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 organisations 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 output80 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 organisations
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.
|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
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.