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Originally published 26 February 2009
I was discussing the economic slowdown a couple of months ago with some fellow business intelligence (BI) experts. I vividly remember that somebody said, “The recession is an opportunity; it is the strongest business driver so far. BI will help companies find their weaknesses, help them find ways to cut costs and help them make smarter choices.” His final conclusion was, “The recession is a blessing in disguise for business intelligence.”
“Now is the winter of our discontent, made glorious summer by this sun of York,” Shakespeare wrote some 500 years ago, meaning that the time of unhappiness is a thing of the past. Now the question is whether BI can indeed make for a glorious future. The fact of the matter is that, blessing or curse for BI, the economy is going to dominate the market this year. As BI is still often executed within IT (and not business), it will therefore be seriously affected by the lowering of IT budgets. The result of this is that many projects will be cut or put on hold, resulting in a decrease of information supply. At the other end of the spectrum, we see business people screaming for more information as uncertainty grows. The paradox is that we find ourselves in a situation of increasing demand for information and less supply. This leads to the two major questions for BI this year: How can BI help cut costs and how can I cut costs on BI?
I expect that many customers will move from best-of-breed solutions to BI platforms from one of the major vendors (Oracle, SAP, IBM and Microsoft) or take a good look at their BI product stack in order to save money. A reduction of the number of BI tools makes sense both from a financial as well as an organizational point of view. Off course, there will a danger of the so called vendor lock-in, but this is hard to prevent anyway. As an alternative, customers might go the road less traveled and evaluate open source BI solutions. While money is tight do not expect more major acquisitions from BI vendors. A further integration of acquired technology in the (BI) infrastructure, applications or processes will be the first objective of these companies.
In time of trouble you need all the support you can get. I expect an increasing demand for relevant information and a need for faster decisions. Employees will connect with others inside and outside their company in order to share information. We also see that cooperation can work as strong stimuli for business innovation. Enablers of cooperation are architectures that allow for open markets of information and self-service solutions of (internal) customers. These solutions will be based on services and the free flow of information. These new requirements will set new standards for BI architecture as it moves away from traditional batch orientation toward more “right-time” or operational BI architectures supported by data warehouse appliances or cloud computing.
With a lower budget comes a growing demand for cost cutting. This will raise the need for cheaper ways of building new information products and more cost-efficient ways for the maintenance of existing ones. IT departments must focus on operational excellence in order to lower the costs of their BI infrastructure. Innovation or management excellence will come from business departments, often using self-service solutions, while making use of proven industry templates and best practices.
Much of the (classic) BI infrastructure is already in place. With increased business need for information, now is the time to exploit this. Reporting is a commodity where companies can no longer realize much competitive advantage. On the other hand, monitoring (right-time BI) of operational processes will increase enterprise agility; therefore, I expect that business activity monitoring (BAM) and rules-based decision engines will begin to pop up. The most added value will be in analytics where data mining, statistics and business knowledge are combined to analyze current and historical performance in order to predict the future. I expect the bulk of the investments will e in this area.
On a final note, it must be said that in these times no organization can afford to be caught in internal or external disputes. Therefore, it is wise to overcome any differences. The first and most obvious one is the discussion of BI cost versus BI benefit. As the return on intelligence is more and more disputed I expect to see an increased demand for business cases. The second one is the gap between the IT department and the business departments. This will lead to an increased need for alignment within some sort of a BI competency center. The third and final one is finance versus the rest. Finance will control the budget and will remain in the driver seat for all cost-cutting programs. They have taken the lead in the majority of all BI solutions. The CFO will be the sparring partner for new BI initiatives and the CIO will be the sparring partner if BI infrastructure is on the agenda.
The economic slowdown will dominate the BI market leading to a decrease in information supply (IT) and an increase in information demand (business) with cost cutting as the #1 objective. We will see customers standardizing on one vendor and a rationalization of their BI products. The increased demand for faster answers and a need to connect with stakeholders will impact BI architecture as we know it. IT will look for more cost-effective ways for delivery and maintenance of BI solutions. Self-service will be demanded by business to cope with the new tasks at hand. More value will be extracted from current BI infrastructure with strong investments in analytics. Finally, all classic differences have to be overcome to face these difficult times. We will see an increased need for business cases, IT and business alignment and a leading role for finance.