searching for a "killer app that would make business intelligence really fly," and believes he finally found it in the company's annual budgeting process. Each of about a dozen departments within Berlin Packaging is required to prepare an annual budget, a process that used to require dozens of spreadsheets. "It was long, complicated, manual and tedious," he says.
Canter used the budgeting cycle to show department heads how they could apply BI capabilities from Microsoft SQL Server and Office PerformancePoint Server to streamline the process and create more accurate forecasts by using a single platform to access data across the company and configure it to meet specific requests. The result was about a 50 percent reduction in work hours dedicated to budgeting.
"They began to see IT was something they could sink their teeth into and gained appreciation for the depth of analysis available," he says. "Suddenly there was a groundswell of demand and people are licking their chops at what we might do with BI going forward."
Businesses are also deploying business intelligence to minimize the "needle in the haystack" approach to new customer initiatives, focusing marketing efforts where they can maximize return. Corporate Express, for instance, a provider of office and computer products and services, wanted to improve its online efforts and create an enhanced "also consider" or "recommended items" feature within its Web site checkout process.
Earlier this year Corporate Express began using the MicroStrategy business intelligence platform to create a "market basket" application based on predictive analytics that could be used by its more than 20,000 e-commerce customers who create about a million orders every month, says Matt Schwartz, director of business analysis.
"We saw we had a lot of real estate on our Web site that could potentially help us broaden sales, but we wanted something driven by well documented algorithms," he says. "We wanted the market basket tool to be based on actual customer buying patters and not some arbitrary items we selected." When a customer goes online to purchase a stapler, for example, staples and a staple remover are obvious additional purchases; last December the Corporate Express Web site also recommended glue sticks. The MicroStrategy tool helped Corporate Express document that staplers are often included in a "new employee bundle" along with waste baskets, tape dispensers, pencil holders and desk calendars.
Since creating the analytics-driven market basket option for its site, Corporate Express has seen the average order for individuals who make additional purchases increase by about 50 percent, Schwartz says.
That success has convinced the company's senior leaders that business intelligence can be a differentiator; Corporate Express is now rolling the software out to about 3,000 employees, Schwartz says.
Intensifying regulatory requirements and the critical nature of data had directors at Maine Medical Center (MMC) in Portland looking for a more accurate, flexible way to create employee "scorecards" for nurses and doctors to track performance and patient satisfaction.
"We were refining our structure of accountability around patient safety and quality, with the expectation that every department would have definable initiatives for improvement on strategic objectives," says J. Peter Chingos, manager of data analysis for performance improvement at the hospital.
The hospital's previous efforts had been limited to spreadsheets and a common scorecard for all workers and departments. The scorecards were distributed on biannually by e-mail or posted in a shared directory. MMC wanted a customizable platform that could be updated at any point. It deployed SAS Institute's business intelligence tools, including its Strategic Performance Management software, to create scorecards designed as dashboards that provide information compiled through the monitoring of more than 50 key performance indicators including length of stay, patient falls, patient satisfaction and physician satisfaction.
The tools have helped the hospital improve quality of care, Chingos says. Since implementing them, MMC has found fewer patient falls, and hospitalacquired infection rates have decreased as the SAS platform has enabled the hospital to correlate specific diagnoses and infections, allowing nurses and doctors to take proactive measures.
Over time, information became unreliable for decision makers at Rensselaer Polytechnic Institute, a Troy, N.Y., university and research institution, and important decisions had to be delayed due to conflicting and inaccurate reporting. University administrators and business officials couldn't come to an agreement on basic numbers and statistics—they didn't even know how many graduate students were enrolled, says Ora Fish, associate director of data warehouse services.
"It was pretty much in disarray at the cabinet level as they debated issues and wondered if they even had the right numbers," Fish says. "Having many versions of the truth and [not] being able to trust the numbers was one of our biggest issues. We had all kinds of numbers, but could never seem to get a straight answer."
Building out a data warehouse and business intelligence platform that met Rensselaer's requirements demanded significant expertise, Fish says.
Rensselaer worked with DecisionWorks Consulting to identify key information components and establish standard definitions and processes to ensure consistent reporting.
An Oracle data warehouse was created, pulling in information from various areas of the university including admissions, financial aid, finance, human resources and research. The Hyperion Performance Suite business intelligence package was integrated with the data warehouse, and about 650 users began using the platform.
The Rensselaer IT staff worked with each department to understand what kinds of processes would best meet their requirements and to build usage models around which to tailor the platform. IT offered users a training program and a question-and-answer meeting and e-mails weekly tips to those using the tools.
The admissions office now does year-over-year analyses, comparing admissions across demographic and geographic areas and checking student retention patterns. The financial aid office can review percentages of students receiving aid and the kinds of assistance they receive. All departments can use the tools to check spending projections, status of budgets and grants and other financial specifics.
MassHousing, the Massachusetts state-facilitated public housing authority, faced problems in moving and retrieving information across its six divisions, which handle millions of dollars in financing for affordable housing, according to BI project manager Carl Richardson. If people wanted to see total loan amounts across divisions, for instance, they would have to access multiple databases and then manually correlate the data, Richardson says.
MassHousing directors wanted to centralize data that was siloed in those divisions and create an information system that would provide executives with access to pertinent information with greater accuracy.
The agency deployed the Cognos 8 business intelligence platform in late 2005 along with the BEA Systems AquaLogic management system. An internal portal was created to provide users with a centralized entry point to access budget information and to proactively highlight reports presented to executives.
"It has enabled us to put the focus beyond the hard-copy reports on what has happened with the company, and show our corporate leaders trends and analysis they can use to map out the future direction of this agency," Richardson says.
But, Richardson acknowledges, BI will likely remain a challenge on multiple technical fronts.
"Right now the field is wide open— really almost too wide open," he says. "The possibilities are limited only by your imagination, and sometimes the hard part is trying to focus on what you really want to get done.
"We are at the beginning of a revolution, and I believe the trend toward business intelligence is still relatively new," he adds. "IT is a critical enabler that a lot of people still don't really understand, but as they see that even small efforts with the tools can yield some genuine results, the use will only grow."
Business intelligence is entering a third wave of deployment that has taken the technology beyond the hurdles of acceptance and some missteps by early adopters to a maturing technology that is gaining widespread support, according to IDC analyst Dan Vesset.
"The real benefits of business intelligence are just starting to develop with businesses that have been playing with this stuff for as long as a couple of decades," Vesset says. "As the intuitiveness of the tools continues to improve, the barriers of complexity are beginning to fall."
Next Page: Business Intelligence: Maturing Steadily
Business Intelligence: Maturing Steadily
WHAT IT IS:
Software and tools designed to transform a company's myriad forms of information into a controllable, consumable format that can be used to manage business performance.
Business Objects (just acquired by SAP), Cognos, Microsoft, MicroStrategy, Oracle (which bought Hyperion this year), SAP, SAS Institute WHAT'S HAPPENING: The new millennium has provided good traction for the BI market as tools have matured significantly and options for integration with other IT tools have expanded. As the technology has matured, consolidation has been the natural progression.
Two significant acquisitions have been announced this year and additional merger talks are ongoing. Many large enterprises remain in a transitory stage in their BI deployments, however, as they attempt to expand the scope of BI in their organizations and expand its use to larger groups.
$4.7 billion in 2006; projected to grow to $6.4 billion by 2010 (IDC)
Next Page: Ouch! BI's Varied Pain Points
Research reveals pain points for business intelligence managers. CIO Insight's October survey on BI revealed a number of obstacles in deploying BI tools. A snapshot of what respondents using BI identify as their biggest pain points:
- 64% say integration and interoperability with other systems such as CRM and ERP pose a problem.
- 57% say poor data quality significantly diminishes the value of their BI initiatives.
- 67% say spreadsheets are still their most widely used BI tool.
- 58% say most users misunderstand or ignore data produced by BI tools because they don't know how to analyze it.
- 61% say they don't have a center of excellence.
Next Page: Project Pointers
Tips for Successful BI Deployments
Organizations still struggle to make business intelligence an integral part of their IT strategies, but many are learning that careful planning can lead to success.
Make information a weapon. Businesses must reconsider how they treat the increasingly large amounts of data they collect, and use those assets to transform the relationship between technology resources and information.
They must understand that information is more than just numbers being shuffled around, says Gartner analyst Bill Hostmann. Instead, they should use data to manage efficiency and performance. "This is not a technology or an IT issue," he says.
Prepare to work. While out-of-the-box BI implementations can be beneficial, the most significant use of the tools results from hands-on tailoring of the platforms to meet specific usage requirements. A knowledgeable internal staff or the use of third-party services is sometimes necessary to enable full functionality, according to Steve Canter, CIO of Berlin Packaging. "There is still a lot of work that needs to be done with BI tools to ensure the right information gets into the hands of the right users," he says.
Gain acceptance. The broader the set of users in an organization that can use BI tools, the greater the chance a business will have in gaining maximum benefit. "Traditionally, predictive analysis has been something reserved for Ph.D.-level types," says Matt Schwartz, director of business analysis for Corporate Express.
"That's only the tip of the iceberg, and we're working to ensure that our BI effort can reach across the workforce."
As the business intelligence market matures, M&A heats up. In just two years the business intelligence market has grown by about $1 billion—30 percent—in revenue, and the market will total nearly $5 billion this year, according to IDC. This indicates a clear maturation of the market, and it is grabbing the attention of the world's IT giants.
As a result, merger and acquisition efforts within the market are red hot. The frenzy began in earnest in March, when Oracle announced it would buy Hyperion Solutions for about $3.3 billion. In October, SAP announced a "friendly takeover" of BI market leader Business Objects for nearly $5 billion.
"We are definitely seeing that more and more of the big application vendors like SAP and Oracle understand they need to compete more aggressively in the BI market," says Bill Hostmann, an analyst with Gartner. "BI today is still very much an adhoc approach to most businesses—an appendage to the information architecture. These acquisitions are intended to take all that information inside a company and make it available to more people in way that can help businesses figure out what information is really important and what is just a lot of background noise."
Following the SAP-Business Objects announcement, speculation on the next big move centered on an acquisition of Cognos, which IDC ranked the third largest BI provider in 2005. Potential suitors may include IT giants IBM, Hewlett-Packard and Microsoft, which already is fourth in the BI market with about 10 percent of worldwide revenue.
"This is an industry that is at the cusp of going mainstream," says Dan Vesset, an analyst with IDC. "Marker leaders understand that large enterprises are increasingly turning to these tools to get a better understanding of the complex nature of managing IT operations with an eye on business objectives."—D.D.
Total BI Platform Software Revenue For All Subsegments and Regions (Millions)
Source: Gartner (June 2007)