Compliance and governance issues have become the main market drivers for business intelligence tools, says Bill Hoggarth, MD f SAS Institute.

"These issues are pushing the spend away from automating operational processes towards extracting core data stored across dozens of different systems, combining it and analysing it to produce the required compliance reports."

He says recent legislation to prevent money-laundering requires financial institutions to achieve a single view of a customer's transactions across all his accounts to identify and report suspicious activity.

"But once companies have been forced to gather all the data together from different resources, the same investment can also be used to analyse internal organisational behaviour and predict customer and supplier behaviour."

Business intelligence tools will also allow a company to track employee behaviour and sick leave trends and abuse, and predict when employees are likely to resign.

An analysis of plant activity and maintenance patterns would alert management as to which equipment is likely to break down and when.

Companies will be able to analyse the real cost of servicing individual customers, as opposed to the traditional transactional accounting approach, says Hoggarth.

They will be able to analyse raw material charges down to item level and look at the cost of presales efforts and the training of the people that fulfil the orders. This type of activity-based costing model will enable a company to identify its most, and least, profitable customers.

"If the average gross margin on goods said is 30% and it takes most customers a week to make purchasing decisions, but it took one customer two years, it will eat into the overall margin."

Business intelligence tools are being used to detect fraudulent activity, for example in social benefits, where billions of rands are claimed in pensions and allowances fraudulently.

"They will help to identify potentially fraudulent claims that should be investigated, and can save the country hundreds of millions of rands."

These tools are being used to reduce credit-card fraud by identifying user activity patterns and highlighting annual behaviour.

Insurance companies use business intelligence to predict which life policies are most likely to lapse, says Hoggarth.

He says a local insurer reduced lapse rates from more than 30% to the low teens by using sophisticated business intelligence analysis techniques.