Project 7
LM1 – Business Intelligence
Sarah Stottsberry
Business intelligence (BI) is a term used to describe the processes and tools used by a business to convert transactional data to valuable information that can help make better business decisions. The roots of BI go as far back as the early 80’s when decision support systems gained popularity. At that time, a Fortune 500 company may have had megabytes of transactional data, and tools like Excel and Lotus 1-2-3 were used to explore, and rationalize the data into actionable information. During this era when many acronyms like DSS (Decision Support System) and EIS (Executive Information System) were used frequently, an analyst at Gartner tried to bring commonality to these terms and in 1989 defined the term Business Intelligence as “An umbrella term to describe the set of concepts and methods used to improve business decision-making by using fact-based support systems “[1]
History and Trends
As shown in Figure 1, this umbrella term includes transactions, data warehousing, analytics, and on demand information access.[2] The 1980’s witnessed the EIS or DSS that provided easy access to internal and external information needed to support strategic goals of an organization. In the 1990’s, the advent of the Online Analytical Processing (OLAP) approach to supply information in a multi-dimensional nature, in addition to scorecards, dashboards, and key performance indicators (KPI’s) that were used to evaluate performance and to help make key decisions after certain events occurred. These tools are often categorized as BI 1.0 technologies, described as “closed loop” signifying that there is generally no outside input because they are used after the key event(s). By 2000, BI 2.0 technologies began to gain in popularity. These are described as “open loop” in that they allow for real-time analysis through alerts and business activity monitoring. This real-time analysis offers a higher level of data abstraction, offering high level knowledge without the need to understand such things as data structures. [3] Additionally, they allow for decision automation that continually reacts to certain circumstances ultimately preventing undesirable business results from occurring. For instance, if a sales team realizes at certain points of time that their sales figures have dwindled, they can immediately change their course in hopes of ultimately meeting yearly goals.
Business Intelligence Industry Vendors
The worldwide business analytics software market is experiencing a significant growth rate. In 2006, it grew at a rate of 11.2%, reaching $19.3 billion.[4] There are two primary categories of business analytics software. It includes performance management tools and applications, as well as data warehouse platform software. Figure 2 shows the competitive market space of performance management tools, showing that Oracle has been a major player. In recent years, the market has seen some consolidation including Oracle’s acquisition of Hyperion, and Business Objects acquisition of Cartesis in 2007. [5] The competitive outlook of the data warehouse software market includes many of the same vendors. Figure 3 shows the revenues by leading vendor. Similar to the performance management software market, Oracle also dominates this market space.
While Oracle remains in the top spot for both BI tools and data warehousing, it is likely that this is because of its longtime presence in the data warehousing market. Analysis of the various market segments shows that some vendors are more focused in certain areas of the market.[6] For instance, in the supply chain and operational analytics applications, SAP was the revenue leader. SAS and Fair Isaac were strong in this category as well. In the CRM segment, leaders include Oracle’s Siebel, followed by SAS and SAP. Additionally, in the financial analytics arena, Hyperion, Cognos and SAP showed a strong position.
Recent consolidation has led some to believe the market has reached maturity. [7] This consolidation leaves little to the middle market, with the mega-vendors on one end, and smaller players on the other. Vendors like Microsoft have been able to offer more affordable options for small to medium sized businesses. Its BI solution in PerformancePoint Server and SQL Server, along with built-in support to Excel, provides value for small business.[8] Ultimately, it allows Excel to handle larger data volumes, providing value to small businesses.
BI and Small Business
Traditionally, BI adoption has been dominated by large organizations that have the time and money to devote to such projects. The market has seen low penetration by small to medium sized businesses, with most of them relying on spreadsheets for CRM and BI needs.[9] This tradition is changing and the market is seeing more small to medium sized businesses successfully implementing strategies that include BI programs. Approximately 16% of small business and 30% of medium sized businesses have adopted a BI solution that is part of a larger system including Customer Relationship Management (CRM) or Employee Relationship Management (ERM) systems. Surprisingly, the small business adoption rate of SAAS offerings is greater at 5%, compared to the 1% of medium sized businesses.[10]
Recent studies have shown that small businesses are more likely to adopt a separate solution compared to their medium sized counterparts. It is estimated that 25% of small businesses are using a separate solution, finding value in using CRM data as a foundation.[11] It is likely that this trend is fueled by feelings that existing CRM and ERM software is no longer adequate.
Enterprise Mashups and Business Intelligence
Enterprise mashups and business intelligence have close similarities. According to Forrester, enterprise mashups are “custom applications that combine multiple, disparate data sources into something new and unique.”[12] When this mashup of data is used to provide information that can be used to support business decisions, it could be considered a BI solution in itself.
In larger organizations, BI is typically an IT led initiative using enterprise-level software. Enterprise mashups add a new level of participation by business level executives. Once IT has enabled access to data sources, enterprise mashup software allows business users to aggregate, and massage data to meet their own business needs, providing valuable information that can help them make better business decisions.
Small businesses will likely use enterprise mashups to meet business intelligence needs. Regardless of the form of aggregated data, enterprise mashups can help to bring it together.. When this aggregation of data is implemented for strategic purposes and is aimed at making better business decisions, it’s ultimately in support of business intelligence. For instance, in order to identify additional prospects, a sales team could use a mashup of existing Customer Relationship Management (CRM) data with Google Maps. Additionally, the small business may want to be warned of potential customer relationship problems. CRM data combined with feeds from social networking sites and blogs may help to identify potential customer problems, allowing the organization to address the problem before it gets out of hand.
Dashboards have become one of the key tools used to deliver business intelligence solutions for small businesses. They are typically one-screen, customizable, snapshots of the key performance indicators(KPI) of a business.[13] Several Enterprise Mashup vendors have focused their efforts on providing tools that aid small business in creating digital dashboards. For instance Dreamface “addresses the needs of analytics, reporting, data warehousing and data integration to allow users a wide selection of ready to use charts, graphs, and gauges to use to constitute personalized analytic dashboards.”[14] Additionally, Microsoft’s Performance Point is a suite of tools used for planning, analyzing, reporting, scorecards, and dashboards. This tool provides support for business executives that want a drag-and-drop, pivot-table-enabled dashboard.[15] Web 2.0 tools such as Websphere Portal and Google Gadgets provide built-in support for externally available data that may be useful for small business.[16]
Conclusion
Business Intelligence has evolved into an essential part of any business. All businesses find value in turning transactional data into information that can be used to make better business decisions regardless of the size of the organization. While the business intelligence market has been dominated by large vendors that typically provide platforms and tools for large businesses, the maturity of the market is yielding an array of tools that are aimed at businesses of all sizes. Enterprise mashups and business intelligence have close similarities in that they both aim at aggregating and turning transactional data into valuable information. The digital dashboard has become an essential element of business intelligence its popularity has yielded a wealth of tools that can be used by small and large businesses alike.
[1] www.lexjansen.com/pharmasug/2007/tu/tu03.pdf
[2] www.lexjansen.com/pharmasug/2007/tu/tu03.pdf
[3] http://en.wikipedia.org/wiki/Business_Intelligence_2.0
[4] Worldwide Business Analytics Software 2006-2010 www.sas.com/news/analysts/idc_wwbusanalytics_0907.pdf
[5] Worldwide Business Analytics Software 2006-2010 www.sas.com/news/analysts/idc_wwbusanalytics_0907.pdf
[6]IDC Business Analytics Study Names BI Leaders: http://searchdatamanagement.techtarget.com/news/article/0,,sid91_gci1230914,00.html
[7] http://searchdatamanagement.techtarget.com/news/article/0,,sid91_gci1298642,00.html
[8] http://blogs.zdnet.com/BTL/?p=4230
[9] http://www.destinationcrm.com/Articles/CRM-News/Daily-News/Are-Small-Businesses-More-Intelligent-49435.aspx
[10] http://www.dmreview.com/specialreports/2008_99/10002016-1.html
[11] http://www.destinationcrm.com/Articles/CRM-News/Daily-News/Are-Small-Businesses-More-Intelligent-49435.aspx
[12] http://www.cio.com/article/350113/Report_Says_Enterprise_Mashups_On_The_Rise
[13] http://www.smallisv.com/small-business-dashboards-guide-peachtree-quickbooks-myob
[14] http://blogs.zdnet.com/Hinchcliffe/?p=174
[15] http://www.enterprise-dashboard.com/
[16] http://dashboardspy.com/dashboards/49/enterprise-dashboard-mashups