CIOs interested in changing the IT department's image from cost center to revenue generator may want to delve into...
the creation of customer-facing business intelligence (BI) data services.
It has not been easy for IT to prove the value of BI software to the business, despite multimillion-dollar investments. As Jitender Nankani, a client engagement manager at BI consulting firm Saama Technologies Inc. put it, his clients need some "BI on BI" to sell it to their own users.
"Right now, my clients are trying to figure out what [data] to measure and how to sell it internally, never mind externally," he said in reaction to a presentation at Gartner Inc.'s recent Business Intelligence Summit on the subject of turning BI from a cost center into a revenue generator.
His sentiment echoed that of many attending the conference, but the audience was also intrigued by the idea that companies were gathering business intelligence data across their customer base and selling it back to that base as a service.
Guy Carpenter & Company LLC, a New York-based risk and reinsurance service provider with more than 500 worldwide offices, has developed a service that allows its customers to conduct "what if" scenarios against their portfolios. "What if [the provider] cut its 50 lowest-performing policies?" asked Kurt Schlegel, a Gartner analyst who gave other examples during the show of businesses wrapping business intelligence data services into existing customer-facing services.
Guy Carpenter is also in a position to aggregate information across the portfolios of all its customers. This allows customers to see how their portfolios fare against competitors, or determine the probable maximum loss-to-policy ratio of their own policies against the industry average, Schlegel said.
Another company, credit card processor Moneris Solutions Corp., has created Merchant Direct, a service that lets customers see how their sales fare against aggregated sales data in specific industry sectors.
"They have 35,000 merchant locations -- florists, gyms, Kmart -- all use [Moneris] for credit card processing, and now these customers can see benchmarking data against similar merchants," he said.
Many of these BI services are folded into existing service offerings for free, but some businesses are finding ways to charge for such services. A large Canadian bank feeds business intelligence data from its data warehouse to self-services kiosks. Customers are charged a minimal fee for information such as bank statements.
"We've been able to automate a manual process, making it more convenient for customers to get information from us, and charge them a fee," said Andy Hanna, a member of the bank's business information systems group. "Making BI self-service … that is like gold; customers just serve themselves and are charged a fee."
By 2013, some form of business intelligence, whether reporting or analysis capabilities, will be an expected component of both customer and partner relationships, Schlegel said. "Your customers are going to expect some type of access to their information, their activities and transactions, and this will evolve eventually into industry benchmarking," he said.
By 2014, 20% of global organizations will create a product or service based on some portion of data derived from their BI systems, according to Gartner. "So one in five will sell these solutions to customers -- most won't charge for it -- but some will be able to," Schlegel said, adding that CIOs are in a prime position to productize BI since many IT departments are charged with their organization's BI efforts.
Legal implications and security risks
Boris Evelson, an analyst at Forrester Research Inc. in Cambridge, Mass., said he mainly sees retailers bandying about the idea of selling business intelligence data services.
"It has to be done at an aggregate level to protect privacy -- you don't want HP to see the detailed transactions for the Dell printer," he said. "But once privacy is taken care of, retailers can offer services that show suppliers what their customers are buying by region, product classifications and benchmarks of how they're selling against competitors. All that, and more, can be sold as analysis as a service to suppliers."
To take it a step further, he said he believes groups of retailers will join forces to aggregate data. Think Best Buy, OfficeMax and Staples offering a joint data analytics service for suppliers -- a type of shared marketplace, which some retailers are talking about, although Evelson said he has yet to see anything implemented.
Aside from the legal implications, the IT department will have to revamp security and network capabilities. It's one thing to supply data internally, but once that data becomes customer facing, an entirely different set of security and performance measures will need to be put in place, Schlegel said.
Let us know what you think about the story; email Christina Torode, News Director.