Both Sides Now to Business Intelligence
- By Stephen Swoyer
- September 1, 2005
ROI IS INTANGIBLE AND HARD TO GRASP
- BI describes nothing more than straightforward operational reporting
running some kind of client application such as Microsoft's Excel spreadsheet
against a relational database.
- BI today is a more expensive proposition than it was just a few years ago,
when organizations frequently built their own reporting and analysis solutions.
- The biggest problems with shrink-wrapped BI are that it's expensive, and
few vendors can claim to address all the pieces of the BI puzzle.
Profiting from business intelligence sounds like a no-brainer, doesn’t
it? Profit, after all, is BI’s raison d’être. From the very
beginning, BI has been pitched as a savvy, but evolutionary, way for organizations
to squeeze more out of existing technology investments, revitalize mature profit
centers and obtain actionable insights that enable the emergence of new ones.
All the while paying for itself. That’s been BI’s charter for the
better part of a decade now.
To a very real degree, most companies do profit from their BI investments.
Few can cite ROI studies, and fewer still are willing or able to quantify ROI
using the empirical metrics (such as revenue growth or income expansion) most
palatable to CFOs. Many, however, can point to the revivification of established
profit centers, or to cases in which BI investments have played an instrumental
role in the identification of new profit-making activities.
Nevertheless, organizations tend overwhelmingly to find BI ROI in intangibles
such as improved customer service, empowered knowledge workers and line-of-business
customers, the delivery of competitively differentiated customer-facing products
or services and the rapid identification of actionable business insights. (See
related story, “In
ROI we trust.”)
Technology innovation is a restless thing, however. With few exceptions, yesterday’s
cutting-edge technology investment will over time become tomorrow’s de
rigueur technology requirement. Just as one no longer—or rarely, in any
case—speaks of profiting from ERP, fewer organizations are embracing BI
because of its perceived ROI-generating abilities.
Instead, companies are doing BI because they can’t afford not to if they
want to keep up with the Joneses, Wangs and Patels of the global economy, that
is. “People talk a lot about ROI,” says Steve Snodgrass, CFO and
interim CIO with Graniterock, a provider of stone and quarried materials. “I’m
actually the company CFO, but I also have a background in IT, and I think it’s
just hard to find an ROI on a lot of IT projects. You have to have them, really,
if you’re going to remain competitive. ERP is one of those [ITprojects],
and I think business intelligence is another.”
There’s another wrinkle, too. BI today is a more expensive proposition
than it was just a few years ago, when organizations frequently built or cobbled
together their own reporting and analysis solutions. For a number of reasons,
companies are doing far less building and much more buying today. The consequences
of this transition have also helped to muddy a once pellucid BI ROI picture.
How far have the goalposts moved in the BI ROI game? Graniterock’s Snodgrass
cites his company’s own recent BI initiative—an RFID-powered information
aggregation application based on Business Objects’ Crystal Enterprise
reporting tool—as a textbook case of changing expectations.
Crystal Enterprise is a substantially more expensive product than the Crystal
Reports software Graniterock used for half a decade. At the same time, Snodgrass
says, ROI expectations, at least in terms of generally accepted accounting metrics,
didn’t directly factor into the company’s project planning.
In fact, Graniterock didn’t expect to enhance its existing decision-making
process—although the collection and analysis of RFID information has helped
to do just that—nor did the company assume that its RFID jaunt would help
identify new profit centers, although in time it will almost certainly do so.
Instead, Snodgrass says, Graniterock embraced RFID and centralized BI as a
means to further differentiate itself from cut-throat competitors.
“Most construction companies compete on low price and poor service, but
our paradigm is really high-quality materials and high-quality customer service,”
he says. So we monitor on-time delivery statistics, we do statistical process
control of quarried rock, because it’s sized, and it needs to be consistent
in the sizing,” he explains. “This lets us provide a unique service
that customers value because it gives them all sorts of information about the
status of their order.”
The only question, he says, was whether Graniterock would build its own next-gen
BI solution or tap a shrinkwrapped BI tool. Given the complexity of the proposed
GraniteExpress 2 application, which assumed massive information collection activity
and Webbased reporting capabilities, it was a no-brainer: Shrink-wrapped BI
was the way to go. It’s a conclusion that a lot of former BI DIY-ers have
The case for shrink-wrapped BI
Basically, business intelligence describes nothing more than straightforward
operational reporting—running some kind of client application such as
Microsoft’s Excel spreadsheet, for example—against a relational
database. There are other important pieces to the enterprise BI puzzle, such
as extraction, transformation and loading, but in many cases, it involves making
slight formatting changes to data when it’s exported from one source and
imported into another. As a result, ETL can describe a process as simple as
transferring data from one source to another via ODBC, perhaps with some script-driven
transformations along the way.
The point is that commercial off-the-shelf software isn’t a prerequisite
for doing, much less for profiting from, enterprise BI. In fact, given the upfront
cost of COTS packages—ad hoc, or do-it-yourself—their licensing
costs and the annual maintenance fees charged by most BI vendors, BI has traditionally
had a lot to offer ROI-wise.
It’s little wonder, then, that organizations have overwhelmingly opted
to build their own reporting and analysis applications instead of buying them.
Three years ago, The Data Warehousing Institute put the build-vs.-buy split
for analytic apps at about 2:1, but according to TDWI’s research, that
ratio has narrowed over time. Why? Because even though there are still a number
of very good reasons for organizations to embrace do-it-yourself BI, especially
for applications such as straightforward operational reporting and spread-sheet-driven
analytics, there are probably just as many reasons not to.
For starters, analysts say, homegrown BI invariably results in siloed BI. Consider
the case of Excel, the most popular ad hoc query and analysis tool. Used by
itself, Excel provides no central means of data management, data consistency,
data collaboration or data security. In practice, non-homologous versions of
the same spreadsheet tend to proliferate throughout an organization. There’s
no single version of the truth.
This is what TDWI research director Wayne Eckerson famously called the “spreadmart”
phenomenon. Purveyors of commercial reporting and analysis packages have tended
to exploit spreadmart FUD in their marketing, but with the mainstreaming of
SOA, there is a strong case to be made for centralized BI. And in this respect,
commercial BI ISVs do have something to crow about: After all, almost all top-tier
BI vendors have incorporated service-oriented underpinnings into their BI suites,
and most of the ERP systems BI tools commonly report against have also been
There’s another reason COTS packages make sense: proven scalability.
This was the case with Graniterock, which found that the scope of its RFID initiative
far exceeded the capabilities of its homegrown Crystal Reports-based reporting
solution, which has well known scalability and licensing limitations with respect
to concurrent user support. As a result, Snodgrass says, his company, which
amassed a repository of more than 1,200 Crystal reports, ponied up the cash
for Business Objects’ high-end Crystal Enterprise offering. Since doing
so, Snodgrass confirms, Graniterock hasn’t looked back.
“Once we upgraded to [Crystal Enterprise], we realized that we could
e-mail reports using Crystal automatically, so we actually have set it up so
that our more sophisticated customers on a daily basis get a report e-mailed
to them on the status of their shipments,” he says. “From a customer
service standpoint, more and more we’re realizing that we have all of
this data that we can get in our customer’s hands, and that Crystal [Enterprise]
gives us so many ways to do it. The best part about it is that once we set up
an automated scheduled report, there’s not a lot of overhead required
to maintain it.”
Graniterock is by no means alone: Many avowed BI DIY-ers have warmed to the
idea of buying some or all of their BI software from commercial best-of breed
vendors. Take RufalloCODY, a provider of software and services for educational
institutions and other nonprofit organizations, which has carved out a market-leading
position on the strength of its analytic chops.
“The big issue we have is obviously the analytics of our business is
really what drives profitability for our non-profit clients, so the more they
can understand their data on a daily basis, the better they can use it for the
purpose of segmentation [or] calling strategy, [and] the better off they are
at raising money for their institutions,” says, RuffaloCODY CIO Bruce
Except that RuffaloCODYwas experiencing tremendous growth—on the order
of 25 percent annually. As a result, Lehrman says, his company was quickly smashing
up against the limits of its homegrown Crystal Reports and Excelbased BI infrastructure.
And with annual growth projected to remain at or outstrip 25 percent over the
long haul, Lehrman and RuffaloCODY determined that COTS was the way to go.
After an RFP process, the company opted for a BI software suite from relational
OLAP (ROLAP) specialist Micro-Strategy. “The biggest issue for us was
the strength they had in the online [analysis], which allows our employees all
over the country, all over the world, to go in and dig into the information
they want to see, as opposed to the [traditional] process of requesting reports
and generating analytics on an ad hoc basis,” he says.
The case against shrink-wrapped BI
The biggest problem with shrinkwrapped BI, as almost any CIO will tell you,
is that it’s expensive. Moreover, comparatively few vendors can claim
to address all the pieces of the BI puzzle, such as operational reporting, ad
hoc query and analysis, ETL, data cleansing and data profiling, which means
customers must frequently purchase point solutions from different best-of-breed
vendors. That gets expensive, too. On top of this, users say, commercial BI
packages keep getting more expensive every year.
This last trend, in particular, is one that few customers think can, or will,
be reversed, in part because BI requirements will only become more sophisticated.
As a result, more and more organizations will replace functional DIY or ad hoc
BI solutions with commercial or best-of-breed tools. This will almost certainly
translate into even higher BI licensing and maintenance costs.
“[BI] is a pretty mature area, so there aren’t a number of big
companies that are just starting down a business intelligence path, so the amount
of green field business is diminishing,” says Matthew Datillo, CIO of
PerkinElmer, a health sciences research, development and manufacturing company.
“As a result, there’s much less pressure for [BI vendors] to accommodate
[customers] on pricing, and there’s going to be even less [pressure] in
Datillo stresses that he’s very happy with his BI vendor, Business Objects.
In fact, he explains, PerkinElmer was able to centralize and consolidate its
highly heterogeneous ad hoc and commercial BI infrastructure—the culmination
of departmental silo-ing and intensive merger-and-acquisition activity—on
top of Business Objects’ Enterprise BI suite and Crystal Enterprise reporting
In spite of its next-gen Business Objects underpinnings, PerkinElmer still
uses an ad hoc ETL tool—Oracle PL SQL-driven scripts. It’s something
of an inelegant solution, Datillo concedes, but it’s a lot cheaper than
the alternative—purchasing an enterprise ETL tool from Oracle (Warehouse
Builder), Business Objects (Data Integrator) or another COTS BI vendor.
PerkinElmer isn’t alone: Many BI suite adopters bring some of their homegrown
or ad hoc software forward with them. Still others remain on less-powerful BI
point products they’ve already paid for. Given the high cost of shrinkwrapped
BI software, some say they don’t have any other choice.
Take Jody Porrazzo, director of econometric risk strategy with APEX, an insurance
services consultancy. Porrazzo describes herself as an extremely happy user
of SAS Institute’s BI software. Her company has been running the SAS BI
suite since 2003, when it implemented SAS8 in place of an homegrown product.
Recently, APEX transitioned to 64-bit SAS9, deploying that suite on top of a
new 64-bit Itanium2 server from Hewlett-Packard APEX’ SAS9 implementation
was easily a six-figure effort, including hardware. But the company still uses
a homegrown ETL solution, even though SAS markets one of the top three ETL tools
“We do not have an ETL tool. We’re still using a homegrown tool,
although one of the things we are evaluating is the SAS [Enterprise] ETLtool,”
she says. “But ETL from anyone is expensive, and we still haven’t
made a decision on that.”
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