The robust growth in the business intelligence (BI) industry continues to provide fuel to wide ranging speculation on the role that products will play in the coming years. This article takes a closer look at one particular catchphrase: BI for the masses. The phrase is a bit vague, but this article examines how it connects to more specific market trends and provides some recent research results that cast light on the current market situation.
Business intelligence is decision support software; and in most companies, its use tends to be limited to a relatively small group of decision makers. This makes sense in a strongly hierarchical company, where the number of decision makers is relatively small. One popular idea about the future of BI software is that as the business intelligence market and products mature, companies will start rolling out the software to more and more employees. The idea is that if the software can bring benefits to the company when it is available to a few people, it will bring more advantages if lots of people have it. A key assumption is that there is a large group of decision makers in companies that have not yet been reached by business intelligence.
The idea that business intelligence could become much more widespread at existing sites is often referred to as “BI for the masses.” BI for the masses is an avenue of potential growth that is distinct from growth through finding new customer sites.
BI User Headcounts
Most reports of the success of business intelligence are based on anecdotal evidence, and there is relatively little information available on how widespread business intelligence is within individual companies. But The BI Survey 9
, which was published in September 2010, specifically addresses this question. The results published in The BI Survey 9 are based on over 3000 responses, and provide interesting data on the state of the business intelligence market.
Most importantly, the results of The BI Survey 9 are not just based on anecdotes, which tend to be skewed toward the most interesting situations and ignore the typical. The results we present here are based on the medians of responses and so reflect typical use cases. Anecdotal evidence from customer references is commonly used by industry analysts to illustrate trends in the market, but needs to be treated with caution. The problem is not that the anecdotes are untrue – they are usually based on valid customer references – but that it is difficult to know how typical of the user base the case in question actually is.
So what percentage of the employees of companies that have business intelligence tools actually use them on a regular basis? Most analysts agree that the numbers are relatively low, at about 20%. But The BI Survey has consistently shown much less participation than that. In fact, this year the result was about 11%.
The Benefits of BI for the Masses
Commonly cited reasons for expecting the vision of BI for the masses to become a reality is greater competition among companies that use business intelligence software. Product life cycles are shortening. New product ideas become commoditized much more quickly than was the case even a few decades ago. Supply chains are globalizing, giving consumers more choice and increasing pressure on producers. This results in lower profit margins for producers and distributors.
The trend toward more open, less hierarchical organizations is largely the result of improved information and telecommunications technology. Information technology, including business intelligence technology, reduces the cost of storing and processing information; and, as a result, it reduces the need for deep hierarchies because the ultimate value that hierarchies deliver is a framework for storing and processing information.
Business intelligence is currently a centralized process, but flatter organizations with better informed workers could be more productive by being more directly involved in the decision-making process. This would also reduce the need for close supervision by management. However, to make this vision a reality, it is crucial for more people to have the right information at hand to make decisions.
Another argument in favor of BI for the masses is that workers are becoming more accustomed to informed decision making. With the rise of the Internet and especially mobile computing, people are increasingly accustomed to having information at their fingertips and are becoming less willing to wait for information to be delivered. According to this idea, the Internet and, increasingly, mobile computing have primed workers to be autonomous decision makers. This dovetails with the trend toward building flatter organizations to cope with intense competition. A term that often comes up in connection with this idea is “digital native” – defined as a person born after digital technology became widespread.
Vendor Interest in BI for the Masses
Wider rollouts tend to be more profitable for software vendors because they reduce the cost of sales. Generally speaking, it is much cheaper for a vendor to sell an additional seat at a customer site than to find a new company willing to buy the product. In fact, in many cases business intelligence spreads from department to department in large companies by word of mouth as frustrated business users learn about successful projects from their colleagues.
Microsoft is one of the vendors pushing the idea of the hardest, and its motivation is different. For Microsoft, business intelligence is primarily a means of adding value to their platform. Unlike most vendors, Microsoft already has almost complete coverage of most companies. But by adding business intelligence features to Excel, Microsoft encourages users to upgrade to the newest version. Business intelligence is also used by Microsoft to promote SQL Server and SharePoint. Microsoft’s argument is that it is uniquely positioned to provide business for the masses, so it clearly has a motive for promoting it.
How Business Intelligence Might Spread
Software vendors find the idea of business intelligence for the masses particularly attractive for the obvious reason that it would inevitably mean selling more seats. However, it is not completely clear how vendors and customers would benefit most from this trend. Use of business intelligence could grow in more than one market dimension.
One way business intelligence could be brought to the masses is if smaller companies make more use of the software. Finding a way to provide business intelligence to smaller companies is an avenue of growth that is being aggressively pursued by a wide range of business intelligence vendors. A variety of large vendors have SME (small and medium enterprise) strategies. These strategies are not usually associated with business intelligence for the masses in the marketing messages of the vendors, or indeed in the discussions of most industry analysts. But clearly, the goal is the same: to broaden the attraction of business intelligence software, finding new customers for vendors and delivering decision support to a wider range of business users. The BI Survey 9 suggests that smaller organizations that use business intelligence tend to use it more pervasively than larger organizations. This observation is an interesting contrast to the fact that business intelligence is usually for large companies. There are several possible explanations for the phenomenon. One is that smaller companies tend to be less hierarchical than large companies, with the result that a larger percentage of the workers are decision makers. In a sense, smaller companies are already living the dream of flatter, more flexible organizations so business intelligence tools are more pervasive when they are used.
A second way that business intelligence could reach a wider audience is that more departments in large companies could make use of the products. Business intelligence tends to be rolled out in a rather lopsided way in most larger companies, with the focus on finance, sales and marketing. A sharper focus on departments that use BI less would be a step in this direction. According to The BI Survey 9, these departments include manufacturing, human resources, logistics and procurement.
A third way to increase business intelligence use would be to target business users making less strategic decisions. This is the goal of the operational BI initiative. Again, “operational BI” and “BI for the masses” are not usually referred to in the same breath, but ultimately the goal of both is to put business intelligence in the hands of people who are not making strategic decisions.
Deterrents to Using BI
So why is BI software not used more often? What are the deterrents to more widespread use of the product?
One explanation for the uneven distribution of business intelligence across departments is that it may be more difficult to assemble relative information for these departments. For example, it makes sense for companies to measure the performance of the procurement department, but it is not always clear which metrics are needed to do this. It is not enough to measure prices – lower prices for purchased goods are only an advantage if the quality of the goods purchased is also measured, and this is more complex. Furthermore, there may be other operative measures reflecting the efficiency of the purchasing process itself that need to be taken into consideration. In effect, something like a balanced scorecard approach may be required. Unfortunately, such approaches are often hampered by issues stemming from the complexity of the project.
Such complexity issues can be reduced to data availability, difficulties in building applications and implementation costs of new applications. None of these ranked as the top deterrent to wider implementation in The BI Survey 9, but all three of them were mentioned by a significant number of respondents.
But in the end, most companies are deterred from using business intelligence more commonly by the cost and complexity of implementing BI applications.
The user base for business intelligence software is surprisingly narrow. Even in companies that use business intelligence, only about 11% of workers use it on a regular basis. A trend toward wider use of business intelligence tools is part of a general trend toward more open, less hierarchical, more competitive companies. Vendors like the idea of BI for the masses, but the term itself is vague and covers several other trends such as business intelligence for SMEs and operational BI. Cost and complexity remain the key deterrents to more widespread usage of business intelligence software.
(Note: Further information about The BI Survey 9 can be obtained at www.bi-survey.com
SOURCE: Business Intelligence for the Masses