An insightful study by IDG Research Services reveals that organisations in the U.K. are putting the budget behind BI and Analytics, but lack the strategic planning and measurement to back up their investments. What’s more, those investments aren’t always performing to expectations against stated objectives. This paper explores what it will take to narrow the performance gaps and maximise investments in BI and Analytics.
Business Intelligence and Analytics OutlookBusiness intelligence and analytics are the foundations for survival for enterprises both great and small as they look to consolidate on their strengths and position themselves for growth in the near future. 2011 IT ForecastUntitled Document The way that organisations conduct business has changed dramatically in the last 20 years, notes Dr. Charles Randall, from SAS, the largest independent vendor in the business intelligence (BI) market. Advances in business process automa-tion and electronic commerce, for example, have expanded reach and generated vast amounts of data. At the same time, he explains, constant competitive pressures on cost and price are forcing organisations to work smarter, not harder. One way to work a whole lot smarter is by put-ting all that data to good use. And that has many organisations turning to BI and Analytics to derive meaning from existing data and improve decision-making. Such technologies provide historical, current, and predictive views of busi-ness operations that can improve everything from manufacturing efficiency to sales forecasting. BI and Analytics are indeed a priority for most organisations in the U.K. That s according to a recent study by IDG Research Services, querying 134 professionals ranging from CIOs to BI special-ists across a range of industries and company sizes. Respondents expect the greatest impact of BI to be on strategic enterprise intelligence, An insightful study by IDG Research Services reveals that organisations in the U.K. are putting the budget behind BI and Analytics, but lack the strategic planning and measurement to back up their investments. What s more, those investments aren t always performing to expectations against stated objectives. This paper explores what it will take to narrow the performance gaps and maximise investments in BI and Analytics. Sheer Intelligence: Organisations are investing in BI and Analytics, but are they realising its true value? sales and marketing, strategic planning and forecasting, as well as budgeting and financials. John Bowling is responsible for the information management strategy at General Dynamics U.K, and says We are investing in BI and Analytics to give us greater capability to monitor, mea-sure and report on our business performance at the strategic, tactical and operational levels. This will result in a standardised and consistent way which enables us to make bet-ter informed decisions with greater accuracy, more effectively, efficiently and economically. Though amidst much hype, some concerning discrepancies emerge. Investment without Measurement An astounding 92 percent of respondents say they are investing the same or increased budget in BI and Analytics.That s a marked upswing compared to previous years for which BI budgets seemed to dwindle. But whilst investments prove strong, only 28 percent of responding organisations have a documented strategy and plan in place that is tracked and measured. Lack of strategic planning suggests that organisa-tions are still in the early stages of adoption, perhaps not committing the appropriate fore-thought. But what s particularly troubling to Dr. Randall is that so few have mechanisms in place for measurement. Introducing BI is pointless without a business culture open to measurement, 2Competitive pressures on cost and price are forcing organisations to work smarter, not harder .Untitled Document3he suggests, thus metrics are part and parcel to success in analytics. Bowling concurs, We already measure performance which has helped us realise the importance of this investment in enhancing our ability further in doing BI and Analytics. Good Intelligence That s Hard to Get With these early efforts, organisations struggle to extract actionable insight from their data. Some 42 percent of respondents find it difficult or some-what difficult to uncover meaningful information from their transactional systems. Surely that s because data queries and reporting are often still funneled through a harried team of analytics experts a seemingly arduous process at best. On a positive note, though, respondents are relatively sure of their efforts, with 43 percent reporting that they are very or somewhat confi-dent in the accuracy and credibility their BI and Analytics results. Strategic planning is key to that success. We have a high degree of confidence that we will be successful because our approach is to manage all aspects as part of a strategic plan which will be executed/implemented as a managed programme, says Bowling.Even more encouraging, modern BI and Analytics 10% No strategy or tactical plans31% Tactical project plans, but no enterprise strategy28% A documented strategy and plan that is tracked and measured.13% A documented strategy and plan, but no tracking or measurement19% A strategy, but no documented planStrategic Planning around BIWhat best describes your organisation s use of an enterprise BI and Analytics strategy?The Difference between Success and FailureToday, many organisations are doing BI very well some not so much. SAS Dr. Charles Randall says certain actions differentiate success and failure.Successful organisations are:1. Creating a competency centre. Successful organisations are gathering expertise in all aspects of BI from the technical to the reporting, com-munications and strategic elements. 2. Walking before running. Successful organisa-tions focus initially on a specific problem and then expand their programmes over time. They get grounded in the basics, developing and nurturing expertise. 3. Fostering a culture of test, learn, and improve. Successful organisations don t do and move on. They test what they ve done, learn from it and improve on it before moving on. Unsuccessful organisations are:1. Not spending enough time on the questions. Unsuccessful organisations think too much about the analysis, not enough about the question being asked. Meaning, is the right ques-tion being answered? In the end, asking the right questions the right way helps eliminate the risk of undertaking the wrong sort of analysis.2. Doing too much in one go. Unsuccessful or-ganisations try to use every scrap of data. It s better to analayse smaller samples that provide valuable insight into the rest the data. 3. Thinking BI is the magic bullet. Unsuccessful organisations think BI can do everything. But it s really a culture of hard work wrapped in a complex trio of technology, people and processes. engines can often dispense with the difficulties. Many tools are now designed to deliver data to non-expert users in easy-to-use formats like dynamic reports delivered via the web; with other-wise complicated analytical jargon is converted to Just over one-quarter (28%) of respondents have a documented BI and Analytics strategy that is tracked and measured.Untitled Document4less-intimidating language. All of this means those analytics experts can spend their time tackling the most demanding/complex issues rather than doing simple queries bringing more value-add to the BI environment, Dr. Randall claims. Forecasting in the Present BI and Analytics are instrumental in predict-ing and forecasting. Interestingly, the IDG study shows that only 19 percent of respon-dents use BI and Analytics to predict future performance. What s more, only 27 percent use it to project nine months out or more. So are tools being used to their potential?Dr. Randall contends that such findings could simply be indicative of the varying definition of the predictive timeframe, which ultimately depends on the use case scenario. Credit card fraud scenarios, he explains, focus on specific transactions with a predictive timeframe of a mere microsecond into the future; store replenishment users look seven days ahead, and loan delinquency cases consider three to six months forward. For a more strategic scenario such as business planning or market forecasting the predictive timeframe can involve nine months to five years to identify major forces that affect the business. With each of these scenarios, there is a cost asso-ciated with sticking to the present views only. The direct cost of unexpected fraud and the ensuing loss of customer confidence impacts revenue, not being able to predict how much product to stock results in expensive shortages or overstocks, and the inability to anticipate loan delinquency can put organisations in a financial bind. There is also a cost associated with lost opportunity, Dr. Randall explains. Organisations that are not looking at future market forces can end up steps behind the competition, unable to tap looming opportunities. Unfulfilled Expectations It s not surprising that organisations are hoping to leverage BI and Analytics to enhance corporate performance, no matter their predictive timeframe. Respondents most often cite improving predict-ability and forecasting, providing faster and more timely reporting and speeding decision making as key objectives. Other goals include decreasing business costs and improving operational effi-ciency as well as aligning with corporate strategy. BI Performance Against ObjectivesGap analysis: Below is a comparison between those rating each objective very or somewhat important to those noting their organisation is excellent or good at utilising BI to achieve those same objectives.Improving perdictability and forecastingProviding faster and more timely reportingDecreasing business costs and improving operational efficiencySpeeding up business decision-makingAligning with corporate strategy and objectivesGap Percentage49%47%47%44%34%Base: 134Base: 134Base: 133Base: 134Base: 132Base: 134Base: 134Base: 134Base: 133Base: 13485%36%81%34%78%31%80%36%71%37%How important are each of the following BI and analytics objectives to your organisation? (Percent rating each objective very or somewhat important.)How good is your organisation at utilising BI and analytics to achieve the following objectives? (Percent rating each objective excellent or good.) Untitled Document5What is surprising, is that when asked to rate achievement against stated objectives, respon-dents report decidedly low performance with the greatest performance gaps around their most important goals. Thus to realize the full value of BI and Analytics, organisations must work toward narrowing these gaps in short order. To start, Dr. Randall recommends that organisa-tions develop their skill base. IT departments have traditionally grown up focused on transactional systems, so skills for implementing and manag-ing large transactional databases, like ERP and financial systems, were critical. Now, reporting and analytics skills are required to support these new functions which is quite a divergence from current specialties. It is interesting to note that there are new educational opportunities emerging at a post-graduate level, such as the MSC in Business Intelligence Systems and Data Mining offered by DeMontfort University.Additionally, organisations shouldn t shy away from asking for advice, Dr. Randall says. Technology partners like SAS are happy to offer guidance. We do a lot of small audits to evaluate a client s data architecture, organisation and processes to identify areas for improve-ment. Those improvements can help maximise analytics performance and better prepare the organisation for new programmes. Falling Short Where It Matters Of course, BI and Analytics are proving valu-able in highly visible areas of the organisation. Respondents point most often to customer service, corporate profitability, and sales per-formance, though Dr. Randall is alarmed that the importance of analytics in marketing hasn t registered with IT departments. In his experi-ence, marketing analytics represents a tidal wave of activity, leveraging opportunistic tools BI Performance Against ObjectivesGap Analysis: Below is a comparison between those rating the importance of BI to the organisation s success and those noting their organisation is excellent or good at utilising BI to make improvements in each area.Customer ServiceCorporate ProfitabilitySales PerformanceMarketing PerformanceContent AnalyticsSupply Chain ManagementHuman ResourcesE-Commerce, Web, OnlineManufacturingGap Percentage39%29%29%26%26%26%23%21%8%Base: 133Base: 133Base: 132Base: 134Base: 134Base: 133Base: 133Base: 134Base: 131Base: 132Base: 134Base: 130Base: 131Base: 132Base: 129Base: 132Base: 130Base: 12676%37%71%42%68%39%57%31%50%48%44%21%46%25%24%16%22%24%How important are BI and analytics to your organisation s success in the following areas? (Percent rating each area very or somewhat important.)How good is your organisation at utilising BI and analytics to gain insight and make improvements in each of these areas? (Percent rating each area excellent or good.)Untitled Document6to redial the environment and make better use of enormous discretionary spend. When asked to rate BI performance in these key organisational areas, respondents again admit that they re falling shortest in the most valuable areas. Fortunately, there is a lot that can be done to ratchet up performance. Specifically, Dr. Randall says that quite sophisti-cated point solutions are available to address the needs of organisational functions. In customer service, solutions can diagnose quantitative issues like frequency of warranty failures, but also analayse the qualitative side by monitor-ing social media to pick up on themes in the public forum. In the corporate profitability area, customer lifetime value models can predict how long a customer is likely to remain loyal, even through life-stage changes. In terms of sales performance, markdown optimisation solutions can identify when to cut the price of a specific item without cannibalising sales of other products. More generally, Dr. Randall advises organisations just starting on this journey to focus upfront on one specific problem to solve. Once that problem is properly resolved, lessons learned can be aptly applied to bigger, more complex challenges. organisations can also learn a lot by understanding how other businesses utilise the technology, so it s helpful to attend conferences, talk to peers, and read case studies. But most important, organisa-tions must define success and be vocal about measurement, always quantifying and publishing results. That kind of post-investment review, he says, can demonstrate value and persuade col-leagues to do more with analytics. Final Thoughts According to Bowling, The business is aware of how significant this step change will be, with company stakeholders recognising this will have Modeling for SuccessFrontline LTD Tackles Demand ForecastingFrontline LTD, the largest magazine distributor in the U.K., handles 160 titles for 55,000 retailers. It s success lies in getting the right magazine to the right stores in the right quantities for too few copies on the shelves means lost sales opportu-nities, Whilst too many copies on those shelves results in pure waste.With sights set on more intelligent decision mak-ing, the media house implemented solutions for data integration, analytics and demand forecast. Drawing on five years of sales and supply data, the technology was able to aggregate and trans-late information into meaningful intelligence to produce an accurate and profitable sales demand curve across a title s lifecycle as well as specific forecasts for new product launches and format refreshes.In the end, Frontline s foray into BI and Analytics has had a direct impact on profitability. The com-pany has improved availability, reduced waste and lowered costs all by targeting product demand more intelligently. a significant and positive impact our how we as a business aim to exceed in our performance. When done right, BI and Analytics help organisa-tions make better decisions faster. It gives organisations confidence to try new things and become more imaginative, Dr. Randall concludes. With that kind of business advantage some organisations are seeing ROI in three months. And that kind of return speaks for itself. So organisations are advised to continue down the BI path, but must be sure to back their investments with strategic planning, the right tools and stringent measurements. Only then can its value be fully maximised. About SAS SAS is the leader in business analytics software and services, and the largest independent vendor in the business intelligence market. Through innovative solutions delivered within an integrated framework, SAS helps customers at more than 50,000 sites improve performance and deliver value by making better decisions faster. Since 1976 SAS has been giving customers around the world THE POWER TO KNOW . For a full copy of the survey results please visit: www.sasknowledgecentre.com/2011ciorpt.