By Yuval Shavit, Features Writer
As businesses accumulate greater amounts of data, it's becoming both harder and more important to track information and compile it into usable reports. Many companies turn to business intelligence (BI) tools
The bread and butter of BI is static reporting, where software gathers data from across the enterprise and presents it to end users, often with fancy charts and analysis tools to help users identify trends and make predictions. Static reporting makes up about 80% to 90% of BI usage today, according to John Onder, a partner at Chicago Business Intelligence Group (CBIG). The other 10% to 20% of BI usage comes from a combination of ad hoc reporting based on predefined reports and custom reports built by power users, Onder said.
As business intelligence tools have become more powerful and easier to use, some VARs have shifted their business models from software margins and technical implementations to a higher-level, more strategic approach. VARs are focusing more on their consultative roles, helping customers determine what tools they need instead of simply installing those tools for them. Companies are more interested in the solution than any specific tool set, said Gary Shiller, vice president at Sky Solutions LLC in Hasbrouck Heights, N.J.
On the other hand, the power of glitzy BI tools is still strong, Onder said. He estimates that about half of companies that buy into BI do so because of demos that show off nifty charts and dashboard widgets -- but that's a case of the tail wagging the dog, he said. Unlike many other infrastructure-intensive projects, business intelligence is consumed directly by high-level managers and executives. That can make a compelling demo very useful, but it's important not to let your potential clients be too distracted by the widgets; about 90% of a deployment involves connecting the various data sources that work behind the scenes, Onder said. You should make sure the client understands not just the tool's visual interface, but the investment behind it -- and, most importantly, how it will help the company make better decisions.
A VAR's role in business intelligence
The roles VARs play in a business intelligence deployment can vary significantly based on the client's size and the BI vendor. We'll talk more about working with vendors in the second installment of this tutorial, but at the low end, you can expect to perform basic staff augmentation services: helping design the data warehouses, doing the legwork of connecting the various elements of the BI system and conducting employee training sessions. Although increasingly sophisticated business intelligence tools let customers do more and more work themselves, companies still rely on VARs and business intelligence consultants for many projects, especially large or complicated ones.
But as with many areas of IT, many consultancies and VARs are increasing margins by specializing and providing industry-specific advice. For instance, when Sky Solutions works with a client in one of its target sectors, like discrete manufacturing, it comes with a precompiled list of key performance indicators (KPIs) that the client can pick from. This industry-specific information helps Sky Solutions work with the client on end goals, like increasing revenue or adding a product line, instead of focusing exclusively on the technology behind business intelligence.
The advantage to VARs, of course, is that the more in-depth your consulting is, the more you can charge. Specialization is especially important in the long term, as easier tools and increased competition from vendors and fellow VARs continues to push prices for basic BI consulting down.
The first step in the deployment of new business intelligence tools is to figure out what your client's goals are. Although the BI project will finally produce KPIs and underlying database connections, it's important not to put the cart before the horse by focusing on the dashboard end users will see before you know why they need to see it. This is where industry-specific knowledge is helpful, but regardless of whether you have that insight or not, it's important to talk to your client's executives and not just their IT staff. Once you know the high-level goals that the BI project is meant to address, determine what KPIs can help. It's useful to prioritize them into roughly three categories, Shiller said: vital KPIs, KPIs your client would like but does not absolutely need, and KPIs your client doesn't need at all.
Even with more advanced tools, the fundamental technology behind business intelligence hasn't changed much over the years, Onder said, so the technological implementation is often fairly standard. The back end of a BI system connects various data sources -- usually databases -- together, Onder said. Setting that system up is roughly a three-step process, he said: outlining the requirements, designing the system, and testing and debugging.
The complications arise largely from the sheer scale of many business intelligence projects. In fact, CBIG developed a software tool, Frogpoint, to help integrate the three steps. Whereas the standard approach might be to set up a series of documents and spreadsheets for the requirements phase, another set of documents for the design phase, and a third for testing and debugging, Frogpoint integrates the three. This lets CBIG easily see not just what bugs need to be fixed, but also where they fit in to the overall architecture and the business goals that component of the system is meant to address.
The future of business intelligence
Another complication is an increasing trend to bring in alternative sources, Onder said. Whereas a standard business intelligence tools deployment project connects only a company's databases, newer BI reporting tools and methods let companies scan in unstructured data, like documents, as well as external sources such as Web pages. For instance, a company looking for user reactions to its product might look at both its own surveys, in the form of structured databases, as well as user-generated ratings from websites like Amazon.com, Onder said.
Aside from just the technological trends, it's also important to stay ahead of your competition: other VARs and vendors. In the next installment of our Hot Spot Tutorial on business intelligence, we'll look at how to maximize your profits as you work with vendors in an increasingly tight economy.
This was first published in November 2008