Business Intelligence Status Report: Recommendations
Written By: Predrag Jakovljevic
Published On: July 16 2005
Recommendations for End Users
Vendors are retooling themselves to meeting the demand for accurate business intelligence (BI) solutions. Acquisitions and strategic partnerships appear to be the most popular way for vendors to jockey for the top position in this growing market. The following are the issues that customers should investigate if their enterprise applications vendor follows the strategy of partnering with a boutique vendor like Vanguard or Corporate Radar (see Boutique Vendors Can Bring Big Value?):
- If scattered data from enterprise resource planning (ERP), customer relationship management (CRM), supply chain management (SCM), spreadsheets, etc., must be included in the total BI solution, does the boutique vendor provide the tools and service skills required?
- Do you feel comfortable with the financial viability and geographic coverage of boutique vendors, which are smaller due to their tight market focus?
- As both the enterprise and BI products evolve, who is responsible for keeping the two in synch? And who is responsible for integration?
- Are you able to provide the internal hardware and software support required? Or will that have to be the vendors' lookout?
Part Seven of the Business Intelligence Status Report series.
On the other hand, customers considering an enterprise application vendor that follows an alliance strategy with a renowned horizontal BI vendor, like Cognos or Business Objects, should consider the following:
- BI vendors using strategic alliances tend to offer product suites that are broad and functional, but lack deep industry specific needs. Are your industry-specific needs provided by the solution? You should rigorously question industry specific issues and the responsibilities of the two vendors relative to the inevitable integration and future enhancements.
- The horizontal BI vendor may have a large customer base, but may have a limited number of customers in your specific industry. Does this make a difference to you?
- As both the enterprise and BI products evolve, who is responsible for keeping the two in synch? And who is responsible for the integration?
- A solution based upon a BI product from a horizontal provider may be an overkill in terms of unneeded functions, support requirements, and cost. How will the vendor approach your needs?
- The BI product will require internal support. Can you support the hardware and software required for a solution based upon a horizontal BI vendor?
This is Part Seven of a seven-part note.
Part One detailed the history and current status.
Part Two looked at contemporary BI tools.
Part Three described what is available.
Part Four presented the BI/CPM market landscape.
Part Five discussed Geac and point solution vendors.
Part Six compared direct access to a data warehouse for the mid-market.
Recommendations for Enterprise Application Vendors
Vendors without BI capabilities should consider a relationship with the likes of Vanguard, not merely as a technology partner, but rather as a BI solution alliance for certain industries. Vendors focused on the cost-sensitive mid-market should investigate Vanguard's direct access approach as a way to address their customer's cost concerns.
Those enterprise application vendors without a BI strategy or with an agnostic BI platform strategy should focus on the value of BI to their customer set. Their customers' needs are real and therefore BI might provide the vendor with a path to customer value and satisfaction, plus additional revenue. Vendors should be realistic in the investment required to build, maintain, and support BI applications. They should select a strategy that matches their ability and willingness to invest, time to market requirements, and alternative uses of the required resources. The strategy selected should reflect the realities of their existing and future customer base relative to industry needs, support requirements, terms and conditions, etc.
Recommendations for Industry Consolidators
Industry consolidators, such as Infor, should consider teaming with Vanguard to offer a single BI solution across all current and future products. Since Infor will soon own three products (Lilly, Agilisys, and MAPICS) with current Vanguard GPS integrations, it should find discussions with Vanguard of interest.
On a more general note, as with all enterprise applications areas, the secret to successfully getting the most out of the IT investment lies not only within selecting the right technologies and tools, but also ensuring that proper business processes are in place to generate data that are meaningful, up-to-date, and accurate. One of the biggest mistakes users often make with BI is forgetting the big picture, the strategic goals of what they hope to accomplish by accessing this information, while breaking out of traditional silo-ed metrics. BI is not a panacea, and enterprises must organize and prioritize their business needs across regions, departments (even across non-official "political" boundaries), etc., before they can hope to usefully report on the business information.
The biggest challenge when building a dashboard or scorecard is getting the correct definition of key performance indicators (KPI) and linking them to a corporate strategy. For example, is the company hoping to increase sales by knowing the customer better or by discovering a new business opportunity? Or is it hoping to better control costs to provide a competitive advantage? Moreover, will it use BI to measure performance against which number of goals? These tools should also have an interactive ability to link these KPIs back to operational reality. For example, they should be able to explain why something is happening instead of only indicating it. Companies also need to filter out irrelevant metrics and reconcile conflicting metric definitions and unique metrics. Further, they need to consider groupings needed by some user groups where everyone has to agree on the definitions and on what has to be measured. Getting the right granularity of metrics and deploying it at the right business level is also critical.
The BI and corporate performance management (CPM) evaluations should involve the IT organization, finance, and operations. Furthermore, most firms should create a joint committee or task force to evaluate how automation can improve enterprise-wide performance management. Although CPM starts with strong financial management, it will eventually extend beyond financial planning to almost all areas of corporate activity. Therefore, organizations choosing BI suites should consider both their financial management tools and future integration with key business-area solutions such as product lifecycle management (PLM), CRM, SCM, etc. To increase the odds of success, end users should favor BI products and services firms that are focused on the application of BI in their specific industry or application areas.
The most important point for prospective buyers of CPM technology is to do a very thorough analysis of existing systems, where the corporation's business needs will be in the next few years, and how the systems will be integrated. Buyers should not forget that mapping data from one place to another is the most arduous, expensive, and time-consuming part of the whole process and one of the major reasons for BI project failure. This must be done before talking to any vendor. Be both open-eyed and open-minded, since it is tempting to create specialized data models and tactical data marts to support the quick deployment of a CPM portfolio, but this can lead to long-term inflexibility.
The best start for a CPM initiative towards building the entire corporate information factory (CIF) or something similar is to identify the most painful points and to try solving them by leveraging existing BI and analytics initiatives. As this is done, one must be aware of being inflexible and of automatically settling for an incumbent vendor if its products and plans do not match up well to strategic requirements. Also, one should not fall in the trap of "low-hanging fruit" and easily obtainable short-term return on investment (ROI) benefits at the expense of long-term strategic benefits that are either of a "soft" nature or of lower value in the short-term.
While the needs of employees, customers, and business partners will vary, successful integration tools will need to provide access to such applications as inventory control, ERP, CRM, data stores, packaged applications, legacy systems, and a myriad of other applications. The effort will be grueling, but the returns from an integrated information portal can be significant. As with any such purchase, users choosing point planning or BI products should consider the integration infrastructure and effort needed to combine these products versus the cost and functionality issues of choosing an integrated CPM product suite (if still possible to find). Mission-critical issues like scalability, reliability, manageability, and ease-of-use go without saying. For smaller enterprises that are more inclined to rely on their ERP vendor on extended functionality such as BI and portals, the route to the complete CPM might be more straightforward.
Though the promise of real-time, on-demand BI is enticing, there are some drawbacks, since, despite drops in hardware and memory prices, real-time architectures can still be expensive to build. The price largely comes from the processing power required to mass-produce analysis in close-to-real time. Also, keep in mind that performance degradation on both the network and application sides is a distinct possibility. If the accounting department, payroll department, or production planning department sees a slowdown in their respective GL/month-end, payroll, or material resource planning (MRP) transactions because the system is busy sending unnecessary information to a real-time BI system, something is not right. In some cases within the financial and manufacturing sectors, information has a definite shelf life, where seconds and minutes count. In most cases, however, the optimum solution is a combination of real-time and traditional BI, with each meeting different business needs.
The same would hold for enterprise information integration (EII) versus data warehousing (DW). Both will fail if they are not rooted in true business requirements. Once justified, a corporate-wide data warehouse is a better approach than a number of smaller data marts that would serve only isolated departments. Yet, a large data warehouse will often not be built at once, in which case one should look for an area of the business with a glaring need for a data warehouse and build one to accommodate it. At the same time, one should make sure that it could be gradually expanded in the future to meet the needs of other departments.
About the Authors
Olin Thompson is a principal of Process ERP Partners. He has over twenty-five years experience as an executive in the software industry. Thompson has been called "the Father of Process ERP." He is a frequent author and an award-winning speaker on topics of gaining value from ERP, SCP, e-commerce, and the impact of technology on industry.
He can be reached at Olin@ProcessERP.com
Predrag Jakovljevic is a research director with TechnologyEvaluation.com (TEC), with a focus on the enterprise applications market. He has nearly twenty years of manufacturing industry experience, including several years as a power user of IT/ERP, as well as being a consultant/implementer and market analyst. He holds a bachelor's degree in mechanical engineering from the University of Belgrade, Yugoslavia, and he has also been certified in production and inventory management (CPIM) and in integrated resources management (CIRM) by APICS.