THE value of business intelligence software does not lie in its ability to analyse the past, but in its ability to predict the future.

A company can use sophisticated software to slice and dice vast amounts of data in numerous ways - but the analysis is useless if executives lack the guts to act on the results that emerge, says Bill Hoggarth, MD of the SAS Institute in SA.

The idea that timely, accurate and pertinent information must be delivered to the right people at the right time to support decision-making has been around for centuries. What is driving the use of business intelligence software now is a slew of local and international regulations tightening up corporate governance.

Those regulations underpin sensible business practices, says Hoggarth, but also present a dilemma: should a company comply at the minimum cost, or use the opportunity to deliver value to other areas of the business?

For example, Hoggarth cites the need for banks to obtain more information about customers to comply with regulations to fight money laundering. That data can be passed to marketing departments to give them a more up-to-date profile of each client. Business intelligence software can analyse the data to identify areas of opportunity and concern.

"The value isn't the ability to tell you what happened yesterday, but the ability to predict what's likely to happen tomorrow, or in the next marketing campaign, or which transaction is most likely to be fraudulent."

Today's software can deliver that knowledge in time for managers to exploit a predicted event or prevent an unwanted event.

If companies find business intelligence software is failing them, the problem is probably human, says business strategist and author Gary Cokins.

"The technology is proven, it's the mind-set that's the problem. A fool with a tool is still a fool."

One profitable use of business intelligence is to extend the scope of activity-based costing, where the cost of a product or process is analysed by its components of labour, overheads and indirect expenses. By analysing which services or products are the most profitable and which are least profitable, managers can use the results to justify dropping certain products or making more effort to push the sales of others.

The forecasting abilities can also show a company which customers to pursue with its marketing resources, by analysing the cost of serving each customer.

"The ideal customer keeps buying from you, but you hardly know they're there," Cokins says. The least profitable are those who niggle about every little thing. "Their behaviour can be measured using activity-based costing so you can understand how they are eroding your margins."

If the cost of serving them is not justified by the profit margins on the products they buy, a company can try to sell them more, introduce service fees or "fire the customer", he says. "Whatever you want to do, you have to have the data to support that."