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Introduction
Turning gigabytes of unruly information into business intelligence requires specialised tools that analyse, drill down or mine data to help users make informed decisions and ensure an organisation is more efficient and more competitive.
If information is the corporate lifeblood then you need to know how healthy you are and weigh up your vital signs against your competitors. Even working with partners requires some level of information sharing but if you can't put your finger on the data you need when you need it, you risk losing business and the confidence of your customers.
The 'corporate memory'
Real Business Intelligence relies on Data Warehousing, which is essentially a database repository designed to support an organisation's decision making. It is batch updated and can contain enormous amounts of information, typically including customer transactional history.
Once all the pieces are in place including a standardised infrastructure, databases that talk to each other, real-time document conversion and storage and management software, you begin to create what may be described as a 'corporate memory' . Rapidly recalling accurate and exact data from that memory in the form of management or departmental reports is the job of business intelligence tools.
Business-intelligence software vendors say steady sales so far in 2002 reflect the need for companies to get the most out of their data assets. "Most organisations have had wave after wave of large software installations (enterprise resource planning and customer-relationship management) over the last 10 to 15 years," says Crystal Decisions CFO Eric Patel. "Now they're seeking ways to get information gathered by those applications into the hands of employees and decision-makers to run their businesses more efficiently and improve sales and marketing efforts."
Gartner Group says that data-warehousing and business intelligence systems have now become a $US 30 billion a year global industry.
Who needs business intelligence tools?
While the target market for data warehousing and business intelligence tools was initially larger corporations, applications are now available from Oracle and others which focus on the small to medium sized enterprise. For example Oracle can install a leased data-warehousing system from $1200 a month or if a company intends to buy a system, prices can start at around $4000 a month paid over 18 months.
Business intelligence or data mining tools from companies such as Cognos, Oracle, Progress Software and Teradata are used to dig through this information revealing patterns and relationships within the business activity and history. Management reports based on this kind of analysis can help organisations with their strategic and competitive positioning.
The benefits may include identifying top customers, product line profitability, demographic trends and fine-tuning of pricing policies, retention of customers and predicting market trends.
- A way to access data in a common format from multiple sources
- A way to measure business goals by analysing cross-departmental data
- See who the good, bad and ugly customers are at a glance
- Track customer behaviour to improve service and relationships
- Track specific product sales across regions and distributors to improve production and supply
- Track internal business trends to improve processes
- Track external market trends to improve competitiveness
- Fine tune pricing and marketing policies
What issues need consideration?
Business-intelligence tools can provide significant value, but measuring return on investment still presents a challenge. While increased efficiency and automating the extraction of clear information from complex data can reduce the need for data analysts and improve bottom line revenues, determining the exact return on investment of a business intelligence system can be difficult.
It can take time to see the real world benefits and executives can label such projects as failures if they look for pure ROI evidence too early. Experts suggest companies select vendors who can first help support a small project where it is easier to demonstrate cost savings and other benefits - so IT managers have an easier time making the case for a larger project.
While there's a growing demand for business intelligence tools there's also criticism from the marketplace that many packages are complex and difficult to use. According to a January 2002 survey by InformationWeek, users still need lots of hand-holding by the IT department.
The survey of 100 business-technology professionals found 48 per cent of respondents couldn't build their own queries without help from the IT department. Training is seen as a critical factor in getting an organisaiton up to speed with business intelligence tools.
The key to successfully putting business-intelligence tools into the hands of users is co-operation among IT and business managers. When asked who drives the design and implementation of business-intelligence tools within their companies, 47 per cent say projects are managed by a collaborative committee of IT and business managers, while 35 per cent say business managers are the driving force.
In the end, transforming data from multiple sources in an organisation enables users to draw on the corporate memory to help with decision-making and problem solving and to better understand customers and market behaviour.
