Beat the recession with BI

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Published: 10 June 2009 09:00 GMT by Andrew Donoghue

Tags: business intelligence, saas

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While no panacea, business intelligence tools can give organisations the info they need to ride out the recession, says Andrew Donoghue.

Tough economic conditions have put pressure on corporate budgets in the private and public sectors alike - with tech spending under scrutiny like costs from every other department. CIOs are being asked to justify investments in IT for their ability to add to the company's bottom line and help drive increasingly tight margins.

The decision then to hold up software tools known under the collective moniker of business intelligence as deserving of a significant chunk of the IT department budget may at first appear to be a strange one. BI, like data warehouse management and data mining, is not the most dynamic section of the IT industry and not likely to stray under the scrutiny of the board very often.

But according to analysts, if used right, BI tools have the ability to deliver on their name, and provide companies with the information they need to make the right choices in turbulent times.

In a report earlier this year, analyst Gartner described the importance of BI tools to companies looking to make the right choices in the current economy.

"CIOs are increasingly being required to invest in technologies that drive business transformation and strategic change. BI can deliver on this promise if deployed successfully because it could improve decision making and operational efficiency, which in turn drives the top line and the bottom line," the analyst said in its Magic Quadrant for Business Intelligence Platforms report.

"Organisations will expect IT leaders in charge of BI and performance management initiatives to help transform and significantly improve their business," said Nigel Rayner, Gartner research vice president.

Companies will continue to invest in BI tools this year, says Gartner, at a rate of around seven per cent per year over the next three years. However, this is lower than in previous years due to the impact of the recession, combined with increasing consolidation and competition among BI vendors, the analyst explains.

Nick Millman, lead for information management services at IT consultants Accenture UK, claims BI tools are well positioned to help companies recover from the downturn by providing strategic information rather than simply analysing previous activity.

"While traditional BI focused on analysing historical data for reporting purposes, a new evolution of BI enables real-time gathering of data as events unfold and uses analytics for predictive monitoring," he says.

BI systems can create streams of information or regular alerts based on data from a variety of enterprise applications. This information is then fed through to different parts of the business to help managers make informed decisions, according to Millman.

"Having the ability to make rapid fact-based decisions is a business differentiator that becomes even more critical in the current climate of market and demand fluctuations," he says.

Who gets to see the information gleaned from BI tools is also important. Traditionally BI tools have been complex and difficult to manage. This has meant they could only be used by individuals with specific skills and training. But increasingly vendors are trying to make BI easier to use, and thus more pervasive in businesses.

"The key is in making sure that the right people are involved in the decision-making process," says Millman.

Some vendors such as Cognos and Business Objects are also aiming to make BI tools more flexible and affordable by offering hosted BI tools or software as a service (SaaS).

Indeed this is a trend Gartner noted in its Magic Quadrant report: "We expect innovation and growth to come from technologies that make it easier to build and consume BI applications (such as visualisation, search, in-memory analytics, SaaS and service-oriented architecture [SOA])."

However, whether BI can actually help companies recover from the downturn depends on not only the technology available but how the BI tools are used by companies.

Pamela Maynard, vice president of enterprise applications at IT consultants Avanade, said although BI tools can help boost sales or reduce costs, companies have to use them correctly.

"Most organisations are only focused on finding solutions to help them get through the immediate business pain rather than on working towards the future," she says. "Companies need to establish a long-term roadmap that will help them through the rough period by delivering a quick return on investment but will also place them in a better position when the market picks up again."

Still other commentators are unequivocal about the importance of BI in the current economy. In a report titled Business Intelligence - Corporate Performance Management, analyst Butler Group says BI is not just important - it's vital to companies' survival.

"Today organisations are being ultra cautious in all areas of IT expenditure, and many might question the value of investing in business intelligence (BI) technology solutions… Butler Group, questions exactly how any enterprise intends to survive without it," the analyst said.

Butler links BI with another area of business information, so-called corporate performance management (CPM). Together the two software disciplines can help companies keep a tight rein on their business during the downturn.

"Good decision-making and performance management are key to business value generation but neither are easy in today's complex world," says Sarah Burnett, senior research analyst at Butler Group and lead author of the report. "The corporate focus on IT costs is often driven by the enterprise-wide mandate to 'do more with less' and growing demands for compliance and governance-led transparency. BI and CPM solutions help firms answer three key business questions: 'How are we doing?', 'Why are we doing this?', and 'What should we be doing next?"

While not even the most ardent supporter of BI would claim the technology is the business equivalent of a crystal ball, there is a consensus that - provided it is used properly - it can be essential to businesses weathering the recession.