SAP Dives Into A BI Market That's Far Short Of Its Potential - InformationWeek

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SAP Dives Into A BI Market That's Far Short Of Its Potential

Companies have solved isolated problems with business intelligence, but higher-level predictive and operational analytics often take heroic effort.

At the rate big software companies are snapping up business intelligence vendors, you'd think BI was a magic elixir for solving today's business problems. But in reality, BI has fallen dramatically short of its full potential. Companies want much more from business intelligence systems, including the ability to predict customer problems and make analysis part of minute-to-minute operations, not merely an after-the-fact report.

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That's far from the current experience of most BI users, but the technology is moving in the right direction. BI vendors recognize that businesses want query, reporting, and analysis tools that meld with their operations, not sit off to one side. That's one standard by which SAP is sure to be judged in its planned $6.8 billion acquisition of Business Objects, announced last week, a catch-up move to Oracle's $3.3 billion deal for Hyperion in the spring. And SAS Institute and Teradata last week promised to integrate their products so that businesses can run SAS analytics in Teradata data warehouses without a lot of extra work.


Gary Forsee

SAP's Kagermann and Business Objects CEO John Schwarz partner--now what?

Photo by Hannelore Foerster/Bloomberg News/Landov
More progress is needed. Business intelligence suffers from a strange dichotomy: It's among the most highly desired business technologies, a roughly $10 billion-a-year market growing at more than 10% a year, yet it has difficulty proving its worth. Cost and complexity remain the leading barriers to BI adoption, according to a recently completed InformationWeek survey of 388 business technology professionals. One in three respondents cites an inability to demonstrate the benefits of BI to internal stakeholders. Most companies have bought BI software to solve a specific problem in one business unit, says AMR Research's John Hagerty, but few are able to use the resulting data silos to explore cross-company impacts, such as how a 5% drop in market share affects manufacturing, finance, and procurement.

Part of the problem is that no vendor excels in all areas of business intelligence, leaving customers to cobble together what they need from various offerings. Some BI users are on the cutting edge of customer scoring, operational analysis, and predictive analytics, but it often takes heroic efforts to get there--millions of dollars spent on data warehouses and software for moving and analyzing data, plus the specialized IT talent and time it takes to set up and manage it all. Medco CIO Mark Halloran estimates that 40% of the cost involved in developing sophisticated analytics and modeling for the pharmaceutical benefits company's 30-Tbyte Teradata data warehouse comes from moving data between systems.

Warner Home Video runs applications for retail category management, sales forecasting, and product replenishment in a Teradata warehouse. Although Teradata sells analytical apps for forecasting demand, Warner extracts data from the data warehouse and feeds it into SAS analytics, which runs models for that function. "The problem is that SAS is a great analytical tool but not a data warehouse, and Teradata is the best data warehouse around but not a good analytical tool," says Thomas Tileston, VP of business decision support at Warner Home Video. If the two vendors can pull off what they promise and let Warner Home Video run SAS analytics inside its warehouse, it'll be a "huge win," Tileston says.

Businesses also want tools that blur the line between data transactions and decision support; that's the idea behind so-called "operational BI," applications with built-in analytics, and performance management software. And it's the reason a joining of SAP and Business Objects makes sense. SAP CEO Henning Kagermann last week talked of blending Business Objects' data crunching capabilities with SAP's industry knowledge for "end-to-end business processes with embedded analytics." Yet the level of integration they'll achieve remains unclear, and SAP is promising to keep Business Objects a separate unit.

SAP has tinkered in business intelligence before, without great success. Tileston at Warner Home Video isn't impressed with SAP's BI tools and data warehouse. Instead, he transports operational data from SAP into a Teradata warehouse, then digs in with Business Objects tools. "Right now, our reporting out of SAP is not very good," he says.

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