The Second Coming of Business Intelligence

When Gartner, the technology-oriented market research group, launched its inaugural Business Intelligence Excellence Award for Asia Pacific in 2009, the winner was food packaging multinational Tetra Pak.

 
“We decided sometime ago that there would be no more IT projects, only business projects,” said Christopher Rowley, the company’s Singapore-based director of customer management and corporate reporting systems. “The first driver for our BI implementation was quite simply to measure and improve our business performance. Secondly, like any business, we need the facts about our customers, products and suppliers, a single source of truth, to enable better forecasting.”
 
The two other finalists, culled from 20 nominations from six countries in Asia, were Australian packaging products maker Amcor Australasia and Indian financial services provider ICICI Bank.
 
“Despite the obvious differences in scale, industry and business strategies, the approach of all three finalists was remarkably similar,” said Gartner managing vice president Ian Bertram. “BI must be driven by the business, not IT; it must present a single version of the truth; and it must be easy for end-users to adopt. The organisation must also be committed, often deep cultural change, for real improvements and benefits to be realised.”
 
That, in a nutshell, is where Asia is in terms of business intelligence software and corporate performance management. You cannot manage what you cannot measure and understand, and so more and more companies in Asia – and their CFOs – are authorising substantial business intelligence and performance management implementations.
 
What Ho, CFO?
The numbers bear this out. Worldwide, says IDC, another technology research firm, the business intelligence tools software market grew 2.6% to hit US$8.1 billion in 2009. “Given the current market assumptions regarding the global economy and demand drivers,” says Dan Vesset, program vice president for ICS’s Business Analytics Solutions research service, “IDC forecasts this market to grow at a compound annual growth rate of 6.9% through 2014 to US$11.3 billion.”
 
IDC says BI is “gaining mainstream interest” in Asia, where it is being used to “help automate the process and manner in which key operational decisions are made.” Business Intelligence is no longer being deployed only for reporting and forecasting. “As the enterprise gains insight into the new information revealed by strategic BI adoption, the spectrum of the strategic and operational decision making process will become further automated and integrated,” IDC predicts.
 
What does all this mean for chief financial officers? Plenty. As competitors deploy BI solutions and reap forecasting and performance gains, other companies will come under pressure to do the same. Some CFOs could be forgiven for hesitating – the track record of BI and other IT implementations in the past has not been exactly stellar. As IDC observes, “the legacy of low adoption rates, shelfware and failed [data warehousing] projects persists.” Even today, there’s a lot of expensive hardware and software that are gathering dust on company shelves, not being fully utilised or failing to deliver on expectations. 
 
But today’s BI solutions have evolved, the research firms say. Since 2004, IDC notes, “BI solutions have improved in performance, availability and user interfaces, enabling deployment of decision support and automation functionality to more users.” Gartner, in a January 2010 report, says new data discovery tool architectures are empowering end-users to “navigate and visualise data in ‘surf and save’ mode as an alternative to a report-only architecture.”
 
Other easy-to-use interactive visualisation products have come to market, such as SAP BusinessObjects Explorer, IBM Cognos Express and PowerPivot from Microsoft. These developments, says Gartner, result in “a growing recognition by user organisations that data discovery tools can be used as full-functioned BI platforms for a broader range of BI platform capabilities.”
 
Don’t forget the impact of the 2008 global recession. “BI spending remained firm in 2009 as organisations turned to BI to survive the worst downturn in modern history,” Gartner reports. “Driven in part by the economic downturn, the need for more accurate forecasts and optimised business processes, and to identify leading versus lagging indicators, was on the rise.”
 
The M&A wave of recent years has also led to more BI solutions that are integrated with other business software, including ERP, enterprise performance management, strategy management, financial management and other systems. Oracle acquired Siebel in 2005 and Hyperion in 2007, the same year SAP did a friendly takeover of Business Objects and IBM bought Cognos.
 
Many pure-play vendors and most mega providers have introduced or already have mature capabilities “to make statistics, predictive analytic models and forecasting algorithms more consumable in reports, dashboards and analytic applications,” Gartner adds. “These advances constitute important steps toward increasing the availability of predictive analytics to business users beyond the traditional statistician-installed base.”  
 
Beyond Money
This is not to say that CFOs should be stampeded into making BI purchase and implementation decisions. They need to first understand the unique needs of their own organisation and how the proposed BI solution will fit into existing systems. The goal should be to integrate BI into the ERP, data warehousing and other systems as smoothly as possible, in order to reap synergies for more effective performance management and bottom-line results.
 
All options should be explored, including SaaS (software-as-a-service) delivery, which Gartner says, may be “a viable alternative for some organisations with specific requirements.” The research firm is detecting increased interest in low-cost options. The CFO’s calculations should extend beyond direct and associated costs, including maintenance and renewal fees. Beyond total cost of ownership lie needed changes in processes, attitudes and business culture.
 
“We have not found any silver bullets,” says Tetra Pak’s Crowley. “You need to have the right people in place to deliver the project and ensure quality and consistency. You need to ensure that the system has a fast response time and is easy to use so that people adopt it.” As CFOs know only too well, throwing money at any initiative is never enough to make it work.
 
About the Author

Cesar Bacani is editor-in-chief of CFO Innovation.

 

 

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