Using business intelligence to steer through the recession

Business intelligence is one of the few areas in the IT sector to have remained buoyant during the economic downturn, as organisations use the technology to help them reduce costs and optimise operations.

Business intelligence is one of the few areas in the IT sector to have remained buoyant during the economic downturn, as organisations use the technology to help them reduce costs and optimise operations.

"At a time when there is a tendency to cut costs indiscriminately, smarter companies are using business intelligence tools to help them weather the turbulence," says Helena Schwenk, senior analyst with Ovum's software division.

Business intelligence has moved into a new phase over the past couple of years, offering tools for everything from better supply chain performance to more incisive sales and marketing campaigns, sophisticated HR management and better overall efficiency.

A few years ago, ascribing these capabilities to business intelligence systems would have been considered a little far fetched. In the early days of the technology virtually all information was historical, structured data, such as spreadsheets and databases, meaning that the "intelligence" part of business intelligence was retrospective.

Unstructured data

Analysts estimate that structured data now makes up only about 20% of most organisations' internal data pools. The other 80% is unstructured data emanating from digital communications and the web, as well as things like customer loyalty cards.

A growing number of products are available to help organisations squeeze value from these vast and rich repositories of information, and to match them against existing historical data to help companies create a more immediate picture of their business, markets and customers and predict the future with more confidence.

Among these is 3D visualisation, which is proving to be effective especially in helping large organisations such as transport authorities and councils identify and remedy inefficiencies.

Business intelligence software is also evolving to make it easier for businesses to match their own data with external sources. Credit checks are one example where this can be useful.

"Don't just use your internal data but look at what you can use from the outside world to assess risk," says Nick Millman, senior director for information management services at Accenture.

British Airways

Airlines have been hit especially hard by the recession, and spending has been slashed across the board. However, when British Airways cut its IT spend by a third earlier this year, business intelligence was one area spared the broom.

The airline uses business intelligence technology from Silicon Valley spend management specialist Ariba, which it says has led to significant savings. BA also attributed the streamlining of direct marketing campaigns and the recent thwarting of a fraud involving bogus travel agents to business intelligence software.

Risk management

Risk management is one of the biggest drivers for business intelligence. A survey in December 2008 of 250 senior executives in the UK found that 40% of business decisions are made on judgement alone, but 60% are made based on business data.

"Business intelligence tools are becoming more analytic, more forward looking," says Millman.

"Organisations are building predictive models, reflecting the fact that management teams are becoming less comfortable making decisions on gut feel and want data to back them up."

Business intelligence is playing a bigger role in areas such as human resources; for instance, enabling companies to identify strengths and weaknesses among staff. Concerned about an exodus among its senior ranks, Google developed an algorithm it says will help it predict when staff might be thinking of leaving, possibly before they know themselves.

Call centres

But business intelligence tools are no longer the exclusive domain of managers and key decision makers, rather they are being more widely dispersed throughout organisations. In call centres, for instance, this has led to an improvement in customer service as more information means fewer questions and faster responses.

"Knowing about your customer when they are on the phone with you is more valuable than waiting until you get the monthly report," says Millman.

The emergence of SOA (service oriented architecture) products incorporating business intelligence, as well as the growth of open source platforms, has encouraged wider use of business intelligence tools, enabling staff at all levels to make more informed decisions.

"Business intelligence is designed to support the decision making process," says Schwenk. "Properly used and implemented it can help companies weather the economic storm."

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