Do BI tools provide the right intelligence for business

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Content Copyright © 2010 Bloor. All Rights Reserved.

Companies today need to be able to collect information on a number of indicators to gauge their performance against their own and external targets. These key performance indicators can vary from number of units produced in a selected time period, to number of orders received through certain channels, to the availability of skilled personnel and particular plant. This is on top of and in addition to the usual financial analytics. So the role of Business Intelligence is changing; as Andrew Stevens, Sage’s Enterprise Development Manager, explained, “We are seeing the requirements for Business Intelligence to become part of the natural workflow of business processes, rather than an adjunct to ERP applications.”

So what does this mean for manufacturing organisations in today’s economic climate? What should they be expecting from business intelligence software?

What does BI really mean?
Well, to start with is to understand what the term “Business Intelligence” really means. Wikipedia gives a very broad definition, “Business Intelligence (BI) refers to skills, processes, technologies, applications and practices used to support decision making.” Perhaps a better definition is that Business Intelligence represents the tools and systems that play a key role in the strategic planning process of the corporation. These systems allow a company to gather, store, access and analyze corporate data to aid in decision-making. Generally these systems will illustrate business intelligence in the areas of customer profiling, customer support, market research, market segmentation, product profitability, statistical analysis, and inventory and distribution analysis to name a few.

So we collect data and turn it into intelligence. How do we do that? US Department of Defense[1] sees that this process consists of six interrelated intelligence operations: planning and direction, collection, processing and exploitation, analysis and production, dissemination and integration, and evaluation and feedback. So therefore our software must support these capabilities.

BI technologies provide historical, current, and predictive views of business operations. Common functions of Business Intelligence technologies are reporting, online analytical processing, analytics, data mining, and business performance. Phillip Howard, Research Director, Data Management at Bloor Research has stated, “You can use any database as a data warehouse or to support business intelligence management, benchmarking, text mining, and predictive analytics. However, if there is any substantial re­quirement for analytics then general purpose databases without specialised facilities will fail to give adequate performance.”

Randy Flam, President of IQMS, commented, “Business Intelligence is becoming more and more important. It used to be that all you needed was a static report writer to extract and report on data, but now you have to be able to provide the ability to dashboard and drive down to more detailed information as well as deliver on multiple user platforms from PCs to mobile phones!” Marge Breya, executive vice president and general manager, Intelligence Platform Group and SAP NetWeaver Solution Management, SAP supports this view, “Customers want to work with their data their way – whether it’s behind a firewall, on the Web, or on their local computer in spreadsheets. With access to data at their fingertips, customers can make more confident decisions, share their insights with others and react quickly to any changes in their business.”

So Business Intelligence is more than just being able to extract data and report on it. It is also more than just financial analytics or even key performance indicators. And it requires more than just standard reports, but alerts and graphs and traffic lights. One other question we need to ask ourselves is in what context was the data collected.

Relevance to manufacturing today
We have all heard about the problems at Toyota that have led them to recall so many of their models. Teradata have been working with a number of automotive vendors looking at the problems with warranty. Duncan Ross, Director Advanced Analytics at Teradata explained, “Warranty data comes from 2 different sources. One is off the production line and is well defined and consistent in nature. The other comes from the dealers’ workshops and is of variable quality. This can lead to the same problem being reported a multitude of different ways. This means big problems can get hidden!” Ross went on to describe how Teradata, working with SAS Institute, have developed a solution using statistical methods to allow the dealer warranty information to be able to be grouped and analysed more effectively. This results in the detection to rectification cycle being shortened. So here is Business Intelligence being used as part of a warranty system (A service management component) to analyse the data received.

Ross saw this as just one business intelligence application in the automotive sector. “A car is now a computer on wheels! Data is being collected continually that the driver is unaware off. As warranty schemes increase in length, we could reach a time when the OEM actually owns the car for its whole life and we, the driver, lease it. Data collected by the computer in the car can stream this data back to a central point, which allow problems to be identified and reported before the driver is even aware of them.”

Real-time BI disseminates information about a business in a range from milliseconds to a few seconds after the business event. While traditional business intelligence gives users only historical information, real time business intelligence provides a comparison of present business events with historical events, which helps in identifying a range of issues, thereby allowing them to resolve it on time. The primary aim of real-time BI is to enable corrective actions to be initiated and business rules to be attuned to optimize business processes.

Rick Whitting[2] stated that real-time information was no longer a competitive differentiator that produced more timely and relevant business decisions. Decision makers in SMEs can communicate and collaborate over broadband networks as if they were in the same office. He sees that it is the ability to forecast where events are heading, and then make informed decisions based on that assessment. Termed Predictive analytics, it involves running historical data through mathematical algorithms such as neural networks, decision trees, Bayesian networks, to identify trends and patterns and predict future outcomes: questions like “Will product demand surge?”, “Will a customer take his business elsewhere?” An organisation’s ability to make such educated guesses is key to improving service, cutting costs, and exploiting new market opportunities.

But do I want to run BI in house? Could I use the cloud? The answer to these questions is yes. February this year saw SAP announcing the SAP BusinessObjects BI OnDemand solution. This is targeted at casual BI users and will deliver a complete BI toolset which requires no prior experience or training. The interesting piece of this announcement was that a user would be able to interrogate data not held in SAP, with a specific interface to included.

So what?
Business Intelligence tools have empowered every business person to make better decisions on their own, without relying on IT or power analysts to prepare and interpret results for them. BI applications have become as commonplace as spreadsheet applications within large organizations and this will extend to all within a few years.

Stevens sees the BI market as, “We have seen a noticeable shift in the motives for firms investing in BI. Historically, BI provided information at a management level only, but businesses are now placing emphasis on utilising BI as a means of transforming data into actionable insights across their organisation. It enables companies to unlock the intrinsic value of data held within their business systems. Indeed, we believe that BI should never be seen as an additional IT layer or standalone platform, but as an integral business tool that can ensure everyone is pulling in the right direction.”

A 2009 Gartner paper[3] predicted these developments in business intelligence market:

  • Because of lack of information, processes, and tools, through 2012, more than 35 percent of the top 5,000 global companies will regularly fail to make insightful decisions about significant changes in their business and markets.
  • By 2012, business units will control at least 40 percent of the total budget for business intelligence.
  • By 2010, 20 per cent of organizations will have an industry-specific analytic application delivered via software as a service as a standard component of their business intelligence portfolio.
  • In 2009, collaborative decision making will emerge as a new product category that combines social software with business intelligence platform capabilities.
  • By 2012, one-third of analytic applications applied to business processes will be delivered through coarse-grained application mash-ups.

I think the key to the future in BI is something Ross shared with me and that is more automatic collection. Manufacturing decision makers don’t have the time to spend on collecting and formatting the data so that they can report on it. As we get more and more data available to us to analyse, that comes not only from with in our own organisations boundaries but also our customers and suppliers and even from other external sources, how do we sort the wheat from the chaff? For a business user’s viewpoint, the software has to allow easier definitions of what needs to be collected and provide interaction during the build process. This will include the ability to define different views and collections for different user interfaces. Then we will have the agility that we need.

This article first appeared in the Manufacturer earlier this year.

[1] Dictionary of Military and Associated Terms. US Department of Defense, 2005.
[2] Predictive Analytics: Business Intelligence’s Next Step, Rick Whiting, ChannelWeb, 12:02 AM EDT Mon. May. 29, 2006
[3] “Gartner Reveals Five Business Intelligence Predictions for 2009 and Beyond”,