Smart Stuff: The State Of Business Intelligence 2008
Our special report highlights what top companies are doing right with their BI initiatives, and what you can learn from them.
IT'S THE DECISIONS, STUPID
Complicated interfaces and data latency be damned--visionaries, and some vendors, increasingly are saying we should look beyond BI to automating decisions.
That's an ambitious vision, but since last year's mega acquisitions of BI vendors Hyperion, Business Objects, and Cognos, acquirers Oracle, SAP, and IBM, respectively, have been tossing around buzz phrases like "contextual BI," which translates to embedding intelligence into day-to-day workspaces and applications. Most large BI vendors have introduced services-based approaches to delivering alerts, metrics, and key performance indicators within business applications and portals, but our survey shows that only 32% of all respondents are using them, versus 62% of "very successful" respondents.
The most sophisticated services-based deployments are going so far as to automate decisions, but more often the advance is the development of a single, intelligent interface through which employees understand what's going on and can use that to decide the appropriate action. Contextual BI has been around for years in the form of "smart" or "analytic" business applications, such as customer relationship and supply chain management tools with embedded reporting and analysis capabilities. Now the approach is showing up in SaaS applications from providers including Salesforce.com, Workday, Oco, and LucidEra.
One appeal of these smarter applications is that they cut the information management and data warehousing burden, so look for these options to multiply. "Within three to five years, there will not be an application on the face of the planet that does not have embedded BI," predicts Marge Breya, executive VP and general manager at SAP's Business Objects unit. "The question is, what do you do when you have to look at information outside of the application?"
That's a not-so-veiled call for a centralized warehouse, but even the largest companies with extensive IT capabilities sometimes favor a simpler, application-oriented approach. That's the case for one survey respondent, an enterprise architect working for a major defense contractor who says his company has embedded analytic capabilities within a CRM application.
"The classic BI tools demand data integration, aggregation, and mining capabilities that we'd love to have once our organization is ready to spend that kind of money," he says. "But we've looked at the requirements people have for data analysis, and we've implemented those in custom applications tailored from [off-the-shelf] software."
The obstacles to conventional BI at this company are more than just money; the architect also points to cultural challenges: "Folks want to spend money within their own departments, rather than a cross-departmental warehouse." And there are also timing problems. "Our CRM is at a particular stage in its life cycle, and that bears no resemblance to the maturity of our finance and supply chain systems," he says.
MANAGE BUSINESS PERFORMANCE
Biggest Barriers To BI Success
Complexity of BI tools and interfaces
Cost of BI software and per-user licenses
Difficulty accessing relevant, timely, or reliable data
Insufficient IT staffing or excessive software requirements for IT support
Difficulty identifying applications .or decisions that can be supported by BI
Lack of appropriate BI technical .expertise within IT
Lack of support from executives .or business management
Poor planning or management of BI programs
Lack of BI technology standards and best practices
Lack of training for end users
Data: InformationWeek Research Business Intelligence Survey of 385 business technology professionals using business intelligence tools
Performance management has long been closely associated with BI, and it's getting even more attention in the wake of last year's BI megadeals. This summer Oracle and SAP both made major announcements about their progress in integrating Hyperion and Business Objects, respectively, and much of their attention is focused on new or upgraded performance management applications, including strategy management; profitability and cost management; and governance, risk, and compliance applications.
Performance management applications are designed to not just provide insight--the part powered by conventional BI--but also to help people take action to improve the performance of the business. Finance departments usually take the lead in implementing apps around planning, budgeting, and consolidation, also known as financial performance management, but as in BI, many companies are pushing into operational areas. Whether in the financial realm or otherwise, the objective is to connect people, business processes, and technologies to big-picture strategic goals.
At HSBC Hong Kong, the Asia-Pacific hub of the global banking company, a BI and performance management implementation has managed to get more than 5,000 employees in some 200 branches aligned and motivated to meet group-wide sales performance targets. Previously, the bank had some 30 full-time employees dedicated just to the task of collecting and reporting information on customer visits, product sales, leads, and follow-up activity in each branch. Reporting amounted to keying data into isolated Excel spreadsheets or, worse, handwriting and faxing data up to division level.
In 2005, HSBC implemented a new CRM-like process and standardized interface for capturing detailed sales and lead information across the division. Integrated with half a dozen legacy banking systems, the accompanying data warehouse and Cognos BI deployment can serve up granular detail ranging from total results for Hong Kong down to sales results and leads by product, branch, and individual salesperson. There's no ad hoc reporting or downloading into Excel, however, at least at the branch level.
"We give the branches a standard set of reports, a standard way of looking at those reports, and a standard way of reacting so we don't operate in a different way in different branches," says David Campbell, head of BI for personal financial services in HSBC's Asia-Pacific region. Rolled out in 2006, the deployment paid for itself within one year through data-collection and reporting efficiencies alone, HSBC says, but that doesn't begin to calculate the benefit of the performance management aspects of the project.
For example, dashboard-style, Web-based reports are tied to a sales performance management plan. Managers and salespeople see branch and individual progress toward incentive compensation targets. The goals are tied to strategic objectives around, say, up-selling and cross-selling mortgages and insurance, and incentives can add as much as 30% to an individual's salary.
Talk about a smart way to get employees excited about BI.