Business intelligence is evolving. In the past, business intelligence implementations tended to be confined to the IT department and to business analysts or "power users".
However, there is now a much greater focus on getting wider adoption of business intelligence among mainstream line-of-business users.
"Business intelligence tools help users answer business questions and measure and monitor business performance at every level of the organisation against clearly stated goals and objectives," says Nigel Rayner, research vice-president at analyst firm Gartner.
Fellow research vice-president at Gartner, Andreas Bitterer, says business intelligence is the number one priority for CIOs in 2007.
With annual sales forecast to surpass £1bn in Europe, the Middle East and Africa, technology buyers are eager to avoid the mistakes of the past.
The good news for prospective buyers is that companies pursuing the twin goals of standardisation and performance management have plenty of choice when it comes to suppliers - the business intelligence market is a very crowded place.
"Over the years, many firms invested in business intelligence software from multiple suppliers. Often, each department bought its own business intelligence systems, resulting in an explosion of different tools across the business," he says.
"As a result, there is simply too much software out there from different suppliers and no single approach to analysing data. Reduce the number of tools and you will see the benefits," he advises.
A single platform enables organisations to roll out business intelligence tools to a greater cross-section of employees. That is good news for suppliers who sell business intelligence software on a per-seat basis, of course, but it may also be good news for customers who are looking to buy into another key business intelligence trend: performance management.
Among the so-called "pure plays" - companies such as Business Objects, Cognos, Hyperion and Microstrategy - there is now very little product differentiation, says Bitterer.
"This is a maturing market and products are becoming pretty well commoditised, so there is lots of overlap between suppliers."
This is because these companies have grown by acquisition for many years, filling out gaps in their portfolio in the process, says Bitterer.
"What functional differences remain between the products are pretty subtle and these suppliers are primarily competing on pricing, licensing models and support."
This group, however, is facing increasing competition from "mega" suppliers SAP, Oracle, and Microsoft.
These suppliers are well- positioned because they can sell their business intelligence tools into large installed bases, where existing customers may be prepared to compromise on function for a piece of software that will slot easily into their existing infrastructure.
For Paul Kay, group business systems manager at tea company Tetley, the choice was obvious.
"We run the bulk of our business on an enterprise resource planning (ERP) system from SAP, so when it came to business intelligence we would have needed a pretty compelling reason not to choose SAP Business Warehouse as our business intelligence tool of choice," he says.
"It was bundled with the SAP Netweaver integration platform, which we had already paid for, plus all the data that would populate the warehouse was consistent with SAP formats, and we had considerable SAP skills in-house," Kay says.
Choosing from the third group - the "up and comers" - is perhaps more of a gamble. These companies tend to be far smaller and their long-term viability less certain than suppliers in the first two groups.
However, they often boast features such as in-memory analysis for improved performance or tight integration with Excel spreadsheets. These features make them attractive to smaller customers, companies with a limited analysis problem to solve, or in niche industries, says Bitterer.
Regardless of what business intelligence supplier is selected, extending business intelligence to employees at the operational level is becoming vital. However, this is a complex task that few organisations have got right so far.
According to market research company Intelligence Business Strategies, operations managers and business analysts account for 80% of tools usage, while only 10% of users at the "coalface" of the company have access to any form of analytics.
The results of this inequality are clear: top management sets strategic goals for the business, but employees on the lower tiers are unable to work towards them effectively because they are not able to view - and more importantly, act upon - the same information.
For that reason, Gartner recommends that companies establish a business intelligence competency centre - a cross-functional team of employees from both IT and the business, responsible for supporting and promoting the use of business intelligence tools by employees.
Those that do not risk losing control of their business intelligence strategy and jeopardising the organisation's strategic objectives, warns Gartner.
Electrolux, the Swedish home appliance firm, is taking steps to guard against this.
However, the company's project, based on Cognos business intelligence technology, has come up against a number of challenges since it was launched two years ago, says Michael Langendorf, head of the business intelligence competency centre at Electrolux.
"Getting funding to set up the centre was possibly the most difficult thing to do. A business intelligence competency centre is, after all, an enterprise-wide effort and, financially speaking, needs enterprise-wide support and sponsorship.
"One thing we would do differently is to secure that funding over a number of years to ensure a smoother ride for the project," he says.
The second biggest challenge, according to Langendorf, was "selling" the concept of the centre to a large, fragmented organisation where business intelligence was often organised along territory lines by individual country managers.
"Employees in different countries and different business units were used to developing and using their own business intelligence systems and were inclined to protect those tools. They were also very protective of what they perceived as their 'ownership' of information," he says.
Here, Langendorf has been tough, completely centralising the purchasing process for business intelligence software licences so that unauthorised tools do not "slip in under the radar".
At the same time, he has outlined a clear roadmap for existing business intelligence tools and embarked on a data integration project that will enable Electrolux employees to view profit information down to product level - "but it is a real task", he says.
Despite these headaches, Langendorf is confident that the business intelligence competency centre will pay off in the long run, enabling Electrolux employees in sales, marketing, finance and manufacturing across multiple territories to access a single view of corporate performance.
"The centre will completely eradicate the 'information silos' that exist within Electrolux," says Langendorf.
"The business information centre is the only way to achieve a single version of the truth and the only way we will ever be able to compare accurately the business performance of individual business units.
"And as we get nearer and nearer to that goal, the benefits are getting clearer," he says.
Movers and shakers
- Business Objects
- Information Builders
- SAS Institute
- 2005 market growth: 7%
- 2005 market share: 64%
- 2005 market growth: 54%
- 2005 market share: 22%
Up and comers
Business Intelligence in practice
Yorkshire Building Society
When it comes to using business intelligence technology, staff at the Yorkshire Building Society are by no means novices.
Chief operating officer Robert Jackson says the society has been using a wide variety of business intelligence tools to analyse its operations data for 15 years. These include Microsoft Excel spreadsheets, home-grown SQL-based reports, and a number of legacy business intelligence tools from defunct supplier Gentia.
But thanks to a rethink in the way the building society purchases and implements business intelligence technology, ad-hoc systems will soon be a thing of the past. In April 2006, Yorkshire Building Society made the decision to standardise on tools from a single business intelligence supplier, Business Objects.
"We decided that we needed to take a broad, strategic view of where we want to go with business intelligence in the future. It seemed to us that if we did not settle on one supplier, then everyone would go off and buy whatever they wanted, whenever they wanted it.
"What we were looking to achieve was consistency of approach, consistency of data and consistency of skills," says Jackson.
Chubb Europe Insurance company
Chubb Europe uses Cognos business intelligence tools to interrogate its Oracle-based datawarehouse, EMIR (Enterprise Management Information Repository), and report back on different areas of its business. In a phased roll-out dating back to 2003, Chubb Europe has introduced tools to measure its financial performance in terms of profitability, as well as the performance of third-party brokers, its internal claims department, and the individual products in its portfolio.
"Data can be 'sliced and diced' according to industry segment, size of policy, size of loss, broker or broker group, and many other dimensions," says Peter Thomas, vice-president of European enterprise IT at Chubb.
"This allows us to identify growth opportunities and capitalise on the most profitable parts of the business. To my mind, it is no coincidence that profits have increased as usage rates for EMIR have gone up - in both cases, way beyond what was anticipated."
BI tools at a glance
These products are also known as extraction, transformation, and loading (ETL) software.
They are designed to combine information from multiple sources to feed a database or datawarehouse.
Dashboards and scorecards
These products gather key corporate performance indicators and display them in a single, highly graphical interface. Typically associated with executive users, they may also support goal setting, collaboration, and standard business methodologies.
These products distribute reports efficiently to large groups of users inside or outside the organisation. They include additional security, management, and distribution features that are lacking in simple operational reporting.
Operational or embedded reporting
These products provide the reports for the systems used to run the organisation on a daily basis.
Operational or embedded reports are often seamlessly embedded into applications. Examples of operational reports include invoices and payroll slips.
These products are designed for information analysis in a particular area of the business, such as human resources, finance and supply chain operations.
Querying and analysis
These products are designed to give business users and analysts autonomous and interactive information access. Users are not limited to the subset of information available in a particular report or cube, but are able to ask new questions and analyse any of the information stored in the database or datawarehouse.
Read more on business intelligence:
Comment on this article: firstname.lastname@example.org
This was first published in February 2007