In the past, attempts to extract business benefits from data have frequently led to business intelligence (BI) applications that performed poorly and cost the earth, moon and stars. But now some analysts believe the wealth of data available online and the determination of vendors to tackle it is providing the hope that BI is about to get much easierWith the Internet continuing to sift winners from losers, the best hope many companies have of surviving in a bitterly competitive marketplace is by keeping strides ahead of the competition. That means basing business decisions on accurate and up-to-date information.
Intuition and guesswork just won't cut it in a world where businesses from the other side of the globe can steal your customers.
The problem for IT managers is how to take a treasure trove of raw business and customer data gathered from the World Wide Web and other sources and transform it into useful, strategic business knowledge, at a time when BI tools still lack maturity.
Businesses trying to keep afloat in the new economy must be fully abreast of issues like market and customer trends, the efficiency of internal processes and how well performance targets are being met.
Data analysis, reporting, and query tools can all help businesses wade through a sea of raw data, much of it available online, and transform it into valuable information capable of informing the business strategies they'll use to keep their customers coming back.
Smart companies exploit BI to explore all the areas that fundamentally influence their strategic plans, from competitors and the business environment through to the marketplace. And they do it continually and cyclically.
Merv Langby, analyst with research company IDC, said the bottom line is that users of all descriptions and sizes have to get into business intelligence.
"The CEO's focus on customer service as a primary business objective means they need to be much more informed about customer profiles and customer buying behaviour, the demographics and the mix of customers within their customer set.
"They need this to develop innovative new products and enhancements to existing products and services; they need it to design both marketing and sales programs, and by virtue of that they need it to be able to respond to rapidly changing market needs and competitive plays," Langby said.
Organisations that harness BI to anticipate external forces gain a razor-sharp competitive edge and some protection against the kind of unwise business decisions that occasionally bring even the best organisations undone"The wealth of data to be had is substantial indeed," Neill Haine, director of The BMA Group, said. "It's quite amazing once you can look at your data in different ways how easily you can get a range of different reports and explore the information that you've got.
"It often reveals comparisons amongst, say, products, in terms of their performance, or amongst areas, with different products in different areas, or amongst performance of different areas within the firm in terms of the way different aspects of the firm perform. These can give you substantial revelations as to how to improve the business, how to improve marketing performance or internal business efficiency."
At the centre of these renewed business intelligence efforts is a growing recognition that companies that don't value their customers and measure their profitability are certain to lose them.
Research company Ovum says demand for business intelligence products and services is expected to top $US50 billion worldwide within the first few years of the millennium. Executive information systems (EIS), decision support systems (DSS), online analytical processing (OLAP) and implementations of the balanced scorecard or other performance management systems all tend to fall under the business intelligence umbrella.
Drilling for gold
The fundamental idea behind business intelligence is to provide information quickly to end users in exactly the way they need it, ideally by storing data in a multidimensional form that lets users "slice and dice", "drill-down" or "mine" to get the exact information they need.
BI has application to almost every functional area of a business, from use of sales and marketing intelligence - for tasks like helping in the preparation of tenders - to the use of technical competitive intelligence for tracking technical advances.
Typically, its most important function lies in responding to questions from senior management to support their decision-making activities. The trouble is, Langby said, while a small proportion of products are handling these requirements in at least a piecemeal fashion, few if any products are addressing in combination all the key applications in an integrated manner.
"That will change," Langby said. "It will be a natural progression. This type of software has been developed by niche market players, and the users are going to want to implement a BI approach that will provide them with an integrated view of all of their BI activities, so those individual products will have to be pulled together in some fashion."
Data 'mine' field
Those who have crossed this ground before know data warehousing can be a minefield, with early implementations littered with problems. Projects were often not tied to any clear business goal other than creation of a company-wide data repository from which all departments could dig for the particular information they needed.
At the same time, BI efforts based on first-generation, host-based query and reporting or second-generation data warehousing technology frequently ran over budget and performed badly.
Now explosive growth in the number of tools available to provide back-end integration and extraction from operational systems and different data sources is making BI vastly more feasible. At the same time IT professionals have come to recognise the futility of building a data warehouse without a strong analytical platform to support it. Traditional business intelligence tools were structured to provide very specific kinds of query, analysis and reporting, but they were expensive and difficult to deploy across the enterprise.
These days a new emphasis on information democracy is coinciding with the bringing of the new enterprise reporting tools to the masses. These tools are designed to help companies turn raw customer data obtained via the Internet and other sources into useful, strategic business knowledge.
"Many of the products have moved that way, and they have tools that enable the user to get at the databases, the information, from over the intranet or extranet," Haine said.
"But I must say that very few of them have got the full functionality of the client/server type of client. They still have a way to go yet, although all [vendors] are working on it."
There's been a surge in packaged applications that can let companies purchase a predesigned framework able to be customised to particular business needs.
Database giants such as IBM, Microsoft, and Oracle have refined their data warehousing wares, structuring their databases as platforms on which to build business intelligence solutions rather than as simple data repositories.
Companies such as Informix and Cognos offer suites of business intelligence tools designed as end-to-end data warehousing frameworks that provide everything from extraction to analysis.
Customers and vendors have also learnt the importance of aligning business intelligence with business practice.
By beginning a business intelligence solution with a specific business need in mind, they have been able to structure data stores more intelligently.
Vendors are also taking the data warehousing practice and developing specialised products for today's killer application: marketing.
Getting it right
There are numerous factors to consider if you want to get your BI implementation right.
According to Haine, the first thing organisations need to look at before deciding to implement BI tools or a pre-packaged solution is the applications to which it will be put.
"If they're just doing reporting and nothing else, where they don't need to do a lot of transformations and they don't need to model what they're getting, they can use one set of tools. If they need to do modelling or they need to enter parameters or do what if' calculations, or for budgeting, they need an entirely different set of tools."
Scalability is also important. Not all packages can cope with huge data volumes, or handle large numbers of users.
Look closely at functionality issues, particularly at the way the tool or package copes with reporting and the way models are constructed before choosing your package, and look carefully at usability factors, Haine said. Not all packages provide a user-oriented, easy -to-use front end.
"Be careful that you don't end up attempting to use a tool for a purpose to which it is not suited," he said.
There's also real value in aligning your BI efforts with your business practice. Beginning a business intelligence solution with a specific business need in mind is far easier than trying to turn a one-size-fits-all' solution to a particular business need.