Pop culture likes to portray computers as magical boxes that spew out answers to any questions posed. Think of HAL in 2001: A Space Odyssey or Mother in Alien. If only it were that simple. In the real world, computers have proven far more adept at capturing and storing information than in putting it to good use. But that may be changing. Business intelligence (BI) software, a category that encompasses a wide range of tools and packaged applications, is designed to help companies ask relevant questions of all that data they've gathered, and act on it.
While BI is not new — current products can trace their lineage back to decision-support applications, executive information systems, and all manner of database reporting and querying tools — it has suddenly become hot. The market, in fact, is growing at 34 percent a year, according to International Data Corp. (IDC), and some leading vendors are achieving 50 percent increases in year-over-year sales. The reason? What else — the Internet, which not only allows companies to gather more information about customers but also allows them to share that information with employees around the world.
Several things differentiate today's BI from yesterday's clunkier tools. For one, it's simply easier to use. "Querying a database took skill," says Gord Watts, director of solutions for market leader Cognos Inc., whereas today nonspecialists can use BI to concoct questions or drill down through data much more easily. And data visualization has been improved, with many products adding charting features, dashboard representations of information, and similar capabilities. Some products will soon go wireless, so field workers will be able to use a variety of devices to get access to the latest business information.
Companies aren't just analyzing customer data, either. The B2B marketplace FreeMarkets Inc., for example, uses BI to "look at buyers across horizontal buying industries, and suppliers across vertical supply categories, so we can understand the volume and types of transactions" taking place, says David R. Silvester, director of business applications.
In addition, vendors are designing their products to function as portals, so customers can surf through data as easily as they visit Web sites. And the products are better at aggregating information from many sources, not just a single database. BizWorks, from InterBiz, for example, uses "dynamic wrappering" to reach into many data repositories and sources of live data. One benefit: Companies that rely on several enterprise resource planning systems don't have to consolidate in order to analyze data.
The very idea of "analyzing" data, in fact, may be changing. While today most "intelligence" is derived from studying what has already happened, BI products are forging into new areas, alerting customers when certain key performance indicators are lagging, for example. Interelate Inc., which offers "customer intelligence" applications in an application service provider model, integrates a client's data with third-party information such as demographic data to arrive at a "propensity score," or likelihood of cross-selling to a given customer. That sort of "actionable" information is, increasingly, the focus of most BI software.
The route that companies take toward greater intelligence can vary. There are a plethora of online analytical processing and data mining tools that enable companies to create their own BI systems, and packaged applications from Cognos, InterBiz, Brio, Interelate, Business Objects, and others provide out-of-the-box intelligence or, at least, the ability to exercise it.