Tuesday, November 25, 2008

Baconators, Batteries, and BI

Many organizations have a "Just the Facts, Ma'am" attitude, which misses the point of BI. Having the world's largest data warehouse on display in the Guinness book of records provides far less value than simply making good use of the collected information.

Evan, my teenage son, recently started driving my old Honda. He kept telling me about maintenance issues: the air in the front tire is low, there is a funny noise when starting the car in the morning, the Valvoline sticker says the car is 1000 miles past an oil change. When he brought me these facts, I would just respond with, "Sure, we'll have to do something about that."

The problem is, my son didn't and I didn't. We had the facts; we just never made thoughtful decisions that might have led to proactive tasks. Instead, we were ultimately forced to respond to crises.

Evan called me one evening from the nearby Wendy's, "Hey, I stopped to eat a Baconator and now the car won't start." The battery was dead. A week later another call came to me, "Hey, I was driving and something happened to the tire." It was flat.

Business Intelligence is not about just gathering facts. Even with all the facts, bad things can still happen to you. If you want real value from BI, you have to think about the facts and take the appropriate action.

At our local DAMA event, Bill Inmon spoke about his clients' gigantic data warehouses. Some amassed hundreds of thousands of terabytes -- call records for a telecommunications giant; cash register receipts for a large retailer. Bill estimated the infrastructure cost of managing each terabyte at somewhere between $750,000 and $1 billion USD.

Bill then said something strange: most companies use only a small fraction of what they put into the data warehouse. At first, it sounded like the creator had indicted his invention. Since Bill is unlikely to do that, he was evidently expressing the sad fact that most companies do not effectively use what they are paying so dearly to capture.

You must have the facts, but if you forgo decisions and never act, you may end up with the corporate equivalent of a dead battery and flat tire.

Friday, November 14, 2008

Power of the Stack

This week, I saw the power of the stack. Talking to local business people, I learned their business intelligence (BI) software decisions were influenced by earlier choices of stacks.

By "stack," I mean that a single mega-vendor provides an integrated product group that meets all or most of a customer's technology needs. If you went with the IBM stack, for example, you would have various hardware and operating system choices, the DB2 database, Cognos BI, WebSphere for the web tier components, and so forth. If you wanted the Microsoft stack, you would get the Windows operating system, SQL Server database, BI in the form of Reporting and Analytic Services, Internet Information Services for web, etc.

If your organization built custom applications, you might choose your stack based on the underlying operating system or databases -- IBM, Microsoft, or Oracle. If you implemented a packaged solution, however, you would probably go with that ERP vendor's stack -- SAP or Oracle (more of a heap of applications than a stack: Oracle, Peoplesoft, JDEdwards, Hyperion, Siebel).

Automobile manufacturers have always offered these "mega-vendor" choices. Buy an Accord and Honda selects the components for you. While you can configure some options, you do not worry about the brand of radio, carburetor, cruise control, or security system. Your real decision is to decide upon a specific vendor -- Honda, Toyota, Ford, Chevy, Porsche, and so forth -- and then pick their specific product that best meets your needs -- Accord, Civic, Element, Pilot, etc.

One of my enlightening conversations this week was with a company using the Oracle ERP and database products. When ready to start a new BI initiative, their strategic decision was easy: use whatever BI tools are provided by Oracle. The next day, I met with an organization ready to swap out their BI product. They decided to go with a purely Microsoft platform, which meant their existing "best-of-breed" reporting tool was no longer welcome.

These examples show an advantage to having a standard, single technology stack. When you want a BI product, you no longer research all of the available products, process RFI/RFP documents, watch vendor presentations and demos, do a competitive bake-off, work with the top vendor on a proof-of-concept, and then put together legal agreements. Instead, your incumbent mega-vendor just tells you which BI product you will use.

It also points out that making your initial stack decision is important. Buying the wrong car is a relatively painless mistake; deal with it for a few years and then replace it. Implement the wrong enterprise technology, however, and you might experience pain. In fact, if you picked the stack, you might be what is traded in for something different.

While some companies may still decide to use "best-of-breed" BI products that fall outside of the stack, most will go with mega-vendor choices -- IBM, Microsoft, Oracle, or SAP.

Monday, November 10, 2008

No 'No Wake Zone' in BI

The mega BI vendors are getting bigger while the little guys are struggling. That's the picture painted by recent 2008 earnings reports. IBM, Microsoft, and Oracle all grew in their third-quarter revenue, while MicroStrategy and Actuate suffered declines.

IBM takes the award for top BI growth. Partially due to its acquisition of Cognos, IBM's total software revenue grew 11.8% in Q3 2008 over the same period the previous year, with their Information Management segment expanding 26% to $2.849 billion. Information Management grew faster than any of its IBM peer software products -- WebSphere, Lotus, Tivoli, and Rational.

Microsoft's total quarterly revenue improved to $15.061 billion; a 9.44% increase from Q3 2007 revenue of $13.762 billion. Isolating Microsoft's revenue to just server and business division products, we see their BI-related software grew over 19% ($8.352 billion, up from $7.016 billion).

Likewise, big vendor Oracle announced quarterly earnings of $5.331 billion, up 17.71% from the previous year. Their new license revenues increased 13.8% to $1.237 billion.

Earlier in the year, the $2 billion privately-held SAS claimed a 16.6% increase in analytics software revenue over the previous year.

The wake of these giant ocean-liners may be causing the small BI dinghies to take on water and could threaten to capsize them.

MicroStrategy was hit with declining total revenues, bringing in quarterly revenues of only $33.7 million. The previous year was higher with $34.7 million. MicroStrategy's sales force struggled to sell products to new customers; new license revenue dropped 18% to $24.8 million from the previous year's $30.2 million.

Harder hit was Actuate, the smallest commercial vendor in the BI space. Actuate's quarterly revenue fell by 2.88% to $33.7 million. New license revenues for the quarter plummeted 25.37% to only $10 million.

For years, privately-held Information Builders has struggled to break past $75 million each quarter, with new-name customers probably providing for about 60% of that figure. The big vendors consolidating the BI market are wrecking havoc on that small BI vendor as well.

Actuate, MicroStrategy, and Information Builders are all facing challenges trying to sell their products to new customers. When buying BI software, customers are choosing those mega vendors most likely to stay afloat for the long term.

(All figures are in U.S. dollars)

Wednesday, November 5, 2008

Software Worldviews

After reading articles and listening to experts speak on spreadsheets, it has slowly occurred to me that these individuals have an underlying worldview of software management that shapes their perspectives and subsequently their opinions, much like how people's mental concepts of a transcendent divine power or a total absence of one determines how they see the world.

Take for example, a November 2008 article written by John Myers, the founder of the Blue Buffalo Group, for the B-Eye Network. In his article "Legalizing the Spread(marts) of Business Intelligence," John compares Microsoft Excel users to marijuana smokers (all meant in good humor, I would assume). Despite those in IT who would like to regulate this "soft drug," users continue to covertly utilize spreadsheets for either recreational or medicinal purposes. John's underlying assumptions about the IT department are fairly obvious:
"For many years, inflexible data governance organizations and IT departments have put a stranglehold on the development, distribution and consumption of analytical business intelligence applications – or at least they thought that they did. These analytical applications leaked out of IT’s 'walled garden' in an almost intoxicating fashion. "

The worldview being expressed here is that of the IT group consisting of elite professionals making regulations and putting restrictions on the common folk who live on the outside of the restricted-access temple. While these smart individuals establish IT laws to prohibit activities dangerous to the organization as a whole, the hoodlums on the street ignore the rules and just duck into a dark alley where they can light up and avoid being caught.

At a recent conference, Howard Dresner recommended to the IT folk that they "stop spreadsheet applications" and limit the tool to only appropriate usage. Howard said that BI needs to be owned by the corporation, run by the CFO, and used to create a "performance-based culture." This would imply that Howard's Priestly worldview of software management is similar to that expressed by John Myers. BI is all about important financial decisions, and those are best made at the top of the organizational pyramid.

On the same day, Boris Evelson of Forrester Research said that spreadsheets play an integral role in business intelligence and that end users need to have a private BI workspace for analysis and what-if simulations. Boris tried to comfort his IT audience with, "you fought a good war and lost," as they have been unable to eliminate user applications of Microsoft Excel and Access databases. In a different session, Boris stated his opinion that "IT can't own BI."

Unlike Howard, Boris seems to espouse the Libertarian worldview of software. The company consists of business users who need to have BI tools in their hands to do their jobs. Some of these individuals are Power Users who can handle BI application development tasks just like the best of the IT professionals.

These two differing perspectives may derive from the idea of the complexity of the BI work and products. One camp has decided that BI is too difficult for the general users and needs to be performed for them by a trained group of professionals. The other camp feels that technology should be accessible to the common person and not controlled and regulated (they admit deficiencies in the products' usability that makes achieving this goal difficult).

If you want to discern where somebody really stands on the issue of software management, just ask them how they feel about spreadsheets.

About Me

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Summary:

With over 20 years of industry experience, Doug Lautzenheiser has provided business intelligence services for well-known organizations such as Procter & Gamble, JPMorgan Chase, Omnicare, Wendy’s International, the State of Indiana, and the State of Oklahoma. ComputerWorld recognized one of Doug's projects with honors for innovative use of technology.  Doug is a featured blogger on BI software at Smart Data Collective.

With his broad knowledge of technologies, business processes, and industry best practices, Doug provides client value by performing strategic advisory services; leading tactical BI application development projects; and enabling dramatic reductions in time, cost, and risks through his unique automated BI consolidation application.

Doug has hands-on experience with a variety of enterprise applications. He is degreed summa cum laude in Information Systems from the University of Cincinnati. An experienced trainer and mentor, Doug has provided educational services to organizations such as National Semiconductor, Ford Motor Company, Northwest Airlines, Principal Financial Group, and Target Stores. Doug is the General Manager of Partner Intelligence.

Talk to Doug before manually performing a large BI initiative. Doug will show you how other smart companies saved time and money by following proven methodologies and automating BI processes instead of letting somebody "wing it" with a manual approach.

Specialties:

B2B software vendor leadership. BI implementations, standardization, and consolidation; data warehousing; WebFOCUS; iWay; BI vendors (Cognos, Business Objects/Crystal Reports, Microstrategy, Actuate, Hyperion/Brio, SAS); ERP; and full SDLC.