Business intelligence boom

The Middle East's business intelligence software market is growing as tech-savvy businesses in the region's key verticals realise that extracting the most from their data can boost their bottom lines. However, if such solutions are to enjoy widespread success, then non-IT related users must be taught how to use BI applications and the vendors must work towards greater standardisation.

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By  Davin Hutchins Published  January 3, 2005

|~||~||~|Ask any non-IT executive across the Middle East whether his or her firm uses business intelligence software and more often than not the answer will be “What’s that?” If one is lucky, there may be mumblings about having reports, score carding and data mining, but such insight is rare. This is not a Middle East specific phenomenon though, as IDC reports that 86% of businesses in Europe can’t even name a BI vendor.

Despite this apathy, the global BI marketplace is worth US$12 billion. And, as markets such as Europe, Asia and the US reach saturation and sales slow to a rate of 5.9%, BI vendors are turning to the Middle East, which IDC believes has a growth rate of 23.6% per annum and could reach a capitalisation of US$75 million by 2007.

“Our latest numbers show that UAE and Saudi Arabia lead the BI market, which is worth US$25 million. So we’re looking at probably US$32-33 million for the Gulf currently,“ says Heini Booysen, senior analyst for IDC, Middle East and Africa.
Early adopters making use of BI’s analytical features are engineering much of BI’s double-digit growth in the region.

Dnata Cargo is one of them. More than 800,000 tonnes of cargo pass through Dubai International Airport (DIA) each year, much of it through the hands of Dnata Cargo. To ensure that it stays competitive as rival firms and other international logistics hubs like Sharjah and Abu Dhabi grow, Dnata Cargo is focused on retaining its edge through the use of BI.

According to Dnata senior general manager Jean Pierre DePauw, Dnata Cargo’s management team first assembled a posse of software engineers to look at ways of empowering its workforce, allowing them to deploy ground crew and equipment with maximum productivity.

This meant having access to realtime sector specific data on import and export volumes, which a BI solution could provide. After testing 15 to 20 products on the market, Dnata Cargo opted for a package from SAS Institute. Now, processes that used to take a week, like extracting data from the mainframe, takes seconds and can be plugged in to statistical forecasting models.

“On a day-to-day basis the SAS application has been very helpful in extracting and generating various types of MIS; analysing, forecasting and evaluating business related data for fine-tuning operational resources such as manpower and equipment. SAS has also been extensively used for forecasting volume trends to understand the product mix and seasonal fluctuations in the market,” says Ramesh Viraraghavan, planning & development manager at Dnata Cargo.

“Dnata Cargo is now optimising supply and demand and understanding its markets,” adds Basel Tutunji, Middle East country manager for the SAS Institute.Firms in the GCC and Levant region wishing to follow Dnata Cargo’s example and deploy BI solutions have a host of software packages at their fingertips.

SAS, Business Objects, Cognos and smaller firms like Datawatch all offer applications designed to help businesses extract warehoused data, analyse patterns, produce timely and accurate reports, deliver score carding and engage in enterprise resource planning (ERP). Likewise industry behemoths such as Microsoft, Oracle and IBM are becoming players in the regional BI game.

While their offerings may lack the same bells and whistles of the pure-plays, they have marketing prowess and relationships that could legitimise BI throughout the Gulf.
“The emergence of players like Microsoft and IBM are having a positive influence on the market,” says Booysen. “The pure plays probably have the best technology. But the big companies have a pervasiveness that increases awareness which helps the pure plays.“

In terms of market adoption, it is the Middle East’s free spending verticals that are destined to drive BI deployments in the Middle East. In particular, IDC sees the financial sector and the telecoms industry as joining the likes of Dnata Cargo as early adopters.

“The big sectors are banking and telecomms. Oil and gas is also taking off,” says Booysen. “Worldwide we have 30,000 customers and almost every vertical is using our technology — banking, telecoms and heavy industries like oil & gas and retail. We are putting in place corporate initiatives to better understand vertical needs. Many companies personalise solutions to suit their needs,” adds Thierry Nicault, regional director for EMEA at Business Objects.

Further credence is given to IDC and Business Objects’ beliefs by the go-to-market strategies of the BI industry’s major players. For example, Master Mind was instrumental in providing Kuwait Oil Company (KOC) with a BI solution from Business Objects. The deal followed hot on the heels of a similar agreement with Saudi Aramco.

“[In the] oil and gas [sector] you have a lot of processes,” says Laurent Grandisson, director of sales & marketing for Master Mind Technologies. “The oil is there so they [the oil companies] don’t have to fight for market share of the oil. But the question is how do you get more revenue out of this oil. And that is all about defining the right process, which is where BI comes in.“

In terms of the financial sector, Cognos and Business Objects are currently competing head-to-head. “We have over 250 clients, many of them large organisations like Riyad Bank, Dubai Bank, Mashreqbank,” says Cognos’ Middle East regional manager David Brierley.

Business Objects clients include customers in the financial sector like Commercial Bank of Dubai, although it also provides solutions to Saudi Arabia’s Aleyasi Electronics and UAE’s International Foodstuffs Company (IFFCO). Business Objects’ Nicault says when it comes to retail financial services, customers want realtime access to their data.

Likewise, realtime customer input at sales points like ATMs and through CRM software at call centers improves the data driving a BI system. “There are a few drivers of growth. The first is a huge need for accurate reporting — high-value reporting that can compare data from different systems. But there is testimony from users in other countries where it enables companies to have more customer retention,” he says.

||**|||~||~||~|Another vendor targeting the financial sector is Datawatch. Rob Graham, the vendor’s product manager, says banks will remain the major engine fuelling growth in Gulf BI sales, if for no other reason that new global compliance standards like Basel II and Sarbanes-Oxley will force a common language of accountability.

The United States passed the Sarbanes-Oxley Act in the wake of the Enron scandal in 2002. It requires that all American firms uphold strict standards in accounting practices and financial reporting.

“For Middle East institutions, there is an incentive to comply with Basel II early,” says Graham. “If a major local bank is seeking funding for a major real estate deal and brought in an international bank to fund a third of it, one of the first things asked will be are they mirroring Basel II compliance.”

Datawatch’s Monarch software gives banks better access to databases and more nimble ways of double-checking auditing procedures. Its entry into the Middle East market was marked by Datawatch’s deal with Dubai Bank. Datawatch offers products like MonetPro 7 and DataPump so that financial institutions can get a leg up on its financials in the new climate.

“There are three options,” says Graham. “One, trust your IT director who says you’re data is clean. That’s a big risk. Two, you can throw money at it with a big solution. Or three, you do minor surgery to be better custodians of the present data. Modern day compliance issues fall halfway between IT and finance. Once the new compliance [regulations] come online, you must data-mine to avoid the fine.”

SAS Institute’s Tutunji agrees: “For banks, Basel II is becoming a key issue and all banks will have to come online in the next two to three years. Sarbanes-Oxley will affect any country in the Middle East that deals with American or European stock markets or financial institutions. Next, it will affect the insurance industry.”

While deploying a BI solution should help financial companies meet regulations and other verticals improve their ability to work with and extract the most from their data, the software is not a panacea. One of the main stumbling blocks is integration and the standardisation among vendor offerings that would help solve such issues.

A 2003 IDC survey of 2500 firms in 10 countries revealed that 35% of respondents had BI software that was not integrated with their other internal systems.“Most customers, especially the oil and gas industry, are dealing with a lot of legacy applications and they wonder why they don’t have access to realtime information,” says Grandisson.

“It’s because they are in a siloed environment. They are not utilising reporting and analyses. Most of the people at the CEO and board level don’t have a clue about the enterprise aspects of BI yet unless there is someone specific that is in charge of performance management. CEO’s are still wondering what will be the benefits of implementing a BI standardisation process,” he adds.

Tutunji says BI should be like the body’s central nervous system, a communication network so pervasive across departments that the users cease to notice it. To achieve this, developers must continue to emphasise user-friendliness so non-IT professionals can make use of BI solutions.

To this end, SAS generally puts 35% of its profits back into research and development (R&D) to improve analysis and usability, like with its SAS 9 Intelligence Platform.
“In general, applications are becoming rather sophisticated now. Even simple reports or advanced forecasting, it is becoming very user friendly,” says Tutunji.

The need for a standardised suite of products globally is also driving consolidation within the BI industry.. For example, Hyperion bought Brio Software in a US$156 million dollar deal and Business Objects acquired Crystal Decisions for US$820 million.

Yet even if standardisation is on its way, BI has other issues to address. In fact, two big questions are users in the Middle East looking to deploy BI. The first is which functions does a company need, and the second is when will firms see a return on investment their investment (ROI). In terms of the latter, IDC research is far from conclusive.

“We’ve done some surveys in Western Europe about what kind of ROI users see. It’s shocking. Firms report from 17% to 2000% ROI for their BI purchases. The first reaction in the region is disbelief. But it’s true,” says Booysen.

“We see very few potential clients putting aside a significant part of their budget for BI. Sometimes it’s difficult to convince the board the ROI value of these things. Price is a problem,” he adds.

One tactic that could see both decisions on what BI features to use and ROI accelerated is greater education across local businesses, especially for those working in non-technical positions. The BI vendors involved in the Middle East market certainly think so, and many are quick to bemoan the lack of knowledge shown when it comes to BI by non-IT department staff. “There is a lack of knowledge and education,” says Tutunji.

Cognos is working with Performance Systems to provide consultancy to key clients to expand BI beyond IT departments. Brierley says that when this works effectively, and BI is utilised across platforms and departments like sales, human resources and marketing, then the solution does deliver the ROI senior decision makers like to see.

“Many organisations [in the Middle East] still use Excel for planning, forecasting and budgeting,” he says. “That means no control, no accountability and it is not in realtime. However in the last six months, we have done some very large deals with customers who realised their data wasn’t necessarily supporting the business and we have helped non-IT users understand what BI can do and ensure users achieve ROI,” Brierley adds.||**||

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