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Issue of January 2003 
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Techscope 2003: Business Intelligence
Business Intelligence: Coming of age

The Business Intelligence market has transformed significantly in 2002. New technologies have emerged and merged with existing ones, changing the market's perception of BI, and forcing vendors to deal with a different marketplace. by Gourish Hosangady

The world is rapidly moving towards convergence and a new business and connection paradigm is emerging: c-commerce. Here, intellectual capital will move to the mainstream of enterprise assets. Technology and services for enterprise knowledge management will evolve to support the extended, collaborative enterprise. Surviving the information flood and effectively managing it will be a critical success factor for enterprises to survive and have a distinct competitive edge.

Thus in a c-commerce business world 'knowledge and information' will be the basis for giving an enterprise its competitive edge. This is where Business Intelligence (BI) comes in. But what is Business Intelligence? Currently, in India, BI as a concept is not clearly understood, typically being limited to either a traditional database analysis tool or mistaken for a concept similar to market intelligence.

In a line, BI solutions strive to manage the onslaught of data flood and eliminate 'gut feel' with empirical data analysis. It is a broad category of applications and technologies for gathering, storing, analyzing and providing access to data to help enterprises make informed business decisions. Typically, BI applications include decision support systems, query and reporting, OLAP, statistical analysis, forecasting and data mining.

Business Intelligence therefore is the foundation on which c-commerce rests. It offers focussed solutions for current front-end applications such as CRM, SRM, Risk Management etc. It should not be confused with traditional database analysis or datawarehousing. It is not a technical tool for tactical implementation but a strategic decision that makes sense of business data.

For effective implementation of a BI solution, the de facto condition is a solid and reliable data warehouse. Data warehouse is a subject-oriented, integrated, time-variant, non-volatile collection of data, cutting across the enterprise. Until there is a repository of accurate data across the enterprise value chain, application of BI tools to analyze and aid in strategic business decisions is impossible. Currently, data integrity, found wanting in most enterprises is the most difficult and resource consuming stage of BI development and deployment.

Having said this though, BI in the near future will be profoundly different from the way it is viewed today. According to Gartner, the Business Intelligence market has transformed significantly in 2002. New technologies have emerged and merged with existing ones, changing the market's perception of BI, and forcing vendors to deal with a different marketplace.

This is clearly reflected in the Frost & Sullivan report on the Business Intelligence market in India, wherein BI has been categorised to include query & reporting tools, data warehousing & mining technologies, and business performance management. As per the report, the BI market was estimated at Rs 26 crore for Jan-Dec 2001 and is expected to grow by 40-45 percent in 2002, i.e. approximately Rs 37.5 crore. This is an indication about increasing levels of awareness of BI, even though implementation at a strategic level is yet to pick up.

Current Scenario
In the current scenario, according to Gartner, forward thinking Type A enterprises (10-15 percent of enterprises) understand the importance of BI at a strategic level and are investing accordingly. They are building BI competency centers and assessing the impact of information on the enterprise and business processes, to use BI in a comprehensive and integrated way. Many Type B organisations (50-60 percent of enterprises) also seek BI, but in a less integrated way. Much of this is driven at the departmental level in a discrete fashion. Type C enterprises (20-40 percent) are those that have either stalled or dramatically reduced investment in BI and are trying to consolidate existing systems and software to 'save money'.

Thus, at the outset, a majority of BI solutions have continued to be implemented on an "as needed" basis, and at a departmental level. And as enterprises continue to move toward risk aversion, it is evident that the vendor success in the last quarter of 2002 will be based on financial and product stability and service excellence. In keeping with the underlying market dynamics, the BI market in 2002 has experienced a limited/flat growth with enterprises expecting more from their vendors than ever before. The result is a tough market in which consolidation is inevitable in the immediate future—one in which only the fittest will survive.

Wait and Watch
BI solutions are thus in an evolving market that has immense potential for growth, albeit slowly. Further, innovation has continued although at reduced levels. The key reason for this has been the blurred understanding by the target audience of the concept itself and its scope and benefits thereof. Compounding the problem has been the huge past investments made by these enterprises in applications, with negligible return on investments.

Thus, the 'wait and watch' approach continues unabated—with enterprises in no mood to invest and deploy new applications as BI. So despite the temptation to rush to the "next greatest thing," most enterprises—particularly the majority of technologically mainstream Type B enterprises—are continuing to focus on improving the use of the applications they already have.

However, the underlying BI market dynamics are slowly but surely changing. The trigger has been the emerging trends in enterprise application software. Gartner says the year 2002 has been a turning point for enterprise application software. This is evident from the increasing number of users' expectations aligning with business objectives. Alongside, a growing number of vendors are delivering products that are more of a solution and less of a tool. Further, Gartner goes on to predict, this trend will continue in 2002-2003 with the beginnings of a model wherein application software emerges as the operating system for enterprises.

This will have direct bearing on the BI market.

To elaborate, with the growth of large-enterprise application suites this year, vendor software has become more closely intertwined with business processes. With this comes the realisation that results from enterprise applications deployed will be best achieved by using a set of applications that will cause and result in optimal business change. Mere automation of functions will typically prove to be adequate. In line with this, key decision makers have started realizing that the path to business change via sound business strategies is based on knowing and understanding the underpinnings of business—or implementing BI solutions.

With this, the year 2002 has marked the beginning of the age of BI. Undoubtedly, going forward, failure by enterprises to begin leveraging the growth in analytic capabilities will certainly place them at a competitive disadvantage—a situation that will make the difference in survival in a world gradually but surely moving towards c-commerce.

The writer is CEO and Managing Director, SAS India

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