Monday, December 8, 2008

What’s in store for Business Intelligence in 2009

As Yogi Berra once said, it’s tough to make predictions, especially about the future. That’s particularly true right now. I wouldn’t want to be the one responsible for predicting where the Dow will be in six months, what’s going to happen to the U.S. Auto Industry, or whether gas prices are going to stay low. Heck, I don’t even want to predict when the new wall unit in our family room is going to be finished.

But, that doesn’t mean I’m going to shy away from making any predictions. ‘Tis the season for predictions about 2009, so here are my predictions for BI in 2009.

1) Cloud computing will cause a shift in the BI balance of power from IT to business users

The exact definition of cloud computing is, well, a bit cloudy. I’m referring to the notion of using services and resources that exist in the internet cloud to get some or all of your application needs met. Whether it’s computing resources, storage resources, development platforms, applications, or some combination of the above, we now have major players including Google, Amazon, Microsoft, and salesforce.com providing cloud-based solutions. With the increasing adoption and visibility of SaaS BI, the cloud concept has already impacted BI, and will continue to strongly influence the market in 2009.

How? Previously, a business’ BI needs couldn’t get met without IT. So, IT was in the driver’s seat. They weren’t just the implementers – they were also the report builders, and the power users. So, BI vendors focused on meeting their needs, even more than they focused on meeting the needs of the business users. That drove the focus of BI solutions towards the few power users, not the broader base of more casual business users.

But, with SaaS BI, BI no longer requires a large scale project from IT. IT will (and should) still be involved, but the buying power is really in the hands of the business unit, not IT. We’ll see the same thing that happened with any other SaaS offering, such as SaaS CRM or SaaS ERP. IT is involved, but the decision will be driven by business users.

2) Simplicity will be the driving mantra for both consumers and vendors of BI

Because IT has historically been the primary influencer, product development was focused on adding feature after feature to meet their needs. But, simplicity was sacrificed. Deployment, maintenance, and usage all became complicated. BI has become bloated.

With business in the driver’s seat, their needs are now the ones that need to be met. What have they been asking for more than anything else? Simplicity. They want something they can use without having to be a specialist. They want something that just works, hassle free. They like iPods, because they’re simple and they work. They’re not big fans of Linux – all that ability to tweak everything is more of a headache than a benefit.

How will this impact vendors? It depends on which type of vendor you’re talking about. For traditional vendors, we’ll see them retrofitting their solutions to meet the needs of the new decision makers. They’ve got a lot of technology that they don’t want to see go to waste, so they’re spending they’ll spend their energy on how to make it more easily consumable. But, they need to be careful that they don’t just “dumb down” their existing solutions – that is, they can’t just snip out the less frequently used functionality, and add in simplified installation procedures. That never works. Nor can they just put it up on the web and call it on-demand. Just physically moving the software from the customer’s servers to the vendor’s servers doesn’t make it any easier for the end users.

Traditional vendors need to rethink their solutions based on a new buyer, and use their existing technology (where possible) to help accelerate the delivery of a solution for that buyer.

For new vendors, it creates a flourishing market for new, innovative solutions to address the new driving force in BI – the end user. We’ve already seen innovations with SaaS BI, visualization, and social analytics. We’ll see more of this in 2009. In fact, we need to see more of this, to get ourselves out of a BI rut.

3) The continued drive for simplicity will cause a shift towards prebuilt analytic solutions with best practices built in, and away from generic toolsets

With solutions like SaaS BI driving the availability of BI to a much broader audience, many more people now have access to simple-to-set up and simple-to-use tools that can let them get answers to just about any questions they might want to ask about their area of their business. But this raises a new issue for most companies – unless they have business analysts on staff, it’s difficult to know which questions are the ones they should really be focused on.

I hear directly from a lot of companies that when it comes to analyzing their business, they don’t know what they don’t know. Giving business users a tool to answer their questions isn’t valuable unless they’re asking the right questions. They can come up with countless metrics, but which are the metrics that really matter?

Having a prebuilt solution focused on particular business areas with the key best practice metrics and analytic processes built in makes life a lot simpler. Business users can be up and running quickly, and be focusing on the things that are most important – instead of using a generic BI tool and struggling to design (and redesign, and redesign again) their own solution with the hopes that they’re choosing the right things to look at.

I also hear a lot of questions about the prebuilt approach. Isn’t every company different? Yes. But, do they all ask completely different questions? No.

Take B2B sales as an example. Everyone has different sales stages and different processes (and a prebuilt solution needs to be configurable enough to handle that). But, they all need to know what their win rates are, the average time it takes to win (and lose) a deal, what percentage of deals in stage one move to stage two, their percentage of new vs repeat business, how long it takes leads to convert to opportunities, what are their best lead sources, and how are all these metrics changing over time? In fact, there’s even a recent book about key sales metrics that matter.

Additionally, they all need to know what’s changed in their pipeline since they last looked. They need to know where their sweet spots are, that is, what are the characteristics of sales opportunities that they’ve been best at winning historically. They need to know which deals are at risk, and they need to know what they should be forecasting. In the end, there are far more similarities than differences.

It’s no longer sufficient for vendors to provide answers. In 2009, prebuilt analytic solutions will help simplify the lives of their customers by also providing not just answers, but also the right questions.

4) Data interpretation will become a significant challenge for new BI users

With business users now having easy access to best practice analytics that can show them the metrics that matter and their associated trends, a new issue will arise: what do the metrics and trends mean, and what should I do about them? For example, what would have happened if during the first time you ever got your cholesterol test results, the doctor just told you that your total cholesterol was 210 and then left the room? Is 210 good or bad? If it’s bad, how do I lower it?

To make your cholesterol metric understandable, you initially needed some assistance interpreting it. The same is true for analytics. To keep their customers happy and make sure they’re getting value, in 2009 vendors will begin providing some type of service to get people started with an understanding of the metrics that matter, and highlight best practice analytics to accelerate their business performance.

At LucidEra, we started seeing the need for this about six months ago, and offered a Pipeline Healthcheck™ service to address it. Here’s an example of the type of results customers have seen.

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So, BI is facing new users and new challenges. With the impact of cloud computing, a shift in the balance of power for BI, additional focus and urgency on delivering simple solutions, and a few new challenges arising around data interpretation, 2009 is going to be a very interesting year for BI.

posted by Ken Rudin at 1:20 pm

Comments

Neil Raden

Posted on 8th December, 2008

Ken,

I’m glad you used cholesterol as an example, because it is a perfect example, a perfect example of how poorly conceived metrics can be followed to disastrous consequences. For fifty years, we’ve been lead to believe that cholesterol is a deadly poison that will kill us, and a cholesterol “metric” was devised that now drives the practice. Doctors advise and people follow protocols to drive their serum cholesterol down to dangerous levels, all because of a simplistic notion that ONE THING can be managed. That should never happen. A metric should advise a practice, and a practice should be measured with carefully constructed metrics that capture the phenomena that drive results.

Example: Cholesterol is not a deadly poison, but a substance vital to the cells of all mammals. There are no such things as good or bad cholesterol. A high cholesterol is not dangerous by itself, but may reflect an unhealthy condition, or it may be totally innocent. Your body produces three to four times more cholesterol than you eat. Every cell in your body needs cholesterol. There is no evidence that too much animal fat and cholesterol in the diet promotes atherosclerosis or heart attacks.
The only effective way to lower the cholesterol metric is with drugs, but neither heart mortality or total mortality have been improved with drugs and the drugs themselves have been shown to be dangerous.

This is identical to the situation in organizations. Sweeping, broad metrics conceal more than they reveal. I agree that BI is still a handcrafted cottage industry, but standardization is not a viable alternative if it doesn’t allow for creation of metrics that are perfectly suited to the organization and caapture all of the relevant factors that drive the performance.

-NR
twitter: nraden

What’s in Store for Business Intelligence in 2009 | Salesforce Times

Posted on 8th December, 2008

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Ken Rudin

Posted on 8th December, 2008

Hi Neil –

Good feedback. Ultimately, we’d like to see everyone able to create metrics that are perfect for their organization. But right now, they’re usually starting from scratch and often end up reinventing the wheel again and again and again when it comes to business metrics. Giving them a head start with some “best practice” metrics, and helping them become analytically focused can truly benefit businesses. Whether or not it’s a perfect solution is open for debate, but it’s certainly a big step in the right direction.