Despite all the money invested in IT systems over the years,
a study byIBMreveals that two-thirds of UK mid-market
businesses still rely on error-prone manual processes when it comes
to dealing with data, the lifeblood of any effective 21st century
business. It is a problem thatbusiness
intelligence(BI) tools were supposed to have
solved.
It is not just mid-market firms that have not yet come to grips
with the issue. Enterprise-level organisations seem equally adrift.
The conspicuous
failure of risk assessment throughout the financial services
sector in recent months is testament to that.
Research firm Gartner defines the BI lifecycle as three distinct
stages: organising, cleansing and collecting data; delivering that
data in a consistent and appropriate form; and using that data for
effective decision-making. It is at the last stage where things are
still falling down. Most companies still fail to link BI to "the
last mile" of business decision-making, which means all that
investment in BI technologies is going to waste.
"Despite unprecedented information availability, several
imperfect decisions were made in both public and private sectors in
the past decade," notes Gartner analyst Kurt Schlegel. "It is not
enough to provide voluminous access to information and expect good
decisions to be made as a result."
An intelligent investment
Yet BI spending continues to grow, according to Gartner's client
research. A poll of 1,500 CIOs worldwide at the start of this year
revealed that the top spending priority, at a time of essentially
flat budgets, was BI. And the trend seems set to continue. In 2008,
companies spent $8.5bn (£5.2bn) worldwide on BI technology,
according to
Forrester Research; by 2014, that number is set to hit
$12bn.
So where is the money going? The number of big league BI
suppliers is shrinking through consolidation, with
SAP acquiring Business Objects,
Oracle acquiring Hyperion, and
IBM acquiring Cognos, and the enterprise applications suppliers
that CIOs know and trust for ERP and CRM have added BI
functionality to their portfolios.
This means that some five suppliers account for nearly
two-thirds of the market. Based on Gartner's figures, SAP/Business
Objects leads the BI pack with 24% of the market, followed by SAS
Institute and Oracle, each with 14.6% of the market, IBM/Cognos
racks up 11.3% and Microsoft 7.7%. This has come at the cost of
slower growth and smaller market share for independent BI
suppliers, although firms such as Microstrategy, Information
Builders, SPSS and Actuate continue to have a profile in the
sector.
What's on offer
For the BI technology buyer, what this leads to is an
interesting tension in the market: do you go to the one-stop
applications shop for your
BI along with your ERP and your CRM and so on, or do you go to
a smaller specialist firm? The former might boast an integrated
stack offering and a degree of financial stability and longevity
that smaller firms cannot offer; the latter might offer a more
focused, deeper expertise in the specific area of BI and
analytics.
The gap between the two ends of the scale are becoming more
marked, as are the messages from the suppliers. SAP, for example,
wants to pitch its
BI offerings as an integrated part of its wider portfolio and
extend the functionality to line of business people, not just BI
experts.
It says it can offer
BI "simple enough for a CEO to use", claiming that it has the
"iTunes of business intelligence" in the form of its recently
announced
SAP BusinessObjects Explorer. This combines an in-memory
database, a custom-built search engine and a user interface that
SAP says is similar to the interface of
Apple's iTunes software.
"If you know how to use iTunes, you can be a great business
analyst looking at your own data in a matter of seconds," claims
SAP CEO Leo Apotheker. "This will allow any user, not just expert
users, to have access to data in a split second. We can start to
close the loop between strategy and execution. We can help people
to go from 'I think this is a good decision' to 'I know this is a
good decision'.
"I believe that BI is a genuine game changer, provided that you
make it accessible to the common human being," he argues. "If you
need a PhD in statistics just to run a BI model, that is dangerous
because it creates a closed world. If you look not only at
statistical data, but at the complete set of data, and are able to
do that at lightning speed, then you can
reduce risk.
"You cannot eliminate risk entirely. Any question about the
future has a degree of risk attached. It is just a question of how
much risk you have. If you can link your BI systems with your
execution systems, you can at least take corrective action. The
more people who are willing to do this, the more transparency there
can be and the more we can manage systemic risk. When you see what
has gone on over the past year [in the economy], I think we can put
to bed any question of whether IT still matters. Everything that
has happened in the economy would not have happened if IT had been
used in a different manner."
Specialist
knowledge
But such pronouncements from a broad-based enterprise
applications player which happens to have added BI to its arsenal
do not impress the smaller BI specialists, which are adamant that
not only does size not matter, but it may further complicate an
already over-complicated market.
Anthony Deighton, senior vice-president product marketing at
QlikView, says, "SAP tells buyers it has 'the biggest, deepest,
most intergalactic stack of software'. Well, we don't. I want them
to sing from my hymn book, which is about simplicity. SAP's BI
iTunes angle is a nice idea, but the reality does not live up to
the marketing. Users do not want all that, they just want it to be
easier to use. What the enterprise software suppliers do is expose
the complexity."
But SAP has marketing clout and brand presence that the likes of
Qlikview cannot even begin to dream of at present - surely that
must prevail in a market that has seen such rapid and extensive
consolidation? No problem, argues Deighton, the proof of the
pudding is in the eating, not the marketing.
"Our sales process is all about showing people their
data in QlikView. We let
them explore it themselves," he says. "It is not a traditionally
competitive battle, it is about changing the dimension of
competition. There is a difference between bravado and sales. If
you want a simple answer, we can do it for you. If you want complex
solutions that need intergalactic visions, then you go to SAP."
Big name, safe choice
Nonetheless, in an age of constrained spending and tightening
budgets, many organisations will veer instinctively to the "safe
pair of hands". It is the modern update of not getting sacked for
buying IBM: add Oracle, SAP and Microsoft to the list and you have
a shortlist for BI procurement that most organisations would be
able to live with.
To that end, expect to see the other enterprise giants making
ever more pronounced BI plays as a competitive differentiator. For
example, Microsoft's Gemini and Madison initiatives are extensions
to a BI strategy that already includes self-service analytics based
on Excel and data warehousing options through its DATAllegro
acquisition. "BI is something that we take very seriously,"
declares Guy Weismantel, Microsoft's BI marketing director. "By no
means are we pulling back. We are in this to win."
Making BI succeed
But then so are all the other major players - which takes us
back to IBM's findings about how poor a track record organisations
have in using this technology. The question must be, if BI is to
remain a long-term major play for the software industry big
hitters, what will they offer to address the shortcomings
highlighted by IBM?
Expect to see technological innovations, of course, such as a
move by BI vendors into
cloud computing or the emergence of packaged solutions that can
offer can address pre-defined problems. But it may be more about a
change of focus than the introduction of new technology for
technology's sake.
"We have seen a 20-year investment in applications that automate
business processes; we see the next wave as investment in
applications that optimise processes and take the value of
investment in data to drive
better decision-making," says Rob Ashe, general manager,
business intelligence and performance management at IBM.
"This is not a new problem we are trying to solve, but we are
constantly seeing new capabilities that make it more understandable
and faster and easier to do. Right now, we are at the intersection
of a number of new trends and capabilities that will fuel the
growth of this whole area," he says.
Picture by Credit OJO
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