Tuesday, June 23, 2009

BI and its Its Impact on Organizational Decision-Making

Business intelligence (BI) is an important aspect of an organization’s strategic framework. But what is beyond BI? Some indicators point to business analytics, a progression from BI, as the next step. Business analytics is predictive as well as historical, which requires a cultural shift to the acceptance of a proactive, fact-based decision-making environment, providing organizations with new insights and better answers faster.

Many IT and business professionals still continue to define business analytics in broad generalizations. According to the IDC Market Analysis Report, Worldwide Business Analytics Software 2001-2011: “The business analytics software market comprises performance management (PM) tools and applications and data warehouse (DW) platform software. This software is used to access, transform, store, analyze, model, deliver and track information to enable fact-based decision-making and extend accountability by providing all decision-makers with the right information, at the right time, using the right technology.” Additionally, business analytics is a framework that extends beyond software and systems to include culture, process and performance strategies as well.

IT and business professionals mainly align business analytics with BI products. In fact, more than half of respondents (54%) cited BI as the category of products that first comes to mind when they think of the term “business analytics.” Business analytics may be the next logical step in the evolution of BI. Additionally, 18% of respondents think of PM products, 11% think of the general category of analytics and 13% reported that they do not use the term “business analytics” at their organization.

The top software tools that respondents consider part of business analytics spanned across various areas, including analytics, data integration, query/reporting and performance management. More specifically, seven out of 10 respondents (70%) consider advanced analytics tools, such as data mining or statistical software to be part of business analytics, followed by query/reporting/analysis tools (66%) and dashboards (60%).

Business analytics is broad enough to include capabilities and solutions that benefit a variety of disciplines. Since business analytics is designed to be used by all decision-makers, it is not surprising that almost three-quarters of respondents surveyed (73%) view business analytics as a function of both IT and business. While 21% consider it primarily a business function, 6% consider it primarily an IT function. With business analytics being a function of both IT and business, there is an increased need for collaboration across organizations, as well as the need for supervision by cross-departmental management teams.

Less than one-third of respondents (32%) rated themselves as extremely or very familiar with the product category, and only 10% rating themselves extremely familiar. While more than four out of 10 respondents (44%) are somewhat familiar with the business analytics software product category, 24% rated themselves as not very or not at all familiar. However, respondents cited a number of key benefits their organization derived or expects to derive from using business analytics software, which encompassed various areas of business analytics.

Top benefits included improving the
decision-making process (75%), speeding up the decision-making process (60%), better alignment of resources with strategies (56%), realizing cost efficiencies (55%) and responding to user needs for availability of data on a timely basis (54%).

Conversely, there were also a number of challenges noted when implementing business analytics software. Respondents have encountered or expect to encounter problems with data integration with multiple source systems (59%), challenges with regards to data quality (56%) and issues when attempting to integrate with enterprise applications (44%).

The implementation of a flexible and straightforward business analytics framework would alleviate these challenges and provide organizations with the right information at the right time to enable fact-based decisions at every level of the enterprise.

Function of business analytics

Almost three-quarters of respondents (73%) view business analytics as both a function of IT and business. While 21% of respondents view business analytics as primarily a business function, only 6% view business analytics as primarily an IT function.

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