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Customers seem to be responding. According to technology research firm IDC, in Framingham, Massachusetts, worldwide sales for BI software topped $3.5 billion last year. That's an 11.5 percent increase in BI spending from 2003. The investments paid off, too. Says Dan Vesset, IDC's analytics and data-warehousing research director: "Median ROI on a business-analytics project [in 2004] was about 110 percent."
Despite the claim, many business buyers remain skeptical about the return on BI investments. In a 2004 market survey (conducted by Riley Research Associates for Noetix), nearly 40 percent of the respondents said the biggest liability of a corporate dashboard is the ROI. Another 30 percent of the surveyed executives said they were concerned about lengthy implementation times. That's predictable, since early BI rollouts — particularly executive dashboards — often moved at a glacial pace.
The Riley/Noetix survey did offer one surprise. Only 14 percent of the executives said the most significant drawback to a dashboard was ease of use. That speaks volumes about just how far some BI tools have come. Older BI systems — including a fair number that are still on the market — require users to conduct complex searches with advanced techniques like Boolean logic. Now, says Kathy Quirk, a manager at Nucleus Research, a technology research firm in Wellesley, Massachusetts, both ERP-application makers and pure-play BI vendors "are trying to make their tools more accessible to a wider base of business users."
Dashboards appear to be the preferred method for creating that accessibility. The desktop tool provides a familiar, centralized interface that nontechnical users can employ to navigate through mountains of enterprise data. Typically, a dashboard connects to a company's far-flung transactional data systems — including ERP and CRM programs — via a master BI database.
IBM, a company that has staked much of its reputation and future strategy on enterprise information integration, sees plenty of potential in BI dashboards. In late 2004, the company teamed with Informatica, a Redwood City, California-based BI software developer, to produce a dashboard. The product, lyrically dubbed the Informatica and IBM Dashboard Engine Appliance, is designed for financial-analysis, risk-management, and regulatory-compliance applications.
In fact, it's nearly impossible to find a financial-software maker these days that doesn't offer a dashboard of one stripe or another. But not all finance managers are convinced of the merits of their offerings. "We've toyed with dashboards," notes Steve Snodgrass, CFO at Graniterock, a construction and construction-products company in Watsonville, California, "but it may be more than our user community can really handle."
Instead, Graniterock continues to use Business Objects's Crystal Enterprise, a conventional BI reporting tool that the company deployed (on a limited basis) in 1999. "I've got about three or four people who centrally create reports," Snodgrass explains. "If you let people create their own reports, it's very hard to exert some level of quality control."
Leery of Query
New releases of BI software — which are easier to administer — may ease concerns about dueling metrics. Nevertheless, a great deal of the corporate skepticism about current BI tools stems from problems with earlier BI tools, including executive dashboards and online analytical processing (OLAP) programs.
Interestingly, industry watchers note that OLAP software — once the bane of finance-department staffers — is staging something of a comeback. OLAP programs enable users to analyze information that has been summarized into multidimensional views and hierarchies.
"With OLAP, you are enabling people to slice and dice data and look at information," says Kurt Schlegel, a research director at Stamford, Connecticut-based IT consultancy Gartner.
For all of their potential promise, OLAP products have long been hindered by slow response times and maddening interfaces. That's changing. The latest multidimensional (MOLAP) products organize data in cubes — cubes that provide data views that can be rotated by the user. "Besides fast query response," says Schlegel, "MOLAP solutions also provide the ability to do advanced calculations — for example, allocating costs to various dimensions to calculate profitability."
Despite the advances, OLAP software products, like other BI tools, remain somewhat hamstrung by the sheer variety of data they must analyze. Metadata — and in particular data that is saved in the extensible business reporting language (XBRL) file format — could go a long way in easing that problem. Industry observers believe XBRL-enabled transactional systems will start making their way into mainstream use in the next five years.
Until then, Mentor Graphics's Beldman stresses the importance of uniting disparate enterprise databases before splashing out on expensive BI tools. "It's a difficult task to combine information from, say, your general ledger with your order system, because they don't necessarily have a lot of things in common," he warns. That's why Mentor Graphics has worked with a number of its business units over the past year to define common data definitions. The goal, Beldman notes, is to make it easy for users to find the exact information they want, whenever they need it. "Design with that goal in mind," he says. Then, no doubt harkening back to the early days of BI deployments gone wild, "build in small steps."
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