Business intelligence software is evolving into its older sibling, business performance management, a combination of planning, budgeting, reporting and benchmarking tools, according to the father of BI, Howard Dresner. At the same time, the main obstacle to BI or BPM adoption remains cultural rather than technological, he said.
Dresner coined the term "business intelligence" in 1989 while an analyst at research company Gartner. At that time, the software industry was mired in acronyms like DSS (decision support system) and EIS (executive information system). Dresner was looking for a phrase that would elevate the debate around those terms and better define the access to and analysis of quantitative information by a wide variety of users.
He left Gartner in 2005 to join Hyperion as its chief strategy officer. Currently, pure-play BI software providers including Hyperion are seeing application vendors like Microsoft Corp. and Oracle Corp. try to muscle in on their turf, putting them under added pressure to offer more capabilities.
Dresner recently chatted with China Martens about the BI industry over the past 17 years. An edited transcript of that conversation follows.
Does today's definition of BI differ from what you originally intended?
It's probably been redefined a little. It's all about ways to deliver information to end users without needing them to be experts in operational research. Early on, some companies tried to make the term even broader than quantitative information to include unstructured content. But it became clear that it was a simple problem which needed to be solved with structured content. That provides far more value to business than trying to boil the entire ocean. BI is in the middle, structured information at one end and the user at the other end.
A lot of things we talked about in 1989 were completely irrelevant. It started broadening and deepening. Back in 1989 only a select development group understood what it was about and were trying it. I felt like the lone voice in the wilderness for years. Some people said BI was a oxymoron.
Have the general improvements in computer technology made BI more readily adoptable?
Possibly, possibly not. It's more how do you work out the value you're really going to get out of it. You do find a lot of BI was shelfware or partial shelfware meaning it already got installed but people didn't use it. We'd just give someone a query tool and a data warehouse and say a prayer. It probably wasn't enough. We'd give them query tools and warehouses and somehow life would be better.
The next big thing is how to give people insight. If BI delivers a key virtue to you, wow, you have something to anchor the quality activity with. Say the cost of a product line spiked, you know that nugget of insight. Then you need to figure out why it happened -- is it an error, a trend? Instead of the approach: here's a query tool, hope you find something impactful. We're figuring out how to get actionable information into everyone's hands.
Business performance management is built on BI, but it goes beyond that, it's also thinking about operational and planning capabilities. You need to develop plans -- how do you know whether information is good or bad, whose gut feeling do you go with? BPM is the next big thing. It's sort of what BI is growing up to become. Data quality matters, it's tied to operational planning. If you do it right, you have to really believe in the numbers.
What's held up BI adoption?
It's typically not technology that holds adoption back, it's business culture and organization. Technically we've come a long way, technology has helped a lot. Information objects are getting so much more sophisticated and intelligent. If we could fast forward in a time machine and grab the software of five years' time, it still wouldn't increase the rate of adoption. You've got to go through that cultural knothole of "everybody knows how I'm doing." If you have perfect transparency with BI, it's not an issue, partial transparency is the issue. It's "I'll show you mine, but I can't see all of yours."
Second-tier management is concerned about losing their secured information and the ability to position information in the best possible light. Once BI is in place, people can get concerned and reveal hidden agendas. There are no more secrets. The right people have access to what they need. There are three groups -- early adopters who just dive in, those who suffer from inertia and a small group trying to work against goals of the organization selfishly.
How do industries stack up in terms of BI adoption? What's the geographic distribution of BI users?
Finance is all over it, they've got no choice. For years, consumer packaged goods were one of the early innovators. Probably 35 percent of people using BI are in finance, then consumer packaged goods, retail, manufacturing and government and then it trails off. Everyone understands it's important. There's some health-care and education, but they both have limited [IT] budgets.
The geographies where BI is extremely well established and quite mature are North America, Western Europe and Australia. The emerging markets are in Asia-Pacific, including Japan, and South America. China is growing, but they don't have the inclination to spend money on BI, they want to get it for cheap, that will change.
How will BI develop?
Customers want to buy a portfolio of functionality, they want it to be fluid. Service-oriented architecture plays into it and Web services. For instance, before a company grants someone financing credit, you'd want to access their propensity to pay. It's about managing a process and integration in context of the process. We support the management of process with technology. Before, we did the analysis in isolation.
BI will persist. We're seeing an inflection point in the market and hearing more about BPM and BPM enabled by BI.