Business Intelligence 2
Business Intelligence 2
Business Intelligence
business intelligence
n 1995, when data warehousing was just another emerging information technology, most peopleincluding some at TDWIthought it was just another tech fad that would fade away in a few short years like others before it (e.g. artificial intelligence, computer-assisted software engineering, object-relational databases.) But data warehousings light never dimmed, and it has evolved rapidly to become an indispensable management tool in well-run businesses. (See figure 1.) In the beginning In the early days, data warehousing served a huge pent up need within
organizations for a single version of corporate truth for strategic and tactical decision-making and planning. It also provided a much needed, dedicated repository for reporting and analysis that wouldnt interfere with core business systems, such as order entry and fulfillment. What few people understood then was that data warehousing was the perfect, analytical complement to the transaction systems that dominated the business landscape. While transaction systems were great at getting data in, data warehouses were great at getting data out and doing something
BuSINESS INTEllIGENCE
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Business Intelligence
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self-service Analysis
productive with it, like analyzing historical trends to optimize processes, monitoring and managing performance, and predicting the future. Transaction systems could not (and still cant) do these vitally important tasks. Phase Two: Business Intelligence As it turns out, data warehousing was just the beginning. A data warehouse is a repository of data that is structured to conform to the way business users think and how they want to ask questions of data. (Id like to see sales by product, region and month for the past three years.) But without good tools to access, manipulate, and analyze data, users cant drive much value from the data warehouse. So organizations began investing in easy-to-use reporting and analysis tools that would empower business users to ask questions of the data warehouse in business terms and get answers back right away without having to ask the IT department to create a custom report. Empowering business users to drive insight from data using self-service reporting and analysis tools became known as business intelligence.
Figure 1. As data warehousing has morphed into business intelligence and performance management, its purpose has evolved from historical reporting to self-service analysis to actionable insights. At each step along the way, its business value has increased.
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Historical Reporting 2000s 2010
This section was written by Mediaplanet and did not involve The Washington Post News or Editorial Departments.
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Phase Three: Performance Management Today, organizations value insights but they want results. Having an intelligent business (via business intelligence) doesnt do much good if the insights dont help it achieve its strategic objectives, such as growing revenues or increasing profits. In other words, organizations want to equip users with proactive information to optimize performance and achieve goals. Accordingly, business intelligence is now morphing into performance management where organizations harness information to improve manageability, accountability, and productivity. The vehicles of choice here are dashboards and scorecards that graphically depict performance versus plan for companies, divisions, departments, workgroups and even individuals. In some cases, the graphical key performance indicators are updated hourly so employees have the most timely and accurate information with which to optimize the processes for which they are responsible. Organizations have discovered that publishing performance among peer groups engenders friendly competition that turbocharges productivity. But more powerfully, these tools empower individuals and groups to work proactively to fix problems and exploit opportunities before it is too late. In this way, performance management is actionable business intelligence built on a single version of truth delivered by a data warehousing environment. The Future As Timbuk3 once sung, The future looks so bright I have to wear shades. The same could be said of business intelligence as it increasingly becomes a powerful tool for business executives to measure, monitor, and manage the health of their organizations and keep them on track towards achieving strategic goals.
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business intelligence
news in brief
n a rising market good enough will generally allow you to get by, says Richard kellett, BI manager at SAS, an analytics software vendor. However, in the current global market, good enough isnt good enough anymore. you have to get everything you can out of every dollar spent. Just having some statistical reports and a bit of classic BI, with multi-dimensional analysis of historical information, is no longer good enough. He says that organizations now use predictive analytics as part of their BI solution. This models what is likely to happen and helps them to optimize
their business. It is used in areas like pricing, marketing campaigns and web site sales, to give them a competitive advantage. It is about optimize, optimize, optimize, he says. Given that all businesses in a market have access to similar data and analytical technology, competitive advantage flows from better analysis. This means being superior in extracting insights from the data into areas like trends and customer behavior, which can be acted upon to increase sales. kurt Schlegel, research vice president at Gartner, the analyst, says that BI is very good at identifying the weak signals of opportunities that are out there
business intelligence
he BI systems installed in most companies are too internally focused to be great macro-economic indicators, says kurt Schlegel, research vice president on the business intelligence team at Gartner, the analyst. Unless you were in the financial services industry and your BI system was about looking at mortgage-backed securities, not even the best BI system could have predicted the meltdown in the mortgage security industry and the freeze in the credit markets. Nevertheless, BI systems have played a part in helping organizations to survive through the recession. Jim
Davis, chief marketing officer at SAS, a business analytics software vendor, says that it enables businesses in multiple industries to improve operations, enhance customer relationships, streamline supply chains, detect and fight fraud, leverage growing volumes of data and do more with less. BI is critical to cutting costs in a downturn, says Schlegel. you dont want to cut too close to the bone and BI helps you trim as much fat as possible without cutting into the meat. you dont want to make cuts that could affect your most profitable customers. BI also helps organizations to contribute to economic growth by identi-
fying new opportunities and improving performance. Greg Todd, global information management lead at Accenture, finds that despite the recession and the economic conditions BI is still top of mind for most executives. Organizations that are looking to do more and spend less need improved BI to understand how they are performing and how to spend their money most efficiently, he says. BI helps to define optimisation approaches and performance improvements throughout an organization. A well designed BI strategy aligns all employees behind the organizations overall objectives and measures,
understand what it has been used for. It is critical that the government demonstrates that the value that people expect from this massive commitment has been created from every dollar of that has been pumped into the economy, he says. It will also help to understand how the markets are recovering. Goyal adds that once we have this 100% transparency, efficiencies will follow. Alys Woodward, program manager for BI at IDc, the analyst, concludes that although BI is not the most important factor in economic recovery, it has an important role to play in supporting it. Best practices in data management and information sharing lead to improved decision making, which will benefit the entire economy, she says. Individual organizations that make better use of information than their competitors have the best opportunity to turn the recession and recovery to their advantage.
business intelligence
No to Gut Feel
owever, competing Through Business Analytics, an Accenture survey, found that 40% of important business decisions are not based on analytics. The reasons given were sufficient data not available (61%); no past data for the decisions and innovation they are addressing (61%); and relying on qualitative and subjective factors (55%). 40% say one of the biggest challenges they have is lack of standard
processes across the company for analyzed business data and 57% said they dont have a beneficial, consistently updated enterprise-wide analytical capability. 72% are working to increase their companys business analytics usage. With the amount of information that is available, you want the organization to be working towards factbased decisions, but unfortunately people revert back, says Greg Todd,
global information management lead at Accenture. Improving the quality of business decisions has a direct impact on costs and revenue and 71% said that BI helps them with their operational performance, which is a strong indicator that the trust and value in BI is there. It plays a role in pricing strategies (55%), asset management (54%), customer retention (52%) and talent management (33%). The complexity of most existing BI
of resulting decisions. Organizations must improve their decision management capabilities by capturing knowledge of how decisions are made and their outcomes, says Alys Woodward, program manager for business analytics at IDc, the analyst. They need to be able access both structured data and unstructured data to analyze and collaboratively and automate repeatable, tactical decisions, she says. However, the key market growth in the BI space will come from users moving away from spreadsheet-based infrastructures, built and maintained by business users rather than IT.
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business intelligence
ers to make better, faster and more intelligent decisions, says kristina kerr, lead BI product manager at Microsoft. It helps users get better business insight, while reducing dependence on their IT departments. This eliminates time spent on ad-hoc BI requests, enabling both IT professionals and users to provide greater strategic value to the business.
hereas a dashboard is fairly simple to implement, a scorecard is a far more scientific and structured way at looking at the state of the company, although it can be reported as part of a dashboard. The balanced scorecard was devised by kaplan & Norton to view an organizations overall performance to ensure sustained profitability. It integrates financial measures; customer perspectives; internal business processes; and organizational growth, learning and innovation. The complexity of managing an organization today requires managers to view performance in several areas simultaneously, say kaplan & Norton. By forcing them to consider all the important operational measures together, the balanced scorecard can let them see whether improvement in one area may be achieved at the expense of another. It involves developing a cascading series of kPIs which are used to translate the overall strategy into different operational measures relevant to each level that will contribute to the top level. Most organizations have turned reports into dashboards over the last few years, which is easy, says kurt Schlegel,
research vice president at Gartner, the analyst. Scorecards are much more difficult to build and are much less widely adopted. However, organizations that have tied dashboards to a broader performance management initiative have experienced success. Tying BI to performance management makes it more strategic, which has been the single biggest factor in running a successful BI program over the last few years.
...helps users get better business insight, while reducing dependence on their it departments.
the complexity of managing an organization today requires managers to view performance in several areas simultaneously...
The traditional focus on tools has limited the business intelligence industrys impact: Most non-technical users find them hard to learn. They need the right information at the point of decision-making, which means widely deployed BI applicationsintegrated into their day-to-day responsibilitiesmust increase in importance relative to slice-and-dice tooling. - Jake Freivald, CMO Information Builders.
informationbuilders.com/go/wapo
business intelligence
BI in the Cloud?! Humpty Dumpty meets there is a solid reality behind Data Warehousing this nebulous concept.
The terms business intelligence and the cloud are much loved by marketing departments, are both There is a dirty, little secret about data warehouses: meaningless and both distract from a very solid we wouldnt need them if top executives ran their business reality. Gartner defines cloud computing as organizations properly. a style of computing in which scalable and elastic data warehouse reflects the staffs, and data. Its the job of the cEO IT-enabled capabilities are delivered as a service to organizationthe more fracto bring order to this chaos. If the cEO external customers using internet technologies. tured and disintegrated the provides the business with a clear, coBy: WAyNE EckERSON, DIREcTOR TDWI RESEARcH
I software is operated by a service provider on its own high performance computing infrastructure. It is shared by a number of different user organizations who access the service over the internet and pay on the basis of usage. It eliminates the up-front costs of software and hardware, is more reliable, more flexible and offers powerful new applications. People find it much easier to bring data inside than moving it outside, says Ambuj Goyal, general manager at IBM information management software. However, time after time, we are seeing that if organizations can access a secure legally-private environment, they do not want to build their own analytical database. They want somebody else to process their data and send back the results of the analysis. Many organizations are already using business software hosted by providers like NetSuite and Salesforce.
com, so it is very natural to extend to use their integrated BI functionality. It is also an attractive proposition for mid-sized organizations that dont have in-house analysis skills. Richard kellett, BI manager at SAS, a business analytics software vendor, says that putting an entire BI infrastructure into the cloud can be difficult, with links to lots of operational systems. However, individual BI applications work well in the cloud, especially if they are embedded into a business application. BI in the cloud is good news, concludes Alys Woodward, business analytics program manager at IDc, the analyst. It will help one-off analytics projects, existing systems struggling to calculate quickly enough or new user organizations that want to move up to a more mature implementation. It is not a panacea for all BI ills, but it will remove some implementation obstacles, reducing the significant challenge of succeeding with BI.
organization, the harder it is to create a robust, highly functional data warehouse. These data repositories really are a tool to reintegrate a fractured enterprise and provide a holistic and consistent view where none exists. Most organizations are like Humpty Dumpty teetering and tottering on top of a big wall. With the slightest gust of wind, Humpty crashes and breaks into dozens of pieces. And data warehousing teams are all the kings horses and all the kings men who are charged with putting Humpty Dumpty back together again. Today, most companies have fragmented into dozens or hundreds of largely unconnected business units, departments, and workgroups, each with their own strategies, policies, processes, applications, systems, IT
herent strategy, integrated processes and systems, and standard definitions and rules governing those processes, then there is almost no need for a data warehouse. The kings horses and men didnt cause Humpty Dumpty to fall, but they often get blamed if they cant glue him back together again. Perhaps poor Humpty Dumpty is cracked beyond repair so that even the best and brightest of the kings men cant rehabilitate him. The good news is that unlike our fairy tale metaphor, many BI teams do succeed in gluing their companies back together, at least for awhile until the next merger, acquisition, or other organizational upheaval blasts everything apart. But while it lasts, these unsung heroes should be congratu-
lated and honored; not outsourced, off shored, or reassigned to the ITequivalent of a Siberian gulag. The moral of the story is this: dont blame the data warehousing team if it cant deliver a successful data warehouse; blame the cEO. The data warehouse is merely a messenger, a reflection of the state of organizational dysfunction.
...many bi teams do succeed in gluing their companies back together, at least for awhile until the next merger, acquisition, or other organizational upheaval blasts everything apart.
Thousands of industry leaders rely on MicroStrategy business intelligence software for detailed insights into their businesses.
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business intelligence
a vital role Panel of Experts: How has business intelligence playedto form? into stimulating the global economy back
BRUcE ARMSTRONG
chairman of the Board and chief Executive Officer kickfire The web and BI are the most important developments in the global economy. The web brings new opportunities for organizations to interact with their customers, but only through an explosion of data. Organizations that succeed at the end of the recovery will have harnessed the power of the web and made sense of the data to drive up revenue and profitability of their customer relationships. The trend in BI is towards lower costs and quicker wins, causing resurgence in independent data marts. These are subject specific and fed directly from operational systems, rather than from an underlying enterprise data warehouse. They tend to contain summarized data, making them smaller and faster. They are very specific to the business managers problem and give them access to the data that matters to them most. They are a lower cost, lower risk way to get value out of the data more quickly, speaking directly to business managers who need to increase revenue and profits. Bruce Armstrong, CEO and Chairman of the Board brings 25 years of technology-specific development, marketing and sales experience to the his position at Kickfire.
BEN TAUB
cEO Dataspace
MIcHAEl STONEBRAkER
Founder and chief Technical Officer Vertica Business analysts desire to put more and more data in the warehouse is accelerating in the current economic situation, as US organizations use BI to cut costs. With BI databases growing and managers wanting more sophisticated analysis, BI is getting harder. Most database administrators are either in pain or can see it coming. This will make it essential to build a shared nothing environment, consisting of a large number of cheap servers that can be easily expanded as the data grows. The data warehouse must then store data in columns, not rows, which is far more efficient. It reads just the columns it needs, where traditional systems have to read every column in every row. It is many times faster, simpler, doesnt store lots of header information, is easier to compress and uses cache more efficiently. This approach will completely take over the data warehouse market within a decade. This will help the US economy through smarter BI and better decisions. Michael Stonebraker, founder and chief technical officer at Vertica, has pioneered database technology research for more than a quarter of a century.
MIcHAEl SAylOR
chief Executive Officer MicroStrategy
DEREk EVAN
Solutions Architect for Advanced Services Tidal Software In todays global economy, the record pace of change leads to the need for quick decisions on where to invest and how to run the business that impacts organizational success or failure. BI provides organizations with the insight to make timely decisions that are most likely to provide the desired outcomes. The data that fuels the BI systems comes from a variety of internal and external sources, often very disparate and global. BI takes this data and transforms it into information that is accurate, timely, and actionable; often through hundreds of processes including extraction, cleaning, transformation, integration, loading, analysis, etc. With its multitude of connectors, global control, and alerting, it is the role of enterprise scheduling to manage the complex flow of data from varied sources into the BI system and ultimately deliver it out as information to the appropriate end users. In the hands of the right leaders, this information is what drives the success of the enterprise. Derek Evan solutions architect for advanced services at Tidal Software, a Cisco company that provides application scheduling and performance management software.
JIll DycH
Partner Baseline consulting
BI can play a huge role in stimulating the global economy back to form. Organizations have invested billions of dollars in operational business systems, which are great for running business processes, but not for decision support. BI pulls together detailed data from multiple systems to give managers the ability to capitalise on these investments by quickly identifying problems and opportunities. It might only be used ten minutes a day, but it will be critical in driving the business. It quickly shows the user what is going on and where the problems and the opportunities lie. The rest of the day is spent acting on the insight gathered. Traditionally BI has been used by large corporations, but it must be democratised to make it suitable for mid-sized organizations. Packaged solutions that run in the cloud allow smaller companies to benefit without a multi-million dollar investment. Each organization must navigate its own way out of the slump, but effective use of BI can chart the way. Ben Taub, chief executive of Dataspace, a BI software and consulting firm.
This economic disaster was largely caused by a catastrophic lack of information about financial instruments. Subsequent lack of information has prolonged the downturn, as people continue to fear the unknown and simply wait. Organizations that do not have timely and accurate information will continue to remain frozen. BI eliminates unknowns and is playing a pivotal role in restoring confidence by illuminating the broader economic landscape. Users understand their business and have the confidence to make investments, re-start operations and expand their markets. Information is the largest renewable economic resource in the world and remains largely untapped because of its sheer size. The uses of information, like the uses of electricity, are limitless, driven by imagination and inventiveness. Modern enterprises must build the information power plants and power grids that will unleash the inventiveness of their employees. knowledge is the key to confidence, and confidence is the key to economic recovery. Michael Saylor, chief executive officer at MicroStrategy, a BI software vendor.
Organizations that have deployed BI successfully are not only surviving the downturn, but thriving. It has helped them to manage inventories, cut costs, better target promotions, increase equipment utilization and identify their most loyal customers and their preferences. They have moved BI from the back-office to the front line. They no longer run the business on gut-feel, but use factbased decision making. Jack Welch once said that when times are good you grow and when times are bad you build. Our most visionary clients are investing in BI for the longhaul. Although their IT budgets have been cut, they know that understanding their business from both an operational and strategic perspective could mean the difference between fast-follower and market leader. We have seen them use analytics to introduce new products and services ahead of their competitors, segment their customers differently and launch smart marketing campaigns that have increased overall revenues. They reap the true benefits of BI by using it as a strategic differentiator.
Jill Dych is a partner with Baseline Consulting, which provides business intelligence, data governance and technology delivery services.