“Somewhere along the way,” Bertrand Russell once observed, “wisdom has given way to knowledge, knowledge has given way to information, and information has given way to words.” Chitra Padmanabhan narrates how Business Intelligence (BI) tools are helping organisations to reverse the process

When a premium quality product does not take off in the market, how does a company single out the cause of failure within the marketing mix? How does the company then take quick and corrective steps to salvage costs and demonstrate RoI? Goodlass Nerolac, the No 2 player in the organised Indian paints market, faced a similar problem when it launched All Scapes, which was targeted at the decorative paint segment. The product wasn’t selling as well as expected and the company could not figure out the problem till it discovered Business Intelligence (BI). With a well-devised strategy in place, Goodlass Nerolac embarked upon a BI venture with SAS. After analysing the sales of the product, the company identified the problem area and strengthened the dealer network by stocking paint at places recording greater sales. The result? The volume of sales that the company had earlier achieved in one year was attained in only six months.

This is not one isolated success story; there are many such examples scattered across different verticals in India. BI tools are increasingly being leveraged across a wide spectrum of industries, especially those where customers play an important role in the future strategic initiatives of a company.

Low awareness of value benefits among companies is acting as a hindrance for quick adoption of BI tools, says Gourish Hosangady

What is Business Intelligence?
BI is an umbrella term for a set of tools and applications that allow corporate decision-makers to gather, organise, distribute and act on critical business information. BI applications include activities of online analytical processing (OLAP), decision support systems (DSS), data warehousing and data mining.

Evolution of BI
Around five to six years ago, due to increasing automation, companies accumulated huge amounts of data. It was felt that in order to derive benefits from the data it had to be consolidated and formatted according to specific needs. This realisation gave rise to applications that enabled organisations to convert data into usable formats.

Tracing the roots of the BI market, it is seen that with each major IT development new BI applications have come online and existing products have been reworked to offer new functionality. Initially, BI tool sets could be broken down into two distinct categories: executive information systems (EIS) and DSS. They typically ran on mainframes, and were considered the exclusive property of top-level managers.

“The basic difference between EIS and DSS tools was that unlike DSS, the EIS tools could be used by non-technical business managers to drill down and analyse highly summarised data to support decision making,” says Daniel Ingitraj, marketing manager, Microsoft India. But with the passage of time, taking strategic decisions no longer remained the prerogative of the top management, and business units across hierarchies became responsible for their own bottom-lines. This marked the emergence of first generation data warehousing tools and BI tools, which offered both analytical and reporting functionality, and percolated across layers of the organisation. The second and third generation BI tools known as relational online analytical processing (ROLAP) provided high-class analytical capabilities, enterprise-wide access and further applications catering to the specific needs of a business unit. Current BI tools represent the fourth generation, which offers companies a centralised enterprise business insight into the performance of the entire organisation. According to Frost & Sullivan, the total BI application market in India is currently estimated at $10.7 million. By 2005, this is expected to touch $30.4 million, growing at a CAGR of 33.9 percent. Today the BI market has reached a significant level of maturity, with organisations realising the value of taking timely decisions.

Imperative need
In most industries today, good information systems are an absolute must for a place in the rat-race. Though the use of enterprise applications like ERP, SCM and CRM has helped companies procure timely information, to derive business value out of them requires tremendous amount of research on the part of the management. The need to deploy advanced tools to give corporates an edge over others in their field is likely to spruce up the BI market.

Though it is too early to comment on the future of BI tools, current BI tools are being seen as a complement rather than a replacement. Sanjay Deshmukh, Business Objects’ business development director for South Asia, feels that after the strategic manager procures data from various sources, the BI tools will enable him to make quick decisions as per the requirement of the organisation. Further, the increased level of automation across business processes has created a need for continuously tracking these processes; BI applications, which integrate and monitor various business processes, have thus made life easier for the management.

“Since the basic function of BI tools is to convert vital data of the organisation into a knowledge platform based on which future decisions will be taken, it is important for the company to configure the data in a usable format,” says Gaurav Dua, senior research analyst, IT practices, Frost & Sullivan. Industry trends have shown that organisations faced with the problem of unmanageable databases are more likely to adopt BI tools.

Key drivers
The customer-centric model of business is seen as the key driver for the BI market. Many companies are trading in products keeping in mind the needs of the customer. Further, in order to find out the acceptance level for their products, companies need to do a detailed analysis of customer patterns. “Market participants that align products and solutions to match customer needs are likely to place themselves in an advantageous position through BI tools as against the competition. This in turn is likely to reflect in their market share,” says Gourish Hosangady, CEO and managing director, SAS India. It has therefore become more imperative for vendors to prioritise customer lists, catering to the most important customers while giving prompt service to others when required. The thrust on tracking customer needs in a real-time environment and bringing enhanced versions of products and services to the market at a rapid pace is likely to drive the BI solutions market.

BI tools are also proving to be useful in dealing with suppliers. For instance, if a vendor can analyse supplier performance and price changes, he is in a better position to negotiate. The same applies to customers; a detailed analysis of the customer’s spending pattern can help the company identify the ideal package deal for that particular customer.

Early adopters
The banking, finance and telecom sectors are seen as early adopters of BI solutions. After the entry of foreign banks, the banking space has become extremely competitive. “BI tools help individual banks to know the entire history of the customer, which in turn enables the bank to offer services suited to him,” says Amrish Rau, India business manager, Teradata Solutions Group, NCR. With the onset of retail banking and de-regulation of the cellular and basic telephony market, it is important for companies to retain and acquire customers to survive.

It is important to note that the BI market in India is still at a nascent stage. Industry analysts expect the market to register high growth rates during 2003-04. The demand is likely to be fuelled by large and medium-sized enterprises and MNCs. One positive trend is that many organisations are going in for data warehousing, data mining, OLAP on transactional data and data mart suites to address the needs of specific business units or departments.

According to Amrish Rau, BI tools enable individual banks to offer services suited to each customer

Stumbling blocks
Though the Indian BI market is headed upwards, in order to fully leverage the benefits of BI tools Indian industry still needs to undergo a significant transformation. The typical Indian scenario consists of companies at various levels of automation—companies with full-fledged ERP in place, and others that are just considering the idea of integrating their businesses. Many companies have legacy systems which do not have the amount of data required for BI implementations. BI thrives on data, and higher analytical tools can only be run if information repositories hold a substantial amount of customer and transaction information. Enterprises all over the world now have an increased responsibility to provide accurate financial numbers in their results. “However, users in many organisations that have adopted BI complain that they don’t “trust” their information, in other words they don’t know whether it was calculated according to established norms,” says Kiran Narsu, vice president of business development for Reveleus at i-flex. This area is likely to receive increased visibility because the accuracy of the analysis is directly dependent on the accuracy of the data that is fed into the system.

Lack of real-time, authenticated and exhaustive information poses a strong challenge to BI vendors. Moreover, companies today are not in a position to compromise on the investments made in their legacy systems. Says Hosangady of SAS, “Companies are yet to reach a higher maturity level in terms of understanding the real potential of BI tools.” Similarly, companies do not realise that the cost of deploying such applications can be offset against the substantial cost savings and increased revenue that are gained using intelligence derived from the applications.

Indian companies are still found to be in the adoption phase of enterprise applications such as SCM and CRM. BI applications are often regarded as high-end and a more mature application. Hence most analysts feel that BI is likely to gain quick acceptance once primary applications such as CRM or SCM have gained acceptance.

Change management
While BI tools lift a company to a whole new level of decision-making, they require a marked change in the organisation’s culture. A successful BI deployment requires a change in the way different processes are conducted. For instance, in analysing customer satisfaction levels and after-sales movements, the point of interaction with customers and suppliers has to be revisited and incorporated into the database for future analysis.

Adds Gaurav Dua, “Managing change and creating greater buy-in from a major section of an organisation’s employees is one of the most important factors for successful implementation of BI tools.” However, setting new practices for each business process and ensuring transparency of all transactions finds heavy resistance in the present Indian business culture. Additionally, since the BI market is still at a nascent stage, lack of positive testimonials has also led to lingering doubts. Companies often invest large sums in data warehouses, enterprise systems or other forms of databases. “Achieving a return on investment depends on how users take to the system. If they find that the BI tool is adapted to their needs then the RoI will definitely follow,” says Vivek Rawat, country sales manager, data management solutions, software group, IBM India. That’s why it’s crucial for business users to drive the initial design implementation and the training of the BI system.

Conclusion
Though the basic functionality of BI tools has existed for quite a long time now, BI as a concept is just picking up in the market. Over a period of time, as BI vendors showcase more success stories, the market is bound to respond in a positive way. And as more and more companies seek to find intelligence in their data and take crucial decisions based on it, BI should start looking like an increasingly wise choice.