May 28, 2004
After a decade of companies acquiring and deploying Business Intelligence (BI) software across their organization, Ventana Research is beginning to see these same companies trying to rationalize and consolidate their BI investments. CIOs grapple with reducing costs and simplifying the IT infrastructure while business users dread giving up their favorite BI tools. At the same time, BI vendors are positioning themselves as the market leader, trying to be the new BI standard within the company.
BI standardization/consolidation has become a hot IT issue for two main reasons: cost reduction and simplification of the IT portfolio. But Ventana Research is advising our clients to consider BI standardization/consolidation for another, more important reason: to improve business and operational performance to create lasting value for the company.
BI is an essential information technology component for companies with performance improvement initiatives. At its core, business intelligence is the extraction and transformation of data from disparate internal and external sources to information that is used to make decisions in the organization.
Today, business intelligence tools access, analyze, and deliver information in the form of KPIs or metrics to business users through applications like dashboards, reports, or portals. Complete business intelligence solutions have evolved to facilitate collaborative decision making that fits the needs of business users in various departments and at various levels. BI technology has become a highly integrated and visible component of both the IT infrastructure and business operations in successful companies.
The problem for most companies is that individual departments and regional units have implemented their own BI solutions and nearly every software application (ERP, CRM, e-commerce, financial) the company has procured has its own BI tools. Factor in solutions inherited through mergers and acquisitions and you are easily into dozens of BI tools within an organization. Over time, as these deployments became larger and more entrenched, they began to accentuate a silo-ed view of information that created challenges for users trying to obtain both consistent and quality business metrics. CIOs are trying to rationalize all this information and reduce redundancies in their enterprise. This is the primary driver for consolidating and selecting a new standard for BI within their enterprise.
The other problem is the wasted money associated with direct costs attributed to each BI tool deployed: software costs, installation, maintenance, training, integration costs, duplicate hardware, and the risk of obsolescence. Most IT and business managers would look at these costs and think this is acceptable for deploying a new software solution. But this will hurt the company’s bottom-line when this is done dozens — if not hundreds — of times needlessly, simply because there isn’t a coordinated BI standard.
While costs involved with disparate BI systems are somewhat obvious, Ventana Research points out that the real damage to a company with a mess of BI tools comes from the costs that are hard to assign a dollar figure to, but could be devastating to the competitiveness of the company — an unnecessary risk:
Unattainable “single version of the truth” — With different tools accessing information, different information can be the result: marketing forecasts one number, sales is getting another number, finance is getting yet another number, and the CEO is wondering which is right.
Limited visibility — The transparent organization is a goal, and not one that is easily achieved with disparate information systems.
Security risks — Using multiple BI tools means multiple security infrastructures (if they have them at all), which increases security risks and costs associated with protecting disparate systems.
Failed performance management initiatives — Information is an essential component of performance management. Without it, performance cannot be improved.
Any one of these could seriously impact the effectiveness of your company, but it is the impact on performance management initiatives that worries Ventana Research the most. Companies that do not successfully deploy performance management initiatives in this decade will suffer.
Performance management is about effective decision making, collaboration, and optimizing business processes. Every aspect of the patchwork, hodgepodge, or whatever you want to call a multitude of disparate tools, goes against the very essence of performance management. From the lost efficiencies of acquiring, deploying, and using many systems, to the loss of consistent, timely, and easily accessible information, to the lack of collaboration they create, the organization that does not act quickly to standardize its BI technology will be doomed.
Business intelligence technology has matured to a point where it is a key enabler for performance management. Ventana Research asserts that performance management will be the competitive differentiator for this decade.
Companies will either successfully deploy performance management initiatives or will suffer crippling competitive threats. Information is vital to improving performance and BI technology is critical for obtaining actionable information that represents the results of an organization. Ventana Research strongly advises our clients to consider standardizing/consolidating their BI systems to reduce cost, simplify their IT infrastructure, and, more importantly, to improve performance that will result in lasting value for the company.
Unfortunately, standardizing/consolidating is a complex undertaking. There are cultural issues, IT issues, and business issues. Potential BI pitfalls include planning and strategy issues surrounding standards setting, management issues regarding user support, and failure to manage software licenses properly. The result can be a fragmented BI implementation, lack of end-user adoption, and wasted resources.
Ventana Research recommends that proper preparation in project process development and creation of an experienced performance management initiative team to work with an IT Program Management Office (PMO) to oversee the process will go a long way toward ensuring the success of your standardization project.
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