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Many countries within the Middle East are betting their post-oil future on highly developed service industries. To ensure this plan is a success, both public and private sector operators will have to ensure they offer the right services at the right time. As such, end user organisations will have to mine customer data like never before and BI solutions will become key.

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By  Matthew Southwell Published  March 1, 2004

|~|ADCB_M.jpg|~|Services cannot be launched effectively without knowledge, says ADCB’s Steven Dickens.|~|The business intelligence (BI) application market is beginning to consolidate. Last year alone, four of the biggest vendors became two as Hyperion acquired Brio Software for approximately US$156 million and Business Objects bought Crystal Decisions for around US$820 million in shares and cash. Both acquisitions saw Hyperion and Business Objects add new capabilities to their product portfolios and swell their installed bases by thousands. “The reason Business Objects moved towards Crystal was that it wanted wall-to-wall BI. It wanted a total solution based around its own analytics and scorecards, but with the addition of Crystal’s strength in web publishing and the enterprise deployment of reports,” says Trevor Caddy, job title, Business Objects. “Rather than developing something to fill the gap itself, Business Objects decided to go and buy Crystal and plug it into its offering. Although the products are running in parallel this year, toward the end of it there will be a new product called BO.11 that will be a combination of both,” he explains. Further evidence of the need for vendors to shore up their BI offerings as the market matures can be found with Oracle. Although the vendor houses its intelligence tools within its database rather than at the presentation layer, it too has had to ramp up the capabilities of its offering and, as a result, has made several acquisitions over the years. “Oracle has completed a number of acquisitions to build up its BI. For instance, the whole online analytical processing (OLAP) piece was acquired and we bought the data mining part of our offering from Darwin,” explains Ayman Abouseif, senior director for marketing at Oracle Middle East & Africa. The need to offer a full suite of BI applications and tools appears to be more important than ever before, as the acquisitions demonstrate. A number of factors have contributed to this trend, ranging from end user demand to product commoditisation and market maturity. In terms of commoditisation, as the need for reports grows due to management’s insistence on knowing exactly where their organisation is at any given time, an increased number of vendors are offering the capability within their core solutions. For example, since its acquisition by PeopleSoft, JD Edwards is now offering Enterprise Performance Management (EPM) tools with its EnterpriseOne package instead of a third party BI application from MicroStrategy. “We are positioning the EPM product far more strongly than we were with the MicroStrategy product,” says Tim Caulkett, PeopleSoft’s regional director for the Middle East. “This is because more people care about BI and know what they can get out of it,” he adds. On the end user front, integration appears to be the key. In the tight economic conditions that have prevailed over the past few years, the funds and resources available to IT departments for integrating applications have diminished. As a result, integrated solutions capable of delivering the functionality offered by a number of best-of-breed BI apps have become the order of the day. “There are so many coporates out there today that are using a mixture of different tools and the cost of ownership of that is far too high, so they are looking to standardise on one or two so they can manage the environment better. This view from the end user then reflects onto the vendors who can see that they may have a few holes in their product lines and need to fill them,” says Caddy. “We are seeing the value proposition of an end-to-end solution become increasingly attractive to users because a lot of IT managers are doing the math and saying that they do not want to integrate because, in the past, it has been expensive, not worked and not been scalable. The vendors, therefore, have to align themselves in that way in order to provide that value proposition,” adds Bashar Kiliani, manager of IBM’s software group for the Middle East & North/West Africa region.||**||Key aspects of BI|~|powell_M.jpg|~|BI helps Al Tayer’s fashion chains promote brands more effectively, says Evan Powell.|~|Another factor influencing the integration conundrum is the more advanced nature of BI. While, in the past, bolting on a simple analytical application to an ERP package may have been a chore, it was no where near as time consuming as integrating the key aspects of BI, which today include data cleansing, data storage, data warehousing and the analytics themselves. “Companies can no longer manage buying a database from one supplier, a data warehouse from another and the tools from a further vendor and integrating it all and living with that,” says Abouseif. “End users are not in the business of integrating solutions but of analysing the data to develop their businesses. Users have the transactional data that is in good shape and they now want to do something with it,” he adds. This user need for integrated BI solutions is being driven by a number of factors. Not only do users now have, as Abouseif suggests, the data required for useful analysis, but they also have the motivation as increasingly competitive markets are forcing end user organisations to learn more about both their businesses and their customers. “The real push for BI now is coming from global competition as companies have to consolidate data so that they can carry out tasks such as customer profiling, customer profitability and essentially understand their business better,” says Basel Tutunji, Middle East country manager for SAS Institute. “Also, customers have started to ask more about their business and have realised their current systems can only give them basic data. As such, they need BI to help them centralise data for planning, forecasting and business optimisation,” he adds. While these market forces are global, they are also beginning to reach the Middle East and some companies are starting to invest in BI to help identify their most profitable customers and develop services specifically tailored for them. At the same time, these firms are keen to learn more about their own businesses and how they can make them more nimble and capable of reacting to ever changing market conditions. “The senior management and CEOs of local companies are starting to feel pressure from not only other local companies but from other factors such as WTO,” says Jamil Jeitani, Teradata regional manager, Gulf /Saudi. “This is a major driver for BI as local companies are beginning to realise they cannot sustain their growth and profitability just by doing things in the old way. They are starting to realise they need to be innovative, they need to be more competitive and they need to be more agile when it comes to their offerings and they have to have better customer services,” he adds. In particular, the region’s telecommunications companies and the financial sector have been buying into BI in a big way. On the telecom front, virtually every PTT in the Middle East, including both fixed line and mobile operators, has invested in some sort of BI solution and Batelco and Etisalat, for example, both have active solutions. “In the telecommunications industry competition is starting to arrive and this is forcing these companies to look at their services. The telcos have been the first to buy into BI,” says Jeitani. Competition is also driving BI adoption in the Middle East’s banking industry as the arrival of international players and a reinvigorated local finance sector makes the need to leverage existing customers and create capital for expansion increasingly important. “We are starting to see that banks are far more interested in profitability as the local market becomes more competitive. It is all driven by the fact that the interest rate is so low and it is making it difficult for them to make money so they have to look at costs and they have to look at their customers and see how they can create a lower cost channel mix and sell more to their customers,” says Abouseif. SAS Institute’s Tutunji takes this theory one step further and suggests that banks that use BI effectively can not only develop new services more effectively but also ensure a greater ROI for them as, in the past, the best a finance house has been able to do is mass mail shots and contact centre follow up. “If a bank wants to offer certain services then the best thing they can do without BI is send a direct mail piece to everyone and follow up from a call centre. The trouble with this is the investment a bank has to make to generate the mail shot and then follow up is huge, especially when not everyone is a valid target — it diminishes the ROI,” says Tutunji. “However, BI helps lower the investment in the development of a service but increases its potential ROI. The ROI depends on how focused the campaign is and this focus comes from BI as it allows the bank to tailor the product to certain customers,” he explains. In addition to increased competition, another factor driving BI adoption within the Middle East banking community is compliance. As accounting scandals in the West highlight the need for strong internal auditing, financial companies find themselves needing accurate versions of their transactional data more frequently than ever before — something that BI applications can help generate. “In the Middle East there will be a strong push for compliance as countries look to attract foreign investment,” says Tutunji. “With the worldwide push for compliance there is a trend for internal auditing and as organisation look to grow they have to have a system that does the checks and balances. BI solutions help companies do this because it is all about the availability of information and ensuring reports can be developed accurately,” he explains.||**||Bank implements Oracle FSA|~|basil_M.jpg|~|BI lowers service development costs while increasing ROI, says SAS Institute’s Basel Tutunji.|~|Although the need for compliance has influenced all the Egyptian American Bank’s (EAB’s) IT decisions, it was the desire to understand its customers and markets more effectively that led the private bank to deploy Oracle’s Financial Services Application (OFSA) and data warehouse as part of its wide ranging business intelligence initiative. The application uses data stored in the bank’s AS400-based Bank Mate core banking system and it allows the bank’s business users to analyse key information across multiple combinations of dimensions. The report parameters were developed by a joint business and technology team and enable EAB to keep track of customers’ behaviours, spending patterns and needs so it can provide a higher standard of service and place greater emphasis on the most profitable customer segments and product groups. “We needed a system that would enable us to collect and analyse all data around our customers’ behaviours and needs,” says Malcolm Neil, chief information officer at EAB. “The ultimate objective of developing our whole infrastructure is to understand where good business comes from, and encourage more of it,” he adds. Elsewhere, Abu Dhabi Commercial Bank (ADCB) is also putting customer data at the heart of its current IT systems overhaul, which will see it implement i-flex solutions’ Flexcube core banking system. As the bank is reinventing itself to target a wider audience with improved products and services, it is ensuring that those responsible for introducing new offerings can do so with information that means something. “If you don’t know anything about your customers then there is no way you can launch new channels because you are just casting your lines out there and hoping something bites,” says Steven Dickens, ADCB’s chief operations officer. “We will use the new [Flexcube core banking] system to see what our customers do and find out the important data from them in terms of what they do, what their transaction patterns are and so on,” he explains. Although the region’s banks and telecom companies are leading the way in terms of adoption, other industry types are starting to buy into BI as adoption becomes more widespread. For instance, those within the retail sector are beginning to realise what accurate customer data can do for them in terms of improved service levels and increased sales. Al Tayer Group, for example, has recently rolled out ProClarity’s BI application out to its Jimmy Choo, Janet Regar and Ghadeer chains to help them analyse customer data. This, in turn, enables them to better identify clients and ensure the stores are carrying and promoting the products and brands customers really want. “It helps identify the brands, so promotions can be run more effectively,” says Evan Powell, group IT manager for Al Tayer Group. “A lot of their [the fashion chain’s] business is very personal and it requires very targeted marketing, which is why we need a BI tool,” he explains. Elsewhere, PeopleSoft’s Caulkett is seeing an increased interest in BI from the distribution industry as it looks to invest in solutions that help it stay ahead of customer requirements and deliver the products they require when they are wanted, something that helps build brand loyalty at a time when more operators are targeting the region’s free zones and ports. “They have to focus on being aware of what suppliers and customers are doing so they can stay ahead of them and take the necessary action before any issue occurs. For instance, they [distributors] need to know that suppliers are coming late and the impact that this could have on delivering to a customer,” he says. “It is about creating an equity that saves the customer time, which is often the most precious commodity today. For instance, if a supplier gets to know so much about a customer that it makes the transaction easier, then the customer would not be inclined to change [suppliers] even if they get it wrong once in a while,” adds Abouseif. The growing interest from distributors, retails and the existing telco and finance BI markets is translating into serious growth for the vendors currently operating within the Middle East. Teradata, for example, is currently implementing data warehouses across the region while SAS Institute experienced 24% growth locally last year and expects to beat that figure during 2004. “The growth is across the whole of the Middle East, but the four main markets are Egypt, Saudi, Kuwait and the UAE,” says Tutunji. However, despite this market enthusiasm and increased end user buy in for BI, local companies must plan such implementations rigorously and take note of the integration issues that are forcing the BI vendors to consolidate. While-bolted on analytical applications may work in the short term, the true benefits of BI can only be achieved with a complete BI infrastructure and, more importantly, complete buy in from both technology teams and business users. Without the former, data sources can dry up and companies can find themselves operating without all the accurate data they need, while a lack of the latter means ROI will not be achieved and the BI tools will not deliver on the goals they are supposed to. As Teradata’s Jeitani says: “The strategy has to come from business users and they have to be involved from day one for it to be effective. Only those projects that have the involvement of both business and IT from the start are successful.” ||**||

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