Business Intelligence Software

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ALSO SEE: Business Intelligence Software and Predictive Analytics

• Ten Leading Business Intelligence Software Solutions

Business Intelligence software, or BI software, is used to find and analyze business data to better understand a firm’s internal and external strengths and weaknesses. Business intelligence software enables managers to better see the relationship between different data for better decision-making, and spot opportunities for innovation, cost reduction and optimal deployment of resources.

Business intelligence software help businesses achieve these objectives by providing historical, current and predictive views of business operations. BI software give companies the ability to quickly sortthrough large amounts of data and then use that data to detect trends and patterns. In addition, BI applications provide companies with analytical modeling tools that can more accurately predict the financial effect of actions than manually generated projections.

Business Intelligence Software:

Business Intelligence Software Functions
Business Intelligence Software Top Investment Focus
Business Intelligence Software Costs
Business Intelligence Software and Cloud Computing
Business Intelligence Software Vendors

Business Intelligence Software Functions

The common functions of BI software are:

Reporting
Online analytical processing (OLAP). OLAP is a category of database processing which affords the ability to consolidate, view and analyze data according to multiple dimensions. It enables complex analytical and ad hoc queries with rapid execution time.
Analytics
Data mining
Text mining
Predictive analytics
Business performance management
Benchmarking

According to research firm Gartner, through 2012, more than 35 percent of the top 5,000 global companies will regularly failto make insightful decisions about significant changes in their business and markets. In theory, business intelligence software could assist this process.

While the economic challenges have forced businesses to become more aware of changes in their organizations and rethink their strategies for greater transparency about finances and operations, most organizations simply don’t have the information and processes they need to make informed, responsive decisions. This, again, is where BI applications come in.

Business Intelligence Software Top Investment Focus

BI software is the top investment focusof chief information officers (CIOs), who seek the ability to:

Set targets, see results and understand what drives the numbers.
Identify trends that may be benefits or threats.
Take action with a common context for decision-making across every department.
Identify and analyst opportunities and trends.

According to Gartner, Business Intelligence software was the top spending priority for CIOs in 2009. And Forrester Research has forecast that the BI market will top $12 billion in revenue in 2014, up from $8.5 billion in 2008.

In a BI software surveyconducted by HP at BI and data warehousing conferences in 2009, respondents indicated their intent to focus on BI initiatives in 2010. The respondents identified their top initiatives as data quality, advanced analytics, data governance and master data management (MDM).

The respondents reported their intent to invest within 12 months as follows: formal governance (53 percent), MDM (52 percent), BI competency center (45 percent), standard taxonomy (40 percent).

However, while Business Intelligence software may be a chief focus for CIOs, it is business units that are expected to begin drivingimplementation of BI software. Gartner Group has predicted that business units will control at least 40 percent of the total budget for BI by 2012.

According to Gartner, while IT organizations excel at building Business Intelligenceinfrastructure, business users have lost confidence in their IT organizations’ ability to deliver the information they need to make decisions.

Business units drive analysis and performance initiatives, relying mostly on spreadsheets that create dashboards full of metrics, along with analytic and packaged analytic applications. These analytic applications may include corporate performance management (CPM), online marketing analytics and predictive analytics that optimize processes rather than just reporting on them.

Nigel Rayner, research vice president at Gartner, has noted a danger in this expected trend.

“By making purchases independently of the IT organization, business units risk creating silos of applications and information, which will limit cross-function analysis, add complexity and delay to corporate planning and execution of changes,” Rayner said. “IT organizations can overcome this by encouraging business units to use existing assets and create standards for purchasing classes of packaged analytic applications that minimize the impact of isolated functions.”

Business Intelligence Software Costs

A business can spend anywhere from thousands to millions of dollars on a BI software implementation. According to Boris Evelson, principal analyst at Forrester, a typical BI deal in a large enterprise and with a large vendor would clock in somewhere between $150,00 and $300,000 just for the software licenses and the first year of maintenance. Add in other essential services and the price climbs.

Evelson said companies can expect to spend $5 to $7 on services for every $1 they spend on software.

The cost has led some to see an opportunity for open source BI providers. According to Forrester analyst Jeffrey Hammond, companies have traditionally had to think hard about how they deploy BI because it is expensive and they can’t deploy it widely to many users without spending hundreds of thousands or millions of dollars. Because of this, the open source Business Intelligence model has gotten a lot of IT organizations excited.

However, Hammond noted that even when deploying open source software, companies still generally pay for support services.

Despite the cost, many companies say the savingsthey can generate by better analyzing their data make BI software worth it.

Business Intelligence Software and Cloud Computing

The new frontier for BI softwareappears to be in the cloud. The software-as-a-service (SaaS) aspect of cloud computing is rapidly creating a new wave of Business Intelligence software benefits and challenges. BI software on a SaaS basis has the ability to provide BI capabilities to a large number of staff rapidly at a low cost.

Howard Dresner, principal of Dresner Advisory Services and the man who coined the phrase Business Intelligence, said that with a SaaS approach to BI, businesses can deploy a basic BI application in a day, compared with six or more months required to develop and deploy on-premise solutions. Still, implementing either a cloud-based point solution or an entire suite with on-premise legacy systems is not a trivial affair.

Regardless, with huge demand, many new BI software cloud vendors have launched in the past five years. Dozens of start-ups have attracted venture capital along with paying customers. They run the gamut from providing full BI suites to point solutions for customer analytics, performance management, workforce analysis and other tasks. And more are expected to launch this year. The established, legacy BI software players aren’t sitting on their haunches either. They’re also moving to offer hosted versions of their apps.