There have been many predictions about IT belt-tightening in a down economy. But some business intelligence
observers say companies can't afford to ignore analytics
tools in the midst of a recession that demands cost cutting.
BI tools aim to simplify information discovery and analysis so decision-makers can access, understand, analyze, collaborate and act on information. BI software deals with measuring, managing and improving the performance of everything from individuals, processes, teams and business units.
Worldwide BI platform, analytic applications, and performance-management software revenue reached $8.8 billion last year, a 21.7 percent increase from 2007 revenue of $7.2 billion, according to Gartner. The research firm expects single-digit growth this year and in 2010 despite tighter IT budgets.
"BI capability today is as critical as e-mail and word processing, yet only about 40 percent of companies are using BI," said Franz Aman, vice president of intelligence platform marketing at SAP BusinessObjects. "In the midst of a recession, BI is not just a matter of competitive differentiation. It's a matter of survival."
Repurposing BI in a Down Market
Although vendor consolidation drove much of the BI revenue growth, this sector of the software industry is nonetheless holding up better than almost all other enterprise application sectors, according to Dan Sommer, a senior research analyst at Gartner. That's because companies can leverage BI to drive revenue and cut costs.
Many companies are still struggling with reporting requirements, but best-practices organizations use BI software to identify unprofitable products, customers and employees, and take action accordingly. Leading organizations also use BI metrics to drive strategic goals and increase productivity, and to help knowledge workers identify the right information at the right time, which improves decision-making, Sommer said.
"The need for BI is repurposed, with more focus on identifying cost centers, isolating unprofitable products, and finding risk. So the focus is on the bottom line and cost optimization rather than growing revenues," Sommer said. "Software vendors are fine-tuning their TCO messaging to users much more today, as that is what will get the ear of budget holders."
Sommer said best-practices companies are also using BI to become world-class organizations, rather than just to cut costs, through initiatives such as building predictive models, closing the loop between strategy and execution through strategy maps and scorecards, and building decision support into business processes.
The Shifting BI Focus
Dan Vasset, program vice president for the business analytics division at IDC, agrees that the ways in which corporations are leveraging BI is shifting in the current economy. A couple of years ago, companies employed BI to drive revenue, Vasset said. That means understanding customer behavior to acquire new customers and drive new sales. Today, he noted, the focus is more on cost containment. (continued...)