The Year Ahead in BI: Operational Business Intelligence, Open-Source Tools and More

As the amount of data businesses create increases daily, so does the need to use that information faster, for better decisions.

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No longer does business intelligence belong to rarefied analysts closed off in a room. Best-in-class organizations use today’s data to make today’s decisions and give their frontline employees the tools to do that.

2007 was the year of BI vendor megamergers. So what’s next? What will 2008 mean to business intelligence? Here are five predictions for the year ahead—and one wild card to watch.

1. IT-business teamwork will be crucial.

The business intelligence landscape is changing rapidly—more and different types of data, new tools, frenetic M&A activity—and in this rapidly evolving world, communication between IT and the business side is key, says Colin White of BI Research.

Defining the core values that you want to use to measure business performance, your key performance indicators (KPI), will remain paramount. These values are not about the technology, they are about what’s core to your business.

IT’s understanding of business needs and communication around technology will become even more important as some types of BI tools become easier for non-IT folks to implement, and as the types of data used in BI change.

Last word: In order for BI to help you gain competitive advantage, IT needs to deeply understand the business case for BI—what performance indicators it should measure and how, how employees actually work, how BI tools will fit into those patterns and so on.

2. Operational business intelligence will lead the way.

For many companies, business intelligence has been successful in its traditional strategic and tactical use, says BI Research’s Colin White. Studying historic data can yield valuable insights on what approaches are working and which need to be changed. But looking at what happened two months ago does nothing to help you save a customer you’ve already lost, nor does it help you recognize a customer’s receptivity to buying more products at checkout time. So the drive to extend actionable business intelligence to a broader audience—frontline employees and even customers and partners—will continue in 2008, putting the spotlight on operational business tools.

Operational BI can automate operational data collection and integration; it can also report and alert creation and certain decisions or actions. For example, operational BI tools can recognize customer inactivity and automatically generate an alert to be sent to an account manager.

Last word: Operational BI is the trend for 2008 for the simple and crucial reason that it brings relevant information to employees as it is needed, allowing them to respond to problems or opportunities.

3. Open source and SaaS tools will become more attractive.

Last year’s wave of BI vendor consolidations has left room for smaller vendors to innovate. Customers looking for less expensive, easier to manage BI solutions may turn to open-source BI and software-as-a-service tools. “Companies are focused on BI’s total cost of ownership, and they want to know how they can acquire BI capabilities without the high prices,” says Aberdeen Group’s David Hatch.

He and other analysts think that more companies will turn to open-source BI, and in turn, vendors will be likely to respond by increasing the number of offerings. (Currently JasperSoft and Pentaho are the main open-source BI vendors.) In addition, BI offered via software as a service can help IT respond quickly to business needs and requires less IT manpower than in-house BI, though costs may add up over time.

Last word: Look for pockets of business needs that may be served by newer, more targeted BI tools. Keep in mind that while many experts think open-source BI will become a greater force, some consider it not adequately tested as a complete business solution. With software-as-a-service tools, carefully evaluate and monitor the costs that may accumulate long-term.

4. Structured and unstructured data will be needed for BI.

Face it: Your company doesn’t have to deal with just more data, but more data in many more places. Consider these types of information: Comment fields, customer comments left on voice mail, competitors’ prices listed on the Internet, blogs that mention your product, wikis that contain instructions, and customer complaint e-mails are all potentially valuable sources. This data can help your company price, operate, stock, sell and serve customers more effectively. A car company that conducts automated searches to scan blogs for discussion of problems can use the information to spot patterns that may point to manufacturing flaws.

White says the idea of folding such information into BI may pose a problem for those whose idea of business intelligence is the “gold standard” of data, similar to those people who see Wikipedia as inferior to traditional encyclopedias. White recommends viewing these new sources as a valuable way to better inform business decisions. Companies will still need to make choices about how they use different kinds of information, of course.

Last word: Companies that can find and capitalize on information such as comments by customers and competitors will find themselves ahead of the pack.

5. BI competency centers will increase in importance.

As the amount and variety of data grow, business will need a BI competency center—a group of IT and business leaders whose buy-in and evangelizing will make or break the success of a BI implementation. This group creates the BI vision, manages the spending and tools, sets standards for using those tools and helps define business intelligence success.

This group should also keep in mind the four pillars of a successful BI implementation, according to consultancy Gartner: user training, data stewardship, a focus on metadata and a focus on possible next steps to be taken.

Last word: Successful BI requires structure and process support. New tools and new types of information will not change those requirements.

The Wild Card: Effects of BI Vendor Consolidation

For the BI marketplace, 2007 was all about mergers and acquisitions. What will that mean for 2008? The largest pure-play vendors have already been snatched up by the giants. Experts are divided on just how much M&A activity will continue and what the consolidation will mean for customers. Many analysts say that M&A activity in the business intelligence space will be mostly about megavendors rounding out their purchases to create more complete product lines. Still, it won’t be easy for megavendors to integrate all the various solutions they’ve acquired. And you won’t be stuck with only megavendors to choose from: Smaller players will continue to innovate, analysts say.

Last word: The results from the IBM-Cognos, SAP-Business Objects, Oracle-Hyperion and other deals have yet to fully play out. While vendor alliances matter, keep your eyes on the prize—your core business goals and whose solutions will best help you reach them.