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Issue of November 2006 

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Putting BI to work

Although business intelligence (BI) can be considered critical to the existence of most organisations, efforts to gather it— collecting, consolidating and analysing information about the organisation’s operational processes, financial situation, business performance and other indicators are hampered by inconsistent data sources, problems with data quality, an often cobbled-together approach to BI systems, and a lack of clarity about how to take the knowledge gleaned from BI initiatives and turn it into practical and positive changes to the business.

  • BI will be shared among more employees: Companies want to distribute analytical data to a wider range of employees not just the high-level decision-makers, most of whom already have access to BI data, but also middle management, operations employees and even front-line staff. This stems from a belief that workers can do their jobs better if they have the right information to improve operations.
  • Performance management efforts will mature: Performance management involves setting operational goals, designing key performance indicators (KPIs) to serve as benchmarks for those goals, using BI tools to measure and gauge KPIs, and then changing operations to help attain desired goals. However, only 55 percent of respondents say that their companies effectively measure progress towards performance goals. About 34 percent of respondents say the same when it comes to getting KPI data into the hands of employees who can apply them towards improving processes. Only 37 percent believe that their companies effectively change processes that fall short of performance goals.
  • Large companies will need to catch up with their smaller counterparts: Surprisingly, big enterprises are not better at gathering BI data than small ones. In fact, in some cases, it is smaller firms’ lack of scale that seems to help them succeed. Large companies are hampered by having to use tools from several vendors, greater amounts of information stored in separate data locations, and more departments and groups that do not co-ordinate their BI initiatives.
  • All companies will strive to manage their BI efforts centrally: The activities of defining the parameters of BI data, how the information is gathered and analysed, and the types of tools to be deployed are still not centralised by most organisations.
  • Simple reporting for diverse data: Reports delivered by e-mail are by far the most popular medium for BI data output—80 percent of our respondents say so. Spreadsheets are a popular format, used by 71 percent of respondents. Surprisingly, given the high-tech nature of BI algorithms and data processing, as well as the strong reporting functionality built into many BI tools, paper documents are the third most popular output medium. More than half the survey respondents, 58 percent, use paper reports. Less than one-tenth of respondents use reporting tools that are part of pure BI packages, advanced graphics software, mobile applications or software designed just to produce reports. However, almost one-quarter of those surveyed say that they use reporting tools that are part of larger, enterprise applications.
  • BI “alerts” or “alarms,” are not widely used: Almost 11 percent of companies with annual revenue of more than US$10 billion say they use BI alerts. Among companies with sales of less than US$500 million, that number drops to slightly fewer than 7 percent.
  • Taking BI to the masses: Most experts agree that true operational-level BI is still in its infancy. The spread of BI tools to the information worker will rise in coming years. If lower-level, less technically savvy workers are to use BI systems then the software needs to be fail-safe with more intuitive interfaces and requiring less supervision from the IT team. The trade-offs are reduced availability of querying functions in the BI programme.

BI is still used predominantly by high-ranking executives, senior management and middle managers, with extensive support from IT and specialised business analysts. Eighty-nine percent of survey respondents say their senior executives take advantage of BI tools. Even a majority of middle managers, 61 percent, have access to intelligence platforms. The prevalence of BI applications falls off sharply at the lower end of the worker spectrum with only 35 percent of frontline supervisors, and less than 30 percent of non-supervisory frontline workers, having access to BI data.

The earliest BI tools were designed to support general and financial management and, predictably enough, survey respondents with jobs in general management, finance, and marketing and sales have the most access to BI applications that support business and operational decisions.

  • Patching up the solution: Poor data quality, far-flung data sources and disparately formatted data are the major impediments to successful BI deployments. Almost 72 percent of survey respondents say their organisation’s data is sometimes inconsistent across departments. Unreliable methods for gathering data and a lack of standardisation in formatting can contaminate data. The acquisition of companies that use a different IT infrastructure also can make data “dirty” over time.
  • Factors that shape purchasing: The survey aggregate results indicate three primary factors that shape companies’ purchasing decisions for new BI tools, as well as three factors that are of secondary importance, but that still rank highly among a significant portion of respondents.

The cost of tools, its ease of use and ability to integrate with existing infrastructure scores the most votes here. It should be noted, however, that the acquisition costs of BI applications are only a small part of their total cost of operation, which remains stable over time because of the consolidation of many disparate tools and streamlining of processes.

The secondary purchasing factors, all of which are rated “very important” by more than one-third of respondents, are vendor technical support, the tools’ ability to integrate with existing software and robustness of functionality.

About the survey
In March 2006 the Economist Intelligence Unit queried 386 executives on their current and planned use of BI applications. Approximately 57% from western and eastern Europe, 20% from the Americas and 23% from the Asia-Pacific region and other parts of the world replied. Respondents represented a wide range of industries and functions. About 50% of the respondents were CXOs or members of the board. At 49% of the total sample, companies with less than US $500m in annual revenue were the most heavily represented ones.

Future of BI

  • Consolidation and standardisation of BI applications: Traditionally, BI programmes have been a patchwork of legacy systems, custom interfaces and add-on components from different systems and vendors. Today, however, fully integrated and scaleable BI software packages are increasingly available, and in the future they will be the norm.
  • The evolution of technology-driven performance management: Companies interested in performance management are not happy with their progress so far, but the technological components of true business performance management are taking shape. Increasing regulation, particularly in the US and Europe, is pushing companies to improve the reporting that they do on financial data. Those companies that have reached a high level of financial data reporting are expanding that level of reporting expertise into other areas of the business, particularly operational analysis. A BI dominated, technological side of performance management is developing.
  • The growth of software verticalisation: Products designed for specific industries that have their own key measures, will also drive the adoption of performance management. Costs will come down and the learning curves will shorten over a period of time.

Source: Business Intelligence: Putting Information to Work is an Economist Intelligence Unit whitepaper, sponsored by SAP and Intel. The author of the report is Ted Kemp and the editor is Rama Ramaswami.

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