High costs not deterring firms from BI

Lack of skilled staff and high initial costs of ownership are the major inhibitors when it comes to adopting business intelligence applications, according to research from industry analyst Gartner.

The results of the survey, announced this week at Gartner Business Intelligence Summit in Chicago, revealed that large companies will need three times as many personnel to manage business intelligence systems in 2008 compared with 2004.

Respondents, particularly first time adopters of the technology, also cited total cost of ownership (TCO) as another inhibitor to adoption.

"Lack of skills and TCO are related because projects that require a lot of 'trial and error' are more costly," said Gartner fellow Howard Dresner. "High TCO is a barrier particularly in Asia, and for those who deploy business intelligence for the first time. In Japan, nearly half of the respondents said that difficulty in learning to use business intelligence hampers its adoption."

But despite potential barriers to investing in and deploying the technology, Gartner claimed that 39 percent of respondents in North America said they expect to increase spending on BI this year. Responding to a need amongst managers for timely data to improve decision making was cited as the key reason for investing in BI.

"Organisations that have already deployed business intelligence expect that their spending on BI software will be higher in 2005," said Dresner.

The analyst claimed that to achieve reasonable TCO organisations need to move beyond using BI in a tactical way, and set up what Gartner describes as a BI competency centre — basically a management team with responsibility for the technology — to coordinate use of BI on a company wide-scale.

Business Intelligence software is primarily designed to allow management to mine information and produce complex reports from company data and includes applications such as reporting tools, scorecards and dashboards. Vendors include Business Objects, Hyperion and Information Builders.

The increasing popularity of the technology — driven in part by regulations such as Sarbanes Oxley — which requires companies to have a better handle on their financial performance — is attracting ERP players into competing for BI business as well as the likes of Microsoft.

In particular, Gartner cites a particular stream of business intelligence applications, which it calls corporate performance management tools, that deal with financially orientated applications as being particular crucial at the moment given legislation such as Sarbanes Oxley.

"Demand for this type of application appears to be benefiting from growing government regulation," said Gartner research director Bill Hostmann.

John Kopcke, chief technology officer of BI provider Hyperion, attributed the recent increased take-up of the technology to companies having the right infrastructure in place to take advantage of BI, as well as regulatory pressure.

"It's my personal perception is that there were a set of things that had to happen before this could take place. Not so much from a market demand, we have had regulatory issues in the past and economic crisis, 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."

Gartner defines BI as an interactive processes for exploring and analysing structured, domain specific information (often stored in data warehouses) to discern business trends and patterns.

For the full interview with Hyperion CTO John Kopcke click here.