Different departments using different analytical tools and different metrics lead to a situation Forrester Research calls "multiple versions of the truth." For example, one division might seem to be outperforming another only because it's using different metrics to report on its performance. Moreover, when a company uses multiple tools to gain business intelligence, it ends up spending more than it needs to for software and spending too much time and money on training and support for all those different applications.
"We still see a lot of large businesses who come to a meeting, and none of the vice presidents can agree on who has the best data," says Patrick Morrissey, director of product marketing for BI software maker Business Objects. "They spend significant cycles arguing over whose data is right, and never get to analysis part."
When a company brings all its information into one truth, it can be a beautiful thing. "When everyone comes to the meeting with the same set of data and having done some quantitative and qualitative analysis, you can put the spotlight on underlying business processes and things that might not come otherwise come to light."
Navigating the Enterprise
Most BI apps have a graphical interface that allows the user to map various pieces of business information against each other and create graphical displays. They're called dashboards because, like their automotive namesake, they let users keep an eye on how things are going. "When I'm driving, I don't pull the car over every 50 miles to see if I'm low on gas or oil," says Michael Smith, product-marketing manager for BI vendor Cognos. "I just look at the dashboard. As a manager, I don't have time to go through the nitty-gritty reports every time. Instead, I'll use the dashboard to see where I need to drill down."
Consulting firm PWC says the trend is to provide BI dashboard access not only to top executives, but also across the enterprise. In a recent report on business intelligence, PWC says, "Innovative technologies such as enterprise portals and mobile wireless devices deliver business intelligence functionality to executives, managers, sales personnel, support staff, remote workers, customers, suppliers, and business partners."
Says PWC's Berg, "There are different ways of customizing the digital dashboard so that it is appropriate to different roles. For example, the CFO has one digital dashboard showing the day's sales outstanding and the number of employees per business unit. The logistics manager's dashboard shows performance relative to delivery targets and the rejection rate of components purchased. The focus is on having role-specific and appropriate dashboards that are not confined to any one particular stratum of the organization."
The next frontier in BI software, according to Forrester Research, will be vertical solutions. Forrester's Root says, "The guts of these systems is starting to look awfully similar, so vendors are focusing on verticals, going deeper into the analytics so that they're better fits out of the box, also going broader." He says such specialization can be very valuable.
But business intelligence solutions aren't a panacea. Smaller companies may not be able to afford the software, much less the infrastructure such as a data warehouse needed to take advantage of the analytics. Says Alan Tiedrich, an analyst with research firm Gartner, "With all this great tech around, a lot of companies are still trying to do basic reporting and get reports to all their users. There are some more leading-edge companies that have gone further down the IT road, and you'll find them able to start applying BI to make the business run better. But you're talking about some pretty sophisticated companies." BI is still traveling up what Gartner calls the "hype cycle." But beware. After the peak of hype, these applications sometimes travel down into the trough of disillusionment. To stay out of that ditch, the enterprise must find a solid business case for BI and find a vendor it can trust.
Sidebar: You Must Comply
There's another potential benefit to business intelligence applications: They can help corporations become more transparent; that is, more able to explain what they're doing to investors and regulators. New government regulations make this attribute critical in some industries. For example, in April, a requirement to maintain the security of patients' healthcare records kicked in under the Health Insurance Portability and Accountability Act (HIPAA). In addition, every public company needs to comply with the Sarbanes-Oxley Act, which requires that CEOs and CFOs explicitly evaluate and report to the public on the effectiveness of internal controls over financial reporting.
"In the traditional financial environment," says Richard Skriletz, national managing principal for business intelligence, RCG Information Technology, an IT professional services firm, "there are transaction systems, ledger systems, financial reporting systems, all designed to do their own thing. There's not a way to start with the annual report, drill down to the monthly cash-flow statement, then see the source transactions underneath it. But Sarbanes-Oxley says you need transparency to see how all these things fit together." Business intelligence solutions let the enterprise pull all financial information into one place.
For HIPAA compliance, for example, Skriletz says, "If you pull all the patient information into one place, you have ability to have single point security. The BI technology has built-in ways to say who gets to see what. Insurers may get to see diagnoses while other providers don't." Skriletz says that many of the business intelligence technologies developed in the last few years are easily applicable to the new regulatory environment.
Business Objects www.businessobjects.com
Forrester Research www.forrester.com
ITA Software www.itasoftware.com
RCG Information Technology www.rcgit.com