Surveying the success of SA`s BI spend

Over 40% of business intelligence (BI) initiatives have no clear owner, say respondents to ITWeb`s 2003 Business Intelligence Survey, which points to most projects not delivering optimum benefits.

This result mirrors those of the previous year`s survey, which also showed that slightly more than 40% of BI projects had no easily identifiable leader. However, when asked during this year`s survey who made the decision to invest in these initiatives, the respondents attributed this almost equally to MDs and CEOs, the board and IT managers and directors. This raises the question as to whether executive management teams have failed to follow through on a high-level decision to invest in BI, or if these projects are being driven on an ad hoc departmental basis instead of as an enterprise-wide strategy.

Determining how and by whom BI implementations should be handled is often difficult, says Martin Rennhackkamp, information specialist at business solutions provider Prescient Business Technologies. "The 'ideal` organisational construct 'around` the data warehouse and BI projects is quite complex. Ideally, BI needs to be an enterprise-wide capability, which is facilitated by an IT competency, but which is owned by the business and is not too heavily influenced by a particular line of business or business unit.

"We find that the IT competencies that operate in the BI space often do not have enough clout in the organisation, so they have too little control to influence global governance and standards that affect the BI solutions directly. We also find that the ownership of BI by the business is 'skew`. It is often owned or financially controlled by a single business unit, which makes it hard to cater for the enterprise-wide benefits it is supposed to provide for. This makes management and steering of BI initiatives very complex. Decisions and management in the BI space are often affected by organisational politics, mostly resulting from incorrect placements of the capability in the organisation, incorrect ownership structures and very little business-IT collaboration."

Ideally, BI needs to be an enterprise-wide capability, which is facilitated by an IT competency, but which is owned by the business...

Martin Rennhackkamp, information specialist, Prescient Business Technologies

Keith Jones, MD of Harvey Jones Systems, a specialist information delivery company that provides financial, BI and business performance management systems, says many BI implementations are still carried out in line-of-business (LOB) silos.

"This will deliver limited benefits - to really get the multiplier effect going, BI must become a cross-LOB solution. Current installations tend to be stop-start affairs, as every new LOB must be looked at independently, a new sponsor must be found and a new business case established. This delays the benefits and leads to `information ownership`."

Adds Rennhackkamp: "In some organisations, the CIOs are not even aware of the problems that the silos of information are creating. One of the problems in these organisations is that the CIOs are more CTOs than CIOs - they are not focused on information and its management at all. They are concerned with systems, hardware, software, vendor relationships, contracts, etc, while the management of information as a corporate resource falls by the wayside. In the bigger corporates, this issue needs a lot of attention - the so-called CIOs actually can do with some education on how information should be managed as a key corporate resource. But first, they must want to be educated."

Twanette Jurd, systems integration and BI solutions manager at ICL Africa, which punts Information Builders, says most of this company`s commercial customers "have a department that is designated as the owner of BI. This, however, appears to be less prevalent in government institutions. There are definitely positive and negative aspects to both. For example, BI owners that prescribe products and that believe they own the data, often delay and hamper installations."

Yet despite the confusion around ownership, 60% of the survey respondents were adamant that their particular projects had delivered a return on investment (ROI). About a third of the respondents indicated they were members of senior and executive management teams, while the remaining respondents chose not to reveal their designations. So, mapping the claimed ownership of these projects back to respondents` designations didn`t reveal anything conclusive. But the response to another question - "Which departments in your organisation use BI tools?" - showed that financial and accounting are the main BI users within the respondent base, followed by corporate management, sales and marketing. If these primary BI users made up a significant part of the respondent base, then it`s fairly safe to assume they believe their particular projects are delivering an ROI.

Yet, despite seeming contradictions among the respondent base as to whether BI implementations are worth it, BI is attracting increasing spend. Craig Rodger, divisional manager at SAS Institute, says: "Business intelligence has never seen dramatic growth. It`s always plodded along at 10% to 12% growth a year. Now growth is starting to accelerate off a big base. There`s going to be a lot of money involved here."

Rennhackkamp believes this growth will continue, until it "levels off almost equal to operational systems. With the focus on information as a competitive-edge, the spend to get the information out quickly and efficiently will continue."

Business intelligence has never seen dramatic growth.

Craig Rodger, divisional manager, SAS Institute

He cautions, however: "Organisations are wary. Most have been burnt by investments in BI from which they have had sub-standard paybacks. There are also a lot of unsuccessful war stories in the industry, so the spend will be careful. Organisations want small, short-term BI projects which show a positive ROI before they continue investing."

Jones has a somewhat different take. "This is a recession-proof market sector. When the market turns down, businesses need to know where to focus and where to cut back. When the market turns up, people spend money on making their businesses grow faster. This will continue to be a growth sector."

The reality is that companies today are faced with the challenge of managing more data, applications and information consumers than ever before. Says Jurd: "We are now experiencing a distinct shift from 'interest` to 'actual sales`. Analysts consider BI the 'hottest` market in the software sector, and most analysts agree that only about 15% of this market has been penetrated."

Gary Lawrence, SA country manager at Business Objects, agrees that IT spend here will increase because more companies now view BI as strategic and are beginning to deploy it across "the enterprise and beyond - to partners and customers". It is, he says, no longer being seen "as a glorified reporting tool".

Llewellyn Claasen, executive consultant at Enzo Business Intelligence Trust, says the situation is somewhat different in the lower end of the market. "In the owner-managed SME [small and medium enterprise] segment, the growth is not coming off a big base. On the contrary, one of our biggest problems is educating the SME manager on why he should consider utilising BI in his business. This segment is still in its infancy. "As managers in this segment become more aware of outsourced BI solutions, we will see significant growth in BI application utilisation off a small base. There will be significant momentum in this segment as manager awareness and uptake of outsourced BI solutions grows over the next year or two."

Part of the growth in the corporate market, says Rodger, can be attributed to companies looking to standardise their BI solutions. "There are, generally speaking, pockets of BI implementations all over enterprises. For CIOs, this is a nightmare. They`re looking at replacing these with a single solution, so the size of deals out there is starting to go up and sales cycles are starting to get longer."

Partnering, says Rodgers, is becoming more necessary and consolidation is another growing trend as companies begin working together to provide complete solutions.

This is a recession-proof market sector.

Keith Jones, MD, Harvey Jones Systems

Jurd agrees, saying: "CIOs are looking to solutions that can extend both within and without the enterprise, with a high degree of scalability and manageability. This requirement for integrated BI suites and widespread deployment is demonstrated by the spate of recent acquisitions in the BI market."

Yet while spend in this sector may be on the increase, most vendors agree that local companies are being cost-conscious. Says Marc Scheepbouwer, CEO at GBI: "Proving the business value of our solutions has been necessary in every one of our engagements."

Half of the respondents to the ITWeb survey this year indicated that their BI initiatives were at the mature deployment stage, 24% said they had begun their initial roll-out, and just under 10% were in the planning phase.

Yet Rennhackkamp says "most of the larger corporates have fairly mature data warehouse projects - but in terms of time, not necessarily in terms of correctness, success and enterprise-wide adoption".

Jones voices his concerns regarding the alleged maturity of installed solutions. "I think the true benefits of most of the projects have yet to be realised. I think the maturity phase reflects the process automation and delivery of data. I think that leveraging the true value of this data into tangible returns is yet to come. This phase will bring the implementations into true maturity and accelerate the take up of BI solutions. I think much of this perception comes from a misunderstanding of what a BI solution should deliver. Reporting solutions tell you something you already know, quickly and in a nice format. They allow you to make the same decisions on the same data faster. BI solutions allow you to turn this information into a strategic advantage. They allow you to make different decisions on the same or different data. BI solutions alter the way you do business, reporting solutions do not."

CIOs are looking to solutions that can extend both within and without the enterprise, with a high degree of scalability and manageability.

Twanette Jurd, systems integration and BI solutions manager, ICL Africa

And Lawrence says he "cannot think of a company that has a mature BI adoption where BI has been implemented strategically across the enterprise. In our experience, many companies have embarked upon so-called BI projects that in many cases just involved implementing a BI front-end across a stovepipe application."

Maturity aside, the way BI solutions are implemented also has an impact on their success rate. Almost half the survey respondent base indicated their companies had implemented BI solutions in-house, 5% had outsourced their BI requirements and 40% had employed a combination of these two approaches.

Rennhackkamp says: "We see about a 50-50 mix between in-house projects and co-partnered projects. There are very few fully outsourced BI projects. Our perception is that organisations realise they have to get their BI projects on track and start delivering a ROI on the costs already sunken into it. But they are equally reluctant to go with new vendors and service companies - having been burnt by excessive costs already. I personally think the reason for this is that there are/were a lot of fly-by-night service providers out there who jumped onto the BI bandwagon without the necessary skills, insight and experience. We encounter a lot of blundered BI projects that have to be fixed."

Jones says of in-house implementations that "this is a definite trend; the BI market has been commoditised to a large extent by Microsoft`s entry into the market and the openness of the newer solutions means that clients can do their own deployments with relative ease. This means knowledge of the data and business can be leveraged without having the technical barriers of deploying solutions on proprietary or `closed` platforms. The success of any BI implementation relies more heavily on business knowledge than technical knowledge. "

Scheepbouwer maintains that although in-house implementations may "appear cheap, they lack flexibility and are expensive to maintain. In my 10 years` experience there have been very few customers who have had successful in-house projects."

The challenges involved in getting BI implementations up and running successfully are similar to those encountered during most IT initiatives. They include "dirty data", obtaining buy-in on a departmental and enterprise level, coping with change management issues and acquiring the necessary training and after-sales support skills. Also seen as significant hurdles to the ultimate success of these projects were understanding companies` business processes, getting users to decide what information they actually needed, the complexities involved in integrating legacy and ERP systems, and the need to continue running the business while implementing the BI solution. A number of respondents also griped about struggling to "get the product to work as promised" and "see through vendor vapourware".

According to the survey respondents, the six most important criteria when assessing the success of a project are ease of use, efficiency, flexibility, value for money, a return on investment and quality consideration.

Says Jones: "I think fluctuations in the rand and the pressure from business on IT to deliver value since Y2K have caused a shift in the market - I think that ROI is now the single most important driver where in the past it was not. Going forward, value for money will define the dominant players in this sector - the days of purchasing the best product with the largest price tag without examining cost-effective alternatives are over. The days of the `free lunch` are over for the BI vendors - they have to show tangible returns in less time."

In my 10 years` experience there have been very few customers who have had successful in-house projects.

Marc Scheepbouwer, CEO, GBI

All in all, the survey showed a clear interest from users in uncovering the benefits BI can offer their businesses and a willingness to invest in implementations that they believed would improve both their decision-making processes and revenue streams.