The global economic downturn is forcing businesses to reassess their internal processes and rethink their strategies. Adding to this pressure are growing demands from stakeholders and regulatory authorities for greater transparency about finances, operations, decisions and core performance metrics.

But most organisations do not have the processes and business tools in place to make informed, responsive decisions. By 2012, analyst Gartner predicts that more than 35 per cent of the top 5,000 global companies will regularly fail to make insightful decisions about significant changes in their business and markets.

Research recently carried out by Sage Group suggested that about 90 per cent of organisations often get bogged down with low-value, seemingly trivial tasks, because of inconsistent internal information, and 44 per cent of these organisations still use spreadsheets and other manual processes to manage corporate performance. But in the face of the economic downturn, more organisations are looking to business intelligence (BI) and performance management initiatives to help transform and improve their organisation and to deliver greater business value.

Andrew Stevens, principal architect, in the mid-market division at Sage, warns that businesses often fail if they simply add in BI technology so that it becomes just another layer over the top of existing systems.

“Today, BI is seen as something that is run outside of a business process,” he says. “But it shouldn’t be seen as a standalone platform.”

According to Stevens, by embedding BI into other common products such as ERP (enterprise resource planning), CRM (customer relationship management), HR and payroll, organisations can benefit from a more holistic approach to BI.

This argument is echoed by Jon Ainsworth, director of business development at Oracle’s European BI solutions arm. “The way to look at BI is not as an additional IT layer, but rather as a way to unlock data that is held within the existing layers of infrastructure. BI turns data into information, that then can be used to drive decisions and change. It unlocks the inherent value held in operational systems ­ and actually helps companies better leverage their existing investments in ERP, CRM and other operational systems,” he says.

But while Gartner predicts that by 2010, 20 per cent of organisations will have an industry-specific analytic application delivered via software-as-a-service (SaaS) as a standard component of their BI portfolio, there is no one-size-fits-all approach to BI.

Sage’s Stevens points out that BI is many things to many people ­ to some it is seen as a reporting tool, to others an analysis tool. It can be used for planning ahead or for being reactive, or for answering “What if?” questions. But fundamentally, BI should be seen as a key technology for achieving a common organisational understanding and alignment to help move the business forward in a way that drives value.

Gartner says that over the coming years, hundreds of information aggregators offering SaaS analytic applications will emerge, but a virtual monopoly will persist within each vertical niche because of the high barrier to entry for others.

While Stevens acknowledges that SaaS can be useful if deployment is a cost issue and a company does not want to invest in dedicated servers, he suggests that no two implementations are the same because each company has different needs.
“The product has to be very usable. What do you want to get out of it? The answer is often very different for each customer,” he says.

“Customers have different expectations on different occasions, and the maturity of the company is usually important and a deciding factor in whether they want a full-blown BI solution.” Sage also believes that local knowledge is vital, which is why the UK-based firm focuses on the UK market.

Whereas the financial director has long held the purse strings for all infrastructure investments, this is often no longer the case for BI. Gartner predicts that by 2012 individual business units will control at least 40 per cent of the total budget for BI, and Stevens suggests this is mainly because the key decision-makers may not necessarily be executives but the business units themselves, and they are the ones looking for the relevant benefits of a BI implementation.

According to Gartner research vice president Nigel Rayner, although IT organisations excel at building BI infrastructure, business users have lost confidence in the ability of such systems to deliver the information they need to make decisions. But while business units will increase spending on packaged analytic applications, including corporate performance management, online marketing analytics and predictive analytics that optimise processes, not just report on them, there is a danger of this approach going too far in the opposite direction.

“By making purchases independently of the IT organisation, business units risk creating silos of applications and information, which will limit cross-function analysis, add complexity and delay to corporate planning and execution of changes,” says Rayner.

“IT organisations can overcome this by encouraging business units to use existing assets and create standards for purchasing classes of packaged analytic applications that minimise the impact of isolated functions.”

One of the most common problems that would-be adopters of BI technology encounter occurs when they try to do too much too quickly. The experts concede that a lot of BI projects failed in the early days because they tried to analyse the information needs of the whole business and they got “paralysis by analysis”.

Sage believes that analysis-paralysis is a very real danger but one that can be avoided if the individual business units use the technology to capture bite-sized, or more manageable chunks of data.

“When a company is looking at the return on investment (ROI) that BI can deliver, it needs to establish whether it needs a full-blown BI implementation or maybe just reporting functionality,” says Stevens

When considering the ROI of a BI implementation in these straitened times, Oracle’s Ainsworth sees no scepticism at all. Instead, he sees a shift in focus.

“From opportunity identification and growth priorities, towards a focus on identifying cost and using BI to drive improvements and efficiencies in operational processes. Right now, we see a need to demonstrate faster ROI,” he says.

“A well-managed BI project will deliver this through addressing the whole programme in a step-by-step manner, where highest-value items are addressed as priorities. Done well, a BI project can become self-financing, as the earlier returns justify further development.”

Ainsworth says recession is driving the adoption of BI, as it helps companies to make better use of their business information, and the key to a successful implementation of BI is not to throw technology at the problem but to ensure that the right information is presented in context at the right time, and in a way that can be consumed by the user.

This, he believes, is why different BI implementations are able to support a range of different output formats, and methods of interacting with the information. A typical call centre employee may be able to cope with a single performance measure such as average call wait time, while a financial analyst will be comfortable with tools that enable them to perform business planning and scenario analysis. The best BI suites will be capable of ensuring absolute consistency of the metrics across many different ways of consuming the information.

The experts are in agreement that a BI project driven and owned entirely by IT will surely fail. The key to a successful project is partnership between IT and the business. People who possess both IT skills and an understanding of the business are typically the most valuable players in a BI project, as they can help join the dots for everyone. The right people, a consultative team-based approach, and incremental ROI-based phased delivery should ensure a BI project delivers rapid results.