Business
Intelligence: Strategically Relevant?
IN
TODAY'S BUSINESS ENVIRONMENT, SENIOR executives are focused
on differentiating their business strategies, and are looking
for answers to their persistent questions including: What
characteristics do our most profitable customers share, and
how can we serve them better? Where are we spending money
and seeing the best returns? The challenge is to provide each
knowledge worker with a focused view into the right business
intelligence information in order to tighten the time frames
throughout the decision cycle. BI systems help managers address
tactical and strategic issues:
•
Operational or tactical questions help line managers plan
their regular operations. Such questions include: "What
is the current production volume?" Or “What were the
sales from the western region last week?” These questions
can be answered by running fairly simple queries or by generating
periodic reports.
• Strategic questions are tougher to answer. BI queries or
reports alone cannot answer strategic questions like “What
is the impact of SARS on our projections for Fiscal'04 forecasts?
”or “How much will we save by outsourcing our call center
to a BPO in India?” However, BI reports and queries form the
basis for further analysis and research to aid executives'
address such strategic issues.
Business
Intelligence implementations aim to answer these kinds of
questions, which directly impact the bottom line. However,
typical BI implementations are notorious for cost overruns
and over-promising but failing to deliver. The continuing
slump in the U.S. and global economies has made business leaders
extremely vary of promises offered by technical initiatives.
Adding to this mood of caution is the ongoing debate on the
strategic importance of Information Technology and the commoditization
of technology solutions.
Is IT Strategically Relevant?
Recent articles in the business press have stirred debate
on the role of IT in an organization's business strategy.
Professor Nicholas Carr, in the May'03 issue of Harvard Business
Review, argues that as information technology's power and
ubiquity have grown, its strategic importance has diminished.
He says “technology's potential for differentiating one company
from the pack - its strategic potential-inexorably declines
as it becomes accessible and affordable to all…are becoming
costs of doing business that must be paid by all but provide
distinction to none.”
Executive management in large organizations has begun to recognize
the fact that in most cases, IT does not form the core competency,
and may not even form a part of the strategic mix. Widespread
deployment of Web Services and On-Demand services (getting
a big push from IBM and HP) will further mitigate the need
to own and manage large in-house application systems
Commoditization
of Information Technology
Business leaders are becoming aware of the commoditization
of software solutions. Software offerings from different vendors
are starting to look distinctly similar, with very little
differential in terms of functionality or underlying technologies.
CIOs no longer grapple with "make or buy" decisions:
there is a distinct shift toward deployment and customizing
of prepackaged software.
Business Intelligence, along with other areas of IT, is seeing
a trend toward commoditization of tools and offerings, a fact
articulated by Michael Haisten: “The business intelligence
vendors are now struggling with how to proceed as their products
become commodities. Many failed to see that their differentiation
would erode quickly. They face the pressure to incorporate
broader functionality, extend their product lines, differentiate
their businesses or consolidate (via merger) before they are
eliminated from the market…. The truth is that virtually all
generic reporting and query technologies are functionally
equivalent. The feature differential is both real and, at
the same time, immaterial. Consolidation is already underway.
The vast majority of business intelligence offerings available
in 1998, the approximate peak in terms of vendor offerings,
are already gone.”
Packaged analytics are supplanting home-grown applications.
Infrastructure and solutions provided by BI and analytic vendors
are robust, inclusive and economical. These BI packages offer
standard queries, reports, architectures and adapters into
popular business applications. With the ease of deployment
and integration offered by pre-packaged BI solutions, the
focus is shifting from deployment to analytics that make a
difference.
Business
Intelligence: Continues to be strategically relevant
Commoditization of BI tools does not mitigate the strategic
relevance of Business Intelligence. Insights gained by analysis
of BI reports can provide tremendous strategic advantages to
business units across an organization. Decisions based on timely
and accurate information can help companies gain significant
competitive advantage.
Translating insights gained from BI queries into action can
help companies respond more quickly to changing market conditions
and increase profits. However, in the current economic climate,
businesses are unwilling to invest resources on new initiatives
unless absolutely necessary and even that at the lowest possible
cost. Enterprises view business intelligence as a tactical,
technology issue. According to Gartner8: “Enterprises too often
treat business intelligence (BI) and data warehousing as after-the-fact,
technical exercises to be addressed by their IS organizations
after a new application has been implemented.” However, it is
expected that enterprises will start viewing BI as a strategic
initiative, making it a catalyst for business change and gain
from greater insight into the business.
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