Contemporary Business Intelligence Tools

Contemporary BI Tools

Contemporary business intelligence (BI) solutions should enable business users to easily author, publish, and distribute enterprise reports via a fully integrated report writer, with an easy-to-use report-creation wizard. Users will also have the power to customize and tailor reports to specific information needs. Report writing and graphing capabilities should enable even non-technical users to easily create and share clear representations of complex business conditions. In addition to being easy to use, report writers must also incorporate advanced features like exception filtering and highlighting, calculations with sub-queries, rankings, drill-through, and more.

Part Two of the Business Intelligence Report series.

In general, contemporary BI tools provide graphical analysis of business information in multidimensional views. Most companies collect a large amount of data from their business operations, and to keep track of that information, users would need to use a wide range of software programs, such as Microsoft Excel and Access (mostly on the lower-end of the market) and other, more sophisticated database applications for departments throughout their organization. Using multiple software programs makes it difficult to retrieve information in a timely manner and to perform analysis of the data.

The term business intelligence (BI) thus represents all the tools and systems that play a key role in the strategic planning process of the corporation, by allowing a company to gather, store, access, and analyze corporate data to aid in decision-making. Generally, these systems will illustrate BI in the areas of customer profiling, customer support, market research, market segmentation, product profitability, statistical analysis, and inventory and distribution analysis, to name only a few.

The BI applications have not experienced the "boom-and-bust" cycle of adjacent enterprise application areas, and their need has been neither over- nor under-hyped. It has recently become one of the key enterprise software sectors, given that skimpy IT budgets have espoused the importance of getting the most out of existing IT assets. BI should provide an environment in which business users receive information that is reliable, consistent, understandable, and easily manipulated. C-level executives and middle management have always had a need to understand their business' performance regardless of good or bad economic times, and while the output from BI might change, the need is always there.

Particularly relative are the recent massive demise of dot-com companies, moderately optimistic economic forecasts, the stringent Sarbanes-Oxley (SOX, see Attributes of Sarbanes-Oxley Tool Sets), and many other mandatory reporting regulatory requirements, such as those from the Food and Drug Administration (FDA) or Environmental Protection Agency (EPA), following up the high-profile corporate fraud scandals (e.g., Enron and WorldCom) or bioterrorism threats. These have increased executives' focus on understanding and managing corporate performance. One should also expect the future use of radio frequency identification (RFID) tags to further drive up the amount of data a business generates, and the importance of being able to report on and make sense out of that information (see RFID—A New Technology Set to Explode?).

BI tools have neither been terribly complex nor expensive to deploy (compared to their extended enterprise resource planning [ERP] counterparts), and have been helpful in facilitating decision-making process, yet, lately, they have become considered a necessity rather than only a luxury. Also, nowadays, decisions are increasingly made at ever lower levels in organizations, thus the need for reliable information is even more pertinent. For more of pertinent information, see Business Intelligence Success, Lessons Learned and What's Really Driving Business Intelligence?.

This is Part Two of a seven-part note.

Part One detailed history and current status.

Part Three will look at what is available.

Part Four will describe the BI/CPM market landscape.

Part Five will discuss Geac and Point Solution vendors.

Part Six will compare direct access to a data warehouse for the mid-market.

Part Seven will make recommendations.

Evolution of BI Solutions

To that end, various BI solutions enable organizations to track, understand, and manage enterprise performance, and leverage information that is stored in an array of corporate databases and data warehouses (DW), legacy systems, enterprise resource planning (ERP), supply chain management (SCM), customer resource management (CRM) and other related enterprise applications. Naturally, the market has gone through a number of evolutionary steps on a journey that began with pesky "green bar" reports printed from mainframe computers in the 1960s and 1970s. These reports were infamously poor at pinpointing critical information. Moreover, they often arrived on managers' desks a week or so after month-end, and were a far cry after the fact that they were "rear view" reports.

Driven by technological progress in the decades since, the evolution of BI has embraced everything from queries and reports to executive information systems (EIS), which extract data to provide a view of quantitative performance measures on-line (a new generation will provide this information in near-real time). It has encompassed on-line analytical processing (OLAP) technology; data mining, digital cockpits, and dashboards to portals and other broadcasting tools. These all have has a common aim to provide more timely information, filtered for importance and in a context that supports better decision-making.

Nowadays, popular uses of BI include management dashboards and balanced scorecards, collaborative applications, workflows and alerts, analytics, enterprise reporting, financial reporting, and customer and partner extranets. These solutions, some of which will be described in more detail later in this series, will enable companies to gain visibility into their business, acquire and retain profitable customers, and reduce costs. They will also be able to detect patterns, optimize the supply chain, analyze project or product portfolios, increase productivity, and improve financial performance. Data visibility problems are possibly the easiest and most rewarding obstacles to solve when it comes to improving business performance.

Dashboards

Accordingly, dashboards have been hailed as a new face of BI, as they provide a comprehensive, at-a-glance, view of corporate performance with graphical presentations, resembling a dashboard of a car. These graphical presentations show performance measures, trends, and exceptions, and integrate information from multiple business areas. They are synonyms to measurements. The centerpiece of any dashboard design is captured metrics and performance indicators that are combined to form graphs reflecting the health of the business.

Typically, dashboards present a wide number of indicators and associated metrics arranged in a single consolidated view. The visual characteristics of a dashboard are simple intuitive displays, such as dials, gauges, stoplights, charts, and tables that are instantly understandable to users and provide immediate visibility into the wellbeing of a company's operations and performance. They provide snapshots of daily operations in a single desktop interface, allowing users to pinpoint problems like inventory or sales levels that fall below or are going over given thresholds.

Further, dashboards enable users to manage their business using sophisticated tools like key performance indicators (KPI), scorecards, and other advanced analytics. While a dashboard typically presents an easy-to-understand picture of key metrics at a particular time, scorecards tend to be more dynamic, allowing greater personalization based on a user's role. Scorecards are lists of financial and operational measurements used to evaluate organizational or supply chain performance. The dimensions of a scorecard might include customer perspective, business process perspective, financial perspective, and innovation and learning perspectives that formally connect overall objectives, strategies, and measurements, since each dimension has goals and measurements. To make a clear difference between dashboards and scorecards (which are often confused or used interchangeably), dashboard is a digital cockpit with a snapshot for a moment in time that can be drilled down. "Scorecarding" is the process of comparing actual results to target ones and discerning trends over a period of time, which is done by drilling down the scorecard.

Balanced Scorecard Methodology

The balanced scorecard methodology, introduced by Professor Robert Kaplan and Dr. David Norton in 1992, is a framework for defining, implementing, and managing an enterprise's business strategy by linking objectives with factual measures. In other words, it is a way to link top-level metrics, like the financial information created by the chief financial officer (CFO), with actual performances all the way down the corporate pecking order.

Currently, many BI suites enable the application of balanced scorecards by providing the ability to readily compare business information with established targets. It also provides a platform for sharing performance targets and results across an enterprise, allowing management to understand, at a glance, how the business is performing. The aim is to take a business' strategic objectives and translate them into a set of performance measures designed to meet those objectives. Unlike many other business management techniques that focus largely on financial metrics, scorecards extend into all parts of the organization. For example, scorecards can be established to measure the cost controls within a business unit, determine the ability of supply chain managers and line employees to accelerate order capture and processing, improve order accuracy and fill rates (service levels), determine a sales team's ability to positively influence customer satisfaction levels, or to even see how well a logistics team can get the fleet out.

There are benefits for those further down the hierarchy too. Scorecards should enable employees to drill down into the report, and find additional details with a few clicks of a mouse, and see just how their decisions and actions affect the overall strategy, and to establish their value and accountability. For a long time, however, balanced scorecards had been appreciated only at a strategic and top executive level, and had not been tied into the operations side of the business. As a result, these tools were regarded as "nice to have" rather than "must have'' (see Why Most Balanced Scorecards are Subverted). That has changed since the recent downturn in the economy and the advent of mandatory, regulatory corporate compliance issues.

Modern BI Suites

Whether a scorecard or dashboard is implemented as a simple, graphical way to display KPIs or as a pillar of a comprehensive performance management strategy, it can produce a quick benefit for any company. Thus, modern BI suites should be able to access and present key business measures for sales, customer service, the supply chain, financials, purchasing, inventory, and many other areas. Then they should provide the ability to use these information building blocks as the basis for comparisons, calculations, ratios, and metrics. Users should be able to dynamically combine business measures to derive KPIs, such as product profitability, margin analysis, book-to-bill ratios, return on investment (ROI), and other vital metrics.

Typical data that manufacturing enterprises should know about on a daily basis, include inventory situation, rejected items, throughput, booked sales, order status, on-time shipments, warranty levels, etc. In each of these categories, users might want to get behind the numbers and the trends to discern the root causes or find out what items, regions, channel partners, or customers are involved.

To recap, BI is an umbrella term that denotes a combination of technologies and architectures. Some important BI tools that allow the storage, access, and analysis of data in data warehouses (DWs) and data marts include executive information systems (EIS), extract/transform/load (ETL) tools, reporting, query and analysis tools, data visualization, balanced scorecards, dashboard, on-line transaction processing (OLTP), on-line analytic processing (OLAP), data mining, and alerting and notification systems. It also includes decision support systems (DSS), which is software designed to support groups in unstructured decision-making by supporting brainstorming, conflict resolution, voting, and other techniques. Under the BI umbrella all these tools are combined, so that BI can transform transactional data into information, information into decisions, and decisions into action (for more information, see Business Intelligence: Its Ins and Outs).

This concludes Part Two of a seven-part note.

Part One detailed history and current status.

Part Three will look at what is available.

Part Four will describe the BI/CPM market landscape.

Part Five will discuss Geac and Point Solution vendors.

Part Six will compare direct access to a data warehouse for the mid-market.

Part Seven will make recommendations.

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