IT Embraces Business at the Information Crossroads of Performance Management

More than any other usage of business intelligence (BI), performance management as a business methodology demands that IT and the business work more closely together to define the business processes that must be automated, establish the business rules to be used in measuring performance, and associate the owners of the metrics with corporate data assets to determine accountability. This approach is radically different from the traditional departmental approach to buying an OLAP engine or analytic reporting tool for use by a small group of power-users. The future of business intelligence, and the essence of performance management, is to align corporate data assets with business processes at all levels of the corporate hierarchy, for use by a large community of business and casual users.

IT is ideally positioned to facilitate the technology part of this strategic approach to BI, but needs direct input from the business to clearly define each process, and to gain executive sponsorship. By asserting its strengths in design and methodology, IT is assuming control over BI initiatives. This greater level of involvement is having an immediate impact on requirements definitions, project specifications, budgeting, readiness assessment and ongoing maintenance and support. Challenges that IT must address in making BI strategic include:

• Eliminating duplicate (and oftentimes contradictory) departmentally managed business rules in favor of a centralized mechanism for creating, maintaining and applying business rules
• Re-using business rules and metadata built into separate, non-integrated BI solutions, as well as operational application (ERP, finance, CRM) metadata
• Profiling all analytic end-users (power, business, casual, and extended ecterprise users) for solution mapping and deployment
• Managing the operational demands (hardware, software, security) required to support a larger, more diverse analytic end-user community

Most of these also require deep involvement from the business, supporting the idea of an integrated IT/Business team. For large user organizations, a centralized approach to defining business processes that can be automated (and the necessary rules that govern those processes) will allow IT to assist the business in defining and measuring corporate performance.

What Will Drive IT and BI in 2004

There are three main drivers for the significant change in business intelligence upcoming in 2004: the IT budget, the sheer number of end-users, and the fixation on measuring performance.

• IT must contain costs, and eliminating redundant BI solutions or repurposing existing solutions are candidate best practices. Companies are looking to standardize on fewer BI tools used to satisfy their analytic reporting (power users-focused) and enterprise reporting (casual users-focused) needs. With performance management solutions being delivered by a wide array of BI and non-BI vendors, companies are looking for IT to assume responsibility for budgeting, product selection and solution administration.
• Neither the tools nor the data are the emphasis; the users are. BI is no longer the domain of a few power users (5 percent of all end users). BI is becoming the domain of the larger communities of business users (25 percent of all end users) and casual users (30 percent of all end users). The majority of BI users will be consumers of information, rather than producers of analytics.
• Companies continue to demand more out of their CRM, supply chain management (SCM) and ERP systems. The need for an integration mechanism becomes the focal point for the BI solution. The enterprise application solutions offer domain-specific, intercomponent integration with less analytic functionality and usability, while the BI best-of-breed solutions offer an agnostic approach (lighter domain expertise) to inter-component integration with greater analytic functionality and usability.

The impact of these drivers will be felt throughout the enterprise, but most acutely within the IT organization. The IT trends in BI for 2004 include: the delivery mechanism, the strategy involved, and the resource requirements for IT.

• Dashboards take center stage as the mechanism of choice in delivering performance management solutions. The third incarnation of dashboards will yield positive results as user organizations look for a consistent means to monitor – and take action to improve performance. Beware of the rhetoric around dashboards, because there are differences between dashboards and scorecards. There are many products (Business Objects Performance Manager, Cognos Metrics Manager, Micromuse Netcool, etc.) that deliver a mechanism for defining business rules (metrics) and managing the relationship between the rules and the roles within an organization. Understand that dashboards are dynamic (updates, drill through, alerts, tolerances and goals), must recommend actions to be taken and require multiple iterations of refinement.
• Contrary to the trend of the last three years, IT grows in size to support enterprise BI (EBI). With more business processes to automate for performance management along with an increase in the number of analytic end users to support, IT must prepare to increase its support staff for BI. An increase in the total number of analytic end users brings with it an increase in software licensing, server utilization, network traffic, data consumption, security risks and administration. The focus on performance management will require that IT increase its budget for technology and staff by 15 percent to 20 percent during the next 24 months.

The requisite budget increases in staff and technology can be partially (perhaps completely) offset by eliminating redundant OLAP, analytic reporting and enterprise reporting solutions. However attractive this may seem, standardizing on a single BI platform from a single vendor is not feasible today for all of the discrete technologies needed, but this is changing rapidly. However, now is an ideal time for IT to develop a strategic plan to map out the future direction of BI. The ultimate goal of developing this plan is to lower the IT cost for delivering business intelligence to the enterprise while working closely with business to measure overall corporate performance.