Global Headquarters: 5 Speen Street Framingham, MA USA P F

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1 Global Headquarters: 5 Speen Street Framingham, MA USA P F WHITE PAPER Why Consider Oracle For Business Intelligence? Sponsored by: Oracle Corporation Dan Vesset September 2004 Henry D. Morris EXECUTIVE SUMMARY Businesses are undergoing a fundamental shift in the way they make decisions. In today's rapidly changing environment, decision making occurs more frequently and at all levels of an organization. It is no longer a semiregular senior management activity. Many organizations invested in their core data infrastructures to facilitate accurate information dispersal, but the trend toward democratization of information and broadening decision-making responsibilities demands more. Enter business analytics, a set of software solutions ranging from reporting and data mining tools to data integration and warehousing and prepackaged analytic applications. The motivation for investment in business analytics is varied. For some, it is to consolidate and gain global visibility across organizational data; for others, it is to streamline operations or production processes; and for still others, it is a wholesale reinvention of their approach to their business or customers. When it comes to supporting diverse decision-making processes, such as manufacturing quality analysis, financial planning, marketing campaign- or supplier relationship management, one-size-fits-all solutions rarely work. It is imperative for organizations to deploy appropriate solutions to support the decision-making needs of end users. Oracle Has #1 Share in Business Analytics Market In 2003, the worldwide business analytics market reached $13 billion in software revenue. In 2003, Oracle was the leading business analytics software vendor with $1.6 billion in software revenue and a 9.6% growth rate over The company provides a broad portfolio of integrated business analytics software, including:! Data warehousing. With Oracle Database 10g, the company provides a data warehousing infrastructure with embedded multidimensional analysis and data mining. In addition, Oracle Business Intelligence Warehouse Builder, a standalone component that is tightly integrated with Oracle 10g, serves as the data extraction, transformation, and loading tool. The unified platform decreases the need for individual tools and analytic engines thus decreasing the overhead associated with data movement, while increasing data quality and delivery speed to end users. In 2003, Oracle was the leading business analytics software vendor with $1.6 billion in software revenue and a 9.6% growth rate over 2002! Business intelligence. The business intelligence (BI) software tools provided by Oracle include Oracle Business Intelligence Discoverer and Oracle Business Intelligence Spreadsheet Add-in for ad-hoc query and analysis and Oracle

2 Reports Services and Oracle Application Server Portal (OracleAS Portal) for information delivery. OracleBI Discoverer enables seamless access to relational and multidimensional data. OracleBI Spreadsheet Add-in gives end users the option to use the familiar spreadsheet interface for ad-hoc analysis while maintaining data and security links with the underlying data warehouse. OracleAS Portal can be utilized as a common interface through which reports, charts, and other content can be delivered to end users. Oracle also provides Oracle Business Intelligence Beans, analytic applications development tools, which allow developers to reuse software components across the full range of Oracle's analytic applications.! Prepackaged analytic applications. Within the Oracle Corporate Performance Management (CPM) application suite, the company provides Oracle Balanced Scorecard, Oracle Enterprise Planning and Budgeting, Activity Based Management, and Oracle Daily Business Intelligence, a set of analytic applications tightly integrated with Oracle's e-business suite financial, CRM, Supply Chain, and other transaction-processing applications. BUSINESS ANALYTICS IN SUPPORT OF THE DECISION-MAKING PROCESS Introduction IDC defines business analytics as the software market comprising tools and applications for tracking, analyzing, modeling, and delivering data in support of decision-making processes. Today, business analytics is reaching more organizations and extends to a wider range of users, from executives and line-of-business managers to analysts and other knowledge workers, within organizations. Business Analytics Has Median ROI of 112% A key to this increased focus has been the strong return on business analytics investments. For example, IDC's study The Financial Impact of Business Analytics published in 2002 showed that the median ROI of business analytics projects is 112%. These measurable benefits in organizations of all sizes relate to increased productivity and efficiency, business process improvement, and technology-based cost savings. Business analytics provide the means to increase the level of intelligence across the organization through historical insight and the ability to maintain flexibility to either face unexpected adverse events or take advantage of new opportunities. IDC's study The Financial Impact of Business Analytics published in 2002 showed that the median ROI of business analytics projects is 112%. By implementing transaction-processing systems, ranging from ERP, CRM, SCM, and ecommerce applications, organizations have taken a big step toward automating business processes. Business analytics software enables organizations to monitor, capture, and analyze the vast amounts of data generated by these applications and provides management and staff at all levels with tools necessary to optimize these processes through strategic and tactical decisions. Business analytics software helps organizations answer questions such as: 2 # IDC

3 ! Who are our best suppliers or most profitable customers?! Which customers are likely to become profitable, when, and to what extent?! What are the root causes of quality issues, and can we cost-effectively minimize them?! What factors or combinations of factors are directly impacting marketing campaigns? These questions require analysis of data from internal transactions as well as external sources. By implementing business analytics software, organizations are able to leverage their existing investment in transactional applications, while avoiding costly mistakes due to "gut feel" decisions made without solid information. Business analytics can be segmented into two areas. One is focused on traditional business intelligence of information access and delivery. The other is focused on advanced analytics in support of scenario analysis, optimization, what-if analysis, and other decision-centric business intelligence processes. Decision-Centric Business Intelligence IDC has outlined a typical decision making process in Figure 1. Depicted as a closed loop process, it nevertheless has two distinct segments of traditional BI and advanced analytics. FIGURE 1 Closed-Loop Decision-Centric Business Intelligence Model Traditional BI steps Advanced analytics steps Hypothesize Model Collaborative, Decision-Making Workflow Deliver information Decide Information Access and Delivery Analyze Track Act Insight Relevance Speed Accuracy Source: IDC, IDC #4257 3

4 Traditional Business Intelligence: Streamlining Information Access and Delivery Traditional BI concentrates on information access by and delivery to individuals. Focused primarily on scheduled, batch-based reporting, information access is being supplemented with near-real-time monitoring of business transactions in an effort to reduce data latency and establish early warning systems for the emergence of new trends. As shown in Figure 1, traditional BI software supports activities for the following three steps:! Track. Results from business (transactional) systems are monitored to get a reading on the state of current operations (e.g., the current marketing or recruitment campaign). These results can be compared with targets or goals that have been established.! Analyze. Time-oriented data from multiple systems is integrated into a data warehouse or mart in order to support an analysis of key trends. Deviations from expected results or targets, such as factors associated with customer (or employee) attrition, are explored.! Deliver information. Reports are published and delivered to business users based on the tracking activities and value-added analysis of the data. The goals of traditional business intelligence are increased speed and higher accuracy in the delivery of information to ever larger numbers of users. Decision-Centric Business Intelligence: Addressing Collaborative Decision-Making Processes Decision-centric business intelligence (DCBI) focuses on the decision-making steps in a business process. The goal of DCBI is to assess the relevance of information to a decision and to gain insight in seeking and evaluating possible decision alternatives. These are the steps in the lower half of Figure 1, comprising a collaborative, decisionmaking workflow:! Hypothesize. The problem is stated and alternative solutions are sought out. There are software aids to searching for new decision alternatives. For example, pricing analytics software can develop many more possible pricing rules than a human agent could handle.! Model. Models are built to predict the likely result of candidate solutions to a problem. The effects of variable factors on business results are explored or simulated. This is the essence of "what if" analysis. A key factor is the ability to deal with uncertainty by showing the likelihood of a desired outcome when a particular alternative is selected.! Decide (policy hub). This is the step in a business process at which decisions are made. The results of the analysis and modeling work are considered along with business judgment and knowledge to decide on changes or adjustments to business policies or rules. Decision making is a process that involves a group of people. Therefore, support for team collaboration is vital. 4 # IDC

5 ! Adjust/act. Making the decision is only the beginning. Its results must be communicated to all people and applications that are responsible for execution. This can involve the translation of the decision into the form that a particular application requires. To support the closed-loop DCBI model, organizations require distinct but related products. These include data warehouse generation and management, business intelligence (query & reporting, packaged data mart, data mining, multidimensional analysis, or OLAP [i.e., online analytical processing]), technical data analysis or statistical and spatial information management tools, as well as customer relationship management (CRM), supply chain and operations, financial and business performance management analytic applications. As shown in Figure 2, Oracle provides a broad portfolio of software products that address the need outlined in each of the steps of the DCBI model. FIGURE 2 Oracle Business Analytics Solutions OracleAS Portal Oracle Reports Services Oracle Enterprise Planning & Budgeting Hypothesize Model Oracle Activity Based Management OracleBI Spreadsheet Add-in OracleBI Data Miner OracleBI Discoverer Deliver information Analyze Non-Oracle sources Oracle10g RDBMS with embedded OLAP, data mining OracleBI Warehouse Builder Track Decide Act Oracle E-Business Suite Oracle Balanced Scorecard Oracle Daily Business Intelligence Oracle Database and Application Server business analytics tools Oracle Corporate Performance Management applications Typical data flow Source: IDC, IDC #4257 5

6 ORACLE IN THE BUSINESS ANALYTICS MARKET Over the past few years, Oracle focused first on delivering the data warehousing platform, before revamping its end-user business intelligence tools and analytics applications. In the past, a fair criticism of the company has come from users who have found Oracle's query & reporting tools lacking in functionality and performance. However, since 2003, Oracle has introduced a new generation of BI tools and analytic applications. Oracle's complete business analytic offering now includes:! Data warehousing platform. Includes Oracle Database 10g, including Oracle OLAP and Oracle Data Mining engines and OracleBI Warehouse Builder! Business intelligence tools. Includes OracleBI Discoverer, OracleBI Spreadsheet Add-in, OracleBI Data Miner, Oracle Reports Services, OracleBI Beans! Analytic applications. Including Oracle Daily Business Intelligence, Oracle Balanced Scorecard, Oracle Enterprise Planning and Budgeting, Oracle Activity Based Management, and Oracle Performance Analyzer Note that further detail on some of these products is presented in the second part of this paper. Again, as shown in Figure 2, these three major Oracle product families provide business analytics software that supports the full range of decision-centric BI needs, ranging from information delivery to advanced analytics. Oracle's software also addresses the needs of both traditional data warehousing while breaking with conventional wisdom and delivering operational business analytics. Data Warehousing and Operational Business Intelligence Companies with Multiple Data Sources Need a Traditional Data Warehouse As shown with arrows in Figure 2, the typical data warehousing environment involves extraction and loading of data from multiple transactional systems into a data warehouse, which is in turn accessed by BI tools and analytic applications. It is common not to allow end users direct access to the transaction processing systems for business analytics. Warehousing data in a separate data store optimized for analytic processing has been the conventional wisdom in the market for many years. One of the historical reasons for such separation of analytic and transaction processing databases was the fear of degradation in transactional system performance if analytic processing is conducted on the same system. Another reason was that data warehouses allowed for storage of historical data from heterogeneous sources that usually is purged from transaction processing systems at certain intervals. 6 # IDC

7 Companies with Oracle ERP May Consider Daily Business Intelligence However, with advances in the processing power and performance management of transaction-processing databases, an alternative solution has emerged. As with the movement of goods, a just-in-time (JIT) process decreases the friction in the supply chain by eliminating inventory and optimizing logistics. Similarly, opportunities exist to create an operational BI environment that integrates business analytics into transaction-processing systems. As most organizations will attest, the two approaches to business analytics are complementary, and Oracle addresses both:! Data warehousing-based BI via the Oracle data warehousing platform, and BI tools and applications such as OracleBI Discoverer and Oracle Balanced Scorecard! Operational BI via Oracle Daily Business Intelligence and Oracle Reports Services Data Warehousing Platform Oracle Database 10g and Oracle Warehouse Builder There continues to be a need for creating data warehouses that consolidate historical data from many heterogeneous sources. Oracle's data warehousing platform is based on its Oracle Database 10g for data warehouse management and OracleBI Warehouse Builder ETL (extract, transform, load) tool for data warehouse generation and loading quality data. Deployable on all major hardware and OS infrastructure, the data warehousing features of Oracle Database 10g are varied. Using Oracle Database 10g for data warehousing, users inherit all the database performance, availability, scalability and security features that have made this the market-leading database. For example, many businesses are choosing to deploy their data warehouse on low-cost Intel clusters running Oracle Real Application Clusters. Clustering a data warehouse can provide 24 x 7 availability and can easily scale out at a low incremental cost by simply adding another small server into the cluster. Oracle Database Eliminates the Need for Separate OLAP and Data Mining Engines, and ETL Tools At the same time, Oracle Database 10g includes analytic capabilities for multidimensional analysis (or OLAP online analytic processing) and data mining. The single data engine that delivers both OLAP and data mining functionality eliminates the need for multiple data engines with separate repositories, specialized for different analytic techniques. The resulting environment eliminates the overhead of data synchronization between the data warehouse and individual OLAP or data mining engines, while decreasing data latency and storage requirements. Oracle Database 10g provides a single data engine that delivers both OLAP and data mining functionality The reduction in administration and implementation costs is also due to reduced needs for additional IT staff. All tasks can be completed by Oracle database administrators rather than by less readily available specialists in other individual software tools. Administrators can take full advantage of the automated, self-tuning and self-diagnosing features of Oracle Database 10g to ease the challenge of managing and tuning very large volumes of data. Other IT benefits include easier 2004 IDC #4257 7

8 upgrading because there is no need to worry about the compatibility between specific OLAP and data mining engines and the new, upgraded version of the database. For example at one of the world's largest financial institutions, Oracle business analytics software powers the companywide procurement-to-pay process. The company deployed Oracle not only as the transaction processing database for its procurement application, but also for their data warehouse. The company also uses OracleBI Warehouse Builder to integrated data from Oracle and other heterogeneous sources. In fact 95% of all data integration needs are solved with Oracle Warehouse Builder, a product that the VP of Global IS feels provides Oracle with ETL functionality at a very attractive price point compared to products from specialty software vendors. The company's procurement-to-pay system is a worldwide multiorganization, multilingual, multicurrency, and multiset-of-books system that already supports close to 50,000 online users. The analytics solution, powered primarily by OracleBI Discoverer, supports a large population of users, including hundreds of analysts and managers who are considered power users, and more than 4,000 other staff or information consumers. Both of these groups receive their reports via the Web using a single sign-on architecture. OracleBI Discoverer OracleBI Discoverer is Oracle's' flagship ad-hoc query and reporting tool. Designed for use by both developers and end users, OracleBI Discoverer provides an intuitive user interface for designing queries and delivering tables and charts. The key enhancement in the latest release of OracleBI Discoverer, is its ability to access both relational and multidimensional data within a single reporting environment. In the past there was a need to use different tools to access relational and multidimensional data. OracleBI Discoverer can also be fully integrated with OracleAS Portal. For example, a portlet or a section of the portal can be used to deliver OracleBI Discoverer data. Exposing OracleBI Discoverer through the portal retains all the interactive features of OracleBI Discoverer, such as drill-down, sorting, filtering, and dynamic connections to charts. The key enhancement in the latest release of OracleBI Discoverer, is its ability to access both relational and multidimensional data within a single reporting environment. Data from OracleBI Discoverer can be rendered to HTML, PDF, or exported to Excel while maintaining any formulas that were used in the original calculations. All this functionality is available through the Web in pure HTML. However, for additional features, a downloadable Java application is also available. End users are also presented with Query Builder and Calculation Builder modules for building queries from scratch rather than using any of the prebuilt views. OracleBI Spreadsheet Add-In Spreadsheets continue to be the most widely used software for reporting and ad-hoc data analysis. Their strength is in their flexibility and ease of use. However, spreadsheets lack performance, security, and control vital to enterprise class business analytic applications. Recognizing the wide use of spreadsheets, Oracle is releasing its OracleBI Spreadsheet Add-in, arguably a long overdue tool, that is likely to be well received judging from the early interviews with several Oracle customers. 8 # IDC

9 OracleBI Spreadsheet Add-in is deployed as a menu item in MS Excel, which launches a wizard not unlike the MS Excel Pivot table wizard. By guiding users through the steps of selecting data sources, data fields and data layout, the add-in dynamically grabs data from a secure database. In other words, the spreadsheet becomes the front-end BI tool on top of the Oracle database platform and thus taking advantage of the performance and security features of the database. The OracleBI Spreadsheet Add-In wizard is built upon the same Java components (called OracleBI Beans) as OracleBI Discoverer, and thus provides identical look and feel for operations such as query building. It also leverages other components such as crosstab beans and graph beans. Oracle Balanced Scorecard Oracle Balanced Scorecard provides the design tools to enable customers to extend DBI. The product provides a unique capability for automatically generating optimized data marts. For example, users can identify their preferred KPIs and the software automatically generates the appropriate schema and materialized views. IT staff can then use OracleBI Warehouse Builder to map data sources to this optimized data mart. In effect, end users are "developing" the data mart and thus taking an important step forward in alleviating one of the perennial challenges in business analytics the gathering of business requirements by IT. Within the Balanced Scorecard application users can develop and present information via cause-and-effect diagrams that are deployed as interactive, color-coded maps showing relationships between organizational initiatives, events, and processes. Color coding is used throughout the application to alert users to exceptions and otherwise guide them through the most critical decision-making paths. Collaborative decision making is supported through addition of qualitative comments by end users. For example, owners of a specific KPI can supplement structured data presented in tables or charts with personal comments. Thus, Oracle Balanced Scorecard application combines the best of both quantitative analysis and experience or intuition. Oracle Enterprise Planning and Budgeting Oracle's Enterprise Planning and Budgeting (EPB) supports an integrated approach to planning, budgeting, and reporting enabling an organization to translate a strategy into operational goals and targets. Planning and budgeting are collaborative processes, requiring the coordination of many departments within an organization. With business processes functionality, Oracle EPB supports the definition and execution of multiple departmental processes that may be unique, but are still linked from an enterprise standpoint. Departments have the needed flexibility to manage their own budget processes as part of the larger picture. This sophisticated process management enables enterprisewide operational budgets in support of a company's strategic plan to be efficiently prepared. The enterprise data warehouse foundation, with its OLAP functionality, of EPB complements Oracle ERP as well as heterogeneous ERP environments. This 2004 IDC #4257 9

10 foundation will support not only EPB but also extended Business Performance Management, enabling customers to refine and improve budgeting and planning processes as part of a larger strategy to implement integrated performance management. Coupling the capabilities of EPB with an easy-to-use application interface empowers the end users deeply involved in the budget process to use the application to fit their specific needs without requiring IT support. Oracle Daily Business Intelligence: Just-in- Time Operational Business Intelligence Oracle Daily Business Intelligence (DBI) provides prebuilt management dashboards within the Oracle transaction processing applications. By leveraging Oracle database features like materialized views, DBI is able to deliver BI capabilities directly on top of the applications database, without requiring a separate data warehouse. For example, analysts and managers who are using Oracle applications for accounting, HR, marketing, or procurement, have their most common BI needs addressed through prebuilt reports that expose role- and context-specific KPIs. DBI reports allow users to drill into the summarized data to view the underlying transactional detail in OLTP tables. However, DBI provides more than just "canned reporting." In a major move toward decision process automation, Oracle has given users out-of-the-box access to business analytics that also include support for collaborative decision making and predefined and customizable workflows that guide users through a decision-making process. Acuity Brands Lighting, a manufacturer of lighting fixtures, is one of the early adopters of Oracle DBI. The company has already deployed Daily Business Intelligence for HR and Purchasing and is planning to expand to Daily Business Intelligence for Financials and Supply Chain. Jon Corliss, manager of Business Systems Intelligence at Acuity, has found high end-user satisfaction with the new and improved just-in-time access to data and negligible impact on the database. "As far as performance of DBI, we have seen less than 1% increase in total database size," said Corliss, "We are also using the RAC option of Oracle, which has allowed us to point all DBI users to a particular node, thus having no noticeable impact on the transaction-processing system." In addition, DBI enabled Acuity to begin using some new prebuilt KPIs the company was not tracking before. Interestingly, the higher user acceptance of DBIs may be a driver for Acuity to invest in other Oracle transaction processing applications. Jon Corliss, manager of Business Systems Intelligence at Acuity has found high enduser satisfaction with the new and improved just-in-time access to data and negligible impact on the database. The current version of DBI does have a drawback it cannot source data directly from other, non-oracle applications. For many users who do have such a need to integrate non-oracle data and extend DBI, one of the options is the Oracle Balanced Scorecard application. 10 # IDC

11 CHALLENGES AND OPPORTUNITIES Oracle, like any software vendor, faces certain challenges. Having the most popular database for business analytics is a key asset for selling a broader business analytics suite. However, there has been a lag from the embedding of BI functionality in the Oracle database and the delivery of BI tools and analytic applications that could leverage this functionality. Nevertheless, with new releases of both BI tools (notably OracleBI Discoverer) and analytic applications (notably Oracle Enterprise Planning and Budgeting), Oracle's business analytics offerings have reached a critical mass. Now Oracle's challenge is to gain mindshare for its BI tools and analytic applications that were specifically built to leverage the database foundation. A point of importance in this regard is that Oracle has priced its business analytics solutions very competitively. IDC analysts were somewhat surprised to hear from several current Oracle customers who have recently either upgraded or purchased new software from the company that an attractive price point was one of the key criteria for selecting Oracle software. This trend is especially true for the components embedded or linked to the database or applications, such as OracleBI Warehouse Builder, the OLAP server option, and Daily Business Intelligence. For example, at the University System of Georgia, the Oracle database technology has been supplemented with OracleBI Warehouse Builder, OracleBI Discoverer and OracleApplication Server. While the University System's institutions have applications from several different software vendors, its analytics needs are being met by Oracle's technology. "Having already acquired Oracle site licenses for the database and application server for our 34 institutions, we only needed to replace certain outdated end-user reporting tools." said John Graham, executive director of Enterprise Application Systems. The cost for these add-on tools was nominal compared to having to acquire them from specialty BI or ETL vendors. The current business analytics solution at the University System of Georgia supports a wide array of applications and users including 247,000 students, perspective students, institutional researchers, department heads, deans, vice presidents, presidents, the University System's chancellor's office, the legislature, and the governor's office. Certain reporting functionality is also available to all citizens in Georgia. CONCLUSION A Full Range of Business Analytics Oracle provides a full spectrum of operational, tactical, and strategic reporting and analysis software with both historical analysis and predictive functionality. Supporting all steps of the decision-centric BI model, Oracle is well positioned to enable decision process automation. The business analytics market through its data warehousing and business intelligence segments has long claimed to be in the decision support business IDC #

12 However, the vast majority of the efforts to date have been concentrated in the upper half of the decision-centric BI model as shown in Figure 1. Data extraction and information delivery have been the recipients of the primary focus of the market. However, a comprehensive business analytics solution requires multiple technologies to support the varied decision-making needs of ever-expanding user populations. Deploying such a solution based on technology from a single vendor has advantages. As a VP from a leading global bank put it, "Having multiple solutions from Oracle contributes to higher quality of data and stronger integration between the data warehouse and transactional system. It has also enhanced our communication with the software provider, our ability to influence future product development and resolve problems not having to deal with multiple vendors streamlines the process." At the same time for those not interested in a purely Oracle end-to-end solution, the company provides openness to integrate with other BI software. For example, at the University System of Georgia, in addition to Oracle's BI tools, software from Business Objects is used. Business Objects reporting software is exposed to end users through the OracleAS Portal. Today, clear signs of a shift in the market are observable. Focus on true decision support is being introduced to the market by vendors such as Oracle. With a portfolio of software that provides organizations with a range of choices on whether to build or buy prepackaged business analytics software, Oracle is making the necessary investment to continue as the market leader in business analytics. Copyright Notice External Publication of IDC Information and Data Any IDC information that is to be used in advertising, press releases, or promotional materials requires prior written approval from the appropriate IDC Vice President or Country Manager. A draft of the proposed document should accompany any such request. IDC reserves the right to deny approval of external usage for any reason. Copyright 2004 IDC. Reproduction without written permission is completely forbidden. 12 # IDC