Gartner analysts warn that, although business intelligence (BI) offers great business opportunities, most enterprises are still failing to use it strategically.
Gartner's BI analysts have identified the most common pitfalls of BI implementations, and advised the industry how they might be avoided.
A Gartner survey of 1,300 CIOs in more than 30 countries around the world has revealed that CIOs plan to increase spending on BI by an average of 6 percent this year. As companies move away from cost-cutting initiatives, CIOs believe strategic use of BI, combined with a focus on improving business processes, will be most significant in delivering IT's contribution to business growth in 2005 through 2008.
"If you ask organizations what they want to use BI for, better decision-making is the top answer," says Frank Buytendijk, research vice-president at Gartner. "But most organizations are not making better decisions now than they did five years ago. The pressure from cost-cutting and compliance has put a greater focus on BI, but businesses are still using it very tactically. Successful organizations realize that having a real vision for BI is the key to business performance and they use information as a resource implemented in their business culture."
Gartner BI analysts highlight seven major flaws inherent in BI, and outline the organization's best practice for avoiding them.
Flaw 1 -- 'If we build it, they will come.'
Gartner's research director, Bill Hostmann, points out that data is fundamental to BI, but how the data warehouse is set up and run is also critical. Data warehouses are often created by the IT organization with little or no business involvement. Consequently, users within the organization often perceive them to be of low value.
"Too many IT departments build a data warehouse based on the assumption that once it is built, users will automatically see the benefit," he says "BI applications require a clear and intimate understanding of the business itself, and it is only by working on business and IT issues in tandem that the real value of BI is realized."
Flaw 2 -- 'Managers need to negotiate the numbers.'
According to Buytendijk, too many people hide behind spreadsheets because they are used to them, and because they know how to manipulate the numbers to satisfy the politics of their organizations. He advises enterprises to use the pressure of compliance to achieve greater things, such as cleaning up the many data silos, creating more ownership around performance data and eliminating many of the thousands of spreadsheets.
Flaw 3 -- 'Data quality problem ... we do not have one.'
Gartner predicts that through 2007, more than 50 percent of data warehouse projects will have limited acceptance, or be an outright failure, as a result of lack of attention to data quality issues. Furthermore, many organizations fail to see that they have an issue with data quality, focusing rather on identifying, extracting and loading data. Hostmann is clear that data quality issues need to be addressed on an ongoing basis and that enterprises need to accept that these are not just IT issues.
"Consistency and accuracy of data remain the responsibility of the business departments operating the systems, not just the IT department. New regulations and corporate governance have increased the demand and attention for data quality. The problem is that most companies continue to take data quality as a given," he comments.
Flaw 4 -- 'Our enterprise applications vendor will deliver the best solution.'
"All too often, enterprises assume that a 'one-stop shop' solution will be both the most cost-effective and best solution for the business," says Gartner research vice-president, Lee Geishecker.
She warns not to assume that major enterprise application providers offering BI solutions and tools will always address all of the information requirements. "Although some enterprise application providers can save you money overall, it is not always the case. Always compare your enterprise application vendor's solution with that of a market-leading speciality vendor," she says.
Flaw 5 -- 'Darwin was right -- BI projects need to evolve.'
Business demands projects to be short and simple, and to have an immediate return. However, Hostmann says that this could easily lead to the wrong scoping of projects. "Just as using the same templates time after time mean plans rarely evolve, building in the same limitations in to a new system is one of the greatest inhibitors to success. BI needs to evolve, but BI projects should not -- they should start and stop and not evolve," he adds.
Flaw 6 -- 'We can outsource the whole thing.'
Gartner predicts that, through 2006, less than 10 percent of enterprises, where outsourcing could be a viable strategy, will be ready or able to outsource their BI applications and operations completely. Gartner says enterprises must define their BI key competencies and capabilities in order to determine what to in- or outsource. "As ever the golden rule of outsourcing applies; avoid the temptation to outsource everything and only outsource things that are not a core competency," Geishecker warns.
Flaw 7 -- "Just give me a dashboard!"
A management dashboard should be seen as the finishing touch. Buytendijk says: "Companies must have a solid and stable BI infrastructure in place first. They should then create a networked approach where these new technologies are able to communicate with other BI technologies inside and outside the organization, as well as with other technologies such as business process management and application integration."
Gartner provides three key recommendations that follow five years of study drawn from thousands of customer interactions and codified in Gartner's BI Framework. These are to: make sure you have senior level business sponsorship for BI, have a unified BI infrastructure and leverage existent wisdom, and evolve your BI initiatives.