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Second proposer:

Nigel Rayner, research vice-president, Gartner [2].

All of us taking part in this debate acknowledge that when it is implemented well, business intelligence technology can and does stimulate better management and innovation. I can point to numerous case studies where it has done so.

But it is equally true that there are many real world examples in the corporate world where BI has failed to fulfil its promise. Unless there are major changes in how vendors and users approach the technology, BI and performance management initiatives in smaller businesses are just as likely to end in tears.

As someone who makes a living out of defining technology concepts and labels, it pains me to admit that the terminology doesn't matter. It's how technology solves business issues that matters. The technology is in fact much more mature and sophisticated than it was say five or ten years ago. A major challenge now is that not enough businesspeople understand what the technology can do.

Somebody whose CFO had just come back from a Beyond Budgeting seminar once asked me about a certain corporate performance management application: "Does it do Beyond Budgeting?" Software can’t "do" Beyond Budgeting, because this is a completely different way of approaching the budgeting process. In this case, the company needed to change its processes first and then implement the software (or at least in a combined program).

BI and performance management technology is like any tool - if you don’t know how to use it well, you won’t get the best out of it. Too many organisations rush into buying technology without understanding the full implications of what they are buying. In many cases, they need to change their processes and approach to managing information and decision-making before buying technology. In that situation they fall prey to vendor hype and marketing.

It's fair to say that BI has been IT-led. The people who have done it best have often been large organisations with big IT functions that understand the technology and how it can fit into the business. But a lot of companies have spent a lot of money on what I call the "Field of Dreams" approach – “if you build it, they will come” - and haven't achieved what they expected. It's a technology sale to technology people and unless they are very good at working with people on the business side, you will hear exchanges like:

"Here are some great BI tools."

"They don't do what I want."

"You never told us what you want."

"You never asked."

BI technology needs to address common business problems
As John Stokdyk mentioned last week, the systems companies use for accounting and managing transactions aren't very good at reporting. If they are built on top of a relational database management system, you will probably have to suck the data into Excel to get out a meaningful report. And before you know it, people will start questioning the validity of the numbers that you produce.

The business intelligence industry has produced a lot of tools to fill this hole. They make it much easier to extract data from transactional systems and analyze “what has happened” in your business. But those alone can’t answer the difficult business questions such as who are your most profitable customers and products and what will be the impact of the credit crunch be on cash flow and earnings over the next five years. This is changing, because the BI vendors realize that in addition to powerful reporting and analysis, business users also need applications that can help them understand the drivers of profitability (which requires some form of activity-based costing capability) and to perform simulations and forecasts to create new planning scenarios. That’s why we now talk about “BI and performance management” together – BI has expanded to include the “analytic” applications that help business users answer those really difficult questions.

The analytic applications that are beginning to bridge the gap between BI and performance management are still mainly focused on mid and large-sized organisations (because that’s where the biggest revenue opportunity lies). There's not a lot out there for small businesses yet and most of them will have to carry on attempting to plan and manage their operations with spreadsheets.

Rather than falling into the BI trap, the best hope for small businesses is that the tools will be increasingly packaged into their financial (and other) applications, so they can get access to some of the benefits without having to go through the pain of extended implementations. This is already happening in the mid-market, with vendors offering sometimes quite sophisticated BI capabilities as part of their solution. Also, the emergence of SaaS-based offerings will allow small businesses to take advantage of some of the BI and performance management offerings without the upfront complexity of an on-premise implementation.

However, before BI technology can become truly relevant and appropriate for small businesses, three things need to happen. First, BI has to continue the move away from its IT-dominated heritage to focus on business applications that answer real business questions. Second, anyone involved in projects to automate business processes, whether in finance, HR, operations, marketing or sales needs to learn more about BI technology so they can understand the solutions they're looking at, what they're for and what their limitations are. That's the only way they are going to stop falling prey to vendor hype.

The third thing that needs to happen is for BI to get embedded into applications so it becomes easier for small businesses to consume. This is already happening in the applications targeted at larger enterprises and will increasingly percolate down to applications for SMEs.

If this happens, and SME owners and managers make the effort to learn how they can adapt the available BI tools to their business needs, we might then be able to lay to rest the disappointments that have fuelled this Great Debate.

Second opposer:

Tony Crowhurst, product manager, Microsoft [3].

This is a very worthwhile topic to debate, but I disagree fundamentally with the motion that business intelligence is irrelevant to small organisations. I would argue that the assertion BI is complex and doesn’t work is unfair. There are numerous examples of organisations that have successfully implemented robust solutions that have had a positive impact on their performance. Why have they succeeded where others have failed? One of the key factors in their success is an organisations willingness to challenge the status quo internally - to look at their internal processes and to change areas that that no longer work. Having succeeded there they then have a great starting point for system selection.

The phrase BI has been around for 20 years and we are now at a significant milestone in this arena. The software is easier to use, it’s more collaborative and above all it is significantly cheaper. Our challenge as vendors is to communicate that value and to overturn the perception that BI is expensive, complex and either ends up on too few desktops to make a difference or, even worse, ends up as shelf ware. I don't think that business intelligence technology is broken; yes, sometimes the solution that has been chosen is not right – that’s not necessarily a technology failure but rather it’s an issue around system selection and implementation.

Nigel Rayner is right that if any small business is implementing BI, the project team needs to have an absolute understanding of what they want to do and what the technology can do. Being small does not mean you should not plan.

As accountants we tend to look at bare bones historical data that comes from financial systems. However we also need to widen the perception of what BI is – it’s not just backroom data analysis conducted by IT folk. It can be anything from demographic analysis of what customers spend to what your competitors are doing. These insights are often found in unstructured data – information held outside our core systems.

At end of the day, if you don't have business intelligence, you don't have an intelligent business.

With the development of Web 2.0 technologies there is a growing menu of insightful information and services available to small businesses. For instance, if you have a web presence, interrogating your web stats to see what potential customers are doing is crucial intelligence for a business - are they clicking on particular products, or stopping their purchases because the price is too high or because the server is too slow? Most sites will give you access to a lot of information about what's happening in your web environment - that's as much BI as anything.

It could also be customer relationship management (CRM) data. Small businesses have access to CRM systems they couldn't afford five years ago. Small businesses should also look at outsourcing some of their BI, just as they may host their web sites. For example, if you host your data you can also get data analysis provided on that information – it’s means BI becomes a cost just like a phone bill.

This is also a huge opportunity here for practitioners. Accountants preparing financial statements need to move into a more interactive environment. For instance, rather than sticking with paper-based bookkeeping, if an accountant can take data from client businesses online, then the adviser can spend more time on value added analysis and turn the return around quicker, which saves everybody time.

They could put also some BI into that package and add value to the financial statements. Putting some basic ratios and graphs together isn't an expensive thing to do, because of how BI software can interact with the accounts system and Microsoft Excel, and it can let the accountant provide an additional service for a very small incremental cost.

The BI market has seen a lot of consolidation in the past couple of years, and the fact that Microsoft has become a bigger player has made BI not only cheaper but also accessible to more people. It's not such a big capital investment anymore and you can choose to implement particular elements of a BI system, rather than adopt the big bang approach.. It's all in understanding the business and planning the project. That's where you'll win or lose with BI.

But what is still missing is user education - we need to change the perception that BI is complex and expensive, which means engaging with not only with the IT people in an organisation, but also with the business decision-makers and accountants.

For their part, small business customers need to do more planning before they jump into BI applications. Twenty years ago, people didn't have access to the information that's available now so the ability to research a solution is much easier. Just as you can get a review of a hotel before you go on holiday, you can go to the web to find reviews of software and implementations, case studies and so on. Preparation is 90% of success but often it is the piece that we spend the least time on

BI doesn't have to cost a ton of money. The cost of Excel 2007 is insignificant but it has some great functionality and numerous templates that you can use in a small business. Also, the data mining, analysis and graph capabilities are easy to use and taking that a step further by publishing that analysis to a website or portal that colleagues can share adds a whole new dimension to its BI capabilites. All of that is available for a small investment.

Unfortunately UK plc lags behind other major industrialised nations when it comes to training our people. If small businesses can invest in education and broaden the reach of the business insight available to their employees, they will be better placed to succeed. This applies to BI as much as any other domain.

It can be difficult for small businesses to raise capital and sometimes the last things they are going to think about are IT skills and BI training courses. But they need to realise that 4-5 hours investment in training can be really, really worthwhile.

If you can put together a framework that links your business plans to BI technology when you start your company, then you've got a platform that can grow with your business. Then you can move up from Excel to collaborative tools and full blow BI applications as you see fit.

We haven't quite got to the embedded BI applications for small business that Nigel Rayner calls for, but we're getting close. If we get over the cynicism at the heart of this motion, and if it stimulates small businesspeople to find out more about the technology then this Great Debate and we will have achieved some good. Rather than being put off BI, small companies should use this debate as an opportunity to find out more about it.

Further reading
The Great Debate: Business Intelligence - Opening Speeches [4]
IT Zone Focus on business analysis [5]
IT Zone guide to analytic applications for business [6]
An introduction to Excel-driven reporting tools [7]
Improve your reprorting skills with self-teach tutorials [8]