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TDWI: Smart Companies in the 21st Century Use Business Intelligence Wisely

  Industry Statistics published in DM Direct Special Report
August 5, 2003 Issue
 
  By Wayne Eckerson

A major airline estimates that it generated $40 million in new revenue and saved $31 million in costs last year thanks to just four of the 35 applications in its business intelligence (BI) environment. A large distributor of electrical construction products has generated $9 million between cost savings and new revenue from an enterprise-wide BI solution and expects a payback of $70 million by 2004.

These are just two of the success stories highlighted in a report recently released by The Data Warehousing Institute (TDWI), entitled: "Smart Companies in the 21st Century." We designed this report for business executives who are evaluating whether to fund a BI project or for those who want to ensure the success of an existing solution.

Click here to download the report.

The report shows how smart companies use BI solutions to gain a clearer picture of their internal operations, customers, supply chain, and financial performance. These companies also derive significant ROI by using BI to devise better tactics and plans, respond more effectively to emergencies, and capitalize more quickly on new opportunities. Simply put, they use BI to become more intelligent about the way they do business.

Although every BI solution is unique, we identified several key success indicators that executives can use to determine if their initiatives are on track. Our research clearly shows that companies whose projects map to the following criteria enjoy significantly greater success rates than those that don't. Here are some key success indicators:

  • Business sponsors are highly committed and actively involved in the project.
  • Business users and a BI technical team work together closely.
  • A BI system is viewed as an enterprise resource and given adequate funding and guidance to ensure long-term growth and viability.
  • Firms provide users with both static and interactive (online) views of data.
  • A BI team has prior experience with BI and is assisted by a vendor and independent consultants in a partnership arrangement.
  • A company has an organizational culture that reinforces the BI solution.

Most successful BI solutions are those in which the business sponsor hands over the reigns of the project to a business driver. A driver is a business manager (or business-oriented IT manager) who spearheads the project on behalf of the sponsor. A business driver is very familiar with the business and has a solid understanding of information technology, or at least a willingness to learn. Ultimately, smart companies succeed by making sure the business - not the technical team - drives the BI solution and is accountable for its success.

There also exists a distinct relationship between widespread usage of a BI solution and overall success. The best BI solutions take years to mature, expanding in breadth and depth over time. It is no coincidence that the value of a BI solution grows exponentially with the number of users and applications it supports.

Smart companies also recognize that BI support systems are very different from other systems in the company, such as operational or transactional systems. Well-designed BI systems are adaptive by nature; they continually change to answer new and different business questions. The best way to adapt effectively is to start small and grow organically. Each new increment refines and extends the solution, adjusting to user feedback and new requirements.

In many respects, the best BI solutions are designed to mimic the processes that humans use every day to learn and make judicious decisions. During our lifetime, we experience millions of events that we assimilate, analyze and turn into rules, consciously or otherwise. Each time we apply a rule, we get feedback on its validity, which enables us to refine the rules and adapt to changes in our environment. Our "gut instincts" are no more than the unconscious application of rules refined from millions of life experiences.

Of course, not all BI solutions succeed. The report outlines a litany of reasons why BI initiatives fail or falter. Here are some danger signs:

  • The data is inaccurate.
  • The data looks different even if it is accurate.
  • The origin of metrics or data can't be discerned.
  • The user interface is confusing; the tool is hard to use.
  • Users have difficulty accessing reports they need.
  • Users can't create custom views of the data.
  • User feedback isn't used to enhance the solution.

The good news is that most organizations eventually succeed, even if they fail initially. In a recent TDWI conference survey, only 18 percent of "stalled" BI projects were canceled outright.

The secret weapon that "smart" organizations wield is information - more specifically, highly integrated information that empowers workers with new insights about what drives the business and how to optimize business processes to better meet strategic goals and objectives. In short, smart companies in the 21st century use business intelligence to increase their corporate agility and meet the needs of today's fast-paced and demanding marketplace.

To help ensure successful BI initiatives, executives must focus on these factors: 1) establish a vision; 2) evangelize the vision; 3) prioritize the portfolio; 4) allocate sufficient resources; 5) align business and IT for the long haul; 6) build trust in the system. These are the "bread and butter" issues in BI. Please note that the keys to success are not technical in nature. Projects succeed because of the "soft" stuff - leadership, communication, planning and interpersonal relationships.

The research for this report was based on a survey we conducted in April 2003, as well as interviews with a wide array of BI experts, including end- users, BI consultants, industry analysts, and report sponsors. A majority of the 540 qualified respondents (54 percent) were corporate IT professionals. The remainder were independent consultants (29 percent) and business sponsors/users (17 percent).

In order to get a broad perspective of BI usage, we involved a wide range of corporations in terms of both size and industry. A majority of respondents (54 percent) work for large corporations (more than $500 million in annual revenue), though a significant number work for smaller companies (11 percent less than $10 million; 18 percent $10-$100 million; 18 percent $100-$500 million).

Report sponsors included: Actuate Corporation; arcplan, Inc.; Business Objects; Cognos, Inc.; Crystal Decisions, Inc.; Informatica Corporation; MicroStrategy, Inc.; and Oracle Corporation.

...............................................................................

For more information on related topics visit the following related portals...
Business Intelligence (BI).

Wayne Eckerson is director of research at The Data Warehousing Institute, the industry's premier provider of in-depth, high-quality training and education in the data warehousing and business intelligence fields. He can be reached at weckerson@tdwi.org.



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