Subba’s Serendipitous moments

April 27, 2008

State of the Business intelligence industry

Dave Hatch writes a good report on the expansion and contraction of the “BI” here.

He mentions three factors that inhibit expansion within the enterprise:

  • A lack of BI skill sets among non-technical business users

  • The inability to integrate data from all sources necessary to meet business needs

  • Poor data quality – end users do not trust the information.

I would add a few more based on my experience in Asia Pacific:

  1. Vendors tend to pitch solutions to buyers than to end users.

  2. There is often a big disconnect between IT and end users in terms of what BI applications to target. In most organizations BI tools often end up as mere reporting applications.

  3. End users often have little understanding of the analysis that they need that would enable them to do strategic planning. Barring the CFO community where the budgeting and consolidation process is often well defined, other functional areas rarely have a well considered view of the role of analytics as applicable to their functions.

  4. Many BI projects have failed to produce the necessary business outcomes and hence there is some kind of skepticism. This explains why despite BI being high on the priority list of CIOs, the actual usage has stagnated, something that you confirm.

I have long held the view that for BI to succeed, the vendor community has to invest in more awareness, education and process know how with users. Given that the BI industry has consolidated with Oracle’s acquisition of Hyperion, SAP’s acquisition of Business Objects and IBM’s acquisition of Cognos, (3 of the largest pure play BI vendors), this is unlikely to happen. These large software vendors are likely to bundle BI as part of their overall applications strategy, which could give users a standard template driven packages, but enterprises are unlikely to gain significant benefits or competitive advantage, as they have not been part of of the evolution of the analytics mind set within the organization.

David also talks of BI being delivered as a SaaS service. We evaluated its appeal, and found that a lot of standard reporting applications lend themselves to the SaaS model. The moment the analytics applications has to seek data from diverse data sources, organizations have no choice but to go for the on-premise model.

I don’t think that vendors have managed to integrate unstructured information into their BI solutions. Clearly there’s a need and there’s a market opportunity.

I just want to emphasize the fact that it is not often the problem with the BI tool set, it is the inability of end users to devise their analytics frameworks relevant to their organization that is blocking the growth of the BI industry. The vendors haven’t addressed this. They would have to establish a baseline literacy of BI tools and applications, and ensure more effective implementation, rather than merely focusing on selling standard applications.

The promise of BI is yet to be translated into actual performance. BI technology has no value unless one gains agreement from the users on how it is to be deployed, more so when unstructured data powered by people whose roles and interests vary has to be incorporated. Clearly a major rethink is required.

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  1. Subbaraman,

    Apart from what I posted as a comment on Dave’s post at Sramana Mitra’s site, here’s what I would like to add here:

    You say: “End users often have little understanding of the analysis that they need that would enable them to do strategic planning.”

    True, but I have seen that even vendor personnel assigned to BI implementation projects do not have a good handle on the domain.More often than not, all they do is to succeed in making end users believe that implementing BI is extremely complex and the product can only give a framework or template – it is upon the end users to do the analysis required, and ask for the right reports/customizations. The product vendors and IT services companies do not invest in enough resources with domain knowledge, bring in thought leaders from each niche domain areas, and use those inputs into making the products more useful/flexible for the demands of each vertical.I suspect they don’t do this because they find the implementation, integration, and support revenues to be much more than the actual license fees.

    Therefore, as you rightly mentioned in another post, the CIOs and Business Area Heads should invest in their own Innovation Teams which develop the capabilities to do the required analysis and thereby get the best out of IT-driven innovations.

    Comment by Kumar Narasimha — April 28, 2008 @ 1:09 pm | Reply

  2. Kumar Narasimha:

    I fully agree with your observations about the vendors. I think the BI vendor eco system needs a fix, but I am not sure it will happen any time soon.

    Comment by Subbaraman Iyer — April 28, 2008 @ 11:27 pm | Reply

  3. I think your comments are valid when speaking at the enterprise level. I have found that at the line of business level, LOB executives have domain/process expertise and a good grasp of the process metrics they want to monitor and measure, and the data and analytics required to do so.

    Their frustration is having to rely on a centralized group of IT or business analyst resources to get the dashboards and analysis they need. Often times they have to wait in a queue until these resources respond to their requests. As BI tools become more end-user friendly, this will change.

    I also see, at the Line of Business level, that data aggregation and integration is fairly common. Also, many times, the LOB is supported by a single application and data store. Therefore, SaaS becomes very viable because the LOB does not have to invest in any BI infrastructure, or rely on limited IT resources. By simply supplying the data, their organization can and create/access their dashboards online from anywhere, with an extremely low TCO.

    Comment by Joe Blank — May 1, 2008 @ 12:32 am | Reply

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