Embedded BI. Boosting Analytical Adoption and Engagement. March 2012 Michael Lock

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1 Embedded BI Boosting Analytical Adoption and Engagement March 2012 Michael Lock

2 Embedded BI: Boosting Analytical Adoption and Engagement In today's business climate, the challenge of effective decision-making is further exacerbated by an influx of data and increased time urgency for actionable information. Line-of-Business managers are looking for the visibility and decision support of business intelligence (BI) solutions. Aberdeen's July 2011 benchmark report, The Analytical Masses: Building Self- Service Insight for Line-of-Business Decisions, demonstrated that 63% of organizations exhibited strong BI adoption in two or more business functions. To meet this clear analytical need, organizations are faced with the challenge of delivering BI tools to decision makers while causing the least disruption to their organization. Some organizations remain content to deploy dedicated or stand-alone BI software applications to support timely decisions. However, many companies are now exploring an embedded approach to BI, where analytical functionality is integrated with existing and deployed business applications (e.g. ERP, CRM). March 2012 Analyst Insight Aberdeen s Insights provide the analyst perspective of the research as drawn from an aggregated view of the research surveys, interviews, and data analysis Based on feedback from a total of 420 organizations, this Aberdeen Analyst Insight focuses on the use of embedded BI and investigates the organizational impact of this approach to business analytics. Building the Case for Embedded BI As technology continues to advance, organizations now have myriad options for the delivery of analytical capabilities. Traditional on-premise BI remains the most common deployment method, but many companies are taking a hard look at embedded BI. Figure 1 lists the tangible benefits companies have experienced - or anticipate - from taking an embedded BI approach. Figure 1: Top Benefits of Embedded BI Speed of adoption / ease of deployment Ability to tailor analytical functionality Cultural and process improvements Add value to existing SW investments 27% 31% 30% Embedded BI Users 53% 15% 25% 35% 45% 55% Percentage of Respondents, n = 174 Definition of Terms This Aberdeen Analyst Insight is based on survey feedback from 420 organizations reporting their experiences with business analytics. Key terms used throughout this document are defined below: Stand-Alone BI: Dedicated BI / analytical functionality delivered as a separate or stand-alone application survey respondents Embedded BI: Analytical functionality integrated or embedded within existing business applications (e.g. ERP, CRM survey respondents This document is the result of primary research performed by Aberdeen Group. Aberdeen Group's methodologies provide for objective fact-based research and represent the best analysis available at the time of publication. Unless otherwise noted, the entire contents of this publication are copyrighted by Aberdeen Group, Inc. and may not be reproduced, distributed, archived, or transmitted in any form or by any means without prior written consent by Aberdeen Group, Inc.

3 Page 2 Many of these potential benefits fall in line with expectations. Consider the common example of a sales director who needs BI to gain more visibility into and analysis of his sales pipeline and his team members' performance. One option for this sales director would be deploy a stand-alone BI tool for these specific purposes. Another option would be to develop this capability as an integrated module of his existing CRM or sales force automation (SFA) solution (assuming such a solution was in place). What benefits would this director see from an embedded approach? He might expect that the analytical capability would be easier to spread to his team members, who are presumably familiar with the existing CRM tool. He might also think this approach to have functionality focused and tailored for his sales team. He might expect this new capability to improve the mindset of his team and provide a baseline for more analytical thinking and activity. Finally, he might expect embedded BI to add significant value to the CRM solution, improving its "stickiness" with the sales team, and the value of the company's investment in these tools. As Figure 1 shows, these four top the list of benefits companies have seen by taking an embedded approach. The benefit most frequently identified by survey respondents (Figure 1) was the faster adoption of, and engagement with, BI. When compared to users of stand-alone BI, users taking an embedded approach have achieved a greater adoption and pervasiveness of analytics across multiple business functions (Figure 2). Fast Facts Software applications used with embedded BI*: Customer Relationship Management (CRM) - 65% Enterprise Resource Planning (ERP) - 56% Financial / Accounting Software - 49% Supply Chain Management (SCM) - 26% Industry-Specific Software - 24% Human Capital Management (HCM) - 22% e-commerce software - 16% * Percentage of all respondents Figure 2: Depth of BI Usage by Function Finance Corp. Mgmt Supply Chain Sales Ops Proc./Purch. Pervasive or Strong BI Adoption 21% 34% 39% 43% 46% 49% 49% 56% 56% 67% Using Embedded BI Using Stand-Alone BI 10% 30% 50% 70% Percentage of Respondents, n = 420 Because BI is more pervasive, companies using the embedded BI approach can spread the analytical mindset to more people, and more areas of the company. Companies that develop an "analytical culture" can realize the third and fourth benefits shown in Figure 1. When the work force at a company has a data-driven mindset, and places greater value on analytical

4 Page 3 decision-making, the company is in a position to improve vital business processes and increase the yield of their investments in enterprise software. Case Study AssetWorks AssetWorks delivers industry-leading business solutions that help assetand infrastructure-intensive organizations control capital and operating expenditures, reduce operational complexity, and manage regulatory and policy-driven risk. As the flagship solution within the Integrated Workplace Management Systems (IWMS) business unit, AiM from AssetWorks helps organizations reduce costs by promoting better oversight and utilization of facilities and real estate. This product is built to help organizations eliminate management redundancies and proactively manage the workplace, ensure regulatory and fiscal compliance by providing auditable data and complete transparency to enterprise assets, and realize their sustainability and business continuity goals. While the AiM product has reporting and analytics functionality built in, these tools require a level of technical proficiency beyond the average user s capabilities. As an alternative, the AssetWorks team decided to investigate business intelligence (BI) tools that would better fit their user profile. The decision to embed BI within our AiM product was driven in large part by our existing customer base, recalls Randy Walsh, VP of Services at AssetWorks. We were in the process of rolling out a new Capital Planning and Project Management module, and it seemed like the perfect time to provide our customers with wider visibility and access to their disparate sources of data, more intuitive dashboards and views of that data, and better overall transparency across their organizations. After an extensive search for the right embedded capabilities, AssetWorks decided on a package of BI tools that would let their users access more enterprise data, manipulate the data, share it, and create better ad-hoc dashboards. We have a very broad array of user types, says Shawn Sande, Director of Product Marketing at AssetWorks. Anyone from a C-level executive, to an IT administrator, to an electrician or plumber, can now use our tools to better understand their business and make better decisions. Branded as AiM IQ, the new solution with embedded BI is already delivering results. Customers can break down internal silos to share data and collaborate on its interpretation. The solution is expected to deliver an enhanced experience to the customer, with better peer-to-peer analysis, easier identification and measurement of key performance indicators (KPIs), and greater access to analytical capability for nontechnical users. One of the most compelling advantages to the solution however is its ability to facilitate better utilization of existing IT infrastructure. According to Sande, Our customers have made significant investments in their IT environments and vested a tremendous amount of time entering data into those tools. Now they have the analytical capability at their fingertips to ask questions of the data and

5 Page 4 Case Study AssetWorks generate more timely and usable business insight. Examining the Best-in-Class for Embedded BI Despite the benefits shown in Figure 1, embedded BI is like any other analytical approach creating business value requires more than just a decision to proceed. Some companies do embedded BI better than others - and as a result, realize more value than others. Aberdeen segmented embedded BI users into three groups (see sidebar) based on their performance in the following three areas: Analytical Engagement: Measured as the average percentage of BI users that actively engage with business analytics at least once a week Self-Service Capability: Measured as the average percentage of BI users with the ability to use business analytics in a self-service capacity, with little or no assistance from corporate IT Process Efficiency: Measured as a percentage of organizations within each maturity class that reported a year over year "improvement" or "substantial improvement" in the cycle times of their most crucial business processes Aberdeen's Maturity Class Aberdeen divides survey respondents into three maturity classes based on their self-reported performance across several key metrics: Best-in-Class: Top 20% of respondents based on performance Industry Average: Middle 50% of respondents based on performance Laggard: Bottom 30% of respondents based on performance Table 1: Top Performers Earn Best-in-Class Status Definition of Maturity Class Best-in-Class: Top 20% of aggregate performance scorers Industry Average: Middle 50% of aggregate performance scorers Laggard: Bottom 30% of aggregate performance scorers Mean Class Performance 74% of users are actively engaged with business analytics 73% of users have self-service, non IT-assisted access to BI 75% of companies saw improvement in process cycle times 36% of users are actively engaged with business analytics 49% of users have self-service, non IT-assisted access to BI 56% of companies saw improvement in process cycle times 12% of users are actively engaged with business analytics 13% of users have self-service, non IT-assisted access to BI 36% of companies saw improvement in process cycle times Table 1 illuminates the stark contrast in performance between companies with an effective strategy for embedded BI, and companies without. In this particular survey, as in most of Aberdeen's BI research, the difference

6 Page 5 between these companies lies in their empowerment of business users with analytical capability, and the performance enhancements that follow. Aberdeen explored a variety of organizational capabilities that Best-in-Class companies use to empower decision makers. First, these companies facilitate the analytical process from the start by originating analytical projects within the lines-of-business, as opposed to the IT department. Companies that are Best-in-Class at using embedded BI are 53% more likely to have BI projects begin with a sound business justification, created by business users (Figure 3). Figure 3: Best-in-Class Organizational Capabilities Fast Facts 79% of Best-in-Class companies are using tools for data management / data cleansing Compared with: Percentage of Respondents 85% 65% 45% 25% 5% 74% BI projects begin with business case created by business users 45% 43% 65% 63% Open exchange of operational data across business functions 47% Clear performancedriven culture to drive accountability 57% of Industry Average companies 45% of Laggards Best-in-Class Industry Average and Laggard n = 174 Another key aspect of delivering analytical value across the organization relates to data sharing and collaboration across silos. Best-in-Class companies are more likely than Industry Average and Laggard organizations to break down departmental barriers and share data between functions. Lastly, an analytical culture is vital for any organizations looking to exploit the value of BI. When line-of-business managers have a healthy curiosity about the business, and an inherent desire to augment their decisions with timely insight, that insight can be created in a more fluid manner. Best-in- Class companies are 34% more likely than Industry Average and Laggard companies to report having an analytically driven culture. Build vs. Buy with Embedded BI Businesses that decide to pursue an embedded strategy for BI face an interesting quandary at the outset. How will they employ embedded BI? The tools can be provided within an existing software tool by the original vendor of that solution, or through a partnership with a dedicated BI vendor. Companies can also take an entirely homegrown approach to BI, where they design and build the BI functionality in-house and then work to incorporate that functionality with whatever existing tools need it the most. Another option is a hybrid of the first two, where a company would Fast Facts What KPIs matter most? Financial metrics most indicative of business performance*: Organic revenue growth - 57% Net income - 35% Operating cash flow - 33% EBITDA - 33% * Percentage of all respondents

7 Page 6 leverage existing BI functionality or a BI package provided by a vendor, then customize the tool and link it with applications already in place. Survey respondents were asked to choose their primary approach from the following three options: Vendor provided: Embedded BI functionality provided within existing applications by current software vendor or 3rd party BI solution provider Fully homegrown: BI functionality built in-house and integrated within existing applications Hybrid: Pre-built BI platform or modular functionality provided and supported by software vendor, customized and integrated by internal resources The majority of survey respondents are taking either a vendor-provided approach, or some form of hybrid approach to embedded BI (Figure 4). Figure 4: Breakdown of Embedded BI Approach Vendor Provided 43% 17% 40% Fully Homegrown Hybrid Percentage of Respondents, n = 174 Each approach carries its own set of benefits and potential challenges. From a cost perspective there is a fairly clear tradeoff between software license cost and the cost of resources required to develop in-house. With a vendor provided approach, the most visible cost is the incremental charge or licensing fee an organization would incur for enabling BI functionality within an existing software application. A homegrown approach, by contrast, carries no direct licensing cost but often requires substantial IT expertise and full-time equivalent employees (FTEs). This cost tradeoff may be why the most popular approach is a hybrid approach, including potential cost savings for both licensing and resources. Aside from the cost aspect, each approach offers benefits in line with those discussed in Figure 1. Each user group selected "speed of adoption" as the top benefit of embedded BI (respondents with vendor-provided embedded BI were most likely - 68% - to identify this benefit). While the benefits are relatively consistent, each of the three user groups identified a different challenge as most prevalent (Figure 5). Fast Facts 79% of Best-in-Class companies are using tools for data query / discovery Compared with: 60% of Industry Average companies 36% of Laggards

8 Page 7 Figure 5: Top Challenges of Embedded BI Usability - delivering ease-of-use our decision makers need 30% 37% 43% Expertise - assembing BI functionality into a cohesive analytical tool 33% 37% 44% Integration - creating effective linkage between BI and existing tools 32% 30% 40% 20% 25% 30% 35% 40% 45% Vendor Provided Fully Homegrown Hybrid Percentage of Respondents, n = 174 Usability was the most commonly identified challenge for companies taking a vendor-provided embedded BI approach. BI is a fundamentally different toolset than many business users are accustomed to. To achieve the adoption levels of Best-in-Class companies, organizations need a clear understanding of what their business community needs, and what they're technically capable of handling. For homegrown BI users, the need for IT and programming expertise is paramount. These companies are challenged by the difficulty of assembling and integrating BI functionality into a cohesive and usable analytical tool. Finally, companies taking a hybrid approach to embedded BI are most challenged by the integration of analytical functionality with existing software applications. This is the flip side to the cost advantage discussed above. While there are cost efficiencies to be gained by using internal resources to embed BI in existing tools, a non-trivial degree of complexity is involved in making all the pieces work together effectively. Hybrid users find this integration the trickiest aspect of embedded BI. Key Takeaways and Recommendations Aberdeen's research consistently demonstrates a visible and growing need for analytical capability among business users. Regardless of industry, company size, or deployment method, effective business analytics can drive visibility and enhanced performance for any organization. More often than not with BI, the quality of the output is correlated to the user, rather than the solution. The potential business value of business analytics rests more on the shoulders of experienced line-of-business managers than on the features and functionality of the BI solution. Best-in-Class companies have the right mix of capability, skill, and mindset to realize the promise of BI and generate substantial return on that investment. Companies considering an embedded approach to BI should take the following recommendations into consideration:

9 Page 8 Adoption begets adoption, so start with low-hanging fruit. Best-in-Class companies have achieved a much higher level of adoption and engagement with their BI solutions, in large part because they attached them to tools that were already widely adopted and frequently used. The tool with the highest usage rate and engagement is the first tool that should be developed with BI capability whether that tool is an ERP system, a CRM tool, or an industry-specific application. Best-in-Class companies are more likely than all others to have an analytically driven culture, and this type of approach is a quick way to building that culture - by injecting analytical capability into widely used and culturally adopted applications. Focus on the business activity, not just the technology. The identification of "low-hanging fruit" should also incorporate business processes and activities associated with those widely adopted tools. For example, if the best beachhead for embedded BI is a popular CRM system, the focus of the BI capability should be on ingraining analytical thought with everyday activity around pipeline management, opportunity qualification, and other aspects of sales activity. The BI functionality has to work well and integrate well inside the CRM application, but those capabilities are just table stakes. BI adoption and success rest on the tool's becoming a part of everyday life for the people who use it. Take stock of end-user analytical needs. One of the purported benefits of embedded BI as shown in Figure 1 is the ability to customize or tailor its capabilities to a specific audience. The ability to realize this benefit is predicated on achieving a solid understanding of the end-user community's needs. Best-in-Class companies are almost twice as likely as all other companies to have some sort of formal requirements gathering process to understand and address those user needs. Share, but share wisely. There are clear efficiencies to be gained by sharing data across organizational silos and collaborating with multiple people on the creation of business insight. Best-in-Class companies are more likely to share data across different departments within the organization. While this type of sharing can provide visibility and value, it can also have a detrimental effect on security, governance, and compliance. To mitigate these potential challenges, Best-in-Class companies are 50% more likely to have established policies for governing / controlling end-user data access. For more information on this or other research topics, please visit

10 Page 9 SaaS BI: The Compelling Economics of Cloud-based Analytics; February 2012 Data Management for BI; January 2012 Related Research 2012 Strategies: Putting the Intelligence in Mobile BI to Work; January 2012 Embedding BI in Enterprise Applications: Magnifying the Analytical Impact; March 2011 Author: Michael Lock, Research Director & Group Leader, Technology Markets For more than two decades, Aberdeen's research has been helping corporations worldwide become Best-in-Class. Having benchmarked the performance of more than 644,000 companies, Aberdeen is uniquely positioned to provide organizations with the facts that matter the facts that enable companies to get ahead and drive results. That's why our research is relied on by more than 2.5 million readers in over 40 countries, 90% of the Fortune 1,000, and 93% of the Technology 500. As a Harte-Hanks Company, Aberdeen s research provides insight and analysis to the Harte-Hanks community of local, regional, national and international marketing executives. Combined, we help our customers leverage the power of insight to deliver innovative multichannel marketing programs that drive business-changing results. For additional information, visit Aberdeen or call (617) , or to learn more about Harte-Hanks, call (800) or go to This document is the result of primary research performed by Aberdeen Group. Aberdeen Group's methodologies provide for objective fact-based research and represent the best analysis available at the time of publication. Unless otherwise noted, the entire contents of this publication are copyrighted by Aberdeen Group, Inc. and may not be reproduced, distributed, archived, or transmitted in any form or by any means without prior written consent by Aberdeen Group, Inc. (2011a)

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