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December 5, 2002

The BI Transformation

Innovation and evolution provide new value and opportunity

by Mark Smith

Managing your organization and aligning cost and revenue to your financial and organizational goals have been especially tough this year. Companies are searching for ways to bring IT investments into line with their most critical business priorities. This new mandate has created a strategic shift from transactioncentric to informationcentric approaches that offer collaboration and information that can drive intelligent action and decisions into the organization. This innovative way of thinking is the impetus behind a new class of software capabilities now evolving from the roots of business intelligence (BI) and decision support that help organizations manage performance in a methodical, coordinated manner.

The critical business goals of increasing efficiency, quality of processes, and value from products and services aren't achieved merely through executive initiatives or even through many of your existing enterprise software investments, such as ERP and CRM. You need methods that build a performance management network linking the strategic, tactical, and operational levels of your organization with business metrics, information, and collaboration in a decisioncentric process.

Performance Management

For those of you unfamiliar with performance management, it comprises the strategies, methodologies, and process of managing an organization at the strategic, tactical, and operational levels by understanding, optimizing, and aligning available assets and supporting technology to achieve a common set of goals and stakeholder objectives. This term is gaining significant momentum in BI-related software markets. It isn't just a buzzword, but a direction that business and IT can follow to leverage information as an asset and assemble new classes of applications and tools for gaining visibility into their organizations for improving productivity.

The dilemma lies in figuring out how to align your business and users' functional requirements in the performance management network and move in this strategic direction. I created DecisionCycle more than two years ago to provide a process and methodology for enabling performance management. In the second annual Intelligent Enterprise product assessment guide (see Resources), we provided an objective and open assessment of how BI-related products comply with this methodology. It's a functional assessment and still requires further steps to fully evaluate a vendor's match to your business requirements.

Software Market Evolution

The ability to provide performance management capabilities and a solution framework isn't for every vendor. Companies still demand and need specific end-user and development tools for extract, transform, and load; reporting; query and analysis; data mining; and so forth that will meet certain requirements. This larger set of vendors that provide their own products will need to build strong business and technology partnerships with vendors transforming into performance management providers. These relationships will be important for products to interoperate and will also require pressure from you to the vendors to ensure some level of interoperability cooperation.

The enterprise application vendors (such as PeopleSoft, SAP, and Siebel Systems Inc.) haven't yet grasped the transactioncentric to informationcentric shift in software solutions. Their marketing, sales, and product investments in process, integration, departmental, and functional capabilities are prime examples of this lack of understanding. As customer spending passes them by, however, these vendors will soon realize the shortsightedness of their current directions.