VideoSometimes, getting smarter requires a little dumbing down.
Take the case of Deltek Systems, the Herndon, Virginia-based application software provider. A few years back, management at Deltek wanted to improve the way workers made decisions. After looking at several approaches, Deltek executives decided to install business intelligence tools and applications across the entire company.
There was just one hitch: Enterprisewide rollouts are notoriously hard to implement in one fell swoop. So, rather than install the systems and software all at once, Deltek took it slow. "We decided to install it in finance first and then roll it out department by department," explains CFO Lori Becker. "We just wanted to perfect the solution before we introduced it elsewhere."
Perfection evidently was realized: Today Deltek staff in human resources, marketing, finance, and sales can go to a portal and pull up diverse financial, accounting, customer, and employee data for analysis. "All of it is integrated seamlessly and pushed to whomever may need it for decision-making purposes," crows Becker. "We've now got a full-enterprise BI solution."
That's unusual. While the search for business intelligence is booming — sales of BI products rose to nearly $4 billion in 2002 — full-blown BI enterprise deployments are still relatively rare. Typically, BI tools from several vendors are intermingled and integrated with various enterprise resource planning (ERP) programs, which explains the entry of big time ERP players like SAP and PeopleSoft into the BI market.
In addition, business intelligence vendors are beginning to plant their flags in other parts of the BI galaxy. Integrated BI tool vendors like Business Objects and data warehouse builders like Informatica, for example, are getting into the applications game, while app providers are adding tool sets and data warehouses to their product offerings.
All this crossover has created a dizzying array of BI products on the market — leading many corporate clients to pick and chose BI products from multiple vendors.
Adding to the available options: Over the past few years, scores of new business intelligence vendors have arrived on the scene. Currently, there are more than 100 software makers hawking a wide range of BI-type stuff, from specific tools for data extraction, mining, and query to off-the-shelf, prepackaged analytical applications. Many BI vendors also offer data warehousing systems.
Given the great flux in the BI universe, industry consolidation seems inevitable — and fast-approaching. In fact, in mid-December, publicly traded Cognos announced that it was acquiring privately held BI vendor Adaytum in a deal valued at $160 million.
No wonder BI analysts at research firms like IDC, META Group, and Gartner advocate a phased-in implementation of BI software, rather than the whole-hog enterprise approach. Surprisingly, so do many BI vendors.
"Prior to the dotcom glut, everyone in the software business had the same dream — build big, which meant build complete enterprise solutions," says Sanjay Poonen, vice president of worldwide marketing at Informatica Corp., a Redwood City, California-based BI solutions provider.
"We, too, suffered from the same 'field of dreams' illusion," Poonen concedes. "But over the course of the last year, based on customer feedback, we've decided to market more of a modular, piece-by-piece, division-by-division BI offering that can be rolled out gradually to encompass the entire enterprise."
By taking the step-by-step approach, businesses arguably take less of a financial gamble. Admittedly, they may encounter common IT implementation problems like change management and employee resistance. But those problems occur on a much smaller — and more manageable — scale.
Further, gradual deployment enables corporates to gauge return on investment — before doling out more dollars. "Most companies these days are loath to fund large all-encompassing efforts like a corporatewide BI installation," says David Folger, vice president of Web and collaboration strategies at META Group. "They're focused instead on solutions to critical, tactical problems where the ROI is clear."
King of ROI
And when it comes to ROI, business intelligence appears to be king. Says IDC's Miller, "The return is extraordinary."
According to research conducted by IDC, the average analytics projects yield an average ROI of 431 percent. In the consultancy's most recent survey, respondents said they had realized returns ranging from 17 percent to more than 2,000 percent on business intelligence initiatives. The average five-year ROI? 317 percent.
Of course, CFOs may view triple-digit numbers like that with skepticism. And many BI applications are not direct revenue-generators. Hence, computing the ROI of BI rollouts can be tricky.
Indeed, CFO Becker says she is still calculating the ROI from Deltek's BI project, noting the difficulty of quantifying soft benefits like improved decision-making and more efficient communication. The company's total BI investment, including the software, hardware, user licenses, staffing increases, and training was about $168,000. "We've estimated that Deltek's account managers saved about five hours a week using the BI tools," Becker notes. "Since we have 21 account managers, that works out to 5,250 hours per year of saved time, which is considerable."
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