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Thursday, January 20, 2011

Business Intelligence What BI Solutions Are & Why Businesses Need Them

Toss a month or two of lagging profits into a company’s business calendar, and you’re likely to see executives scrambling to investigate the source of the trouble. Before refined techniques and mature technologies helped business intelligence become the force it is today, rooting out problems or even analyzing business data for a strategic advantage was a chore of the highest level. But now companies are increasingly turning to BI to effectively absorb and use the massive amount of data that pours into their environments with no end in sight.

Intelligent Insight

As BI has evolved over the past several decades, the concept has grown to span an extensive range of concepts that combine to help businesses make better decisions about their strategies and processes. According to a Forrester report, BI encompasses the “methodologies, processes, architectures, and technologies that transform raw data into meaningful and useful information,” though more casual references to BI often refer to certain pieces of the entire


BI model, such as information gathering and analytics. While businesses can certainly extract value from single pieces of the entire BI pie, the biggest benefits typically derive from the use of most (or all) of those pieces.

“Business analytics and business intelligence are about providing leaders with the information and insights that will help improve business performance with better decision-making,” says John Lucker, principal, Deloitte Consulting (www.deloitte.com). “However, there are a number of factors an executive must have in place to execute a successful business analytics strategy that is truly useful to the business goals of the organization. Only with the right tools, the right training, the right people, and the right culture of analytics innovation can you become better at turning your information into a factbased resource to help your company make better business decisions.”

Whether a business is struggling to keep its head above water or enjoying unprecedented success, there’s almost always an opportunity to gain an advantage through data analysis. For example, Lucker notes, data analysis can help to identify business process leakage where a business misses the opportunity to maximize various forms of value (such as better products, pricing, supply chain management, sales, customer service, and customer insights and relevancy).

“Imagine a large computer distributor that competes on service, not price, to achieve a healthier margin than its rivals,” says Paul Sonderegger, chief strategist with Endeca (www.endeca.com). “To sustain this advantage, the company must offer better service in everything it does, including how it sells. By giving its salespeople a BI solution that brings together customer information, past transaction history, and current promotions, each salesperson can combine exploration of this data with personal knowledge of his or
her accounts to target offers more effectively. The result is a whole sales team that caters to customers’ needs better, reinforcing the company strategy, and beats its quotas.”

Many businesses have already invested heavily in ERP (enterprise resource planning) over the past decade in an attempt to achieve similar value, but the results weren’t always quite as they anticipated, according to Bill Jeffery, technology practice leader for Tatum’s (www.tatumllc.com) eastern region. “[ERP] provided improved transaction efficiency but did little to improve the insight a business executive has into either the
performance of the business relative to the stated business strategy or how the business was performing

relative to the market and competition. BI can leverage the ERP investments and raise the value that IT can provide to support what we call ‘business insight,” Jeffery says.

Smart Tool
The BI market boasts such a tremendous amount of tools that managers new to the concept could easily

grow overwhelmed when searching for the right product for their environments. Yet from a bird’seye view, BI breaks down into a few basic parts. At the core of a BI system is the method for gathering and storing data that will be used for analysis. Ideally, data collection software is used to gather data and store it in a data warehouse, which usually resides on a server, though some BI applications don’t necessarily require a data warehouse.

Some businesses choose to simply dump data into spreadsheets, but this method runs the risk of creating a “spreadmart” composed of varied sets of data across multiple spreadsheets. In a spreadmart, a business might have the same data across different spreadsheets, but different values are applied to the spreadsheets, including the data that’s collected and the spreadsheet’s format. Rather than having businesses risk data becoming trapped in data silos (that is, in disparate spreadsheets), many experts recommend using common reporting tools that provide dashboards, scorecards, ad hoc query and analysis, and other intuitive, flexible functions.

“This software will auto-discover storage repositories and, as long as [the business gets] the right security credentials and assuming the various policies are set up by IT in terms of what to do with certain types of data, it will catalog all the data and index it for future use,” says Arun Taneja, founder and consulting analyst, Taneja Group (www.tanejagroup.com). “The policy engine is provided by the software vendor and allows IT to take certain actions on the data. These actions could include the retention period [i.e., how long to keep the data], placement in a certain tier of storage, movement from tier to tier over time, immediate deletion, tagging
for legal holds, number of copies to be produced and kept, etc.”

With this type of tool, the business is armed with a solid baseline since it knows what data it has and where it is, Taneja adds. Developers such as Oracle, Actuate, Endeca, StoredIQ, and others provide platforms and utilities that can search across company data to extract the information required for analysis. Some of these platforms include high-powered databases that can keep data updated from across the enterprise and that also provide powerful search functions to pull in specific data. These platforms also allow businesses to integrate data from various sources into single views.

BI tools can collect data from an enormous number of sources, including those outside of company walls. In fact, Lucker says that while it’s essential to capture new data and store it internally through a company’s own business or operational processes, it’s also important to find and license new external data sources. Having this data—along with the requisite internal data—readily available to BI tools ensures that data remains fresh and relevant, since external data can change often, he says.

What’s Your Problem?
Naturally, gathering data and creating dashboards, scorecards, and other seemingly helpful reports is just one part of the BI equation. A business using these BI tools remains tasked with determining exactly what to do with that information, or what Taneja calls “extracting business value” from the data. There may be heaps of data available from e-commerce activity, for example, but the treasure lies in how that data can be applied to

business strategy. And as data piles into terabytes of storage, BI can help make sense of what would otherwise be little short of information overload. “Is there a competitor that is eating into the western region revenue? Is there a price issue in the Denver market? Is the new discount program that was announced in the eastern region affecting the western region? Why was there a spike in activity in Utah last month? Is there an underlying pattern to higher sales in the north? Some of these problems require the use a subset of data and [to] perform analytics on it,” says Taneja. “But many require hundreds of terabytes of data to deliver meaningful results. This is the space for BI.”

Approaching BI with the knowledge of why it’s needed is a crucial element often overlooked by companies
that fall into a tools-first mindset. Lucker says that instead of having conversations about buying tools, executives should first focus on the business problem at hand. Once that problem is identified, the search for analysis tools that have the technology and services to accommodate that problem can begin in earnest. Also, he adds, technology support for BI and its associated analytics should be a collaborative effort.

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