Making business intelligence a competitive weapon

A weakening global economy has put increased pressure on businesses from all industries to perform better, faster, and more efficiently. Business intelligence is the secret weapon for leading companies to outperform competitors. For some businesses, it’s a matter of lowering costs and boosting their revenues, and for others, it’s about providing superior customer service.

Widespread use of business intelligence applications and tools has been the rallying cry of BI vendors for more than a decade, and yet, we’re not anywhere close to making that a reality. On average, only 25% of workers use BI (according to a 2007 survey in Successful Business Intelligence: Secrets to Making BI a Killer App). The tools themselves are partially to blame for lackluster adoption, along with company cultures that encourage gut-feel decision-making, allow information hoarding, or let IT departments keep data locked away. A good bit of the blame also rests with a failure to convey the value of BI to business executives, some of whom remain confused about how it’s different from the ERP system reports and manual spreadsheets that they currently use.

Yet there are those visionary companies who use BI to better understand and reap value from data. For BI to become a competitive weapon within a company, several roads must converge. First, businesses have to fully appreciate the gold mine of data they're amassing. Vendors need to provide lower cost ways to license and deploy BI; and while only a small segment of employees need to be BI experts, BI interfaces have to let information be presented in a multitude of ways in whatever interface is optimal and most familiar. However, pervasive BI requires more than technology innovations; it demands information be relevant and aligned with users' motivations and incentives. It's up to the business and IT to work more closely together to find that relevance.

Smarter, better, faster

The value of business intelligence is in making companies smarter, better, and faster. This kind of value add requires a pro-active approach and in the frenetic pace of running the day-to-day business, such opportunities often get overlooked, making BI appear optional. For example, a mail-order business may grind to a halt if the order entry system crashes, but not if BI fails. This then is where competitive forces are driving the need for BI. In an era when customers can look up product prices and availability on the Internet, finding ways to provide better service and products at the best prices is the key to survival. BI enables this.

Many companies deploy BI predominantly to business analysts and power users. But at 1-800 CONTACTS, the world's largest supplier of mail-order contact lenses, the BI initiative began with front-line workers, call center agents in particular, who directly influence sales. The company faces stiff competition from the very people who write the contact lens prescriptions it relies on for business: the eye doctors. 1-800 CONTACTS' service and price has to be better than that of the prescriber. “All the agents were clamoring for information. The biggest dissatisfaction in their job was to have to wait until the next morning to look at a piece of paper taped to the wall to see how they were performing,” recalls Dave Walker, vice president of operations. With the call centre dashboard, agents can immediately see what a customer has ordered in the past, recommend complementary products such as a lens solution, and predict when the customer will need to re-order. Tapping into a sales person’s competitiveness, agents can track their performance versus their peers and the rest of the call center. The very week the dashboard went live, the company saw an immediate lift in sales, says Christopher Coon, a senior analyst at 1-800 CONTACTS. More than 60% of 1-800 CONTACTS employees now use BI.

For BI to become pervasive, companies must first see data as a strategic asset to be exploited. This requires a mix of vision, faith, and creativity. There are signs that BI is becoming a must-have business tool that's no longer strictly optional. The spate of recent vendor acquisitions –Oracle/Hyperion, SAP/Business Objects, IBM/Cognos –­ as well as new solutions from Microsoft (Performance Point) reflect BI’s increasingly strategic importance.

Affordable, enterprise BI

At times, BI has been synonymous with expensive, never-ending projects. For it to be pervasive, BI has to be affordable for companies of all sizes to be able to provide it to a broad range of their employees. Conventional licensing models with a high cost per user – typically over US$1000 per user – stand in the way of this goal, keeping BI in the hands of a small number of experts who demand data access and analysis tools.

Microsoft’s expanding presence in the BI market has driven down pricing by bundling a breadth of capabilities with the SQL Server database. Other vendors have rethought their licensing models as well. Open source BI is also helping to bring down pricing and make BI affordable to businesses of all sizes. Conducive Technology's FlightStats, which provides real-time and historical flight information, recently switched to open source BI vendor JasperSoft. FlightStats’ original customers were airlines and using licensed commercial BI software made sense. But as the company began offering travelers access to flight data, traditional BI licensing costs for the more than a million consumers per month would have been prohibitive.

Licensing costs aren't the only focus. Established vendors and startups are looking to software as a service to cut BI deployment and staffing costs. Business Objects (now a division of SAP) launched CrystalReports.com in 2006, essentially providing the infrastructure for publishing and sharing reports. Specialty BI Software-as-a-Service vendors such as LucidEra, PivotLink, and Oco offer customers pre-built extractions and applications in a hosted environment that's ideal for companies with minimal IT staffing.

Whereas many companies started with BI as departmental initiatives to address specific problems, those deployments are now being transformed into enterprise, mission critical applications. Deploying BI across the enterprise versus departmentally brings greater economies of scale, reducing development and infrastructure costs compared to individual business units going at it alone. Yet, with this shift to BI across the enterprise, BI vendors have largely failed to provide customers with enterprise class administration tools – whether usage monitoring, caching, or lifecycle management. Some products such as MicroStrategy and Oracle BI Enterprise Edition (formerly Siebel Analytics) have paid closer attention to such administrative features, but for the most part, other vendors have had to play catch up. Beyond the technology, many customers face political hurdles in shifting BI from a departmental effort to an enterprise initiative that requires greater co-operation among business units.

BI your way

Pervasive BI requires matching the BI interface with the appropriate group of users. Many people associate BI with business analysts who rely heavily on query tools and OLAP. Front-line workers would never have the time or need to learn these complex interfaces. Instead, BI embedded into their operational applications is the right way to deliver it.

For example, Continental Airlines gate agents rely on business intelligence to identify which OnePass Elite passengers should receive a complementary upgrade. This information is presented within the flight check-in application; agents aren’t forced to launch a separate BI tool. With the steady rise in fuel costs, airlines are struggling to remain profitable; and yet, Continental has outperformed its competitors while winning industry awards for its customer service.

Many BI vendors leverage Excel and PowerPoint as paths to pervasive BI. An Excel or PowerPoint user can access live data via these interfaces; unlike earlier integration with spreadsheets, it’s not a one-time export that leads to data chaos and multiple versions of the truth. Corporate Express, who was recently acquired by Staples and provides office products to businesses, made BI more broadly available to its employees through MicroStrategy’s integration with PowerPoint, MicroStrategy Office. Sales people access customer account information through familiar PowerPoint slides they can refresh as needed.

While improvements in the interfaces and other options let companies offer BI to more employees, Web-based BI has been the biggest driver behind expanding BI use. Web-based BI has become as robust as former client-server interfaces in the last three years, but adoption has been somewhat slow. Companies who want to make BI pervasive have to be on the latest software releases to benefit from improvements. The web lets them bring on large groups of users at the click of a mouse, rather than the days and months it took to install desktop software. And web-based tools, let companies extend BI beyond corporate boundaries. At Corporate Express, over 10,000 customers are able to access, refresh, and analyse their purchase information via a Web browser. Matt Schwartz, vice president of business intelligence and analysis intends for the new on-line analysis capabilities to catapult them ahead of their competitors in terms of breadth, speed, and level of detail available.

Rich Internet applications are transforming once static web-based BI from boring to fun. By embedding Xcelsius Flash files with Crystal Reports 2008 (launched last November), report consumers can perform what-if analysis via simple sliders within a gauge animation. Business Objects, an SAP company, recently launched Polestar, a module that blends the simplicity of search (think Google) with an iTunes-like interface to enable data exploration for even the most novice of users.

Demonstrating that BI has to not only be prettier, but smarter, predictive models are increasingly embedded within these reports and dashboards as opposed to being a stand-alone analysis. Predictive analytic leader SAS and data warehouse vendor Teradata, once arch rivals, recently formed a strategic partnership to strengthen in-data base analytics. The two companies are collaborating at the engineering level so that SAS analytics customers can perform data-intensive operations, including exploration, manipulation, and scoring, in Teradata without having to download large data sets into the SAS platform.

Rethinking BI

With BI becoming more affordable and in flavors to suit every budget, it would seem BI is poised to go mainstream. But are companies ready?

The final road to pervasive BI has nothing to do with technology and everything to do with the way companies must re-think who benefits from BI. In defining BI requirements, the IT department will often ask users what they want or just respond to whoever shouts the loudest. The challenge here is that users rarely know what they want until they see it and may not realise the problems BI can solve. Those users who know what they want are typically power users, already well-versed in BI. In extending BI to people who may not know what it is, BI experts need to flip the requirements definition process from “what do you want?” to “here’s information relevant to your job.” Finding the relevance for people beyond business analysts requires a study of what decisions they make and what motivates them.

For example, teachers have little time to study student data, and yet, as part of the No Child Left Behind effort, making sure every child succeeds is mandated by the federal US government. In Florida, the Miami-Dade school district is the fourth largest in the US, with over 340,000 students. They recently began using Cognos 8 and Microsoft Office SharePoint portal to give principals and teachers a snapshot of each student’s attendance, grades, and standardised test results for three years. CIO Debbie Karcher says schools have been able to identify students struggling in particular areas, target instruction, and intervene much earlier.

In making BI relevant to new groups of users, the business and IT have to work as partners. To foster such a partnership, companies may use agile development techniques in which technology and business experts build applications collaboratively. Rugby fans will appreciate the use of scrum methodology in which the business and IT are interlocked as in a scrum and deliver new capabilities in 30-day sprints. The use of prototypes facilitates defining requirements. With a prototype, IT develops screen mock ups as a way of demonstrating capabilities and determining if they’ve correctly understood the business requirements. Users critique the screens as opposed to providing lengthy, written documentation of their requirements. Dave Walker, vice president of operations at 1-800 CONTACTS attributes agile development as one of the reasons for their success with BI. “We are virtually one team. There is partnership, high trust, and it’s collaborative. It’s not ‘make a list, send it over.’ It’s very iterative. It takes a lot of time and effort on both sides, but the end product is well worth it.” Agile development allows BI teams to respond to new requirements at the pace the business demands.

Organisationally, business intelligence competency centers (BICCs) or BI centers of excellence can help foster a partnership and improve BI’s relevance when the center is jointly staffed by IT and the business. A BICC is a group of technical and business experts who provide BI services to individual business units. The group typically resides within IT or finance. These experts model data, extract it from source systems, evaluate and purchase BI tools, build BI applications, and promote best practices. Even if an individual business unit has its own BI experts, the BICC provides second level support. The growing prevalence of hybrid business-technologists increases the number of people who understand both sides of BI and know best where to apply it.

Are we there yet?

For years, software vendors have claimed they're about to take BI mainstream. Recent innovations are finally putting this goal within sight. Changes in licensing models are making BI affordable to more companies. New delivery models are making it accessible to a broader number of employees within those companies. There's now an ideal interface to suit all the styles of BI. And new ways of thinking about BI's relevance to different types of workers are expanding its reach.

BI as a set of technologies has matured significantly in the last decade. The industry has become smarter about how best to store data for analysis versus just capturing it. For BI to be a competitive weapon, however, it takes much more than technology. It takes a vision for how information can be used to achieve business goals, a strong dialogue between the business and IT to make BI a reality, and a culture for acting on insights gleaned.

Cindi Howson is the founder of BIScorecard, a website for in-depth BI product reviews and has 15 years of business intelligence and management reporting experience. She is the author of Successful Business Intelligence: Secrets to Making BI a Killer App and Business Objects XI: The Complete Reference. She has an MBA from Rice University. Contact her at cindihowson@biscorecard.com