International research group Gartner says companies often fail to comply with the spirit of corporate governance although they may meet legal requirements, and that this results in less transparency than before.
This was the thrust of the message at Gartner`s annual business intelligence (BI) conference in Amsterdam, Holland, recently.
Gartner research VP Frank Buytendijk says executives have become liable for the quality and timeliness for external reporting.
"Many managers instinctively desire a return to information distribution on a need-to-know basis to better control information streams, together with less responsibility delegated to lower levels of management. BI initiatives, if accompanied by an appropriate change in management processes and culture, can help them achieve this transformation," he says.
Gartner also warned that many enterprises, by ignoring managerial process reform allied with BI solutions, risk complying with only the letter and not the spirit of new corporate governance regulations in most European countries.
Gartner says the European BI market will continue to stabilise in 2004, growing at 7.3% with a compound annual growth rate (CAGR) of 8.2% until 2007.
The UK will remain the largest European BI market by licence revenue, forecast to grow by 8.6% from $157 million in 2002 to $238 million in 2007. This will be driven by the strength of the UK financial services sector, and the number of UK-based European headquarter functions.
Germany will experience a CAGR of 7.8% until 2007, and with projected revenue of $148 million by that time, will continue to be the second largest market in Europe.
France, while typically an early-adopter of BI technology, will remain in third place with a CAGR of 7.8% between 2002 and 2007, to reach a total value of $121 million in 2007.
Gartner says there are four key drivers forcing companies to seek a clearer view of the internal workings of their businesses. However, it has also highlighted the roadblocks they must be aware of that typically inhibit successful execution of BI initiatives.
The drivers are regulations such as the Combined Code on Corporate Governance in the UK, and similar new regulations in other countries are forcing companies to be more open and timely in their external reporting. This requires an unprecedented ability to access current and detailed information from within the organisation.
A second driver is unfinished enterprise resource planning, which many companies adopted in a bid to improve processes in the nineties. However, despite improvements in back-office operations, managerial processes were left largely untouched. "These processes, such as annual budgeting, have now started to break down - taking longer, costing more and becoming less connected to the business," Gartner says.
Thirdly, there is a need for better controls and metrics as the weak economy has required organisations to minimise their room for error in spending. Data overload will also drive this need.
Gartner believes that by 2012, enterprises will need to deal with 30 times more data than in 2002. Humans will not be able to keep up and therefore better metrics are needed to condense data into more meaningful information.
The fourth driver will be an increase in competitiveness through the removing of delays in internal processes, enabling enterprises to compete using up-to-date information. By achieving, through increased process speed, key strategies such as operational excellence, product innovation or customer intimacy, they start becoming what Gartner calls "real-time enterprises".
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