BI and Analytics: All For One

Information has a shelf life even shorter than reality TV contestants. Yet business decisions are often based on information that is nearing its sell-by-date even before it reaches a manager's inbox.

One corporate tool that has been fighting the battle to provide timely information for more than a decade is business intelligence. Despite its longevity, BI is still a way off maturity. Time-consuming and requiring expert analysis in the past, BI is now slowly beginning to be pushed out to the masses.

"Traditionally, companies have used labour-intensive methods to gather business information together for analysis. This has been done offline, both in terms of the people undertaking the analysis and the timing of the analysis," says James Dallas, consulting manager at Deloitte.

"There has been a continual desire to 'close the loop' by feeding back the results of this analysis into operational processes. For this to work, BI must be improved to enable clear decisions to be presented to the front-line worker, who is already doing a full-time job, without having time to analyse non-targeted information," he continues.

"This has already been done to great effect in direct marketing, where customer segmentation based on historical information is used to target marketing campaigns more efficiently. The new challenge is to gain similar benefits from using this information in real-time, by making the BI which is available to the back office available to the front office."

Forward-looking companies are already taking this back-end information generated in the finance department out to the front office. Although front office implies the whole company from CEO to cleaner, in practice it means carefully targeted groups.

Greater accessibility

"I think we are certainly moving quickly down that path. BI has reached 15% of users in an organisation," says Donald MacCormick, VP of analytic operations at Business Objects. "Business intelligence can make a big difference in what at first may seem an unlikely place."

While it is still unusual to use BI on the shop floor, it is beginning to be used by factory or business managers. Hyperion customer Bank of Ireland, for example, has been able to replace a largely paper and Excel-spreadsheet reporting process with an Oracle data warehouse and BI tools. As a result, branch-level managers can compare their branch's performance with other outlets on a weekly basis.

Staff at shirt maker Thomas Pink used to spend hours each week pulling together data from EpoS and mail order systems to create weekly spreadsheets of information. The results were out of date before they were finished. Using Cognos PowerPlay analysis tools, staff have weekly reports, which they can customise, drill down, filter and basically answer their own queries without needing to rely on the IT department.

Pointed at the right targets, BI tools are helping to improve customer satisfaction and reduce costs in departments such as sales and marketing.

"BI has been around a while now, but the technology tended to be used at the departmental level," says Graham Walter, UK managing director of BI tools vendor Cognos. "It hasn't been possible until the last couple of years to deploy on an enterprise scale."

Now - particularly using the Web as a delivery mechanism - there is the potential to deliver information to thousands of users and with minimal training costs.

If these tools are going to be used by general managers, then they have to be simple. "Everyone wants systems that are easy to use," says Mila Burt, UK operations manager at KXEN. "Thus far, BI systems have produced results that have been hard for lay people to interpret. For this reason there's traditionally been a degree of mystique attached to BI, a gulf between analytics and the operational management people who run the business."

Demystifying this information is now possible. But it is not simply better technology that is now making this feasible. A number of other factors are producing the budget and the desire for BI. For one thing, companies have moved out of a major phase of cost cutting and streamlining their business and IT processes and are looking at ways for information to outsmart their competitors.

Compliance is also a driver. When CFOs sign their names to financial reports, they want to be sure the information is truly accurate. That means the reporting across departments and regions needs to be correct. One way to do that is to use tools to get the information, and in particular to standardise those reporting tools across the business. Hardly surprising that BI now occupies the number two slot of IT directors' concerns, compared to number 10 a few years back, according to Walter.

Companies need to map their information in the same way they have been busy mapping their business processes. And as Gartner analyst Andreas Bitterer reiterates: "Everybody wants a single version of the truth. But as long as they don't have a single version of the question they'll never be able to get that."

To get that single version of the truth companies need to consolidate or standardise their reporting across the enterprise.

"We probably talk to more customers about that than anything else," says MacCormick. Companies have five, 25 or even more business intelligence tools from different vendors. How can they rely on this information, if they cannot standardise it across the enterprise?

In many ways, there are strong parallels with the ERP market of a few years ago. In pre-ERP days, there were lots of applications and the links between them were manual. Then a bell rang, and people realised that what you needed was an integrated approach. That bell is now clanging loud and clear in this market. What is different this time is that companies will not go for a painful - and expensive - big bang approach and replace all their BI tools.

"A lot of companies approach this like trying to boil the sea: big budget projects that spiral on for years and years," says Chris Knighton, chief executive of Aspiren, which offers BI on an ASP basis. Instead, companies need to take a step-by-step, piecemeal approach, but this time with the bigger picture of a standardised approach in mind.

Bigger target audience

As MacCormick notes: "If you put an ERP system in you have to go for all or nothing. The luxury with BI is that one good report to 10 people takes your business forward."

Of course, like ERP this is going to be a challenge. But the economies of scale and power that integrated BI can bring companies is making it hugely topical for large corporates.

"The coalface is still far off," says Bitterer. "Organisations have realised that it's not just the top five people in a company and that decisions are made at all levels of an organisation. That is easily understood, but very hard to implement."

Given the challenges, it is not surprising that most companies are on the nursery slopes when it comes to really reaching operational staff. But the benefits and the business drivers are forcing them into action.

"In the good old days, you'd give a group of six people at the top of the company information and they'd drive it out to 600 guys in an organisation," says Nigel Youell, marketing director at BI supplier Hyperion. Based on financial and other data, those six people set the key performance indicators (KPIs) and the plans for the whole business. Yet it is the other 600 people at the lower levels who actually run the business and need that information to modify their behaviour. Senior management setting a target to increase sales by 10% is one thing, but how does that affect how a manager spends his time when he switches on his PC at 9am on a Monday morning?

The human factor

Youell says that companies need to go further than simple information dissemination. People at the coalface need to be able to enter in changes and, in effect, update those plans. Planning needs to be linked to execution. "Obviously you change the plans within parameters. You'd say, I've spent less money here, so I will spend more over here," says Youell. "Before you had business intelligence tools that did all the reporting and an application that did budgeting and the money."

The problem with that is that information on money, or derived from financial performance is backwards looking. "Financial information is always looking in the rear window, while operational information is more forward looking." The Hyperion vision is of a business performance management platform that links the planning and reporting stage. BI tools are one part of that larger vision. Linking reporting and planning means: "The manager at the coalface can set their own plans and properly own their KPIs. BI alone is just a report: it doesn't mean anything."

To give a report meaning it needs to fit into an overarching strategy. "If you don't start with the business case but go down the BI route you potentially won't see best results," says Knighton at Aspiren. He points out that 9 out of 10 companies who formulate a plan fail to execute it. Getting tools to the business coalface will bring the plans and the people closer together. But you cannot swamp people with information and expect them to make sense of it: the key to successful BI is getting the right level of information, to the right people, at the right time.

The ultimate challenge for the industry is real-time BI. "The holy grail of business intelligence is getting real-time BI," says Gerry Brown, head of UK marketing at Micro-Strategy. "It's about getting access to transactional systems and most systems won't do that: they are not designed for it and it would slow down the transactional systems."

Providing tools to the coalface is good for everyone concerned. It means the business people are in control of what they are doing and do not need to involve a third-party to get the information they need. And the IT department is happy because it means less of a burden on their resources.

Information is power

BI is not only taking off because head office decrees it, but because business people at the coalface recognise that information is power. "With BI, once you start to make information available, you start to have people ask to see it," says Walter.

Nevertheless, one of the major roadblocks to BI success is 'the politics of information', as Walter Tan, consultant at Diagonal Consulting, describes it. "Different organisations and parts of organisations are loathe to give up information."

It is simply human nature to object to change, says Gartner's Bitterer: "If you're head of a business unit and using your tool and your own data mart and someone comes along and says your system may be fine but you're going to move to another system, you won't be pleased."

CBR Opinion

As we all know, getting the right information to the right people at the right time sounds straightforward in theory. But like Deep Thought's understated response to the ultimate question in The Hitchhiker's Guide to the Galaxy, while there is a solution, it is "tricky". At least until now. It may have taken the best part of 10 earth-years and millions of software years for BI tools to get there, but companies are beginning to make real inroads into solving the ultimate information question.