June 2009: A Note from Jeff Mack
The Bottom Line: BI – The Next Viral Craze?

If you have been reading this monthly column even occasionally, you surely know that BI is the acronym for business intelligence. You may not know, however, that the term business intelligence was coined by the Gartner Group back in the mid nineties, even though the concept is much older than that. Gartner conducts numerous studies every year on the subject, along with hosting various expert panels and releasing annual prognostications on where the industry and its key players are going. Earlier this year, they released their five BI predictions for 2009 as a press release. You can read the full story on their website.

I found a couple of these predictions particularly interesting. First among them was the following.

“Through 2012, more than 35 per cent of the top 5,000 global companies will regularly fail to make insightful decisions about significant changes in their business and markets.”

A primary reason cited for this: ”most organizations do not have the information, processes and tools needed to make informed, responsive decisions due to underinvestment in information infrastructure and business tools.” In the case of publicly held companies, this would seem to be a fairly strong prod or indictment (depending upon your point of view) to get their act together, and to do it now. What about the case of a small to midsize closely held company? Can it afford to not invest in information infrastructure, process and tools to support informed and responsive decision making? The seemingly obvious answer is no.

Yet we know that even though the BI adoption rate is accelerating, there are still some companies sitting on the sidelines. So what might be holding them back? Here are a few of the more common concerns we hear voiced.

"BI is too expensive."
While it’s true that expensive BI projects can certainly be found, today there are many free, open source BI tools available for download. Some of these are trial or limited functionality versions but they are still useful. In addition, there are many different delivery mechanisms today, ranging from the traditional on-premise installation to the SaaS model. And many core ERP and CRM applications are being shipped today with business analysis tools built in. So the perceived cost of a BI project should not prevent you from evaluating the options as there is a full spectrum of solutions available.

"BI is too complicated."
This certainly used to be true in the early years as it was primarily very technical folks driving these initiatives. As time has gone on, better tools have been developed that automate many processes. In addition, the key pressures and objectives of early adopters have given voice to a need to enable non-technical users to embrace the BI tools and solutions as an integral part of their daily routine. Thus, when done properly, the folks on the shop floor or out in the warehouse can derive just as much value as those in the C suite.

"My company does not need BI."
Really? In its simplest terms, BI analyzes a company’s historical data, and transforms that data into information. The information then enables decisions, which ultimately lead to action. The goal is to produce the right information at the right time in the right context so that the business can gain competitive advantage from it and make intelligent decisions faster. Here are just a few questions that a business might want better information, decisions and action for:

• Why is market share going to competitors?
• Which products and/or customers contribute the most to profit?
• How healthy are my customer relationships?
• What is the order backlog?
• What would cause existing customers to buy more?

These types of questions need to be answered in order to determine your current - and future - health. Just like the warnings in your favorite equity prospectus, however, past performance does not guarantee future results. The uncertainty of the future requires consideration of a variety of what-if scenarios so that decisive action can be taken. BI tools excel at facilitating what-if possibilities. Failure to use these tools, although seemingly inexcusable, is a primary cause for Gartner’s prediction that far too many companies will regularly fail to make insightful decisions.

The Gartner Group’s 2nd prediction reads as follows.

“In 2009, collaborative decision making will emerge as a new product category that combines social software with BI Platform capabilities.”

I find this very intriguing as the possibilities are almost unimaginable. Think about what is happening with Twitter right now, yet just a year ago few of us had even heard of it. Integrate the explosive phenomenon of social networking tools such as Twitter with the use of BI tools, and it quickly becomes something that none of us can afford to ignore.

Think about the possibilities as you design, package, and promote your products and services. Use of social network tools can provide almost instant feedback as to the degree your offering finds favor in the marketplace. Couple that feedback with strong BI analysis and what-if scenarios and you can begin to imagine the power of combining these two technologies.

Instead of promoting a formal, top-down decision-making initiative, the social networking aspect signals a bottom up groundswell. Try to imagine an environment where all of your staff is as enamored with their BI tools as they are with the social networking movement. Could the use of powerful BI tools become your primary recruiting weapon? I can’t even begin to answer that question, but I find it fascinating and a potential game changer in all of our bottom lines. And that after all, is the bottom line.

 

Two top business predictions for 2009:

1. You're going to need BI - and yes, you can afford it and, done properly, it provides invaluable information to all your staff.

2. Combining social networking with BI is creating a whole new realm of possibilities.