Casting for ROICasting for ROI

We swapped rod, bait, and tackle: no luck. Our fishing guide paddled the boat hard against currents, down rapids, and toward quiet eddies that brought us within casting distance of the shadows beneath overhanging trees. The atmosphere of summer in southern Oregon came into bloom: barbeque haze and heat along the Rogue River banks, beer-bellied locals balancing fishing poles, 10 year-olds chasing and splashing, boom boxes booming, dogs barking after Frisbees. All manner of watercraft filled with stripped-down passengers floated by. Word was that somewhere below the surface lived lots of fish. We were trying to catch them.

Jill Dyche, my fishing partner, whipped her pole outward and sent the bundle of bait, hook, and tackle on a line toward a promisingly dark patch of water. I copied, mustering talent and concentration to avoid snagging Jill and our guide with my fishhook in the process. Such small success made me glad. I sensed the same from Jill and our guide.

I wish I could say that we caught one "this big." In all honesty, it got away. We left the river with memories of a few spirited fights and a number of tugs, but no salmon, trout, old boots, or anything. Well, we hooked one or two that we threw back. But my record is clean; I've never caught a fish in my life. I hope Jill can forgive my karma; fish just see right through me — or my bait, that is. Fortunately, colleagues fishing in other boats on this relaxing July afternoon outing from our conference did catch some big ones. Cooked and served by the Weasku Inn's fine chefs, we enjoyed a fresh catch — and some spirited exchanges about the future of business intelligence (BI).

The year is almost in the books. All the fiery debates about who's on top in politics and baseball — no one remembers them now. It's all over. Discussions hither and yon about strategic business applications like BI have stuck with me, however. Which is a good thing: I meant to write my recap of Humphrey Strategic Communications' 2004 Pacific Northwest BI Summit (held over the weekend of July 31) some time ago, but other matters intervened. Of course, it is now nearly December; the Rogue and its environs are facing brisk mornings, snowy days, and frosty nights. However, the afterglow still burns bright from our panel discussions about the present and future of BI. Plus, as temperatures fall, it's kind of nice to think about summer anyway.

Consolidation Rules

If I had to choose one dominant theme in BI, "consolidation" wouldn't be a bad choice. The difference was that this year, the theme was prevalent in the user community. Sure, there were some vendor acquisitions: IBM acquired Alphablox, and several of the major tool players made smaller buys to fill out their product suites for financial performance management and data and application integration. However, 2004 was when concepts such as "single view of the customer" and better visibility, especially for regulatory compliance, dominated. For many organizations, this meant removing some software licenses, bringing data resources into centralized warehouses, and defining corporate BI standards.

Participants in the BI Summit's panel discussions, which I was honored to chair, put consolidation high the list of key trends. The panelists this year were Jill Dyche, Partner and Cofounder, Baseline Consulting Group; Claudia Imhoff, president and founder of Intelligent Solutions; William McKnight, president and founder of McKnight Associates; and Colin White, president and founder of BI Research. We also had great commentary from the Summit attendees, many of whom are industry veterans, which informed much of our discussions.

"Companies want to reduce redundancy," said Claudia Imhoff. "One thing that Kim [Stanick, an attendee from Data Allegro] and I have talked about over the years is the mitigation of chaos. Companies have multiple, redundant data marts and analytical systems. Now, they are taking a hard look at paring things down. The BI environment has become pretty complicated, with databases and tools all over the place that somebody has to manage. We're talking about a lot of moving parts." Looking dramatically around the room, Claudia concluded "I have yet to see 'the brain' that sits on top of this environment that can say, 'we can save a lot of money if we just drop that database,' or 'do this to take an inefficient system and make it automatically efficient.' So, the answer right now is to reduce the sheer amount of complexity and chaos."

"It's about re-architecting BI and data warehouse (DW) environments that are very inefficient," said William McKnight. "Companies are looking whether they need real-time DW, real-time operational data stores, business activity monitoring, and exactly what needs to change in the current extract, transform, and load (ETL) cycle to accommodate 'right' time. Strategic decisions won't be made on intra-day information, but companies do want to monitor product movement, detect fraud, and enable call centers to make the right offer at the right time."

Process Thinking

We discussed how this sort of effort could be complicated by the expansion of BI into more operational contexts, a trend that is diversifying the user base, as well as plausible definitions of BI's credo of "the right information, at the right time, in the right hands." Colin White offered many insightful comments about BI's increasing process orientation. "The dividing line between what is operational and what is BI is getting fuzzy," Colin said. "More and more companies want to use BI as part of their day-to-day operations. I'm finding that the group in charge of business transactions is also in charge of putting in the BI/analytics stuff from the transaction application vendor — that is, a different group from the DW group. There's a political battle going on in terms of how we integrate the two camps."

Our panel considered how some companies are choosing not to mess with these BI-transaction application packages, viewing them essentially as data marts that may be tapped for cross-business or cross-functional analytics — perhaps through new enterprise information integration (EII) software — and that this may be the ultimate role of the enterprise DW (EDW). "However, while each business or function can justify its own project, nobody wants to pay for cross systems," Colin said. "The only way to get that is to go up to the CEO level. This is where performance management comes in. It's getting much easier to say, 'okay, let's create key performance indicators across business areas and get that project funded without interfering with business-area budgets. If you can start there with the EDW, you may be able to convince the CEO to fund more cross-business analytics."

ROI Dynamics

The real issue behind consolidation and even the extension of BI to a wider user base is return on investment (ROI). IT concerns often remain focused on total cost of ownership; one attendee offered an anecdote about a CIO who "didn't care" about compliance because it was the CFO's problem. His focus was on taking cost out of IT. However, as expensive BI projects and infrastructure gain a higher strategic profile, business executives are demanding a better ROI assessment. Major vendors, including Business Objects, Cognos, Hyperion, and Information Builders have been talking ROI during 2004. We'll hear more in 2005, including how to evaluate ROI against maturity scales that describe technology adoption rates and what ROI the organization should expect at each stage.

"ROI is revenue generated and money saved," said Jill Dyche. "What I'm seeing is the human cost savings BI and DW bring by eradicating the data location, gathering, cleansing, and dispersal cost. You can quantify the human labor savings; you don't have just the soft ROI of employee retention and happier customers." Jill said this was important because "as the VP of marketing, for example, moves into predictive modeling, he or she asks, "'what's it going to buy us?' There has to be a financial story before acquiring the data. This is increasingly a business conversation. Is it worth it? If not, then the ROI isn't there."

Thus, "business" will increasingly be the initiating half of the BI acronym. I'll have to leave it there for now. Thanks to Scott Humphrey for putting on a great event!

David Stodder is editorial director and editor-in-chief of Intelligent Enterprise.