Realising the potential of Business Intelligence

Many organisations now have BI software, but few are reaping its full rewards

Business Intelligence (BI) as a term has been around for about 50 years. It refers to technologies, applications and practices used for the collection, integration, analysis and presentation of business information.

Such information can be gathered by a data warehouse, and then sliced and diced using analytical software. The information thus extracted, such as key performance indicators, is then presented in various ways — as a scorecard or in a dashboard, for example.

But, despite the technology having been widely available for a couple of decades, many businesses are not using BI to its full potential.

Research analyst firm IDC recently issued a wake-up call to companies lagging behind in the use of business intelligence in their operations.

IDC says there is a widening gap between BI “haves” and “have-nots”, as decision-making moves down from top management to those on the front line. However, many businesses still rely on gut instinct for decision-making, rather than analysing sales and other company information to make better informed decisions. But, businesses perform better if they make better informed decisions, say BI suppliers.

The recent entry of Microsoft into the BI market will make business intelligence tools more affordable for businesses, says Microsoft Business Solutions marketing manager Ben Green. He points to a recent Gartner survey showing BI as being the top technology priority for CIOs in both 2006 and 2007.

Green says companies’ systems already contain a lot of data, but, while they have the technology, they don’t know how to manage it properly to get the best insight into the business.

“If you cannot measure something, you cannot manage it,” says Green.

And, with companies increasingly setting key performance indicators around sustainability, triple bottom lines, amid other issues, as well as the usual financial reporting, more sophisticated tools are needed.

Despite this, Green quotes an Information Week article that says just 8% of firms are using BI tools.

“It is the domain of a privileged few, but the way Microsoft sees it, every worker should have BI at… their fingertips.”

Microsoft’s entry into the BI market should simultaneously boost and consolidate the market, in a similar way to when the company moved into the ERM and CRM markets.

Mark Ramsay, leader of the New York-based centre of Business Optimisation, who visited Wellington this month, told Computerworld that New Zealand’s early adoption of electronic banking has meant companies have already captured a lot of valuable information.

The country’s small size has also allowed it to use more advanced BI and analytics, putting it ahead of China and emerging markets.

Ramsay says BI means companies can take ever increasing amounts of data and use that information to inform their business actions.

“Several years ago it was about providing access to information. [Now] there’s so much information about, it’s not about accessing information but leveraging it and turning it into a specific action,” he says.

“BI is now evolving into the use of specific solutions to address specific business problems.”

For example, in the supply chain constantly updated information about the flow of products through the distribution network and logistics can help retailers minimise stock levels when this is tied to knowledge of what is being sold and where. It also means retailers are better able to ensure a store will have an item in stock.

In electronic commerce, BI is also being used to understand consumers and, by analysing their patterns of behaviour, it can also help in detecting fraud.

It is also becoming increasingly useful in marketing, where it can help companies devise the right promotions and offers, and aim these at targeted customers, rather than using the more scattered approach, which results in customers receiving offers they don’t want.

“What we are seeing now is that the use of real-time analytics is driving attention down to interesting areas to take action on. The collapse of time for the BI solution has dropped from quarterly, 20 years ago, then monthly, then weekly, and now daily and in real-time,” he says.

It means a retailer, for example, can view stock in any of the chain’s stores.

In addition, providers can also offer solutions that analyse people entering stores and can detect strange behaviour too. Facial recognition and biometrics are even involved in some BI processes now. Systems are also beginning to cope with unstructured data, like video.

Ramsay says BI has shifted from having a technical focus to having a solutions focus, to better meet business needs.

“Business Intelligence is different to an operational project in that it is never finished. It’s a journey that will continue to evolve as the business climate changes,” he says.

Ramsay advises: make sure a BI project has a business sponsor and be prepared for challenges with the data — ensure data is “cleansed”, so all the disparate information systems integrate, to give “one version of the truth”.

Systems integrators Gen-I and Eagle Technology confirm much of the above.

Stephen Usmar, BI practice manager for Gen-I, says New Zealand companies face a major challenge in integrating their data, as Kiwi companies typically have a disparate array of IT systems.

Companies are also increasing their reporting from monthly to almost daily, and businesses want to know why things are happening, not just what is happening. Thus, BI is increasingly being used to forecast and plan.

Businesses are also moving away from building entirely new systems, taking a more agile approach, with projects being developed piece-by-piece.

The term BI itself is also expanding, to cover business performance measurement, monitoring and analysis.

Carl Harris, head of Eagle’s BI group, says Kiwi firms have already built their data warehouses and are now looking at how to assess information better.

Harris confirms that the use of unstructured data is becoming more important, with some product offerings tying-in BI analytics with GIS information, for example.

Thus, a retailer can analyse a potential market within a certain radius of a store, or use such information to help decide where to build a new store.

Such sophistication is also leading businesses to seek standardisation, so the increasing range of functions and solutions can be better integrated.

Businesses are also seeking simpler interfaces, to give a wider range of staff greater access to this data. Interfaces now use gaming technology, for example, to graphically improve the presentation of information, says Harris.

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