The Next Wave of Business Intelligence

By Dan Vesset

What’s on the horizon for business intelligence? More users at every level of the organization, a strong focus on decision-centric analysis and the capabilities to meet the information needs of many different types of users.

According to IDC research, the BI market moves in 15-year cycles. The first of these periods, from 1975 to 1990, was characterized by production reporting on mainframes and some statistical software. The second 15-year period, from 1990 to 2005, marked the “modern era” of BI and featured client/server-based BI tools that were easier to use. Eventually, query, reporting and OLAP technology migrated from client/server technology to Web-based architecture with the development of broad suites of BI platforms.

In hindsight, 2005 will be viewed as another turning point in the BI market – the beginning of a new wave of investment in BI by organizations across all industries. If the 15-year trend holds, this current market cycle should last until 2020. During this period, organizations will focus more on expanding the reach of BI to users inside and outside the organization, as well as moving BI from its traditional focus on reporting to decision-centric functionality.

Historical and current market trends suggest two key developments in the BI market over the next 15 years.

Bringing BI to the masses
The traditional BI market has focused primarily on the analysts or power users, who represent only a small subset of any typical organization. BI tools have complex report development, OLAP and advanced analytics solutions – not suited for the majority of decision makers.

However, the goal of any enterprisewide BI strategy should be to provide the right data to the right people at the right time to support decision-making processes at all levels of an organization. Surveys conducted by IDC show that only 15 percent of managers are confident their organizations are currently achieving this goal.

To address this challenge, BI solutions need to become more broadly accessible to a wide range of users, through more data visualization, better interactivity, the addition of content access and text mining functionality exposed through a familiar search interface, support for collaboration, and workflow or guided analytics. The general thrust in this BI solution approach is to morph the BI software interface into something resembling an online media site, such as My Yahoo!

Another parallel approach is to infuse more BI into operational applications – a concept IDC defines as intelligent process automation (IPA). IPA is the convergence of BI tools and business process automation (BPA) deployment software. IPA software automates repeatable, operational decisions within business process sets in response to events where analytics drive the workflow. Today, no single, prepackaged IPA software solution is available. Instead, organizations are beginning to combine BI, data warehousing, BPA and data integration components into IPA solutions. The goal of IPA is to create a seamless link between analytic and operational functionality of the software by matching and automating the user’s natural workflow.

Decision-centric BI
The second key development in the BI market is the move from information delivery (i.e., reporting) to collaborative, decision-centric BI (DCBI). Most solutions in the BI market focus simply on reporting and OLAP-based analysis of historical data. Answering questions about the past is very important, but that falls short of providing true decision support, which should also include real-time business activity monitoring and predictive analytics.

It’s simply not enough to receive a report or an alert that identifies a noteworthy event. How do you know what action to take? Currently, a decision maker typically acts on a gut feeling, rather than relying on fact-based analytics.

How does the BI solution support the actual decision-making process that involves hypothesizing and modeling – a process where you identify a problem and pursue alternative solutions? Models can help predict the likely result of various solutions to a problem, and they can even explore or simulate the effects of variable factors on business results. This is the essence of the “what if” analysis that predictive analytics enable. Opportunities exist to provide additional automated decision support. 

A key factor in enabling DCBI is to supplement traditional reporting and OLAP technologies with the ability to process large amounts of data, find patterns and insights, and deal with uncertainty by showing the likelihood of a desired outcome when a particular alternative is selected. 

Laying the foundation for a successful long-term BI strategy
Bringing BI to the masses and focusing on decision-centric BI are complementary trends, and you must take that into account to address the needs of different user groups within and outside your organization. For example, executives might be looking for scorecard applications, while managers might need exception-based alerts sent to their mobile devices and the ability to drill into the details of their personalized dashboards. Analysts would require more sophisticated core and predictive analytics, while the front-line staff might be looking for a search-line interface or application-embedded guided analytics.

A robust foundation should be able to support the multiple analytic workloads and data integration, analysis and delivery needs of all these constituents. The key factor in all successful BI deployments is the combination of data integration, data quality, master data management and data warehousing to establish a scalable and flexible platform on which you can deploy various end-user tools and applications over time. 

Competitive landscape of business analytics technology suppliers
In IDC’s view of the market, BI represents a distinct set of software tools for query, reporting, OLAP, data mining and statistics. Therefore, BI is a segment within the broader business analytics market that comprises tools (BI and data warehousing) and applications (customer relationship management, supply chain management, financial management and workforce analytics) for tracking, analyzing, modeling and delivering data that support decision making and reporting processes.

In 2005, the worldwide business analytics market generated $16.5 billion in software revenue. IDC expects this market to grow at a 10 percent compound annual growth rate over the next five years.

Given the breadth of the market, the competitive landscape includes two types of software suppliers:

• A few large vendors that provide broad solutions, including data integration, data quality, query and reporting, advanced analytics tools, as well as various prepackaged analytic applications.
• A sizable number of niche vendors that focus on one or just a few related segments of the market.

This balance between large and small vendors is unlikely to be upset during the new wave of BI. Each group brings to the market combinations of attractive features, functions and services that provide client organizations with the necessary tools to either launch or continue their ongoing performance management efforts.

Bio: Dan Vesset is a Research Director for IDC’s Analytics and Data Warehousing Software service: www.idc.com.