Designs of Intelligence

As companies extend business-intelligence software to the masses, they should think before they deploy.
Scott LeibsNovember 1, 2006

Companies go to enormous
trouble to capture and store data,
and then go to even more trouble
(and expense) when they attempt
to extract and use it. The systems
for accomplishing the latter task go
by various names — business intelligence
(BI), performance management,
analytics — and while a technologist
could make a case as to
why one category differs from
another, for most corporate
employees the distinctions are
largely moot.

A current spate of mergers
will further blur those boundaries,
as BI vendors rush to add
performance-management applications
to their “product footprints”
and performance-management
vendors expand into analytics. A
few companies already cut across
all three categories, and the world’s
largest software vendors, including
IBM, Oracle, and SAP, are rumored
to be exploring acquisition targets.

That urge to merge is
motivated at least in part by the relative
success of the (broadly
defined) BI market, which is booming
at an annual rate of 11.5 percent,
and the business-performance-
management category, with
growth of 12.8 percent, compared
with overall growth in the software
market of just 8 percent. In turn,
that growth is being driven by the
spread of the technology to more desktops
in more parts of the organization.
Traditional BI software has typically been
the province of technologically astute
analysts, who use it to generate reports for
employees who need to know what the
numbers say without learning how to
make them talk. But newer performance management
and analytics applications
are being provided to employees throughout
a company, from the executive suite
to the call center.

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Companies have tried to provide those
capabilities to the masses before, with
mixed success. Business intelligence is
sometimes branded as a classic example
of “shelfware,” software that is bought but
not necessarily used or even deployed.
There are a number of signs, however,
that the situation is changing.

For one, mergers take some pressure
off companies to stitch together products
from multiple vendors in order to address
both the back-end data needs and the
front-end presentation and interface issues
that BI projects entail. While a genuine
merging of disparate technologies typically
takes a year or more following an acquisition,
at the least a vendor may now be
able to offer a broader family of products
and help clients piece them together. Over
time, analysts say, that integration will exist
out of the box and may be largely invisible
to end users, who may find themselves
tapping the powers of BI and related technologies
without even realizing it.

That, says IDC analyst Dan Vesset, is at
the heart of what he terms the “third wave”
of BI. In this latest wave, “a vast population
of employees whose BI requirements have
not been met” by the initial waves of mainframe
and client-server-based technologies
will find that new Web-based software
improves information flow and decision-making.
Expanding the reach of BI, says
Vesset, will depend not only on technological
advancements, but also on how companies
learn from past mistakes and match
their investments in software to their business

Competency Centers

At De Lage Landen, the asset and vendor
finance arm of Dutch Rabobank Group,
the creation of a BI “competency center”
has played an important role in bringing
BI to more workers. Launched two years
ago, the center aimed to push a range of BI
capabilities, including desktop scorecards
that track key performance indicators, out
to employees as quickly as possible.

“If we had left that role to IT,” says
Daan Greven, the firm’s corporate manager
for process, controls, and data management,
“things would have taken longer”
because BI would be fighting for attention
amid a score of other projects. Instead, a
team of five people now fields all company
requests for anything pertaining to (in
this case) BI software from Hyperion
Solutions. “The team members are a mix
of the very technical and those with more
of a finance/economics background,” says
Greven. They address problems and
requests for changes and enhancements
to the system and are part of a larger
“information infrastructure” group headed
by Greven that ultimately reports to
the chief financial and risk officer.

Competency centers have been championed
by Gartner and other consulting
groups and are popular in the IT world for
everything from ERP implementations to
integration projects to exploring new technologies
such as open-source software. When the concept is applied to BI, however,
success usually hinges on strong
finance-department involvement and close
communication with business units that
might benefit from an infusion of BI. “Ideally
[a competency center] should report to
finance,” says Hyperion chief strategy officer
Howard Dresner, “because finance is by
its nature a cross-functional group, and the
currency of business is money.”

Dresner notes that while there were
no BI competency centers six years ago,
today it’s estimated that 20 percent of
large companies have one, and another 20
percent plan to add one within a year.

While competency centers play a useful
role in helping employees actually use
whatever BI software the company rolls
out, Greven says the centers do more. “They have a very important advisory role
in helping us realize our long-term vision
of turning data into useful information
that can help us drive strategy,” he says.
For example, while the center responds to
employee requests for help or added
capabilities, it isn’t merely passive: it also
helps push the technology further into the
company by understanding how the software’s
capabilities complement a given
department’s needs. In a sense, it acts as a
collective tutor and coach.

And Greven says the center has
proven to be an excellent launching pad
for new finance staffers, because it gives
them a broad introduction to all corners
of the company, and a look at how technology
intersects with everything from
basic financial-reporting needs to more sophisticated
analytics projects.

Culture Counts

Whether a company establishes a formal
competency center or not, senior finance
executives have had enough exposure to BI
software in its many forms to understand
that a company’s culture will shape just
how quickly and how far the technology
can expand. When Dan McGowan, vice
president of financial reporting and analysis
at Southeast Corporate Federal Credit
Union, arrived at the company three and a
half years ago, “we had very antiquated systems — in fact, I’m being generous to even
refer to them as systems.” He found that it
was relatively easy to get the finance team
to handle internal and statutory reporting
on a new performance-management system
(from Applix), but when he then tried
to roll out certain BI capabilities to the
investment and human-resources groups,
he realized that “people differ greatly in
basic PC proficiency. Some people aren’t
even sure how to open a spreadsheet file.”

While the company did offer some
training in the form of one-on-one sessions
McGowan conducted, he says that
“successful organizations are marked by
people who are naturally curious and willing
to try new things.” He agrees with a
fundamental tenet of the competency center
approach, however, in that “leadership
in BI and performance management
has to come from people who understand
both the business entity and the capabilities
of the latest tools.” McGowan got a
look at that firsthand when his company’s
IT department took an early stab at building
a data warehouse. “Their intentions
were good,” he says, “but few employees
understood how to use the system or even
why they would want to.”

At mortgage insurer The PMI Group,
CFO Donald Lofe says that to improve
financial planning and analysis throughout
the company, “we needed to get better
IT capabilities to the troops” in the
form of BI software (from Cognos) to
drive the firm’s strategic planning “from
the ground up.” Lofe says the firm offered
various levels of training depending on an
employee’s needs, and, more important,
“we made sure we had constant phone
support from either a PMI staffer or a vendor
employee so that absolutely no question
went unanswered.” The goal, he says,
was to keep post-training momentum
high by addressing any concerns or questions
immediately, so that employees
developed an affinity for the new software.

At the same time, customers are pushing
vendors to make such software simpler.
“It has to be easy,” says John Kennedy,
controller for the locomotive and rail-car
services unit of Progress Rail Services, “or
people won’t use it.” In his view, corporate
software should follow a consumer model.
“I can look online at the stocks I own,” he
says, “and get a very clear snapshot. We
want people to be able to look at scorecards
and similar systems from anywhere
and get that same quick take.” The company’s
executives are now using BI software
from SAS Institute and exploring the
option of rolling it out to managers at
nearly 100 facilities around the country.

Vendors are rushing to develop (or buy)
visualization technologies to make that
possible. But Crispin Read, chief marketing
officer for Cartesis, cautions that the
software must jibe with a company’s culture.
“Things like key performance indicators
are a management issue, not a technology
issue,” he says. “If KPIs determine
how people are measured, people will use
the software that helps track KPIs. If there
is no particular push, then users may exercise
their discretion to ignore it.”

“People don’t beat down the door for
new software,” agrees McGowan of
Southeast Corporate. “They have to be
nudged and pushed. But today there is so
much good software out there, with good
price tags, that the efficiencies you gain
are worth what it takes to provide it to as
many people as you can.”

Scott Leibs is a senior editor at CFO.

Top Players, for Now
Company Rank by market share Rank by growth*
Business Objects 1 7
SAS Institute 2 6
Cognos 3 10
Microsoft 4 1
Hyperion 5 9
Oracle 6 4
MicroStrategy 7 5
SAP 8 3
SPSS 9 8
Information Builders 10 2
* Based on gains in revenue, 2004–05
Source: IDC

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