Technology alchemists have been promising to turn base data into golden nuggets of information for the last 20 years. Granted they have had their successes but the path is littered with fool’s gold, alongside genuine gems of information that although beautifully formed, arrived too late and at too great a cost to be of much use.
But all that is changing. The technology is finally maturing enough to deliver on its promises just as business intelligence (BI) becomes CIOs’ number one priority. Reduced cost of ownership, aided and abetted by the ability to deliver over the web rather than over a client/server architecture, has also opened up BI’s prospects.
In fact, BI usage is accelerating and spreading so fast that Donald Feinburg, vice-president at Gartner, suggests: “By 2012, BI will be 85 per cent of every business application.”
The future of BI
BI 2.0, as some pundits are calling BI today, is characterised by a whole new vocabulary of promises: it is real-time, operational, pervasive, event-driven, self-service… but it can best be described as being BI for all.
Mark one BI was all about querying data to create reports, basically commenting on events that already happened. Techniques such as online analytical processing and data mining moved BI on further, enabling better analysis of this data to help companies decide future action. But ultimately BI 1.0 is all about analysing historical data and it requires specialist effort.
BI 2.0 allows general business people to make real-time decisions using personal analytical tools. They do not need to know how to query the datawarehouse, anything about data structures or indeed where the data comes from to help them make these decisions. And rather than send out reports to people as a matter of course, modern, event-driven BI will only alert users when something out of the ordinary happens.
The next step for BI then, is to become “more self-service, more self-serving”, says Bill Hostmann, research director at Gartner. In a way, BI is being ‘googleised’, and moving towards a situation where people make their own searches as and when they need to.
Hostmann outlines the different levels of BI sophistication. Basic level companies use spreadsheets and produce one-off reports. Then companies may get a datawarehouse but BI is still on a project-by-project basis. Next level – and where many companies are today – is to begin to use BI for competitive advantage. But the ultimate aim and the vision of BI 2.0 is for “BI to be driving a business transaction, not analysing it”, he says.
"Time and time again I see organisations making significant investments in BI but they are still not addressing data quality"
Ian Charlesworth, senior analyst, Ovum
To do that it needs to be providing up-to-date information. According to a recent study commissioned by the Evaluation Centre, a website offering independent advice on vendor products, 16 per cent of firms are already using BI or corporate performance management tools to analyse data in real-time, one of the BI 2.0 buzzwords. But for companies like Inspired Broadcast Networks, real-time is overkill and ‘appropriate time’ would better describe what is needed.
Inspired Broadcast Networks provides networked gaming terminals to pubs, casinos and betting shops. Even though, in theory, information from terminals is updated every 15 minutes, next-day updates are sufficient. Betting company, William Hill, earns more than 30 per cent of its profits from their gaming terminals in betting shops. Using Cognos 8, Inspired can provide them with information on individual terminals’ performance. “Inspired is about operating pay-to-play terminals and BI helps to decide what content to run and informs sales about what’s working and what isn’t,” says Scott Kieh, head of BI at Inspired Broadcast Networks. William Hill can quickly tweak the content to appeal to local environments.
As this type of business information becomes available and pervasive to more business users, then as Ian Charlesworth, senior analyst at Ovum, points out: “BI will cease to be a separate activity and instead become an embedded part of everyday business.”
For example, when someone rings into a call centre, the service representative will be able to call up customer details and be able to offer prompt service and appropriate products.
So what should you do now to take advantage of BI? Medium to large firms can stack numerous BI vendor platforms, gained through acquisition or simply the legacy of a devolved company structure. From a straightforward economy of scale perspective, rationalising these tools will save money, increase negotiating power and simplify management and central reporting.
Knowing your place
First off, you need to figure out where you are. It sounds obvious but Feinberg believes it is too easily overlooked. You also need to forget about taking a technology approach. As Feinberg quips: “The difference between men and boys is the size of their tools.”
Formulating a cohesive business strategy has to come before any purchasing decisions. So before deciding on a technology path, you need to figure out how mature your organisation is and analyse how committed it is to BI from a business perspective. And think about data. “You are going to need a data strategy across the organisation, especially now data is going to be used across the organisation as part of BI,” says Feinberg.
"Unless you’re hiring the best electronic engineers and computer science graduates every year, you’re not ready to use open source in mission-critical areas"
Donald Feinburg, vice-president, Gartner
Control of BI is moving away from the IT department to line of business executives – and so is the budget. If your systems integrator, chosen vendor or IT department has not sorted out data quality, then this investment will be wasted. Much of the last decade has been about data – data warehousing, quality, integration and cleansing. Only with that data properly cleansed and housed can BI do its job properly.
“Time and time again I see organisations making significant investments in BI but they are still not addressing data quality,” says Charlesworth. The Evaluation Centre study finds that many companies are struggling to release the benefits of BI and data warehousing because data volumes are growing fast, with one in 10 firms saying their data waistline has expanded by 200 per cent over the last three years. If people do not trust the data, they will not use the technology.
Responding to users
BI 2.0 is not about ripping out what is already there. It is evolution, not revolution. Instead of trying to coax users away from their comfy Excel screens, BI vendors are now incorporating that technology into their offerings. In other words, they are adapting to what users want rather than imposing their rule.
“Excel is pervasive and its popularity is its own Achilles heel,” says Charlesworth.
“If you export data into an Excel spreadsheet you lose all data quality. In the BI community, Excel is seen as an enemy and the objective is to get people to migrate from Excel. But they are fighting a losing battle. The other option is to embrace it and some BI vendors will allow you to push and pull data into Excel.”
Two key technological trends that are propelling the BI movement are SOA and metadata. “I can’t stress how important metadata will be,” says Hostmann. “As we start to get more cross-functional, it will be a key way to evolve applications without changing the hardware.”
Not opening up
What is not making such an impact – at least not yet – is open source. “Unless you’re hiring the best electronic engineers and computer science graduates every year, you’re not ready to use open source in mission-critical areas,” says Feinberg. Another area that is beginning to take off is Software-as-a-Service, where companies can access information via a hosted service. This is all part and parcel of the BI market opening up its services to mid-size or smaller companies rather than its large organisation homeland.
Alongside a gear-change in the technology, there is a shift on the vendor side, as some of the major names in software sweep the landscape with speed and hunger, swallowing BI and related companies as they go.
In March, Oracle made the latest in a long line of BI acquisitions with a $3.3bn cash offering for Hyperion. Oracle, SAP and Microsoft are all getting stronger in this space. But investment in this area could come from the likes of BEA and Tibco, or even Autonomy or Google in the long term. Similarly, the areas of business process management, content management and other areas of information management are moving together as vendors try to create a more cohesive answer to general information needs.
While the number of vendors is consolidating, companies now have the choice between picking a vertical suite or a best-of-breed approach to BI. Both are valid choices according to individual company requirements. Regardless of whether it is best-of-breed or a vertical solution, CIOs will still have the problem of persuading users to change the way they work. “It’s quite a cultural change. Everyone has different experiences and likes their own system,” says finance projects manager Kathryn Jackson at the Laurel Pub Company. So, are we there yet in terms of what BI can do? Of course not. But BI does finally seem to be making serious steps into the mainstream.
“I think we can say it is starting to reach maturity but we are barely scratching the surface of how to properly exploit information. That shall require a lot more sophisticated understanding of values and opportunities of information,” says Charlesworth.