Demanding Intelligence

As the amount of data gathered by organizations grows, so too does the demand for business intelligence tools to analyze this information in a way that can add value and competitive advantage for a company. Last year the global BI market was worth just under $4 billion in license revenue alone; it is expected to double by 2012, according to Datamonitor.

Despite booming business, however, BI is suffering from a chronic skills shortage, with the demand for skilled developers outweighing supply. Highlighting this concern is a recent survey by research firm Aberdeen Group of 364 companies in the US, Europe and Asia Pacific, which reveals that 30 percent of respondents think that the lack of BI skill sets was the top business pressure preventing delivery of actionable information to the enterprise. According to the survey results, 74 percent of companies say they are using traditional onsite installed BI software applications, while 72 percent said they are also using Microsoft Excel, and are emailing and faxing reports to colleagues. “I see some new approaches emerging right now,” says David Hatch, Research Director for Business Intelligence Research at Aberdeen. “One approach is having BI embedded within enterprise applications – 40 percent of survey respondents are currently accessing BI this way, and 21 percent say this is how they plan to acquire BI capabilities in the next 12 months.”

Another way the challenge of limited skills can be addressed is through a more on-demand, self-service approach. “When I asked about BI accessed through a third party – whether that’s software-as-a-service, dedicated hosted BI applications or a BI appliance that is more of an on-demand, self-service approach – I found that 16 percent of companies are utilizing this today,” explains Hatch. “This is actually far greater than I thought it would be. Interestingly, 33 percent of respondents revealed plans to adopt an on-demand BI approach within the next 12-24 months. This is the only technology enabler that is showing growth over time versus other deployment methods.”

The on-demand approach

Hatch believes users are faced with a very daunting decision. “They may start-off thinking about integrating BI at the enterprise-level across their entire enterprise information management strategy; or, as my research has shown is most typical, they end-up implementing BI at a departmental level or on a project basis,” he explains. “If the majority of BI implementations are made at a tactical department or project level, it only makes sense to consider the fastest and least costly path to a solution.”

The on-demand approach allows end-user organizations to outsource BI and rely on a service provider rather than an internal IT organization that is already burdened with other strategic systems maintenance and support. There are a number of companies now filling that need, combining the delivery of technology capabilities with industry expertise. Oco and Seatab, for example, have expertise in delivering BI to retail and CPG companies. Companies like Dimensional Insight and OnDemandIQ focus on healthcare solutions. And there are several new pure play, on-demand BI vendors that are addressing the desire for rapidly deployed solutions within thin-IT environments, or at larger firms where BI projects spring-up faster than IT can address them.

Indeed, it is not only SMBs – the traditional targets of such solutions – that are taking an interest in on-demand or software-as-a-service BI solutions. An increasing number of large organizations are also catching on to the benefits. In fact, contrary to popular belief, larger organizations (those with revenues of $1 billion or greater) have the most interest in this approach with 11 percent reporting current usage in comparison to smaller organizations (eight percent). According to the survey, larger companies show a greater interest in adoption of on-demand BI within the next 12 months. There have already been some notable successes – for example, Hatch identifies how international brand-management company Pernod Ricard has deployed Dimensional Insight’s InterReport product for on-demand reporting and analysis capabilities, whilst sports goods retailer REI has been using SeaTab’s PivotLink.

“It really comes down to determining the approach to BI that is most appropriate for solving a company’s needs and that aligns with their existing IT strategy,” says Hatch. “Do they have the BI skill sets and IT skill sets to effectively implement a solution in a reasonable amount of time? And do they have the self-realization within their organizations to make that decision?”

Developing a BI culture

One trend that Hatch has noticed is a shift to what he calls a “BI culture” within an organization. Fostering this kind of approach at an organization includes measuring the cost of BI development and deployment, and analyzing the results to decide whether to bring in an in-house deployment or to outsource. He also recognizes the need to measure ROI, something that currently only 16 percent of the survey respondents are able to achieve today. “The emergence of a BI culture is not just purchasing software to solve a specific need; companies must recognize that they also need to understand the impact of BI holistically – at a budgeting level and at a return on investment level,” he advises. “They should be asking questions such as whether or not these solutions are really going to provide the returns that their business needs, and what approaches they need to take to limit costs and accelerate the return on investment.”

Over the next 12-18 months, Hatch expects to see the market developing along two lines. The first of his predictions is that companies will take an enterprise view, establish a corporate BI culture and make some determinations on standardizations of their BI stack. “This may have to do with their existing technology infrastructure,” he explains. “Are they an Oracle shop? Are they an IBM shop? Are they an SAP shop? Are they a combination of those? Companies at that ‘thin-air’, high-end of the market are going to have some decisions to make about how to establish an enterprise BI solution that ties into all of these infrastructures.” In this respect, Hatch believes recent acquisition activity will have a big influence on the sector. “For instance, how will IBM integrate Cognos into its information management division? How will SAP treat its acquisition of Business Objects? Many customers will be affected by the future decisions these companies make.”

Second, he predicts that more companies will continue to adopt BI at a departmental or project-based level. Encouragingly, there are a number of options available in this space – including many vendors offering robust commercial grade solutions such as Pentaho, Jaspersoft, Spago BI, OpenBI, Talend, GreenPlum, Ingres and others. “The options for end-users have now increased, and I see there being a real possibility that on-demand BI, open source BI or a combination of the two will begin to compete heavily with the large enterprise vendors,” adds Hatch.

Branching out

In addition, Hatch predicts a greater convergence between business intelligence, search and enterprise content management solutions as companies realize the potential value to be gained by utilizing more of their unstructured data. “Not only are there more options for how companies acquire and access BI capabilities, the amount of data and the types of data that they can access within those solutions is growing as well,” he explains. “Unstructured data can take many forms: for example a combination of customer e-mails, web page data and blog site data can be combined to establish a richer view of the customer. I just recently talked to a company that is looking at aggregating pricing data from all their competitors’ websites, combining that with their own very structured internal pricing data, and developing some automated pricing adjustment calculations. The amount of customer data and intelligence that can be gleaned from call center dialogue and narrative and field service notes is immense. Whether you’re a customer of an established BI vendor or you’ve got a new project and are looking for a solution, the options are out there.”

It all comes down to whether your data infrastructure is capable of handling the explosion in the amount of data that can be captured. Netezza, DATAllegro and Dataupia are all smaller companies that will be making an impact in the data warehouse space, predicts Hatch. As with larger vendors (such as Teradata and IBM), these will enable organizations to increase the amount of data they can capture by providing data accessibility and integration tools. Other vendors such as Informatica, GoldenGate and Talend will, he continues, be integral in providing integration services. “Overall, there is a new ‘BI stack’ that’s being driven by the explosion of the amount and type of data that’s available, and the desire among end-user organizations to tap into the data and gain competitive advantage and new efficiencies,” he concludes.