Intelligence or Info Overload? - InformationWeek

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2/17/2004
07:26 PM
Rick Whiting
Rick Whiting
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Intelligence or Info Overload?

Today's breakneck business climate has prompted some companies to adopt real-time business-intelligence systems. But how much is too much?

For Canadian paper-mill operator Abitibi Consolidated Inc., adapting to constantly fluctuating electricity costs--the result of last year's deregulation of the Ontario power industry--can mean the difference between operating its five Ontario plants at a profit or a loss.

To smooth out costs, Abitibi has implemented a real-time system that constantly monitors energy consumption at its newsprint plants and every five minutes compares that data to electricity prices posted on the Web site of the Independent Electrical Market Operator, which oversees Ontario's wholesale electricity market. "We get readings every minute about the energy consumption at the mills," says Guy Roussel, senior analyst for IT planning. If energy prices get too high, production can be cut back or shut down.

Abitibi's use of real-time business intelligence gives it an edge. But some companies, such as roofing materials manufacturer GAF Materials Corp., still aren't sold on the need for that kind of capability. GAF collects production data from its 25 plants and replicates it each night to a database at its headquarters, where it's used for cost-management planning and reporting. With the IT systems it has in place, GAF could collect production data every few minutes. But to what end? "I don't know if any business would be able to make decisions on data that comes in that fast," says Rick Stevenson, director of business-intelligence and supply-chain systems.

There has been a good deal of buzz lately--both pro and con--among business-technology managers and IT vendors about real-time business intelligence. The term "real time" is a bit of a misnomer, however, since it's been used to characterize both the updating and analysis of data every hour, every few minutes, or instantly. In some cases, real-time business intelligence taps directly into operational systems like supply-chain applications or securities-trading systems--a monumental change from updating data warehouses weekly or monthly. Any way you look at it, real-time business intelligence is about keeping pace in the accelerating world of business.

But it's not for every company and certainly not for every application. For traditional business-intelligence applications, such as analyzing sales data to detect trends or profile customers, investing IT resources to assemble a complex real-time business-intelligence system can be a waste. A business analyst trying to discern seasonal sales patterns, for example, doesn't need up-to-the-second data.

Yet as businesses change, so could views about the value of real-time intelligence. When IT research firm Gartner asked 540 companies in the United States and Europe last year how current data needs to be for analysis, just 11% said data should be updated instantaneously and continuously. But those same companies, anticipating continued acceleration, expect by 2006 that 29% of the data they use for analysis will need to be instantaneous and continuous. In contrast, the need to update data monthly for business-intelligence applications will drop from 17% to 3% during that time.

Growing demand for real-time business intelligence correlates to the shift in how that information is being used. Traditional uses have been for strategic analysis and planning carried out by top management, like sales forecasting, marketing-campaign analysis, and financial consolidation. Since these functions relate to longer-term planning and strategies, there's no compelling reason for real-time analysis.

The sweet spot for real-time business analysis is on the factory floor, at the reservation desk, or in the customer-service center, where operational managers and staff-level employees use it as a tactical tool. "The more real time you get, the more tactical you are," says Philip Russom, an analyst at Forrester Research.

That's a view shared by Teradata, a data warehouse vendor and division of NCR Corp. "Real-time business intelligence derives maximum value when you push it out to the front lines of your organization," says Teradata's chief technology officer, Stephen Brobst. While Teradata's products once epitomized the traditional batch-loaded, non-real-time data warehouse, today its system's "active data warehousing" architecture makes it easier to build data warehouses that support both strategic and tactical data analysis.

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