Intelligent by design

Understanding a business sounds straightforward, but with increasingly complex organisations, emerging firms may need some help. Eliot Beer looks at the rise of business intelligence.

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By  Eliot Beer Published  January 29, 2006

|~|lightbulb200.jpg|~||~|Army intelligence is famously derided as an oxymoron, and the same could be said for intelligence in many businesses. Business intelligence is already a sensitive topic, so: how can IT ever hope to enlighten the murky recesses of an organisation's messy inner workings?

Business intelligence (BI) as an IT concept is often hard to define exactly. It includes reporting tools, dashboards and the like, but so do ERP and CRM suites. It can centralise and manage all of an organisation's data, but so can data mining applications. BI's secret is that it can do all of these things, and make them meaningful; not just reporting, but customising; not just centralising data, but allowing users to reach back and reorganise it; not having to rely only on one system, but supporting a whole range of different application environments.

But while the concept may be slightly nebulous - in that vendors seem unable to define it in less than 100 words - the skills an IT manager will need to implement it will need to be sharp and honed, and they won't just be technical. A successful BI implementation will reach into every part of an organisation, and will require people to surrender control of their data, for the greater good of the company - something many may be unwilling to do.

"Often we find that an IT manager's 'soft' skills are the most important thing in a BI implementation," says Basel Tutunji, regional manager for SAS Institute Middle East. "While BI is often led by the business side, rather than IT, we find in the Middle East that IT managers are ahead, sometimes - they actually understand the business needs of an organisation better than the business leaders. This is often because they are the ones having to deal with user requests for different information and different reports, so they know the benefits BI could bring."||**|||~|tutunji200.jpg|~|Tutunji: An IT manager's 'soft' skills are the most important thing in a BI implementation.|~|Tutunji says SAS's approach to BI implementations is to start small and get buy-in from the relevant executives before implementing the technology throughout an enterprise. This can also help resolve conflicts between data owners and the BI team, by limiting the initial impact of the implementation, and making sure the business benefits are clear to all.

David Brierley, regional manager for the Middle East, Greece and Turkey at Cognos, also favours starting small. He says it can be beneficial to roll out BI to a limited number of users initially, as once the complex implementation is complete it is a very straightforward matter to increase the number of users. But Brierley has noticed an interesting trend in the Middle East, where regional enterprises are actually moving faster on business intelligence than their European and American counterparts.

"We've seen a lot of our customers 'leapfrogging' Europe and the US in their BI implementations," he says. "I think there are two main reasons for this: first, you've got a lot of people who have had their education and initial employment in the West now coming back to the Middle East and moving into more senior positions - these managers have seen the potential of things like BI, and want to move ahead with it quickly.

"And at the same time, organisations here simply don't have as much data to deal with; if you look at a bank here, it may have 20 years' worth of account information to integrate, compared to decades and decades for banks in the US. So it's much easier to integrate the data for Middle Eastern businesses."

The potential business benefits of BI are clear; greater understanding of customer activity, improved insight into profitability, reduced reporting times for complex accounts, and an end to confusion from multiple versions of the same data. For IT managers seeking to strengthen the information value chain and develop better business IT skills - respectively the first and second most important CIO challenges in Gartner's 2006 CIO survey - BI can be a vital plank in driving the business forward using information technology.

"For a lot of our customers, one of the most obvious benefits of BI is simply time," says Alistair Menzies Anderson, regional director for Middle East indirect markets at Hyperion. "We hear from so many end users that it used to take them most of a month to do their reporting; now it often takes less than half the time, so they can now devote their effort to analysing the reports, not just producing them."

This is one of the more tangible benefits of the technology, but the real value for businesses comes from the simple reality of knowing the business. Cognos' Brierley gives the example of a telco customer who implemented BI and discovered its assumptions about the business were not entirely accurate.

"They had designed a particular promotion based on the fact that calls made by a certain set of customers lasted around one minute and 30 seconds," says Brierley. "Two weeks after implementing and rolling out the BI solution, they found the calls actually lasted only around a third of that time - what they thought was one of their most profitable customer groups was actually losing them money."||**|||~|brierley200.jpg|~|Brierley: We've seen a lot of our customers 'leapfrogging' Europe and the US with their BI projects.|~|Profitability is an important part of BI, with some studies suggesting as little as 20% of a firm's customers may make around 150% of the profits, the implication being other customers lose money. All of the main BI vendors place a lot of emphasis on profitability analysis. Part of this comes from the shift in emphasis from 'simple' BI to corporate performance management - CPM (or EPM or BPM, depending on the vendor).

While all of the vendors are keen to look at the advanced analytics offered by CPM, the impact of this latest trend is likely to be slight for IT managers. CPM tends to be driven and implemented by the finance side of an organisation, and typically builds on an existing BI solution. Hyperion's Menzies Anderson says his firm normally needs little interaction with the IT department to ensure a successful CPM implementation.

An issue that is very close to CIOs' hearts, however, is data warehousing (DW). The foundation of any BI implementation, DW requires all of an organisation's various data sources to be cleansed, reconciled and made available to the analytic applications above it. Hamad Al-Daig, CIO of King Faisal Specialist Hospital in Riyadh, is currently implementing a BI and DW solution and explains some of the challenges he faces.

"We are data rich and information poor; we don't have one standard version of our information," says Al-Daig. "If you look at length of stay for patients, we have seven different sets of data produced by seven different departments. Or looking at how many employees we have in the hospital, one department may say 7,000, another 5,000, another 6,000. And they're all correct, because the number changes depending on how you look at it - if you include people who are joining in a month's time, or those who are leaving, then the number is different. The first task, then, is to standardise the source of data, then standardise how the data is aggregated across the enterprise."

Martin Kaczmarek, general manager for Systems Union (SU) in the Middle East, says a big benefit of BI is the ability to standardise on one reporting platform across a business - especially those made up of a large number of individual organisations using different systems. SU provides a number of solutions across several verticals, including hospitality, and says it aims to deliver products with less need to customise than some of the bigger BI vendors.

"Particularly in the areas of budgeting and forecasting, there are real economies to be had using one system over an organisation," says Kaczmarek. "Because BI can work across a number of applications, it gives IT managers a chance to start to integrate disparate systems and disparate business units."

Industries such as healthcare, retail and finance, which tend to have a lot of accumulated information, are in an excellent position to benefit from BI. Cognos' Brierley says that along with manufacturing and the public sector, these three verticals are driving BI uptake in the Middle East at the moment. But even though big enterprises in these industries may be able to make the best use of BI, it does not automatically follow that user numbers need to be large.

"In some of our implementations world wide we have tens of thousands of licences, but many customers only have a few key users, such as high-level executives and managers," says Francois Trouillet, director of marketing and communication for Business Objects. "It depends on what information needs to be delivered where, and this is different for every organisation."||**|||~|trouillet200.jpg|~|Trouillet: Many customers only have a few key users, such as high-level executives and managers.|~|This echoes the opinion of Ayman Abouseif, Oracle Middle East's general manager. He says that it is important for IT managers to play the game of office politics with BI implementations, in order to secure buy-in from the key figures within an organisation.

"For an IT manager, it may be a great achievement to rationalise all the organisation's data and automate all the services," says Abouseif. "But if he or she does this and finds there isn't enough budget left over to produce some high-level reports, then it's likely that the CEO or other executives will say that they can't see any difference following the implementation, making it harder to gain their support. It's always a good idea to make sure executives can see the impact of BI clearly."

Oracle is busy promoting its own brand of BI at the moment, putting the 'pure' BI vendors under pressure as it talks up the high level of integration and compatibility with its database products. Other vendors are now claiming that Oracle's BI tools are not as developed as their own - which could be true, depending on which analysts you believe - and that Oracle's BI tools don't work with databases other than its own - which Oracle flatly denies. What is clear, however, is that the other vendors are taking Oracle seriously.

"There's been a lot of different firms talking about delivering BI tools recently," says Brierley, confirming what the other 'pure' BI vendors say. "Companies like Microsoft and SAP we don't rate as competitors; we see our offerings working alongside theirs. But Oracle is a competitor, although they have claimed the largest number of users by counting their database customers as BI customers too."

Gartner's BI 'magic quadrant' report for the first quarter of 2006 seems to bear out the view held by the big BI vendors, putting Oracle well behind the traditional players in the market and saying the database vendor's BI "continues to take a 'back seat'" compared to its traditional offerings. But the report - which Oracle unsurprisingly dismisses - acknowledges the firm is placing more focus on BI, and says its challenge for 2006 is to "articulate a cohesive BI strategy and roadmap".

BI is still feeling its way in the Middle East, and the vendors are currently busy jostling for position in what should be a very fast-growing market, even compared to Gartner's prediction of a compound annual growth rate (CAGR) for BI of 7.3% world-wide. With organisations such as Riyad Bank in Saudi Arabia and Etisalat in the UAE currently implementing BI solutions, not to mention the technology's use across a range of traditionally high-tech oil and gas producers, firms can see a bright future for BI in the region.

And for an IT manager, BI offers a crucial chance to deliver real business value through technology, and catch the eye of senior executives. Baqer Bahbahani, superintendent for the exploration and production data management (EDPM) division of Joint Operations - an oil and gas producer run by the Kuwait Oil Company and Saudi Arabia Texaco - recently oversaw a BI implementation at the company.

"Until a year back there was no way anyone could get any critical information delivered to them in any format, unless they physically sat down and went through the pages of data," says Bahbahani. "Today, BI has made us transparent and made information an easily available tool to help us make strategic decisions. The CIO of Chevron [a partner in Saudi Arabia Texaco] was surprised by the ease with which this BI tool was enabling access to business information; and as a company, sharing best practice is a norm."||**||

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