How business intelligence can improve your bottom line

By Martin Lynch

They can include databases and applications in the data mining, online analytical processing (OLAP), statistical analysis, reporting, decision support and enterprise resource planning sectors.

The tools exist to turn data - past and present - into useful information that can be used to predict market trends, analyse customer behaviour, make internal process more efficient and support sound business decisions.

According to market analysts at Gartner, which surveyed 1,500 chief information officers (CIOs) earlier this year, despite admitting that their IT budgets are flat, the number one spending priority is BI software. And it has been on top for the last four years. In 2008, the BI software market topped $8.8bn, up an impressive 21.7% against 2007 in a very depressed economic climate where most IT budgets are flat or declining.

The reason BI ranks so highly is that, when implemented properly, BI solutions can make a real difference in how a company performs. In a survey of top executives by the Economist Business Unit, 85% claimed that when business data is made available throughout their firm, the impact on financial or operational performance is 'significant' or 'very significant'.

BI tools can be useful in a diverse number of scenarios, from figuring out whether or not you are selling to the right customers and what their shopping habits are to seeing what business processes within your company are working well and those that are in serious need of an overhaul.

In the current climate, the need for BI tools has never been greater because hard times are forcing companies to look at their internal structures, how they make decisions.

Ranjit Rajan, Senior Research Manager at IDC, said the BI market is growing in the Middle East, and has proven resilient through the economic downturn. 'We're seeing more and more companies investing in analytics tools that will help them make better decisions. In the past companies were busy expanding and growing in scale, rather than adding intelligence and analytics to their business processes.'

As companies look at how they can generate business from customers that are also feeling the pressures of the poor economy, they need good information, which is something many companies just don't have.

According to Gartner, through 2012, more than 35% of the top 5,000 global companies will regularly fail to make good decisions about significant changes in their business and markets. The reason is that they have neither the information, tools, nor processes that can lead to fast and decisive decision-making. But where do you start?

Right software tools for the job

Choosing the right tool for the job and implementing it successfully can be a tricky task and many companies fail to get the most out of BI. However, the task has gotten somewhat easier in the past year since most of the big software companies have made major acquisitions in the BI sector. For instance, Oracle bought Hyperion, SAP snapped up Business Objects, IBM purchased Cognos in early 2008 and Microsoft has also made some smaller BI acquisitions.

Since most businesses already use databases and assorted software solutions from one or more of these companies, choosing a BI tool that fits in with what you already have is potentially easier and a little less terrifying. With budgets on a diet, IT managers may find it safer to go with a vendor they already have a relationship with.
A good BI solution can have a profound impact on a business.

The old business adage "if you can't measure it, you can't manage it" has been applied by many blue-chip CEOs when talking about BI, and how it has worked for their companies. BI is about improving internal and external performance through the intelligent use of data - creating a yardstick to measure your performance.

For instance, reporting tools can be used to collate and monitor past and current performance, while analysis tools can drill through that reported data to highlight trends for better performance.

And that's where any BI project starts: data. In order to succeed, the first task is gather your data, validate what's useful and what isn't and then deliver that data to users in a usable format. After all, if the information sources feeding into your BI solution are not 'clean' or validated you will find yourself falling victim to the 'garbage in, garbage out' rule, whereby the results you get are less than accurate.

Finally, start small. BI pilots need to prove themselves in order to get more support from the users and additional funding for a wider rollout. Take Dutch energy giant, ENECO, which faced internal resistance from users to BI. It rolled out a small, focused project in 2003 that cost €350,000 to implement, but which saved the company €4m. BI has since been accepted and rolled out in other areas of the business.