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Globalization is happening at an accelerating rate, thanks to the internet and e-commerce. There is also a renewed expectation that companies will protect profitability and shareholder value. These two factors make it imperative and increasingly urgent for you to understand your company's performance and optimize management of its resources. This need for better and quicker understanding has spurred rapid growth in the business intelligence (BI) market, as shown in increased product development, establishing it as a major category of business software.
However, despite the fact that plenty of BI products are now available, the challenge remains for companies to understand how to align the software to all employees and business processes to achieve improved efficiency and profitability. BI traditionally, for nearly all of the past 20 years, came in the form of decision-support and executive information systems, which served mainly executives and a few analysts. Industry movements this past year have responded to this problem, enabling companies to leverage BI enterprisewide for business results.
The first movement entails the introduction of analytic applications, packaged solutions focused on optimizing business processes, such as customer relationship and supply chain management (CRM and SCM, respectively). However, although these applications are well aligned with business processes and have significantly improved companies' bottom lines, they were designed for analysts rather than the general employee population.
The second movement puts the power of analytics into the hands of all individuals and embeds analytics within business operational systems. This push in the market may have, as a side effect, created some confusion about the word analytics; many suppliers of data warehouse and BI software have begun to stretch its definition. But the word's meaning is unchanged since 1592: the method of performing logical analysis. Confusion aside, businesses should focus on how to gain competitive advantage by leveraging analytics for the entire company.
Analytic Challenges
Using analytic techniques to leverage the exponential growth of data, by transforming the data into relevant and timely information, is a difficult undertaking. Doing so requires your company to overcome three challenges.The first challenge, accessibility, which is about connecting the broad employee workforce and business network of customers and suppliers with relevant information, has traditionally been a low priority. It has been perceived as important; however other projects have taken precedence, such as advancing business operations and maintaining existing software infrastructure.
Not only has accessibility been on the back burner, but it's also a difficult undertaking. Companies have been looking to established BI tool vendors (such as Cognos Inc., Business Objects, and MicroStrategy Inc.) for query, reporting, analysis, and publishing capabilities to address information delivery needs. The goal of providing these capabilities to potentially thousands of employees, customers, and suppliers is not easily accomplished, and suppliers vary significantly in their ability to support this level of deployment. Companies typically get caught up in the features when evaluating vendors, and do not spend sufficient time validating server architecture and required performance and scalability. This step is absolutely critical to meet the deployment requirements and user needs involved in environments saturated with data.
The second challenge is to evaluate cost of ownership, which includes the human and financial resources needed to fully leverage the analytics. Still keeping in mind the preceding example of deploying BI tools to thousands of users, understand that companies must carefully consider the hardware configuration required to support planned deployments. If this subject is not closely addressed, a company could grossly underestimate the hardware and human capital costs it will incur. Many companies with this problem have already spent anywhere from $50,000 to a million dollars on BI tools.
Another related consideration is the high software cost per user, which has been a barrier to performing broad deployments. This issue has pushed many companies to spend more money than originally intended in order to get sufficient discounts to reduce the cost per user. Unfortunately, most vendors are clinging to their profitable pricing models, which often require an investment of $1,000 per user. To ensure that you are properly addressing cost of ownership, look carefully into the technical architecture and server configurations required to meet existing and future deployments. Ensure that you check vendors' customer references and benchmarks. In addition, be sure to estimate the ongoing IT staff requirements for supporting the deployment. It is essential that companies fully evaluate the total cost of ownership required for implementation, deployment, and maintenance.
Integrated and Embedded Analytics
The third challenge is to attain efficiency within business processes and individual users. To increase business efficiency, you must, of course, streamline activities, but what's more important is reducing the complexities that many employees face. The traditional approach of having distinct tools for many functions, including BI, is becoming increasingly too complex for IT and employees.The answer to some of these challenges is integration and embedding of analytics within a business application framework. One approach is to integrate analytic tools and applications within one environment. Advanced portal technologies deploy this strategy by providing frames or windows into tools and applications. In fact, at the Cognos user conference in October 2000, the keynote session demonstrated portal applications that were integrated with Cognos Inc.'s PowerPlay and Impromptu. Another example is SAP's MySAP.com Workplace offering, a portal framework that centralizes and aligns tools and applications to the role of the individual.
Another approach is to embed analytics within applications to drive information to the user or suggest actions. This approach is already seen in e-commerce systems that dynamically generate content (such as the advertisement selected to appear, pricing offered, and cross-sell pitches made) based on analytics performed on knowledge of a given individual. One example is Vignette Corp.'s e-commerce software, which uses embedded analytics in combination with individuals' profiles to drive content to the individuals. Another example is from a company called Zilliant Inc., which provides dynamic pricing based on embedded analytics within e-commerce systems.
Embedding analytics requires integration at both the server and application levels. To be able to integrate and embed analytics, BI vendors are under new pressure to support this level of openness and customization. This push has also provided new market opportunity, seized by vendors such as InfoRay Inc., MicroStrategy Inc., and NQuire Software Inc.
This year will prove to be the year of analytics and will put the term "business intelligence" into a new context. To successfully leverage analytics, you have to understand its meaning and potential business benefits. The opportunity to streamline business processes and optimize the activities of employees and their interactions with customers and suppliers is tremendous. Using analytics that are integrated or embedded can provide meaningful information that gains you new insight and knowledge and also automated actions that take quick advantage of this knowledge. To apply analytics to their full potential, be sure to fully evaluate your BI software to understand how it can be integrated and embedded while also scaling and performing to meet your business needs.
Mark Allen Smith (mark.smith@fullcirclestrategies.com) is principal and founder of Full Circle Strategies and an expert in the applied use of information and analytics in the areas of business intelligence, portals, and analytic applications.
RESOURCES
Business Objects: www.businessobjects.com
Cognos: www.cognos.com
InfoRay: www.inforay.com
MicroStrategy: www.microstrategy.com
NQuire: www.nquire.com
SAP: www.sap.com
Vignette: www.vignette.com
Zilliant: www.zilliant.com
  
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