Technology Evaluation Centers

Business Intelligence Success, Lessons Learned

Olin Thompson - 10/9/2004

Business Intelligence Benefits Are Real

An extensive 269 pages industry report, OLAP 3 that was published in November 2003 by Nigel Pendse explains that BI benefits are very real. While the report covers many aspects of OLAP and BI, we will focus on business benefits and overcoming the obstacles of achieving those benefits.

According to the report, approximately 19 percent of companies implementing BI claim they have met or exceeded their business goals. Over 60 percent state they have at least largely met their goals. As always, soft benefits were more easily obtainable than hard benefits. A detailed look at the types of benefits reveals the following:

Benefit
% Companies Realizing Benefit
Faster, more accurate reporting 81
Improved decision making 78
Improved customer service 56
Increased revenue 49
Savings in non-IT costs 50
IT savings 40

When the statistics on benefits from a BI investment are compared to those of ERP or SCM investments, we see that BI appears significantly more beneficial. However, it is likely the combination of the ERP or SCM investment and BI generate the benefits because benefits imbedded in the ERP or SCM system cannot be unearthed without the BI tools to dig them out. Moreover, a common opinion on ERP and SCM software is that they generate too much data. BI allows this data to be analyzed to bring forward the most important aspects of the data.

Certain application areas are more widespread than others. The most common applications areas for BI are

  1. General data warehouse reporting
  2. Sales and marketing analysis
  3. Planning and forecasting
  4. Financial consolidation
  5. Statutory reporting
  6. Budgeting
  7. Profitability analysis

Challenges

The implementation of a BI project is not without challenges. Although the selection of the BI product is important, many of the major challenges remain internal. The number one major non-product challenge includes company politics. Experience has shown that single department implementations are less challenging but often result in fragmented, non-integrated approaches that, in the long run, increase interdepartmental issues instead of simplifying them. Experience also tells us that, as with many enterprise projects, those projects crossing department boundaries typically yield a greater value than departmental specific projects.

As with any project, the user is very important and the interest of the user must be considered key to project success. The factor of ease-of-use for users is critical in both product selection and overall success. The OLAP 3 report indicates that the inability to get users to agree on requirements is a common problem with BI implementations and if the requirements are agreed upon, staying on the course without changing the requirements proves difficult.

In the report, the most common product issue was response time. This includes the inability of the product to function effectively with large databases. Another limitation that is both a product and architectural issue is the ability to include various data sources in the overall project.

Product Selection and Implementation Resources

When companies were asked what they considered important in product selection, they answered with the following priorities:

  1. Functionality
  2. End user ease-of-use
  3. Integration to existing applications
  4. Price
  5. Performance
  6. Ease-of-use for application builders

However, when correlated with success factors, a proof-of-concept completed rapidly proves second only to performance as a key criterion for product selection.

Additionally, implementation leadership has a direct impact on project success. Projects led by BI specialist consulting firms are the most successful and have fewer problems. However, the most widely used implementation resource is in-house. Projects led by in-house business users are more successful than those led by in-house IT specialists. Projects led by large, general-purpose consulting firms cost more, are the least successful in business terms and experience the most problems. There is little correlation between project success and consulting dollars.

Strong evidence supports that the more quickly projects are rolled out the more successful they are. Experience also shows that integration into existing applications, prepackaged analytics and ease-of-use are key to compressing the implementation cycle.

The OLAP 3 Report

Nigel Pendse is a noted OLAP expert and industry analyst who has been involved with business intelligence products for over twenty-five years, first as a user, then as a vendor, and since 1994, as an independent industry analyst. He is the lead author of The OLAP Report, (www.olapreport.com) a resource that provides an in-depth analysis of OLAP applications, usage, products, and the market.

The third edition of Pendse's comprehensive OLAP 3 Report is now available from www.survey.com/olap in North America and www.optimamedia.co.uk in Europe. The report is based upon a survey of almost 3,000 people from 1,047 user organizations and 48 countries. The survey asked detailed questions on their purchase and use of OLAP products. The report addresses questions on various aspects of BI projects, including how products were chosen, which applications were used, who implemented them, how long it took, benefits, performance, reliability, and many other technical and business factors.

Recommendations

End user organizations considering a BI investment or who are dissatisfied with the return on existing BI investments are urged to acquire the OLAP 3 Report by contacting one of the two sources listed above.

Companies currently or soon to be evaluating BI products should focus on completing a proof-of-concept-faster as an evaluation tool. End users should favor BI products and services firms that are focused on the application of BI specific to the end user's industry or application areas in order to increase the odds of success.

Vendors who have not added BI to their existing products should consider adding it to their portfolio by using one of the existing BI specialists, if possible. Vendors with mature products will find that the addition of BI will serve their customers' needs and the vendors revenue objectives.

Definitions
Business Intelligence

The use of software tools that enable business users to see and use large amounts of complex data.

The following three types of tools are referred to as Business Intelligence Tools:

  1. Multidimensional Analysis Software, also known as OLAP (see below), is software that gives the user the opportunity to look at the data from a variety of different dimensions.

  2. Query Tools is software that allows the user to ask questions about patterns or details in the data.

  3. Data Mining Tools is software that automatically searches for significant patterns or correlations in the data.
OLAP (On-Line Analytical Processing)

The use of computers to analyze an organization's data.

OLAP is the most widely used term for multidimensional analysis software. The term on-line analytical processing was developed to distinguish data warehousing activities from on-line transaction processing, which is the use of computers to run the on-going operation of a business.

About the Author

Olin Thompson is a principal of Process ERP Partners. He has over twenty-five years experience as an executive in the software industry. Olin 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.