Business intelligence now a given for SMBs

November 20, 2007

By Linda Tucci.

Central Maine Medical Family is small by big-city standards, with some $280 million in revenue and 2,000 employees. But the aim is to get bigger by operating smarter. In order to meet that initiative, the medical center’s financial staff looked to business intelligence

“We want our finance department to be strategic, not transaction-oriented,” said Wayne Bennett, vice president of finance at the three-hospital system. “Instead of adding value to our managers, however, we were spending all our time moving data around, creating reports and emailing them to people.”

Central Maine Medical Family operates hospitals in Lewiston, Rumford and Bridgton, Maine. Much of its region is rural, stretching from northeastern New Hampshire to the Rangeley Lakes area and just south of Augusta, the state capital. Some 400,000 people turn to the Central Maine Medical Center for medical treatment, Bennett said, but many more “are driving by us,” to Portland and farther, for medical care. The center’s big push is to convince more central Mainers to seek “care closer to home” — its new slogan — by highlighting new offerings, such as its cardiac program.

Documenting how many people come into a Central Maine Medical Family emergency room for chest pain and from where, and then acting on that information, requires merging many data sources, Bennett said. Excel spreadsheets were proving labor intensive and difficult, besides.

Bennett started looking for a tool that could integrate financial, clinical and patient population data to produce the much-vaunted single version of the truth. “We needed performance dashboards that aligned with our strategies.” he said. And employees needed to easily access reports online, so the 30-person financial department did not have to spend its days pushing paper. Business Objects Crystal Decisions, a midmarket product from San Jose, Calif.-based Business Objects SA, proved to be the answer.

A growth market

Bennett is not alone in turning to BI. According to a recent report from consultancy Gartner Inc. in Stamford, Conn., companies are spending more on BI and using it for more things, from complying with regulatory reporting requirements to measuring system performance. Use of the technology has spread from the confines of upper management to operations people, managers and even customers, pushing what Gartner predicts is a solid 9.5% annual growth through 2010.

“It’s very much a growing market for SMBs,” said Michael Speyer, who covers the SMB market for Forrester Research Inc. in Cambridge, Mass. The push is coming from both small and medium-sized businesses (SMBs) and vendors eager to exploit a promising software niche.”Companies now realize they can get more out of the data assets they have collected. The growth is also a reflection of the fact that IT systems in the midmarket are quite mature,” Speyer said. “BI is relatively less well adopted, compared to other types of applications.”

No question the big guys have taken notice. Microsoft, Oracle and SAP AG have set their sights on the BI platform market, muscling in on pure-play BI vendors. Indeed, the variety of choices can overwhelm, said Michael Schiff, principal of MAS Strategies, a BI and data warehousing consulting firm in Reston, Va.

The first step is an IT assessment, Schiff and others said. BI buyers need to identify the various data sources their organizations draw on to do business. And, if the company uses a bunch of technologies from different vendors, a vendor-agnostic specialist, such as Business Objects, may well be the way to go, Schiff said.

Simple, but not dumb

Business Objects’ marketing vice president, Todd Rowe, pegs the growth of BI in the midmarket as five times faster than at large companies. “Smaller companies are producing massive amounts of information, but what they don’t have is line of sight into their business, so they can make real-time decisions,” Rowe said.

@37577 Business Objects rejected the route taken by many vendors to the midmarket, Rowe claimed — that is, dumbing down the enterprise version and slapping a discount on it. He said Business Objects’ midmarket line is simplified for easy use, but it isn’t simple in terms of functionality. A new edition announced Tuesday, Business Objects Crystal Decisions Professional, provides data integration functionalities as well as intelligent reporting, ad hoc query and analysis, and dashboards capabilities.

The finance department at Central Maine hired a global consulting firm and Business Objects partner, SDG Group, to help configure the software, Bennett said. “They really understand the concept of business intelligence,” he said, and, more important, were able and willing to meet with users and identify “what the pains were” and fix it. “They didn’t just install the technology; they spent a lot of time understanding our business needs,” Bennett said.

A few months in, the system is getting rave reviews from users. Finance staffers are a tad more hesitant about the change.

“You get comfortable sitting in your cube, moving data around all day and producing reports,” he said. “It is a little less comfortable thinking of yourself as going out into the hospital and working with people side by side and teaching them the skills they need to build their financial acumen.”

Source:


On IBM buying Cognos

November 18, 2007

News:

I.B.M. Acquires Cognos, Maker of Business Software, for $4.9 Billion

Cognos, the last major independent producer of software that companies use to analyze mountains of data, agreed on Monday to be acquired by I.B.M. for $4.9 billion in cash.

The takeover of Cognos, which is based in Ottawa, followed last month’s acquisition of the French company Business Objects, another maker of business intelligence software, by SAP of Germany for $6.8 billion. In March, Oracle bought Hyperion, another competitor of Cognos.

Software that sifts through data to tease out things like a customer’s buying habits or a corporation’s inefficiencies is hardly new. Cognos itself was founded in 1969. But several factors have prompted the recent interest in this market segment from larger software companies and led to Cognos’s relatively high price tag.

If the deal is approved by Cognos’s shareholders, I.B.M. will pay about 5 times the company’s annual revenue and 39 times its annual net earnings of about $126 million. Takeover speculation has driven the value of Cognos shares up in recent weeks. The I.B.M. bid of $58 a share represents a 9.5 percent premium to its Friday closing price.

But many analysts anticipate that the business intelligence software market is about to enter a period of significant demand from companies and government agencies.

“I.B.M. had nothing in this area,” said Colleen Graham, research director at Gartner, a technology consulting firm. “I.B.M. had to do something. But because it didn’t move fast enough, it paid a premium.”

The acquisition of Cognos will present I.B.M. with some unusual integration issues. Business intelligence software has traditionally been intended to be compatible with a variety of computer applications from a wide number of software companies.

Doing that requires cooperation from those other companies on technical issues. But Sanju K. Bansal, the chief operating officer of MicroStrategy, a relatively small maker of business intelligence software, anticipates Cognos may find those companies less helpful after it becomes part of I.B.M.

“Those vendors don’t want to cooperate with I.B.M. because they compete with I.B.M. every day,” he said.

There may also be conflicts with companies like Accenture that include Cognos software when they sell large data systems to corporations. Those firms are also direct competitors to I.B.M. in many areas.

But Bob Djurdjevic, president of Annex Research, a consulting firm, said Cognos would find it relatively easy to recover any lost business once it is part of I.B.M.

“Cognos will have a distribution system it could only have dreamed of,” Mr. Djurdjevic said.

In a conference call with reporters, Rob Ashe, the president and chief executive of Cognos, said he would continue to run the company from Ottawa. While I.B.M. intends to maintain the Cognos brand name, the company will be an I.B.M. unit rather than a stand-alone entity.

Like most business intelligence companies, Cognos software has a following among many retailers including Home Depot, Amazon.com, American Eagle Outfitters and 7-Eleven. Harrah’s, the casino operator, similarly uses loyalty programs and Cognos software to tailor incentives for gamblers.

Ms. Graham at Gartner said that the stricter financial reporting requirements imposed by the Sarbanes-Oxley Act were having the unintended side effect of increasing interest in business intelligence software.

Meeting the new regulatory requirements has forced many companies to clean up their computer systems and databases, a process that often involves purchasing large packages of programs from companies like SAP, Oracle and I.B.M.

“When they go through all that effort, many of them consider adding B.I. software to see if they can get some additional cost benefits from the process,” Ms. Graham said.

News from other sources:

IBM Takes Cognos for Next-Gen Business Intelligence

IBM said the acquisition of Cognos will help it deliver the “next generation” of BI (business intelligence) tools that customers will require as markets become increasingly global and competitive.

More specifically, IBM senior vice president Steve Mills said that Cognos technology is focused on processing information innear-real-time, rather than retrospectively.

Cognos BI applications are consistent with “a real-time, prospective approach to business analysis,” Mills said during a conference call with reporters to discuss the acquisition.

Cognos and IBM have partnered for more than 15 years, but Mills said that the acquisition will help IBM develop applications that customers will want in the future.

In an answer to a question from eWEEK, Mills noted that “the quantity of data [customers are] going to want to analyze is going up.” He asserted that independent companies are less able to produce “the next generation of business intelligence capabilities” that customers require.

He cited previous IBM acquisitions of Ascential and Rational as examples of where IBM acquired business partners to deliver greater value to the market.

Cognos is the 23rd IBM acquisition in support of its Information on Demand strategy, which is intended to help customers deliver more business insights to a broader set of people across an organization.

Other strategic acquisitions in support of IBM’s Information on Demand initiative include Princeton Softech (data archiving and compliance), FileNet (enterprise content management), Ascential Software (information integration), DataMirror (changed data capture), SRD (entity analytics), Trigo (product information management), DWL (customer information management) and Alphablox (analytics).

IBM has identified BI as an important growing sector of the enterprise software space. Using numbers from IDC, the company said BI Tools represent a $7.8 billion opportunity in 2008, growing at almost 12 percent per year. It added that the overall market opportunity for BI software and services is expected to be $30.6 billion for 2008.

IBM‘s $5 Billion Cognos Offer Signals Shift Beyond Middleware

Cognos offers business intelligence tools, like its Cognos 8 suite, that let users generate reports, charts, and other tools through which they can quickly get a handle on metrics such as sales, inventories, fulfillment rates, and the like. The Ottawa-based company’s customers include corporate giants like BMW, Bank of America and Dow Chemical.

For its part, IBM — in part through acquisitions — has been building a strong portfolio of middleware that can extract raw data from various departments within an enterprise and feed it to business intelligence tools like those offered by Cognos.

In recent months, IBM has bought out middleware vendors Ascential Software, FileNet, Trigo, and others.

By adding Cognos, IBM would be in a position to offer customers a complete information management platform that begins with its DB2 database line, runs through its middleware offerings, and extends out to Cognos-powered dashboards and reports tapped by line-of-business end users.

The battle for business intelligence

Business-intelligence software allows companies to mine and turn overwhelming amounts of data into coherent information that could be used for a wide range of business tasks, such as monitoring sales or keeping track of inventory.

The market’s grown in response to the explosion of information that’s ensued as businesses began producing massive amounts of data over the last decade.

“They are producing so much data and they are inundated with it,” said Gary Beach, publisher of CIO Magazine, which is geared toward chief information officers. “Business intelligence is a solution to massage that data for business purposes rather than have it sit in silos.”

“It’s like Google Maps for business data,” he added. “It allows you to monitor data to minutiae levels. If you work for Wal-Mart, you can drill down on a region, a store, an aisle.

Smaller, pure-play software companies, such as Cognos and Hyperion Solutions Corp., had been the key players in the business-intelligence market. But as the software became a more critical tool in the business world, the big guns have taken notice.

Indeed, the IBM deal is the third major acquisition of a business-intelligence company over the past eight months.

In March, Oracle Corp announced a plan to buy Hyperion for $3.3 billion, a move that analysts predicted could trigger a domino effect.

That prediction is proving accurate, as borne out by last month’s announcement by Oracle rival SAP for $6.8 billion — and now by the IBM deal.

The large vendors are looking to take over the business-intelligence territory and carve it between themselves,” said Colleen Graham of research firm Gartner.

“Tell me your BI plan”

Beach said the tech giants have to have a business-intelligence tool as part of their portfolio in order to be competitive.

“They need that arrow in their quiver to put in front of customers,” he said. “Customers are smart. They’ll say, ‘Tell me your BI plan.’ They need a direct answer to that.”

Graham cited the example of Oracle. Chief Executive Larry Ellison has been making good on his vow to lead the consolidation of the corporate software market.

“Oracle clearly wants to own the whole stack,” she said. But until it purchased Hyperion, she added, Oracle didn’t have much to show in terms of business-intelligence tools.

Similarly, Graham added, IBM’s decision to buy Canada’s Cognos is also a move to address a “competitive hole” in Big Blue’s corporate software portfolio.

Beach said the recent deals underscore the difficulty that smaller software companies are having competing in business intelligence.

“It’s getting increasingly difficult for best-of-breed vendors to get a seat at the table,” he said.

But Russ Cobb, a vice president at SAS, one of the remaining stand-alone players in the business intelligence market, said the recent acquisitions of its rivals have created opportunities for the Cary, N.C.-based company, which also offers data integration and other business-software products.

He said that the Hyperion and Business Objects acquisitions have led to periods of distraction for the acquired companies, and he expects the same thing to happen with the IBM deal. “We expect this one to be similar to the other two, giving us opportunities in the market,” he said.

IBM to buy Canada’s Cognos for $5 billion

“This is the end of business intelligence as we know it. The IBM move is evidence of the domino effect that’s affecting the sector,” he said.

IBM has long said it wanted to develop its business-intelligence products internally, but the latest deal is the 23rd acquisition over the past year and a half to support its so-called Information on Demand strategy. Analyst Boris Evelson of Forrester Research said the Cognos deal shows that “organic growth is not happening fast enough.”

The goal of the strategy, first unveiled in February 2006, is to provide a complete suite of software to help companies manage heir data and run their businesses more efficiently. Cognos helps fill a major gap in IBM’s portfolio.

The acquisition is expected to close in the first quarter of 2008 after a “plan of arrangement” is completed. Under that type of merger approval, a special meeting of shareholders is set up and two-thirds of the votes cast must favor the transaction.

Largest IBM Deal Ever: $5B for Cognos

IBM Corp. is making its largest acquisition ever, a deal announced Monday to buy Cognos Inc. for $5 billion in cash in hopes of keeping up with rivals in “business intelligence” software.

The acquisition would follow similar moves in the same market this year. SAP AG recently linked up with Business Objects SA for $7 billion and Oracle Corp. grabbed Hyperion Solutions Corp. for $3.3 billion. Cognos shares had soared recently on expectations that it, too, would be acquired. They leaped another 8 percent on Monday’s news.

Business-intelligence software helps big organizations gather data in “dashboards” that can be used to model such things as the financial impact of staffing changes or marketing moves.

Because that capability meshes with other things business software does, big vendors like SAP, Oracle and IBM have moved to include business-intelligence applications in their product packages.

But their challenge will be to technically integrate business-intelligence offerings in a way that is easier and less expensive for customers. David O’Connell, a senior analyst with Nucleus Research, said he was skeptical that will happen with IBM and Cognos.

“I’m not sure it will become more than a bolt-on,” he said.

Forrester Research’s Paul Hamerman agreed that it could take time for IBM to produce compelling technological linkages, but he added, “I don’t see any downside for customers.” IBM and Cognos already had a business partnership.

IBM has been on an acquisition tear in recent years to build out its software portfolio, because software generates much fatter profit margins than IBM’s sprawling technology-services business. IBM had been primarily a provider of “middleware,” which connects various kinds of software applications, but its recent push has led the company to expand more into the business of selling applications as well.

Cognos will be added to IBM’s information management software division. Cognos CEO Rob Ashe is expected to remain and report to the group’s head, Ambuj Goyal, after the deal is completed in the first quarter of 2008.

ANAYLIS

Cognos Buys More Pipe for IBM

Guy Creese, an analyst with Burton Group, said IBM’s acquisition of Cognos fits in with IBM’s information management initiative and “they get a company with $1 billion in revenue.”

Creese said that by gaining access to the Cognos customer base, IBM also gains “entree into companies that have already committed to BI. And with IBM using information as a service, they want to own that whole conduit.”

The conduit or “pipe” Creese is talking about is the data pipeline that runs from the database, which IBM owns through DB2, to the transformation phase, which IBM owns through Ascential, to the reporting, which IBM will own through Cognos.

“So the idea is when you go to IBM [or Oracle or Microsoft] you buy a piece of information infrastructure that they’ve connected all together,” Creese said. “You just add the data. You historically had to go to three different vendors for this, but that has changed over time.”

Meanwhile, said Creese, “the part they’re not talking about is that the dance floor is quickly getting empty. After Cognos, SAS is the only big BI player left, but they are privately held. IBM realized if they didn’t buy Cognos they wouldn’t have a whole lot of options.”

Boris Evelson, an analyst with Forrester, said he believes both IBM’s acquisition of Cognos and SAP’s acquisition of Business Objects are defensive moves, “since both companies have been telling us for years that they prefer to grow their BI portfolios organically, with smaller tuck-in acquisition.

“However, organic growth is not happening fast enough, and giving in to sideway pressures from Oracle [with two top of the line BI products from Siebel and Hyperion] and upward pressures from Microsoft [after the Proclarity acquisition and with significant Performance Point market momentum], IBM and SAP had no choice but to react.”

With the proposed acquisition, Cognos customers will benefit from the depth of IBM’s service and support, observers said.

Creese noted that both Business Objects and Cognos have boasted of being agnostic, “but now as part of IBM, will Cognos make sure DB2 is the first version they ship,” he asked. Creese said he did not believe IBM would function that way. IBM’s Mills acknowledged that it would not.

Evelson said many questions arise from the IBM/Cognos deal. “But the main one that puzzles me is, will IBM completely deviate from their strategy of not being in the ‘apps game’ now that it will be competing head to head with Oracle, SAP and Microsoft on BPS [Business Performance Solutions]? What’s next, an ERP acquisition of Lawson or Infor? Or a CRM acquisition of Salesforce.com playing on IBM’s latest Information On Demand strategy?”

Another question is: “Will Cognos be a key component in IBM’s intent to highly optimize enterprises,” Evelson said. “Absolutely yes. IBM is likely to pour significant dollars and resources into making its overall BI [including Cognos] offering ‘process centric’—a key component in our opinion to ultimately optimized enterprises.”

The bad news, Evelson said, is that “all new BI behemoths—IBM, Oracle, SAP, Microsoft—will now be forced to spend more time on product integration, potentially pulling resources away from and reducing priorities of new functionality development.

“Watch remaining smaller pure plays [SAS, Microstrategy, Information Builders, Actuate] and Tier 2 BI vendors [Panorama, QlikTech, Jaspersoft, Pentaho, Logixml, Inforsense and many others] jump on that opportunity. Good news is that the BI market is very hot.”

Tony Baer, an analyst with onStrategies, said: “The other shoe has dropped. But it’s really no surprise at all. Just look at how investors have been bidding up Cognos’ stock since the SAP-Business Objects deal. Given the fact that Cognos is the only Tier 1 independent left, a 9 percent premium on the share price would have otherwise looked rather modest.”

Baer also pointed to a possible Web 2.0 connection.

“The deal does create room, maybe even a vacuum, for midmarket players to fill,” Baer said. “At this point there’s no clear anointed successor to pick up the mantle of BI 2.0: a dynamic, easy-to-use BI approach that’s highly dynamic, borrowing the best of Web 2.0 technologies with innovative approaches to smart data caching. Whoever rises to that challenge should find a very receptive audience.”

Gaurav Verma, product marketing manager at SAS Institute, said: “IBM just now gains business intelligence/query and reporting and financial performance management from Cognos. However, IBM still does not have predictive and advanced analytics or vertical-specific apps.

“SAS is the largest independent software vendor offering companies integrated business intelligence/query and reporting, data integration and analytic capabilities with a long line of vertical-specific applications.”

IBM Slips Further Into Apps Market With $6.8B Cognos DealAbsorbing midtier players lets IBM combine their products with its own in ways that are more seamless than what can be achieved through partnering, says Buell Duncan, general manager for IBM ISV and developer relations. “We can share technology road maps and work more closely day to day to build on each other’s strengths,” Duncan says. “You can do that if you’re one company much more quickly and capably.”

Duncan says IBM will continue to acquire companies whose products are natural extensions of its information management offerings, and whose software–like Cognos’–is built to live in service-oriented architectures. IBM isn’t shopping for a broad-based ERP vendor like SAP or a midtier one like Lawson Software, Duncan insists. “There’s no fundamental shift in our strategy that says we’ll be going into the business applications market,” he says.

Longer term, however, IBM may have little choice but to expand its software footprint to keep pace with major industry players–principally Oracle–that are acquiring more and more pieces of “the stack.” Oracle recently snapped up BI and performance management vendor Hyperion for $3.3 billion, while SAP has agreed to buy Business Objects for $6.8 billion–deals that left Cognos as the only major BI tools vendor without a dance partner.

Still, Duncan insists that IBM is committed to its existing ISV partner program and won’t plunge deeper into applications as a defensive measure. “We’ll continue to work closely with Business Objects” and other partners that have been bought up by rivals, he says.

But there’s another reason IBM may need to build out its app portfolio more aggressively: the growth requirements of a $90 billion company that has become more dependent on software for revenue since shedding big parts of its hardware business in recent years. Duncan is unphased. “We’re not on the same path as Oracle in terms of acquiring pure application vendors for the sake of expanding our customer base,” he says.

Of course, it was only four years ago that Mills told a group of journalists that “IBM is not in the applications business.”

IBM’s planned $5 billion acquisition of Cognos cements the inevitable: the days of buying business intelligence tools from an independent software vendor are drawing to an end. Within one year, the market for traditional, front-end BI software — the reporting and analysis tools used primarily by executives and financial and business analysts and managers — has undergone a major shift from one dominated by independent vendors to one that will soon be dominated by the world’s largest software companies. IBM’s planned acquisition of Cognos follows SAP’s pending acquisition of Business Objects for $6.8 billion and Oracle’s acquisition of Hyperion for $3.3 billion.

With this shift, half of the roughly $5-billion-a-year market for reporting and analysis tools will be owned by SAP, IBM, Microsoft, and Oracle. After that, share sharply drops, with SAS, MicroStrategy, and Information Builders each owning less than 6% of the reporting and analysis tools market, according to an IDC report based on last year’s sales.

The Cognos acquisition will leave privately held SAS as the only remaining independent BI vendor with annual revenues of more than $1 billion (it’s revenues hit $1.9 billion last year), but most of SAS’s sales come from the higher-end niche area of BI known as advanced analytics. Next in size among the independents would be MicroStrategy, which sells primarily reporting and analysis tools and reported revenues of $313.8 million last year.

Both benefits and cautions come with the shift in market ownership of reporting and analysis tools. With the consolidating software industry, CIOs and IT managers regularly cite the benefits of having fewer vendors to deal with and manage. If vendors do the integration work they promise, it might also prove beneficial to purchase front-end BI from the same vendors who sell the apps that contain core business data:Oracle, Microsoft Dynamics and SAP enterprise-resource planning applications, and Oracle, Microsoft and IBM databases.

Yet the remaining independent BI vendors like to argue those large software vendors’ ongoing acquisitions is creating stockpiles of un-integrated software, and could spell trouble for those vendor’s customers.

After SAP’s acquisition of Business Objects, for example, MicroStrategy issued a statement that “Business Objects needed to be acquired” because it was a company weakened by having accumulated so many non-integrated technologies through its own acquisitions, in a market where “organic technical integration” results in the best BI software. MicroStrategy also claimed that unless SAP maintains Business Objects purely as a portfolio investment, it’s likely SAP would change Business Objects’ architecture to improve integration with its ERP software, causing Business Objects customers to potentially undergo “major migrations.”

Cognos Gives IBM The Front-End Tools

IBM’s acquisition of Cognos is an extension of its database-oriented “Information On Demand” strategy it’s talked about over the past few years, which includes many investments in technologies to cleanse, organize and store data. Cognos completes the Information On Demand picture for IBM by providing the front-end tools for accessing cleansed and organized data.

IBM’s Information On Demand has largely been a strategy of acquisitions: data-integration vendor Ascential for $1.1 billion; content management vendor FileNet for $1.6 billion; metadata management company Unicorn; natural language search company iPhrase; customer data integration company DWL; and identity resolution company SRD. Some of that technology, particularly what IBM got from Ascential and Unicorn, make up IBM’s Information Server, a package comprising several WebSphere application servers that conduct various data-integration tasks.

Yet even as they acquire, the big vendors are also making efforts to keep BI choices open to customers. IBM, for example, was likely already engaged in acquisition talks with Cognos when it announced last month a deal it reached with Business Objects, which will soon be owned by SAP and is Cognos’ top competitor. Under that deal, Business Objects will distribute and resell IBM DB2 Warehouse with Business Objects XI and CFO Performance Management software, and IBM will distribute a limited license of Business Objects XI with DB2 databases and warehouses.

Solo BI Vendors Have Something To Offer

With IBM now acquiring Cognos and SAP in the midst of buying Business Objects, the world’s four largest software vendors–IBM, Microsoft, Oracle, and SAP–will soon control more than half of the business intelligence software market. But it’s a mistake to ignore what’s happening in the other half of what IDC reckons is a $7 billion-a-year market for query, reporting, analysis, and advanced analytics software.

Consider part of the reason Business Objects and Cognos are no longer going it alone: Each lost market share last year, according to IDC, and their BI tool sales grew slower than the 12% market average. Most of their revenue comes from tools that run queries against data and generate reports, functions that are becoming commodities. Sales of cheaper Microsoft BI tools, recently rebranded PerformancePoint Server and given an Excel interface, grew 28% last year while gaining a point of market share, to almost 8%, IDC says.

Once IBM completes its $5 billion acquisition of Cognos, announced last week, the only really big BI company left will be SAS Institute, whose revenue will exceed $2 billion this year. Chief marketing officer Jim Davis insists the company–still two-thirds owned by CEO and co-founder Jim Goodnight–isn’t interested in being acquired. It’s among the fastest-growing BI vendors because it dominates the market for advanced analytics, including predictive analysis, and has a loyal customer base. This highly sophisticated (and pricey) form of BI constitutes about 25% of SAS revenue and drives other areas, including data integration software (55% of revenue) and query and reporting tools (10%).

MicroStrategy is the next biggest BI independent, at $313.8 million in revenue last year. CEO Michael Saylor, in a letter to employees last week, predicted that Business Objects and Cognos will veer off on “proprietary strategic trajectories, which place them in a conflict of interest with large segments of their own customer base.” MicroStrategy COO Sanju Bansal predicts the acquired BI vendors will get less cooperation from important allies such as data warehousing vendors. “It’s hard to believe the Teradata folks will open up their technology plan to IBM,” he says, “because the two are mortal enemies.”

But the success of smaller independents such as Information Builders, MicroStrategy, and myriad niche suppliers depends on whether they can provide enough differentiation to be worth the added integration effort. Privately held Information Builders does about $300 million in revenue, but growth sputtered last year as it transitioned from mainframe-oriented BI tools to new markets such as mobile BI access. Revenue is tracking 10% higher this year, says chief strategy officer Michael Corcoran, and its labs are working on user interface technologies that deliver more visual capabilities, including animation, to BI reports. Information Builders also sees opportunity partnering with niche software vendors that compete with the likes of SAP and Oracle–a specialist in ERP for retailers, for example.

Customers will be demanding. Transplace, a provider of supply chain software to the transportation industry, recently bought BI tools from Microsoft, deciding early on that Business Objects and Cognos were too expensive, says Cindy Winkel, director of BI and data warehousing. Microsoft beat out Oracle because it had a package starting with SQL Server 2005 for data warehousing and extending up to OLAP cubes and dashboards, and the ability to view it all in Excel.

Transplace’s decision-making shows the challenge ahead: BI vendors outside the big four still have a lot to offer, but they’ll have to fight that much harder to get considered.

Business Intelligence Consolidation Won’t Kill Innovation, Claim Execs

In a few months, after IBM and SAP will have completed their acquisitions of Cognos and Business Objects, the world’s four largest software vendors will have control of more than half of the $5-billion-a-year business-intelligence software market.

The obvious endgame for IBM, Microsoft, Oracle, and SAP is to sit down with customers and sell them as much of the BI-related software “stack” as they can, extending from databases and warehouses up to the reporting and query tools that sit on users’ desktops. This may appeal to IT managers looking to deal with as few software vendors as possible. But it would be a mistake to ignore what’s happening in the other half of the BI market.

First, consider why Business Objects and Cognos decided to no longer go it alone. Both companies’ market share dropped last year, and both their BI tool revenues grew slower than the market average of 11.6%, according to IDC. Most of their revenues are derived from tools that run queries against data and generate reports, both quickly commoditizing functions in the evolving BI market. Microsoft has been acquiring and improving its own BI desktop tools in the past few years — recently rebranding them all, including Excel, under the name of PerformancePoint Server–and is rapidly gaining share in the BI market. Competition is coming from everywhere: even Google’s enterprise search appliance, in a sense, is a data query tool.

Once Cognos is acquired, the only “large” company left in BI (not including those that sell the deeper data warehouse layer) will be SAS Institute, which will exceed $2 billion in sales this year. Chief marketing officer Jim Davis insisted in an interview Monday that the company isn’t interested in being acquired. Even so, CEO and co-founder Jim Goodnight could easily set his own terms should he ever have a change of heart, and SAS isn’t subject to a hostile takeover: Goodnight, recently cited by Forbes magazine as having a net worth of $8.7 billion, owns two-thirds of the company. SAS is among the fastest-growing BI vendors because it has a near-lock on the market for advanced analytics, including predictive analysis, and a loyal customer base, some of whom have already invested millions on SAS technology. This highly sophisticated (and typically expensive) form of BI makes up about 25% of the company’s revenues and drives other areas, including data integration (55% of revenues), and query and reporting tools (10%). The remainder of the SAS’s business comes from services.

Among the independents, next in size after SAS is MicroStrategy, which reported revenues of $313.8 million last year. In a letter sent internally to staff Tuesday — a copy of which was provided to InformationWeek — CEO Michael Saylor predicted Business Objects and Cognos will veer off ” off on proprietary strategic trajectories, which place them in a conflict of interest with large segments of their own customer base.”

Saylor predicted to his staff that Hyperion and Siebel Analytics development teams will favor Oracle over DB2 or Teradata; Business Objects will be tailored more for SAP apps than Oracle Financials; and Cognos to be “less aggressive” in support of Teradata, Hewlett-Packard, Netezza, Sun, Oracle, and Microsoft.

“Integration and synergy with the parent company will outweigh customer-driven requests for more features, more performance, and more support for existing applications in the current IT production environments,” he added. “We see the chaos and confusion inherent in these mergers as creating a vacuum in the market, and we intend to fill it.”

Microstrategy COO and co-founder Sanju Bansal reiterated the company stance in an interview Monday. “History has shown us CIOs prefer an open stack versus a proprietary stack,” Bansal said. “The second point is there may be conflicts of interest that keep vendors form working together. It’s hard to believe the Teradata folks will open up their technology plan to IBM, because the two are mortal enemies.”

Dave Menninger, VP of marketing at Inforsense, a $7 million-a-year BI company, is among several independent vendor execs claiming that consolidation could actually drive innovation in the BI market.

“If you look at the market as a changing, living organism there’s a process that continually happens,” Menninger said in a Wednesday interview. That starts with small companies that sprout up with good ideas, grow into something successful, often go public or get acquired. But not long after, the best and brightest often split. “When companies get too big, people who are creative and innovative find that constraining,” he said. “They then go to places where they can express their ideas and bring them to market in less than a three-year period.”

Inforsense’s technology, sort of a hybrid of query tools and advanced analytics, is popular among pharmaceutical companies for drug discovery and patient demographics analysis.

Information Builders, a privately held company with about $300 million in annual revenues, also took a positive spin on the consolidating market. “We’re feeling pretty exited about the market, as it seems there will be no slow down in BI as a focus technology in three to five years,” said chief strategy officer Michael Corcoran in a Wednesday interview. “Our focus will be multi-platform-agnostic. As an independent vendor, we have a much better capability to innovate.”

Information Builders’ growth sputtered to a halt in 2006 as the company began transitioning away from mainframe-oriented BI tools to modern-day BI products including more cutting edge areas, such as mobile BI access. The shift is paying off, and revenues are on target to rise 10% this year, Corcoran said. The company is working on user interface technologies in its labs that will deliver more visual capabilities, including animation, to BI reports, he added.

Information Builders also sees an opportunity to build up its channel sales through niche software companies. A developer of customized ERP applications for retail, for example, may prefer to offer its customers Information Builders for analyzing their retail data, rather than SAP-owned Business Objects, noted Corcoran.

The independent BI vendors raise some good arguments. IBM software senior VP Steve Mills, however, claims no such thing will happen with the Cognos acquisition. Just as Cognos will have to continue connecting to non IBM databases, Mills said in a Monday interview, IBM will continue to support other flavors of BI. That, he said, is a given in the “heterogeneous world” of software.

On Cognos:

Cognos Incorporated, a Canadian corporation founded in 1969, is a provider in business intelligence and corporate performance management software solutions. The Company’s solutions helps in improve business performance by enabling planned performance management, supported by effective decision- making at all levels of the organization through the consistent reporting and analysis of data derived from various sources. Its integrated solutions consists of its BI components, performance management solutions, and analytical applications. Its integrated solutions consist of BI components, performance management solutions, and analytical applications. These components are supported by software services for administration, deployment, integration, and extraction, transformation, and loading. In the solution for CPM, it offers products that address the need for organizations to link reporting and analysis to organizational goals and strategies. These solutions span Company functions and processes and define the parameters for performance in scorecards, plans, and budgets. They also help structure, automate, and control processes that relate to governance and compliance such as consolidation and financial reporting. Its software services consist of the Administration Services, Deployment Services, Integration Services, ETL Services.The Company’s worldwide sales and marketing organizations are led from Burlington, Massachusetts location. The Company has global customer base with over 23,000 customers located in more than 135 countries. Its primary target market is Global 3500 companies and large public sector organizations. Cognos, the Cognos logo, Axiant, Cognos DecisionStream, Impromptu, NoticeCast, PowerHouse, PowerPlay, and Cognos ReportNet are trademarks or registered trademarks of Cognos Incorporated in the United States or elsewhere. As of February 28, 2006, the Company had 3,516 full-time permanent employees.

More on Cognos

Cognos to Acquire Applix for $339 Million:

Applix, of Westborough, Mass., will complement Cognos’ latest BI software—Cognos 8 Planning, 8 Controller and 8 Business Intelligence—by bringing additional capabilities for analysis and optimization of complex financial performance management, officials said. Applix will bring finance self-service modules with a business rules engine, as well as Applix TM1, the company’s 64-bit in-memory multidimensional OLAP (online analytical processing) server.

“This acquisition is a terrific strategic fit for Cognos. Applix will broaden our solution offering and provide Cognos with an innovative, 64-bit, in-memory analytics capability,” Cognos CEO Rob Ashe said in a statement. “It will also bring into the company a very strong employee and customer base that has been committed to performance management through high-impact analytics. This is another major step forward for Cognos in delivering leading performance management solutions to finance and across operations.”

Cognos, IBM Team Up on Bank Risk Management

The Cognos-IBM Risk Adjusted Profitability Blueprint, announced Aug. 22, is geared toward helping companies—mainly banks—better integrate risk information with revenue and expense planning data.

The goal: to help banks maximize risk-adjusted return on capital, striking a better balance between aggressively expanding their businesses and controlling risk exposure.

Risk factors for banks include risk-adjusted return on capital and economic capital, probability of default, loss given default, and expected loss.

The co-developed blueprint combines Cognos 8 Planning and Cognos 8 Business Intelligence with IBM Banking Data Warehouse. It also brings in financial services expertise garnered through IBM Global Business Services.

Overall, the combined reporting environment includes functionality for integrated risk-adjusted planning and forecasting across multiple dimensions with built-in risk factors. Also included are activity-based management and costing for customer, product and business segments, which provide profitability planning and reporting data.

A multidimensional scenario-planning module incorporates activity costs—data that allows users to compare the financial impact of several business options and take action.

The Profitability Blueprint, available now, is not the first bank-related Blueprint Cognos has developed. The company also developed blueprints for branch performance, corporate and retail banking, customer segment performance, and insurance product profitability

Cognos Now Is Newest Member of Cognos BI Family

Cognos announced May 14 a new family of appliance-based performance management and business intelligence software. Cognos Now also is available as a service.

The appliance consists of operational BI—a sort of generalized roll out of BI and analytic capabilities designed for the everyday user. Users are able to create self-service dashboards, analyze data and write reports with minimal to no IT input. The software also includes in memory 64-bit computing capabilities culled from Celequest’s patent stable, and data integration or ETL (Extract, Transfer, Load) functionality.

On the hardware side of the Cognos Now appliance, the company has bundled a rack-mounted server with a J2EE open-source application server and a meta-data repository.

Cognos will offer three configurations: one for the lower end of the market, a standard edition and an enterprise edition. What varies among the three editions is the amount of CPUs utilized and the amount of memory installed. The enterprise edition also has some capabilities for integrating to other applications such as SAP’s Enterprise Resource Planning transactional applications.

The company also will offer different variations of the appliance.

The first, available now, is Cognos Now for Salesforce, geared towards customers who need to monitor performance against their Salesforce.com data.

The idea with an appliance-based BI is to enable companies or divisions without a lot of IT support to create their own dashboards, modifications and watch points without having to involve IT, according to Jim Hare, vice president of Product Marketing and Business Development, Cognos On Demand.

“The idea is to enable [users] to make changes without having to go to IT,” Hare said.

Both the appliance and SaaS capabilities are lifted almost entirely from Celequest, a company Cognos acquired in January. Celequest had developed a BI appliance called Lava that included ETL, streaming OLAP analytics, self-service visual dashboards and a built-in rules engine for event-driven analysis. On the hardware side, Lava took advantage of multi-core processes for the standard editions. The higher-end enterprise edition included two multi-core CPUs, up to 16 gigabytes of memory, hard disk drives and was pre-wired for network infrastructures.

Cognos has tweaked Lava to include newer Web 2.0 concepts such as Google maps. It’s also interoperable with Cognos 8 Business Intelligence, which provides a more comprehensive BI platform.

Like Lava before it, Cognos Now is available as an appliance or through the Software as a Service model. The appliance (and SaaS) model represents a cheaper, albeit scaled down BI tool for some users. However, some critics warn that a pre-configured appliance can only be used for its specific purpose; it can’t run any other applications in the same box.

Nonetheless, Cognos is not alone in its pursuit of appliances that pre-configure software and hardware for a specific need. SAP announced its BI Accelerator last year and it’s largely anticipated that its new A1S mid-market suite, in the works now, will be available on demand, with some functionality pre-configured and bundled on an appliance.

Earlier this month, BI software vendors MicroStrategy and SaS confirmed that their BI software is being tailored for HP’s NewView appliance, according to media reports. In March, Business Objects unveiled its Open Appliance Initiative that amounts to partnerships with data warehouse vendors—IBM, Netezza, DatAllegro, Greenplum, HP, RPath, Teradata (a division of NCR) and VMware—which will pre-install Business Object’s BI software on its hardware to create mid-market geared appliances.

Cognos Acquires Celequest to Speed BI:

By adding privately held Celequest to its roster, Cognos will achieve several objectives: a longer reach into channel markets, a better breadth of offerings for midmarket and on-demand customers and, at the end of the day, faster business intelligence capabilities.

Celequest, based in Redwood City, Calif., develops a BI appliance that utilizes in-memory, or streaming data, technology that stores data in memory rather than at the database level. The result is much faster query times on BI requests, with the capability to support thousands of concurrent users with little latency of information. Since the capability, dubbed Lava, comes in the form of an appliance—essentially hardware that plugs into a network—users are able to deploy BI functionality in a short time frame (days, according to Celequest’s Web site).

There are three versions of the Lava appliance: an SMB (small and midsize business) edition, a standard edition and an enterprise edition. Each includes performance dashboards, an application workbench to set up data integration and an analytics server that houses the in-memory technology.

Cognos Search Tool to Support New Enterprise Software Offering from IBM and Yahoo

Cognos, Panorama Launch New BI Platforms for SAP

Cognos Gives Banking Industry BI Blueprint

Cognos to Add Search to BI Platform

IBM, Cognos Look to Ease SOA Deployments

Cognos and FileNet Agree to Integrate Products


ParAccel Seen As A Promising Startup In BI Database Market

November 16, 2007

By Antone Gonsalves

Startup ParAccel has launched an analytic database that at least one expert sees as a potentially disruptive technology in the data warehouse and database management system markets.

The San Diego-based company officially launched itself and its first product last week by announcing the general availability of the ParaAccel Analytic Database, a DBMS capable of all types of decision processing, from traditional data warehousing and analytics to operational business intelligence, online analytical processing, and high-speed query processing.

In addition, ParAccel announced a partnership in which Sun Microsystems would offer a DBMS appliance with ParAccel software, which is also available as a standalone database or as a drop-in database accelerator.

In addition, the software can be configured for all-in-memory analytical processing, or for traditional disk-based database-execution deployments, James Kobielus, analyst for Current Analysis said in a recent research note. “It can run on a single massively parallel processing-capable compute node or on multiple distributed nodes with scale-out and high availability.”

Kobielus said the potential impact of the ParaAccel Analytic Database is high on the DBMS and DW markets because of its innovation, flexibility and scalability. “This new release could prove truly disruptive to established segments in which rivals offer point solutions rather than flexible, appliance-ready, analytics-processing solutions,” Kobielus said.

Nevertheless, ParAccel has its shortcomings. For one, it can operate as a drop-in accelerator only with Microsoft SQL Server, and not with the top two enterprise databases: Oracle and IBM DB2, the analyst said. In addition, ParaAccel’s offering competes with products in several market niches, and the startup has yet to prove that its technology is truly the best of breed in any of those segments.

However, ParAccel’s announcement “sends a signal that innovation is alive and well in the DBMS arena,” Kobielus said.

“Rival DBMS/DW vendors should rethink their go-to-market strategies in light of the release of ParAccel Analytic Database,” the analyst said. “This radically flexible new release could prove truly disruptive to many established market segments.”

Source:Intelligent Enterprise


Information Builders’ Software Lets Smartphones Manage BI Reports

November 14, 2007

By Mary Hayes Weier

Information Builders on Wednesday released new software, WebFocus Mobile Favorites, that lets professionals organize business-intelligence reports they access
through their mobile devices.

Various BI vendors have begun offering access to reports via mobile devices in recent months, but customers aren’t exactly flocking to the capability. Information Builders executives insist that’s about to change with the new and better generation of smartphones offering bigger screens with better resolution, and better form factors and
navigation capabilities.

Using Safari on the iPhone, “you can meaningfully navigate [BI reports] on these phones,” said Rado Kotorov, the company’s technical director of strategic product management. Kotorov says Information Builders has a handful of beta customers testing mobile access to BI, including NASA engineers accessing space-shuttle data. However, they don’t recommend sending large fields and reports,” he said.

Information Builders’ mobile users access BI dashboards containing business data residing on Web servers through their device browsers. A traveling salesperson can view sales results, for example, via columns, pie charts and fever charts. Information Builders is targeting executives, salespeople, and other on-the-go professionals with the software. The new Favorites feature, installed by an administrator onto a Web server and accessed by the user through a Web link, lets users add or remove frequently accessed BI reports.

The standard-browser approach helps businesses get around the problem of having to develop or purchase applications customized for mobile devices, and then support that separate software. Since users’ favorites folders are on a Web server, they can change or
use different devices, including a laptop, PC, or different mobile device, to access their frequently used information.

Information Builders’ s browser approach to mobile BI is distinctive since its focus is to make BI accessible regardless of the mobile device used. Cognos began shipping Cognos 8 Go Mobile in February for accessing BI reports on the go, but it’s currently limited
to Blackberry devices. Microstrategy last month also began offering mobile access to BI reports, but that’s also limited to BlackBerrys.

Business Objects, like Information Builders, has taken a more open approach, and in May began offering software that lets professionals access and interact with reports residing on their companies’ BusinessObjects XI Release 2 deployments, from Blackberrys, Windows Mobile, and “various other” devices.

Source:Intelligent Enterprise

More on WebFocus Mobile Favorites

Information Builders Mobile Favorites™ offers business decision-makers a unique tool that is compliant with emerging mobile technology trends. It is a low cost solution that does not require any additional software or hardware investments, and no special security enhancements. Mobile Favorites™ allows the user to vary their information requests through simple, interactive forms, thus providing a greater variety of information.

With its innovative pure browser-based approach to mobile computing, Information Builders has established itself as the leader in delivering mobile reporting to business and non-technical users. With just two clicks, content can be easily added or removed from the Mobile Favorites folder in Information Builders’ standard BI Dashboard. The process is no different from adding content to the favorites folder in a Web browser. From an end user perspective, reporting through Mobile Favorites™ is as easy to use
as using e-mail or the Internet on a mobile device. Viewing a Mobile Favorites™ report is similar to scrolling through a Web page. Experienced mobile users can take advantage of parameterized reports and active reports, which allow users to customize content and apply analytics on the go. And, Active Technologies also allows interactive dashboards to
be delivered to mobile devices.

Some of the benefits of WebFOCUS Mobile Favorites™ include:

  • The ability to share documents across multiple devices    organizations can deliver applications and content to mobile devices    without having to change their underlying systems infrastructure. Users    typically change or upgrade their devices every 18 months. Once in place,    Mobile Favorites allows BI consumers to be device independent and also    eliminates programmers’ burden of customizing reports for multiple devices.
  • No device software to support — reports are delivered directly to a  device’s browser, eliminating costly maintenance, updates, and versioning for different operating systems; reports are available on all mobile browsers.
  • No additional hardware required — standard Web and BI technologies are used so that dedicated mobile servers aren’t needed to convert BI content to mobile formats or manage interactions.
  • No unique design and delivery tools needed — create mobile reports and make them immediately available using standard development and delivery tools; existing reports can be distributed to any mobile device without conversion.
  • No special security considerations — provide a secure connection through mobile device and virtual protocol networks (VPNs); WebFOCUS Managed Reporting is used to manage user access and any Managed Reporting user can be immediately given access to mobile content.

Source: MarketWire.com


Business Intelligence Versus Business Analytics–What’s the Difference?

October 30, 2007

By Rock GnatovichThe marketing and analyst airwaves are flooding with speculation about what is next for business intelligence (BI). What will comprise BI 2.0?

Historically, this market has been served by vendors such as Business Objects and Cognos. But the competitive landscape is changing. Microsoft has now shrewdly entered the market by driving the placement of SQL servers into the space in order to broadly deploy and deliver its BI suite and reporting services in volume. Oracle has seen the effect of companies moving data out of the database to stage it for analysis. The resulting data warehouses have provided a degree of utility in housing, manipulating and delivering “strategic” information across the organization.

Recently though, established vendors such as SAP and Siebel have unveiled BI product suites under the banner of “analytics.” SAS, a perennial stalwart of the statistics market, is suddenly being touted as the number-three BI vendor and frequently positions itself as an analytics vendor.

With analytics finding its place within many functions and business processes it seems clear that it will be a defining feature of next generation business intelligence. Particularly, a significant new group of business users—a group I like to call “Go-To Guys”—are in need of analytics tools to tackle daily problems and opportunities. Go-To Guys are the operating managers of company—product managers, sales managers, researchers, engineers and marketers.

So, what is analytics? Neil Raden of Hired Brains, a market research and management consulting firm, has said that, “the proper term for interacting with information at the speed of business, analyzing and discovering and following through with the appropriate action, is ‘analytics’.”

CIOs often assume that business analytics (BA) comes along with BI. The traditional BI market has been associated with providing executive dashboards and reporting to monitor the assumptions and key performance metrics that are part of long term planning cycles.

Everybody wants a dashboard. To the extent that all of us are CEO’s of our own business discipline, we want a simple measurement display of how we are doing and an alert mechanism of when something goes wrong. Additionally, dashboards address the growing urgency around Sarbanes Oxley. Monitoring planning assumptions and key performance metrics has now become mission critical from a regulatory and compliance standpoint.

Where BI Stops and BA Begins
But BI reporting ends with the dashboard, which is sufficient only for some business planning, and BA picks up the rest for the Go-To Guys. Simply, this group must interact with data in a much different way from what traditional BI allows.

The Go-To Guys deal daily in unanticipated outcomes and unknown results and it is their job to mitigate risk and capitalize on opportunities. BI is not architected to iterate on new scenarios or for immediate response to unanticipated questions because it is set up to automate the distribution of standardized reports that monitor pre-determined key performance metrics and planning assumptions. BI’s answer to analytics has been to deliver the report to the business user and the business user typically takes the data in the report and dumps it into Microsoft Excel in order to do his own analysis.

As a result, there are $8B (yes, billion) of internally developed analytic applications with Excel as their front end. The BI players treat the output to Excel as a feature. But I actually think it’s a tremendous failing. It is proof that you don’t get BA when you buy BI. The BI architecture cannot support the operating needs of the business users to ask and answer their own questions in response to new occurrences and events in the marketplace.

Secondly, Excel is not an answer either. As soon as the data is dumped into Excel, the user is out of the BI system with no way back in. Any insight that the business user gains while interpreting Excel spreadsheets tends to stay with him—all opportunity for organizational learning or process improvement is lost.

So requirements for analytics are different than the requirements for BI, but the benefits are different as well.

Technically Speaking…
There’s also a technical component to all of this reinforcing the claim that the technical requirements to support analytics are different from the technical requirements that enable BI. To facilitate reporting and dashboards, BI traditionally works with aggregated data. Business users cannot rely solely on aggregated data in the operating environment. They have to be able to get to the details. The aggregated data will many times obscure the key issue or opportunity in your information.

BI data is typically staged in an OLAP cube to support drill-down. In analytics the Go-To Guys have to be able to get directly to the source data in the database. The key facts needed to make your operating decision are often not in the cube because they haven’t been anticipated by the IT department. This is not a question of the trees obscuring the forest—you have to be able to see both. The business users cannot be disconnected from the critical data needed to make a key business decision.

And lastly, the requirement of the BI system has been to monitor the data based on pre-configured questions requiring only a thin client environment to inform the user. In the operating world, users need to engage with the information requiring a richer client to support interactivity and the ability to ask and answer their own question without having to go back to IT.

What are the characteristics of an analytic savvy organization? First of all, even the planners want into the act. Analytics is enabling more proactive, high-frequency planning cycles. Planners are better able to refine and iterate the plan, shifting resources to higher performing areas with the goal of being first-to-market and never having a warehouse full of trendy goods once the trend is over. Secondly, the analytically savvy organization is more agile—able to adapt and respond—whether that’s to a competitor that releases a new product, a change to the pricing structure in the marketplace or the success of its own marketing campaign.

Remember, you don’t get business analytics when you buy business intelligence. The requirements are different and the benefits are different. The return on information and expertise achieved by arming your operating managers with analytics will supercharge your existing BI investment.

Source:


An Introduction to Business Intelligence (by CIO)

October 30, 2007

Compiled by Ryan Mulcahy, CIO

What is business intelligence?

Business intelligence, or BI, is an umbrella term that refers to a variety of software applications used to analyze an organization’s raw data. BI as a discipline is made up of several related activities, including data mining, online analytical processing, querying and reporting.

Companies use BI to improve decision making, cut costs and identify new business opportunities. BI is more than just corporate reporting and more than a set of tools to coax data out of enterprise systems. CIOs use BI to identify inefficient business processes that are ripe for re-engineering.

With today’s BI tools, business folks can jump in and start analyzing data themselves, rather than wait for IT to run complex reports. This democratization of information access helps users back up—with hard numbers—business decisions that would otherwise be based only on gut feelings and anecdotes.

Although BI holds great promise, implementations can be dogged by technical and cultural challenges. Executives have to ensure that the data feeding BI applications is clean and consistent so that users trust it.

What kind of companies use BI systems?

Restaurant chains such as Hardee’s, Wendy’s, Ruby Tuesday and T.G.I. Friday’s are heavy users of BI software. They use BI to make strategic decisions, such as what new products to add to their menus, which dishes to remove and which underperforming stores to close. They also use BI for tactical matters such as renegotiating contracts with food suppliers and identifying opportunities to improve inefficient processes. Because restaurant chains are so operations-driven, and because BI is so central to helping them run their businesses, they are among the elite group of companies across all industries that are actually getting real value from these systems.

One crucial component of BI—business analytics—is quietly essential to the success of companies in a wide range of industries, and more famously essential to the success of professional sports teams such as the Boston Red Sox, Oakland A’s and New England Patriots.

With an analytical approach, the Patriots managed to win the Super Bowl three times in four years. The team uses data and analytical models extensively, both on and off the field. In-depth analytics help the team select players and stay below the NFL salary cap. Patriots coaches and players are renowned for their extensive study of game film and statistics, and Coach Bill Belichick reads articles by academic economists on statistical probabilities of football outcomes. Off the field, the team uses detailed analytics to assess and improve the “total fan experience.” At every home game, for example, 20 to 25 people have specific assignments to make quantitative measurements of the stadium food, parking, personnel, bathroom cleanliness and other factors.

In retail, Wal-Mart uses vast amounts of data and category analysis to dominate the industry. Harrah’s has changed the basis of competition in gaming from building megacasinos to analytics around customer loyalty and service. Amazon and Yahoo aren’t just e-commerce sites; they are extremely analytical and follow a “test and learn” approach to business changes. Capital One runs more than 30,000 experiments a year to identify desirable customers and price credit card offers.

Who should lead the way?

Sharing is vital to the success of BI projects, because everyone involved in the process must have full access to information to be able to change the ways that they work. BI projects should start with top executives, but the next group of users should be salespeople. Because their job is to increase sales and because they’re often compensated on their ability to do so, they’ll be more likely to embrace any tool that will help them do just that—provided, of course, the tool is easy to use and they trust the information.With the help of BI systems, employees modify their individual and team work practices, which leads to improved performance among the sales teams. When sales executives see a big difference in performance from one team to another, they work to bring the laggard teams up to the level of the leaders.

Once you get salespeople on board, you can use them to help get the rest of your organization on the BI bandwagon. They’ll serve as evangelists, gushing about the power of the tools and how BI is improving their lives.

How should I implement a BI system?

When charting a course for BI, companies should first analyze the way they make decisions and consider the information that executives need to facilitate more confident and more rapid decision-making, as well as how they’d like that information presented to them (for example, as a report, a chart, online, hard copy). Discussions of decision making will drive what information companies need to collect, analyze and publish in their BI systems.Good BI systems need to give context. It’s not enough that they report sales were X yesterday and Y a year ago that same day. They need to explain what factors influencing the business caused sales to be X one day and Y on the same date the previous year.

Like so many technology projects, BI won’t yield returns if users feel threatened by, or are skeptical of, the technology and refuse to use it as a result. And when it comes to something like BI, which, when implemented strategically, ought to fundamentally change how companies operate and how people make decisions, CIOs need to be extra attentive to users’ feelings.

Seven steps to rolling out BI systems:

  1. Make sure your data is clean.
  2. Train users effectively.
  3. Deploy quickly, then adjust as you go. Don’t spend a huge amount of time up front developing the “perfect” reports because needs will evolve as the business evolves. Deliver reports that provide the most value quickly, and then tweak them.
  4. Take an integrated approach to building your data warehouse from the beginning. Make sure you’re not locking yourself into an unworkable data strategy further down the road.
  5. Define ROI clearly before you start. Outline the specific benefits you expect to achieve, then do a reality check every quarter or six months.
  6. Focus on business objectives.
  7. Don’t buy business intelligence software because you think you need it. Deploy BI with the idea that there are numbers out there that you need to find, and know roughly where they might be.

What are some potential problems?User resistance is one big barrier to BI success; others include having to winnow through voluminous amounts of irrelevant data and poor data quality.

The key to getting accurate insights from BI systems is standard data. Data is the most fundamental component of any BI endeavor. It’s the building blocks for insight. Companies have to get their data stores and data warehouses in good working order before they can begin extracting and acting on insights. If not, they’ll be operating based on flawed information.

Another potential pitfall is BI tools themselves. Though the tools are more scalable and user friendly than they used to be, the core of BI is still reporting rather than process management, although that’s slowly beginning to change. Be careful not to confuse business intelligence with business analytics.

A third impediment to using BI to transform business processes is that most companies don’t understand their business processes well enough to determine how to improve them. And companies need to be careful about the processes they choose. If the process does not have a direct impact on revenue or the business isn’t behind standardizing the process across the company, the entire BI effort could disintegrate. Companies need to understand all the activities that make up a particular business process, how information and data flow across various processes, how data is passed between business users, and how people use it to execute their particular part of the process. And they need to understand all this before they start a BI project, if they hope to improve how people do their jobs.

What are some benefits of business intelligence efforts?A broad range of applications for BI has helped companies rack up impressive ROI figures. Business intelligence has been used to identify cost-cutting ideas, uncover business opportunities, roll ERP data into accessible reports, react quickly to retail demand and optimize prices.

Besides making data accessible, BI software can give companies more leverage during negotiations by making it easier to quantify the value of relationships with suppliers and customers.

Within the walls of the enterprise, there are plenty of opportunities to save money by optimizing business processes and focusing decisions. BI yields significant ROI when it sheds light on business bloopers. For example, employees of the city of Albuquerque used BI software to identify opportunities to cut cell phone usage, overtime and other operating expenses, saving the city $2 million during three years. Likewise, with the help of BI tools, Toyota realized it had been double-paying its shippers to the tune of $812,000 in 2000. Companies that use BI to uncover flawed business processes are in a much better position to successfully compete than companies that use BI merely to monitor what’s happening.

More tips for getting BI right

  • Analyze how executives make decisions.
  • Consider what information executives need in order to facilitate quick, accurate decisions.
  • Pay attention to data quality.
  • Devise performance metrics that are most relevant to the business.
  • Provide the context that influences performance metrics.

And remember, BI is about more than decision support. Due to improvements in the technology and the way CIOs are implementing it, BI now has the potential to transform organizations. CIOs who successfully use BI to improve business processes contribute to their organizations in more far-reaching ways than by implementing basic reporting tools.

Source:


The Perfect Search

October 30, 2007

By Penny Crosman

If you want to find out what Brad and Angelina are up to, Google is a great search tool. Type in the celebrity names and poof, you get a list of the latest stories about the Brangelina baby-to-be. But if you need a technical or business-oriented search, Internet-style search technology doesn’t cut it. Accurate enterprise search depends on intelligent use of state-of-the-art taxonomies, metatags, semantics, clustering and analytics that find concepts and meaning in your data and documents.

The idea that the enterprise can’t be searched like the Web sounds foreign to many business executives. “Why can’t we use Google?” says the CEO. IT obediently buys Google’s search appliance, turns it on and the problem is solved. Or is it? “For some companies, Google is fine,” says Laura Ramos, Gartner analyst. But where many repositories of non-Web content and documents need to be searched or critical information must be found quickly, companies need to design searches that approximate human reasoning.

No one product can do this. But by mixing and matching the latest taxonomy, clustering, and entity, concept and sentiment extraction tools, you can get close. What’s helping is the rise of XML: As more companies realize the benefits of reading and sharing information in standard XML formats, such as RDF, ebXML and XBRL, more products roll out to convert documents, databases and other content into XML. The information provided in XML tags and formatting brings a level of intelligence about documents and content hitherto unavailable. Next-generation search technologies are taking advantage of XML formatting and metadata to provide searches informed by insider information and structure.

Structuring Content

The main trend adding power to enterprise search is the increase in semistructured information: content that has some kind of structure to it, generally through the use of metatags that describe content. E-mail, which is structured with “To,” “From” and “Subject” fields, is one example of semistructured data. XML is also expanding the universe of semistructured content as industries adopt XML schema, such as ACORD (Association for Cooperative Operations Research and Development) for XML in the insurance industry and XBRL (Extensible Business Reporting Language) in the financial services arena. Such schema help businesses exchange and analyze data in a standardized way.

Basic structure is provided by metatagging. An author or software program identifies the elements of a document, such as headline, abstract, byline, first paragraph, second paragraph and so on to modestly improve search results.

Using content structure in the display of search results is useful. If a search engine can present the headline, abstract, graphics and the first and last paragraphs of an article, the user gets a good idea of what it’s about — much better than the typical document “snippet” that’s often no use at all.

A few vendors are using XQuery, a command-oriented, SQL-like standard for creating search statements, to exploit the structure of XML-tagged content. Mark Logic, for example, converts documents and databases to XML, provides structural metatagging, and indexes the content and tags in a database where they can be mined by a variety of text analytics tools. Similarly, Siderean Software’s Seamark Metadata Assembly Process Platform converts unstructured and structured data to RDF (Resource Description Framework), generates metadata such as page title and date; and organizes the content and tags into relational tables. Entity and concept extraction can be applied to create tags, and metatags can be suggested to an editorial team, which can approve and refine them. Content and metadata are then pulled into a central repository where they can be organized according to corporate vocabularies or ontologies and mined using the tagging results.

Building Taxonomies

With metatags and some structure in place, the next logical step to improving an enterprise search is to build a taxonomy. For as long as search technology has existed, it’s been obvious that the first step toward getting something more accurate than 500,000 useless hits is to create context or navigation for the search, such as a taxonomy — a classification according to a predetermined system. A taxonomy can be as basic as organizing documents by month or client, or it can be a sophisticated scheme of concepts within topics.

“Categorization lets you sharpen the search and do concept-based retrieval as well as browsing,” says Sue Feldman at IDC. “It lets a user answer questions that can’t be answered by search alone, such as, ‘What’s in this collection?’ or ‘I’m interested in going on a vacation, but I don’t know where; what are some interesting places?'”

With a taxonomy in place, users can browse through categories and discover information they need but didn’t know how to look for (indeed, few people understand how to write effective search queries or ask the right questions of a search engine). The tricky part is deciding who will build the taxonomy. Who is willing, able and blessed with sufficient free time to decide what the structure should be and where each new piece of content fits in?

The most straightforward answer is to have authors categorize and apply the proper metatags and keywords to their content. Publishers of magazines and technical publications, for instance, take a structured-authoring approach using marked-up templates. But this laborious practice is not for everyone, and in a typical company, most users lack the time and inclination to fill out forms describing each document.

A more lightweight method of categorizing, called “folksonomy,” is becoming popular on the Web, where sites like Flickr and Del.icio.us provide those submitting photos or lists with easy-to-use tools to annotate their content. “By combining annotation across many different distributors, you gain insight into useful information and get around some [of the] problems with more traditional approaches to metadata management,” says Brad Allen of Siderean.

With an active community of users assigning categories and metatags, valid new terms, initiatives and projects are easily added to the existing taxonomy, making it more dynamic than a rigid taxonomy created by a librarian. “It’s sloppy and it’s chaotic, but the degree to which it improves precision in the retrieval process can be quite significant,” Allen says.

Formal taxonomies are usually created by a librarian or cataloger trained in library science. This can be effective, but it’s expensive, time-consuming and hard to keep up-to-date.

Sometimes Web masters help determine relevancy. Google’s search engine creates page ranks based on how frequently people link to a given piece of content. The downside to this is that most companies’ documents and data sources have little or no record of content linking. “That this is lost on most people is a triumph of branding and makes page-rank-free Google somewhat akin to caffeine-free Jolt as a product,” says Dave Kellogg, CEO of Mark Logic.

Clustering tools, such as those from Engenium or Vivisimo, create an ad hoc taxonomy by grouping search results into categories on the fly (search engines from Inxight Software and Siderean also cluster results). With clustering, a search for the term “life insurance” on an insurance company’s site would display results grouped under headings such as Whole Life, Term Life and Employee Benefits. It’s a fast and efficient way to categorize content, but it’s not always accurate; there’s no consistent set of categories, and the results can be strange because there’s no human involvement.

Combining Search Tools

The next step to intelligent search is to apply text analytics tools. Several small companies are providing analytics software for entity, concept and sentiment extraction.

Sentiment extraction, or sentiment monitoring, the newest of these tools, tries to identify the emotions behind a set of results. If, for example, a search uncovers 5,000 news articles about the Segway, sentiment extraction could narrow the set down to only those articles that are favorable. Products from Business 360, Fast, Lexilitics, NStein and Symphony all provide sentiment extraction. IBM has layered NStein technology on its OmniFind enterprise search platform to support “reputation monitoring,” so companies can know when their public image is becoming tarnished.

Entity extraction uses various techniques to identify proper names and tag and index them. Inxight and ClearForest are the two leading providers of entity-extraction software, and many search tools embed or work with their technology.

Concept search tools put results in context, as in Paris the city versus Paris the person or Apple the company versus Apple the fruit. These tools use natural-language understanding techniques to make such distinctions. Autonomy and Engenium are two vendors of concept search software.

Adding a Backbone

Assuming you need more than one search technology, how do you knit disparate solutions together? IBM’s answer is Unstructured Information Management Architecture. Recently published on SourceForge.net, UIMA is an XML standard framework whose source code is available to third-party search technologies. It acts as a backbone into which text analytics and taxonomy tools can be plugged.

UIMA may sound like a gimmick to promote IBM’s OmniFind enterprise search product, but because its business is driven by services more than software, IBM is willing to pull in other, sometimes competing applications. “No single vendor can address all analytics needs or all requirements to understand unstructured information,” says Marc Andrews, director of search and discovery strategy. “Companies need different analytics for different sets of content; [what’s] relevant to the life sciences community will not be relevant to the financial services industry. And even within an organization, the analytics relevant to warranty claims and customer service data will be different from the analytics relevant to marketing, HR and generic interest.”

UIMA provides a common language so search results can be interpreted by different applications or analytics engines. The framework defines a common analysis structure whereby any content — whether it be an HTML page, a PDF, a free-form text field, a blob out of a database or a Word document — can be pulled into a common format and sent to a search tool. Results are fed back into the analysis structure and passed along to the next search tool. The final results are output in a common format that any UIMA-compliant application can use.

Can UIMA become a universally accepted backbone that holds search tools together? Some think UIMA is on its way to becoming a de facto standard. So far, the Mayo Clinic, Sloan Kettering and the Defense Advanced Research Projects Agency are adopting the framework, and 15 vendors, including Attensity, ClearForest, Cognos, Inxight, NStein and Siderean, have agreed to make their search tools UIMA-compliant.

In a case of co-opetition, Endeca will support UIMA in an upcoming release of its enterprise search software even though the company competes with iPhrase, which was acquired last year by IBM. “UIMA will uncomplicate the world,” says Phil Braden, Endeca’s director of product management. “As more and more people adopt UIMA as the standard for how structured and unstructured data is supposed to look and how these components are supposed to integrate, it becomes that much easier to pull data from these different systems into Endeca.”

There’s little to challenge UIMA other than a couple of XML initiatives that also address the standardization of data formats for search engines. One such initiative is Exchangeable Faceted Metadata Language, an open XML format for publishing and connecting faceted metadata between Web sites, but that standard doesn’t have the momentum of something being pushed by IBM.

Not every company, of course, will go to all the lengths described here to architect accurate search. For some, keyword search and placement of documents in well-labeled electronic folders will suffice. The sophisticated search pioneers are e-commerce sites, pharmaceutical companies and government agencies, which have the most to gain: greater sales, faster drug development, detection of terrorist activity. Call centers are getting search makeovers so that multiple search tools can mine unstructured content and databases together and give reps all the information they need to close calls. What could broader and more accurate searches achieve in your company?

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