Intelligent business: It`s the only way to go

"Without intelligence, how much longer do you expect to survive?" This was journalist and media personality Chris Gibbons` question to over 370 delegates at this year`s Sugisa, SAS SA`s annual user conference. Gibbons was at the conference, held earlier this month, to chair an interactive panel discussion on business intelligence (BI).

Members of the panel included Ken Modise, group CEO of the State IT Agency; Bill Hoggarth, MD of SAS SA; Tim Dr"oge, community head at Discovery World; Jithoo Daya, chief knowledge officer at FNB; Allan Russell, senior VP of SAS International; and Prof Louis Fourie, subject head of management of information systems and e-business at the University of Stellenbosch.

BI is not about the technology. Companies have gone through the process of having big installations done and not received any value.

Ken Modise, group CEO, State IT Agency

Surprisingly few of the questions directed at the panel by the delegates - who lost no time in getting down to picking their brains on how to get maximum business benefits out of BI products and solutions - centred around specific technologies. In fact, even some of the panel members made a point of stressing that successful BI implementations were those that eased the business pain they were directed at and not necessarily those sourced from a specific supplier.

Among them was Daya, who said he believed that there wasn`t a single vendor in the marketplace that could solve "all your problems". He also cautioned users to look locally first. "Of critical importance is local support. Time constraints and pricing become an issue here [in SA] when no local support is available."

The unwillingness to punt products by pushing brands was also evident when locally-based BI product and solution providers were approached after the conference and asked to comment on what they thought would differentiate the leading vendors in the next two years from their nearest competitors. All of them stressed the need for products and solutions to deliver value and none of them ventured an opinion on who would lead the market in the next few years. Almost everyone also stressed the "stretch factor", with ICL marketing communications manager Tony Cross`s comment proving the most succinct: "The ability for the solution to integrate with the widest range of back-end data and applications, and the ability to deploy to all users at a reasonable cost of ownership."

[VIDEO]Cynics might wonder at the passing up of what appeared to be a perfect marketing opportunity for each of these vendors, but the tone of the conference together with their responses suggest that BI end-users and providers alike have moved past the hype and are now serious about getting down to business.

But don`t be misled into thinking that established BI players are about to lightly concede any of their turf to new entrants in this market. When questioned: "It seems all major software players are now claiming they have BI offerings. How do you feel about this?" Hoggarth was quick to respond. It was clear, he said, that everyone was "jumping on the BI bandwagon". While some of the bigger IT players were "looking at BI as an important revenue driver", users should ensure their vendors of choice had an established track record in delivering real business value.

The danger is that with lots of vendors coming in and offering everything, who do we choose? Who is telling the truth and who can actually offer what?

Tim Dr"oge, community head, Discovery World

When the same question was put to Marc Scheepbouwer, sales director at Global Technology Business Intelligence, he replied in a similar fashion: "Competition will only be healthy in raising the overall maturity of the market. This does not remove the day-to-day irritation of new players suddenly claiming to be experts. The varying approaches are also confusing our customers. Customers have to test and validate delivery before believing a smooth 'marketer`."

This was also Dr"oge`s concern during the panel discussion. "It`s great that there are more offerings and more choice," he said. "The danger is that with lots of vendors coming in and offering everything, who do we choose? Who is telling the truth and who can actually offer what?"

Modise`s response to the delegates was rather blunt: "Business intelligence is not about the technology. Companies have gone through the process of having big installations done and not received any value." His approach, he said, would be to first decide what business problem required solving and then to ensure that whomever he chose - regardless of the technology they were punting - could deliver.

Fourie said it was interesting that "although businesses are flooded with information, only a few have successfully translated that into business value". He stressed that the old maxim "You are what you know" was rapidly being replaced by "You are what you do" which meant that it was more imperative than ever these days to make sure BI solutions delivered "information to the right people at the right time at the right place".

Queried as to how he felt users should be measuring a return on investment (ROI) with regards to their BI initiatives, he replied that a recent survey in the US showed that while most users believed they should be measuring ROI, more than half of them failed to do so. "It`s easy to measure costs as opposed to delivery." Some companies, he said, were still using traditional ROI measurement models while others were looking at different yardsticks such as customer service and churn levels.

[VIDEO]Russell pointed out that receiving an ROI was continuing to elicit significant attention from corporate executives. "IT spend hasn`t necessarily dramatically decreased, companies are just being a lot more careful about what they spend it on." However, he cautioned against a "blanket approach" to measuring ROI, stressing that it would differ from application to application.

Estelle de Beer, BI manager at Sybase, echoed his comment. "ROI from a BI initiative varies greatly and can be calculated if the business need is very clearly defined and understood. As an example, a casino with a loyalty card program can determine exactly who visits the gaming room, when, how much they spend, how long they stay, where they come from, etc, and formulate their marketing campaigns to target the relevant customer groups. The ROI will then be both the savings made on running a more cost-effective, focused campaign, as well as customer loyalty."

Hoggarth pointed out to the delegates that while ROI was definitely a factor when corporates were involved in a BI decision-making process, it wasn`t their primary concern. "A conversation we have more and more often [with users] is costs versus value," he said. While corporates appreciated that successful BI initiatives could improve revenue streams and keep customer satisfaction levels climbing, they still looked at "cost savings first and then future revenues".

Staying with cost issues, the panel was asked - given their budgetary constraints - how start-ups and small and medium enterprises could take advantage of BI offerings. Hoggarth`s advice was that they should "think big but stay focused" by carefully measuring the returns on their initial BI projects and then moving on to addressing the next project. He also advised looking at different licensing models such as application service provision.

Gary Lawrence, SA country manager at Business Objects, concurred, saying: "It is important that small companies understand what is available in the market, what value these tools provide and then start with a tool that allows them to begin the BI journey in a manner that suits the business but can be extended as the business needs evolve."

Somewhat conflicting statements were made by the local vendor community in response to the question as to what proportion of a BI budget should be dedicated to technology.

[VIDEO]Sagent MD Susan Andre said there were several influencing factors, such as the number of users, the volumes of data and a company`s current infrastructure. "A company may derive the same value from BI at a low cost (less data, less powerful machines, fewer user licences) but the cost of the project team may be high - in this case it could be 25% budget to technology. In other cases it could be 60%."

Paul van der Merwe, a director at Knowledge Integration Dynamics, said that during the implementation phase, technology would be approximately 60% to 75% of the BI budget, but after the implementation the services component would be the bigger cost. Craig Hart, technical director at BI Planning, said most organisations were used to a 1:2 or 1:3 (product : implementation) total cost of ownership on their enterprise resource planning (ERP) strategies.

Competition will only be healthy in raising the overall maturity of the market. This does not remove the day-to-day irritation of new players suddenly claiming to be experts.

Marc Scheepbouwer, sales director, Global Technology Business Intelligence

"Unfortunately, this has also become true for the implementation of successful BI solutions. This is due to the fact that organisations buy too many BI widgets and gadgets that are not used to their full extent. This causes the customers to pay for features and functionality that are never used and the implementation costs thereof. I believe that even with all the technology that is required behind BI (data warehouses, data marts, etc) we will see in the future a move more towards a 1:1 relationship."

[VIDEO]Opinions from the panel on who should take responsibility for business intelligence initiatives within any organisation ranged from Dr"oge`s belief that CEOs should manage ownership to Daya`s "every employee has a part to play in BI". The vendor community also differed, with Andre saying it should be the CIO "with strong backing from the business team" to TCM marketing executive Jorge de Campos`s view that the responsibility lay with the business owner who stood to gain from the information attained from the BI solution. Perhaps not surprisingly, none of the vendors approached for comment on this issue after the conference said they should share in this responsibility.

However, they were quite outspoken as to how global mergers and acquisitions would impact the SA market.

Said Lawrence: "As we have already seen in the ERP space, there will be much consolidation among vendors. Ultimately only the strong will survive, the smaller companies will most likely be acquired or be squeezed out unless they have an offering so niche that it does not attract the large vendors. Customers should try to partner with the 'gorillas` in the space, ensuring that these vendors understand the space and view the space as strategic to their survival as opposed to a necessity to sell another product. Openness is key as well as domain expertise, financial stability and a proven track record."

A conversation we have more and more often [with users] is costs versus value.

Bill Hoggarth, MD, SAS SA

Cross said he believed the number of vendors in the SA market would "continue to reduce. Recently we`ve noticed BI vendors buying other companies to address shortcomings in their solutions. We believe the leading BI vendors with long track records will survive."

"Only the fittest will survive," said Julian Field, GM of Ascential Software. "The SA market is cluttered with too many technology vendors."

That whomever headed up the BI market in the near future would certainly have a strong customer base was obvious from the panel members` responses as to what the main business driver in this area was. Russell summed it up in two words: "Competitive survival," agreeing with Daya that BI initiatives were there to support business strategies and not to execute them.

So then, how long will companies without access to intelligence survive? Probably not very long at all.