Light at the Bottom of the Data Rat Hole?

BI is coming soon — to your desktop. What exactly is BI, you might ask. No, it’s not the sequel to “AI,” the Spielberg movie featuring Haley Joel Osment. BI is the abbreviation for what’s expected to be one of the fastest-selling software categories this year: business intelligence.

The peanut gallery can quiet down about the term being an oxymoron. That joke’s older than the one about Al Gore inventing the Internet. BI software isn’t new, mind you. It’s been around for some time. Now, it’s hitting the mainstream.

Bernard Liautaud, co-founder of a leading BI software firm, Business Objects SA (founded in 1990), was asked in a Wall Street Journal interview last October what BI software does. He responded, “Business intelligence is a set of software solutions that enable people to access the data in a very easy way and to analyze that data and to share it with others. Data is very complicated, so the first thing is to present the data in a way that is meaningful for business users through the use of business terminology. Once that is done, the users are able to, by themselves, without going through the company’s information-technology department, interact with that data.”

Reading Liautaud’s response reminded me of my ClickZ colleague Melaney Smith’s “Beg. Borrow. Steal. Whine. Cajole. Learn SQL?” She discussed methods marketers employ to overcome the brick walls standing between themselves and the data they need to make business decisions. With BI software, marketers (and everyone else, for that matter) can stop wasting time and money schmoozing the IT folks they depend on to provide the data needed to perform their jobs. Instead, they simply use a BI desktop software application to access the answers to their business questions.

BI and Marketing

A marketer can quickly determine the return on investment (ROI) of an email campaign using BI software to pull together data retrieved from the campaign management tool and commerce server. A merchandise category manager at an electronic retailer can determine the best-selling digital cameras over the past day, week, month, and year to decide which and how many digital cameras she should order for the holiday season. The key to BI is its ability to access all available data and present a user with just the information she needs. By solving both the access problem and the focus issue, BI kills two birds with one stone.

Perhaps no other industry needs BI more than retailers, who have spent gobs of money building data warehouses to store incredible quantities of customer information. According to a recent article in Fortune, Sears, Kmart, and Wal-Mart store 70, 90, and 285 terabytes of data, respectively. Those quantities are staggering.

Within the retail industry, probably no segment needs BI more than electronic retailers. Over a third of online retailers surveyed by Forrester said it’s difficult to understand shoppers’ behavior. Analyst Kate Delhagen was quoted as saying, “There are a lot of data flowing through their companies [electronic retailers], but a lot of it is minutiae. They go crazy trying to do that level of analysis.”

Remember, electronic retailers have to store the same operational and transactional data traditional retailers store, plus information from sources not associated with brick-and mortar: Web logs, interactive marketing campaigns, and shipment tracking information, to name just a few. All that data adds up, leading marketers down what Delhagen calls “data rat holes.” BI could be the answer to the problem.

When can you expect a BI software product to land in your laptop? If the predictions are true, soon. According to the Fortune article referenced above, BI software is expected to be one of the few hot areas in the technology sector this year. The article cites three independent data points, suggesting BI is on the verge of significant growth:

  • 44 percent of companies considered buying BI software in 2003 (Forrester).

  • BI software topped the list of technology spending for 2003 (Merrill Lynch CIO survey).
  • The market for BI software is expected to grow from $4.7 billion this year to $7.5 billion in 2006 (A.G. Edwards).

Even Bill Gates is getting into the act. From a Fortune interview on the future of technology:

I spent this morning in a meeting about what we call business intelligence. Inside a company you’re doing sales analysis, project planning, project budgeting… does software make that stuff as easy as it should be? The answer is not within a million miles. I mean, you sort of forecast based on what your Siebel customer-relationship management software tells you, and you try to look at your SAP enterprise resource planning data, but there’s not really a process that systemically deals with all that. We want to build tools like that into Office.

BI software holds tremendous promise for the future. It’s too early to tell if it will flame out, like so many other software initiatives that over-promised and under-delivered. Early results are promising. Let’s hope they stay that way.

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