No one would call business intelligence (BI) a new star in the technology lineup like, say, cloud computing. But...
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technical advancements that let users build their own reports without the mediation of IT experts, an explosion in data and, yes, an economy in recession, have conferred A-list status on BI systems. In fact, Gartner Inc. put BI on its list of "Top 10 Strategic Technologies for 2009." BI also made the top 10 list of IT management imperatives for 2009 in the annual Society for Information Management survey of CIOs.
The BI solution of tomorrow, however, is not made up of the disparate tools and dysfunctional processes that have torpedoed many a BI effort in the past. A BI system should give users new capabilities and help build an "information-centric" enterprise.
BI done right is expensive and complex. Two analysts who chew on BI issues for a living offer up suggestions as to what CIOs need to keep in mind as they plot their BI agenda for 2009. Here are Bill Hostmann of Stamford, Conn.-based Gartner Inc. and Chris Howard of Midvale, Utah-based Burton Group Inc. on five questions to ask about your current strategy before you take on a new BI initiative.
How good is the data?
Unfortunately, data management strategies, unlike fancy interfaces or distributed computing, have gotten the short end of the stick for the last 10 years, Howard said.
"Data management is complicated because data in most large enterprises is such a mess. It is easy enough to generate reports, but data without effective data management is rarely information in the larger sense," he said. "If the intention with BI is to drive business decisions, then the data exposed by BI must be of high integrity." He said in his view, the aim should be to get as much data exposed to XML as possible and run XQuery on top of it.
But, he added, you don't have to perfect data management to start on BI. "It's not like you have to eat all the peas on your plate before you move to the turkey."
Poor data quality will lead to poor decisions, Hostmann agreed. Organizations must establish a process or set of automated controls to identify data quality issues in incoming data and block low-quality data from entering the data warehouse. Implement the process using custom code, data quality technology, paged data integration tools or a combination of these.
Remember, data quality cannot be solved by the IT department with a tool. Hostmann said business users must be engaged to determine what is "good enough" in terms of data quality. And don't mistake data accuracy for relevance. That leads to the next big uh-oh.
Is the data transparent?
Whipping data into shape means having expert data modelers who also double as "great ambassadors," Howard said. "They're going to spend most of their time working with the business guys who understand how the data is intended to be used."
You need strong executive leadership to drive the business lines. "The biggest problem with BI has always been getting the business lines to agree on what can be made common," Howard said. Private wealth bankers tend not to want to share with the company's retail bankers, for example. From an infrastructure perspective, it is important to try to normalize that relationship.
Hostmann called the phenomenon "managers dancing with the numbers," flaw No. 2 on his list of BI mistakes.
"Managers don't want other people to look at their numbers. They talk about compliance and governance, valid reasons. But generally they like the opportunity to spin the numbers themselves. They don't want to have transparency by a dashboard or scorecard or report. They want to go into the monthly executive-level meeting with slides and dance their numbers."
Do your company a favor. Transparency correlates with better business performance. It's up to the business to say those monthly review meetings will be based on the following sets of questions and the following sets of data. Find strong business sponsors who believe in a fact-based approach to management and IT people who can map agreed-upon metrics to the data, Hostmann said. Managers who don't agree that is the right data should get the opportunity to fix it. "And that is the best way to get to data quality."
How many platforms do you have?
Many of the big vendor packages -- Oracle Corp. or SAP AG -- come with a BI solution. As a result, "you unwittingly end up with multiple BI solutions in your infrastructure that don't work well together," Howard said. "The issue becomes how do you create an uber-BI that gives you a consolidated view of all your processes and transactions."
Hostmann said enterprises often mistakenly assume that the best option is to buy a BI system from their standard ERP vendor. Indeed the error is one of the "nine fatal flaws" Hostmann and colleagues urged clients to avoid in their research report on BI published earlier this year. ("The first fatal flaw: believing there are only nine fatal flaws," Hostmann joked.)
There is plenty of pressure to go with the standard vendor. The CFO who authorized millions of dollars for ERP may balk at spending more for BI and corporate performance management tools. But "one-stop shopping" doesn't necessarily lower the total cost of ownership, Hostmann said, or deliver the best fit for your enterprise's needs. Determine which BI functions are delivered by your enterprise application vendor and compare these functions with those offered by other BI system vendors.
Who's gonna pay?
After you've shelled out for your BI software, expect to pay three to five times that in implementing it. Business intelligence is expensive, another reason for taking full measure of the political implications tied to this business initiative. Implementing BI involves multiple IT initiatives, as mentioned, and more than a dozen business and IT managers. Gartner strongly recommends that organizations form a BI "competency center" that brings together the business user, analysts, data specialists, executives and business sponsors to build a coordinated BI program and a set of projects that deliver on complex workflows across a lot of undefined economics.
"Here's IT building out this thing. Is it just peanut-buttered into the IT costs? Who's going to pay for these efforts that are not typically defined on any type of budget," Hostmann said. BI has not been widely accepted as the cost of doing business, on par, say, with the preparation of a departmental-level budget.
Hostmann said the most successful organizations he has seen typically have someone at the CFO level who decides that answering the dozen or so questions about the operational side of the business is as important as analyzing the financial side of the business and signs off on the money.
Why invest in BI now?
Budget constraints make it likely that your project load for next year will decrease. Use the free time to tidy up the infrastructure and harden up your environment to prepare for the upturn, as well as what many believe will be a more stringent regulatory environment. Good BI is critical for not only helping companies understand what they are doing, but also for providing accurate information to auditors, Howard said. BI is also related to data center consolidation and virtualization, two cost-saving measures that many companies will continue to pursue next year. And that comes back to the data.
"In order to be effective with that, you again have to have data management to go along with it, and BI is a good way to inform that effect, to tell you where redundancies are and study the state of your data," Howard said.
Hostmann agreed that BI is critical to any number of business scenarios in this recession. "Let's step back for a minute. If you look at the business factors like emerging markets, liquidity of capital, risk appetite -- all of those things have dramatically changed in the last year. That means most companies' business models have changed on multiple dimensions, and that means that the information and the rules that they make decisions by have changed dramatically since last year," Hostmann said.
How important is BI? "We even go as far as to predict that a good 30% of the Fortune 1,000 are going to miss major changes in their markets and their business because they haven't made the right investments in their information infrastructure."
Let us know what you think about the story; email Linda Tucci, Senior News Writer.