Who cares about business intelligence?

Analytical software for tracking business performance may not be the most exciting area of IT but it's an increasingly vital one, says the chief technology officer of Hyperion

Business intelligence, two words that together promote instant narcolepsy in technology professionals everywhere. But things may be about to get interesting.

The staid and perfunctory applications that allow companies to closely monitor their financial and logistical performance have undergone a renaissance of late, thanks in part to the creative accounting of several executives at Enron. The US legislation that resulted from that accounting scandal, such as Sarbanes Oxley, has forced chief executives everywhere to have a much more transparent view of their firm's financial dealings.

The best tools for improving financial insights are analytics and reporting software from companies such as Business Objects, Hyperion and Information Builders. But the consolidation pressure affecting much of the software industry is also being felt by these BI providers as they attempt to position themselves at the top of the tree when it comes to catering for all the needs of enterprise customers. While there is still a lot of consolidation to be done — analyst Gartner claims some firms may have up to 23 different BI tools deployed across the organisation — no one firm has emerged as the BI equivalent of Microsoft.

Hyperion, ranked number four in the BI market by IDC, would like the honour but has some work to do compared to Business Objects, say analysts. But Hyperion has a cunning plan to get ahead — change the rules of the game. Rather than battle it out in the business intelligence space, Hyperion is positioning itself as the leader in the different, if adjacent, field of Business Performance Management. It claims to be more focused on the high-level strategic planning than most of the competition — an area which it claims is much easier for chief executives to visualise the importance of compared to the more analytical vision for mainstream BI.

ZDNet UK caught up with Hyperion's veteran chief technology officer John Kopcke to discuss his take on why BI is back in vogue and why companies should care.

Q: Why is there so much momentum around business intelligence tools at the moment — is it purely down to companies having to comply with stricter legislation around accounting and operations?
Q: I have actually been in this space for 28 years. There are still a lot of companies in this space and it seems to be getting the biggest momentum it has ever had now. What makes that interesting is that if you take any other segment of software such as databases or office products that have been around for roughly the same amount of time, they went through the big momentum and consolidation several years ago. Look how many database products there are today — not very many.

It is kind of interesting to ask why did it take so long for BI to catch up and why now? My personal perception is that there were a set of things that had to happen before this could take place. We have had regulatory issues in the past and economic crises, but what was missing was all the infrastructure that is now in place; not everyone had a PC on their desk to access a BI application. What you also found in the eighties was you spent a lot of time trying to find the data and when you did eventually find it, it didn't make sense. You also had a lot of infrastructure worries - those guys over there have a Vax, those guys have an ICL and so at the end of the day you actually spent very little time doing things from a decision support or business intelligence perspective.

Then the nineties brought us the big ERP and data warehouse implementations and then the final technological advancement arrived in the form of the Internet; we can now pretty much reach anybody anywhere and the data resources and the transactional systems mean that we can now spend most of our time on business intelligence activity.

Fair enough — but is there something else that has helped to catalyse the uptake of BI in the last couple of years?
If you add economic pressure to this model then acceleration in BI starts to make sense. It has always been the case with our products that when companies are making money hand over fist and you think you're brilliant then you don't really focus on how to improve performance. When reality sets in, combined with regulatory pressures, then you have got the alignment of the stars which says this is really a brilliant time to be in this space.

So we've got the backdrop to why companies could to BI but what is actually motivating companies to invest in your technology specifically?
Ever since the 1970s we have focused on the word insight — business intelligence gives you insight into your business. Quite clearly if you don't have insight into your business then you are dead from the start. But once you do have insight — what do you do with it? From our perspective, the next thing you do with it is to drive performance and that means looking at the plans your company is actually executing. If I am looking at the performance of a company or of a football team, I can say well the athletes are fine, their training is fine but they are making bad plays. There a better plays given this talent that you should switch to. So Hyperion brings planning software into the mix.

What are we talking about here in terms of actual software tools?
The most comprehensive one is the concept of planning. What are the actual financial and operational plans a company is putting in place. We also add another layer in, focused on financial consolidation and statutory recording because if you're a business today then you not only have to meet the all the needs of your business but also the needs of regulatory agencies and governments. Sometimes you find that things that look good from a management reporting perspective don't actually look so good from a regulatory perspective. This has been some of the downfall and why Sarbanes Oxley has emerged. It's a case of "Yeah, you look really good from a management reporting perspective but from a risk point of view, you are a very shaky business."

Doesn't the planning side of things require a lot of consulting work to be done - well beyond just supplying software?
Absolutely, but although planning and consolidation is fairly complicated, it is something that companies have been doing years and the financial planning in particular that a bank does isn't much different from the planning that a manufacturer does. If you are a CFO then you can pretty much be a CFO at any company you want to be. It is actually fairly easy to deliver a relatively packaged application but that said there is still an implementation phase where you have to tailor that application to the needs of that business.

Does your planning approach to BI take more integration and customisation than pure data analysis?
Probably the simplest thing for me to do is querying and reporting against a data warehouse. That one is the least likely to require services. The state of the technology today is such that you just drop it in, do a day's course on how to use and then you start creating reports. As you go up the chain and start getting into heavier analytics such as profitability analysis you may want to think about bringing in some services as you are looking for those best practices.

Do you see services being a bigger part of your businesses going forward?
I don't see us growing services dramatically. The reason is that any successful software company that requires services needs a very healthy services partner because you can grow your software sales very fast but to get more feet on the street to do consulting requires you do the hiring, training — companies that have tried to do it all themselves have really stunted their growth.

Gartner claims that despite BI companies trying to position themselves as providing the whole gamut of services — no one provider does. In fact, every BI does something badly. What is the one thing that each of the top three BI players does badly in your opinion?
You have the ERP vendors saying we do business intelligence now — their "We do everything" claim is even bigger than people just in our space claiming they do everything. Gartner has very clearly called that into question.

There is also the question of whether you are talking about Business Intelligence or business performance management, which we do. If I was critiquing Business Objects I would say that there is an obvious omission of planning in their portfolio if you are talking about the kind of business performance management that we do.

If you were to take a look at Hyperion and say of all the things in this space that people might expect, what doesn't Hyperion do, the biggest piece would be advanced statistical analysis, something that a SAS is particularly well known for. Now do we envisage adding advanced analytics at the size we are today? Absolutely not, but in ten years when we have grown to the size we want to be then would that be something we would add? Probably.

Is business performance management a term that you would like to see usurp BI?
Yeah, we would like to see that. According to IDC figures we are number one in financial business performance management and we are number four in business intelligence. From our perspective we can say that we think it is all business performance management but if the analysts are going to count it that way we have to go out there and compete and move up from four to a better number.

Do you think this confusion over naming and definition has contributed to the relative obscurity of BI compared to other technologies?
At one level it is pretty easy to define. If you say I am in the business performance management space and it as about everything you do to drive performance of your enterprise, then a CEO is going to understand that pitch in the time it takes to go up an escalator. If I say BI to that CEO I have to start explaining all sorts of examples of how you use BI.

Going back to my example, if I walked into an organisation in 1980, I would find IBM in the finance department, DEC in the marketing department and a few ICLs and Wangs thrown in for good measure. The reason for that was that department heads were making IT purchasing decisions. You sit back now and look at that from today's perspective and think "The CFO was having hardware salesmen come into his office and making decisions between IBM or ICL — how ludicrous is that?" Eventually companies said this is ridiculous, look at all the hardware providers we have, it's a mess. They very quickly standardised and Sun, HP and Dell did very well and people like Wang and ICL didn't.

The same thing has been happening in BI for about 30 years — there are some companies out there with 23 BI technologies as a result because there were 23 different decision makers bringing that in. It has in some respects being flying underneath the radar. But now people are saying we want to start down the path of reducing the number of BI vendors we have.

Have you done any research on how many other BI vendors your customers typically have?
Well, you have heard the high of 23 from Gartner but on average we think it's around four to five.

On-demand has cut swathes through the CRM market — specifically with Salesforce.com — is there potential for a similar effect in the BI space?
I think the interest will be there but there are some technological challenges for all software companies, it is not just unique to our space. What Salesforce.com has been able to do, and it's the real secret of getting that model to work, is to create a model of running a sales force that will work across many, many companies. As they sign-up each new customer, they are not having to spend a lot to get that customer up and running. That is a bigger challenge for business performance management and business intelligence because although there are similarities in each company, each company's needs are different, and different enough that it has not been clear how to do that from a hosted perspective.

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