SIGNIFICANCE OF BUSINESS INTELLIGENCE APPLICATIONS FOR BETTER DECISION MAKING & BUSINESS PERFORMANCE

SIGNIFICANCE OF BUSINESS INTELLIGENCE APPLICATIONS FOR BETTER DECISION MAKING & BUSINESS PERFORMANCE Dr. Nitin P. Mankar Professor (Director), Jayawantrao Sawant Institute of Management & Research (JSIMR). Prof. Sanjeev D. Chaube Asst. Professor, PhD Research Scholar & Executive Director, Prism Information Technology Limited Abstract: The volume of information generated from enterprise applications is growing exponentially, and the cost of storage is decreasing rapidly. In addition, Cloud Based applications, mobile devices and social networks are becoming relevant sources of unstructured data that provide essential information for strategic decision making. Therefore, with time enterprise databases will become more valuable for business but also much harder to integrate, process and analyze. Business Intelligence software is instrumental in helping organizations to analyze information and provide reports to support business decision making. Accordingly, BI Applications evolved as enterprise information grew, hardware-processing capacities developed, and storage cost is being reduced significantly. In this paper, we will analyze the current BI world market in order to come up with business plan recommendations for better decision making and opportunities generated by the global BI Software Solutions. Keywords: Decision Support System (DSS), Business Intelligence Software & Applications, Enterprise Resource Planning (ERP), Performance Management, Predictive Analytics, Cloud, Data Mining 1 Introduction While the whole software market is facing challenging economic times and a market that has declined compared with the previous year, Business Intelligence (BI) software did not share the same destiny, showing double digit growth in 2011 because of its diverse analyzing and reporting feature of Decision Making. According to Gartner s annual Survey, BI remained among the top five priorities in 2011 (and it was number one in each of the previous five years). BI software provides the transparency and Decision Support that is helping Senior Management to improve business performance. We could say that BI is one of the most relevant business technologies of the decade and the decades to come. In order to drill down into BI software and its market growth we will use as a reference the Forrester Research BI Framework that covers five layers of BI software including Core BI, Business Performance Solutions, Predictive Analytics / Data Mining, Text Analytics and complex event processing: 1

Core BI : Provides generalized reporting and ad hoc query and analysis. In addition to these, Core BI players now typically provide Online Analytical Processing (OLAP), Analytic Dashboards, and interactive visualization features such as drilldown, portal and Microsoft Office integration, merging of coordinates and alerts. Thus Core BI today combines Reporting and Analytics. Business Performance Solutions : Adds specific business metrics, often for vertical industries. In combination with Core BI features, business performance solutions provides tools and templates to help users make strategic decisions supported by scorecards, metrics, KPIs what-if modelling, and budgeting. Predictive Analytics and Data Mining: Use models and statistical analysis for scenarios. These solutions extend Core BI features and historic business analytics with modelling, statistical analysis, clustering / set analysis, scoring and simulation. These products are still largely for highly sophisticated users, who employ them to identify meaningful patterns among variables in complex structured data sets. Text Analytics: Extend the scope of BI to unstructured textual data for richer analysis. Core BI does not typically encompass natural language processing, semantic analysis, or entity analysis, but with these techniques can identify useful patterns in unstructured and semi structured formats, especially when combined with powerful search capabilities. Complex Event Processing: Uses near-real-time data for operational BI or activity monitoring. These products use event stream processing via low latency middleware. So far confined primarily to the financial community, such analytics hold the promise of more actionable results, moving beyond predicting the past to reacting in the present. From all BI layers Business Performance Solutions, Predictive Analytics / Data Mining, Text Analytics and complex event processing software show higher forecasted growth. Commoditized Core BI is serving as a platform for the new layers that are generating new business opportunities for organizations that can generate higher margins. 2

16000 14000 12000 10000 8000 6000 4000 2000 0 2008 2009 2010 2011 2012 2013 2014 Core BI Business Performance Solutions Predictive Analytics / Data Mining Text Analytics Complex Event Processing 2008 2009 2010 2011 2012 2013 2014 Complex Event Processing $48 $62 $84 $108 $138 $177 $223 Text Analytics $231 $296 $393 $499 $632 $792 $978 Predictive Analytics / Data Mining $561 $698 $900 $1098 $1328 $1579 $1843 Business Performance Solutions $1699 $2099 $2676 $3226 $3838 $4466 5073 Core BI $4411 $4811 $5421 $5688 $5891 $5989 $5990 Note: Forecast Starts in 2009 Source: Forrester Research, Inc BI Market Share IT executives and software decision makers from United States and Europe (Source: Forrester: The State of Business Intelligence Software and Emerging Trends: 2010) name as their companies primary providers for business intelligence software SAP with 20%, followed by IBM with 17% and Oracle with 14%. Indeed the three BI Mega vendors started a consolidation race that began in 2007, and current market share values are the result of a frenetic wave of mergers and acquisitions that had not stopped yet. 3

BI Megavendor Share Information Builder, 1 Actuate, 2 Microstrategy, 3 Don t Know, 7 Others, 18 SAS, 1 Oracle (Including Hyperion), 14 SAP, 20 Custom Developed (In house or Third Party), 17 IBM (Including Cognos), 17 Base: 495 North American and European Software Decision Makers responsible for Packaged Applications. Source: Enterprise and SMB Software Survey, North America and Europe, Q4 2009 BI - Market Overview A relevant BI market consolidation began in 2007, concentrating the market in a few large vendors. In 2009, the top five vendors held 75% 1 of an $8 billion market 2. In the image below, we can observe the most important mergers and acquisitions between 2006 and 2008. Market Consolidation Roadmap 3 Apr 06, Microsoft Acquires ProClarity Feb 07, SAP Acquires Pilot Software Apr 07, Business Objects Acquires Cartesis for $300m Oct 07, SAP Acquires Business Objects for $6.8B Nov 07, Cognos Acquired by IBM for $5B 2006 2007 2008 Oct 07 Teradata /SAS Announce Strategic Partnership Sep 07, Cognos Acquires Applix for $339M May 07 SAP Acquires Outlooksoft for $200M Mar 07 Oracle buys Hyperion for $3.3B Despite the economic downturn, Gartner forecast for BI the fastest growth in the software 4

market. In tough economic times, BI had become a key business enabler, helping corporations to reduce cost and risk, and increase their incomes. 1 Gartner, Market Share: Business Intelligence, Analytics and Performance Management Software, Worldwide, 2008 2 Forrester, BI Software and Emerging Trends, 2010 3 http://www.clarkstonconsulting.com/viewpoint/bi_marketconsolidation.html Use of BI Application: Data from the Forrester Research estimates that 84% of companies in North America and Europe show strong interest in Information Knowledge (IKM) software, which includes collaboration Management, content management and business intelligence software among others. Surveys rank sixth in current adoption rates among all business applications, with 31% of all companies that had already implemented IKM Solutions. In addition to the above, companies rank IKM software third in the level of interest, just behind finance, accounting, customer relation management (CRM) and Human Resource software. Spend Management or Supplier Relationship Management Supply Chain Management (SCM) Softw are Human Capital Management Softw are Order Management Softw are Expanding/Upgrading implementation Implementing/ Implemented Planning to Implement in next 12 Months Planning to Implement in a Year or more Interested but No Plans Enterprise Resource Planning (ERP) Softw are Finance and Accounting Softw are 0% 20% 40% 60% 80% 100 % Not Interested Don t Know Source: Forrester: The State of Business Intelligence Software and Emerging Trends: 2010 5

Strategic Business Use: BI Business Use Text Analytics Complex Event Processing Advanced Analytics Data Quality Management Decision Support Solutions Business Performance Solutions Specialised Database Engines Data Visualisation, Dashboards Expanding/Upgrading implementation Implementing/ Implemented Planning to Implement in next 12 Months Planning to Implement in a Year or more Interested but No Plans Not Interested Don t Know Reporting Tools Finance and Accounting Software 0% 50% 100% Base: 853 North American and European Software Decision Makers responsible for Packaged Applications (Percentage may not total to 100 because of rounding). Source: Enterprise and SMB Software Survey, North America and Europe, Q4 2009 Global BI Market Growth: Gartner Research Reports BI Market Revenue Hit $12.2 Billion in 2011 Gartner Research recently published its annual enterprise software market share report which found that Business Intelligence (BI), Analytics, and Performance Management (PM) software revenue was $12.2 billion in 2011 a 16.4 percent growth over 2010 making the combined areas the second-fastest growing in enterprise software. According to the report titled, Market Share: All Software Markets, Worldwide, 2011, twothirds of that market revenue came from BI platform software, which hit $7.79 billion in 2011, up 16.3 percent from the previous year. BI, analytics, and PM have been identified as one way to filter vast and growing amounts of information to reach insights and decisions in the digitized world, which is transforming industry after industry, said Dan Sommer, principal analyst at Gartner. In a vendor sales comparison, Gartner identified SAP as having increased its revenue ($2.88 billion, up 19.5 percent from 2010) and market share to become the leader in the BI, analytics, and PM software space. In second was Oracle, with $1.9 billion in 2011 revenue, which, along with third-ranked SAS Institute ($1.54 billion in 2011 revenue) saw a dip in market share in the year-to-year recaps by Gartner. IBM registered $1.47 billion in software revenue in 2011 and 12.1 percent of the market share to come in fourth, and Microsoft totalled $1.05 billion in 2011 revenue with a steady 8.7 percent of the market share. 6

Indian BI Market Growth: Indian business intelligence (BI) software revenue is forecast to reach US$101.5 million in 2012, a -17.53 percent increase from 2011 revenue of $86.4 million according to Gartner, Inc. This forecast includes revenue for BI platforms, analytic applications and corporate performance management (CPM) software. During the next 10 years, the explosion of information will be the biggest opportunity for BI, and also its biggest challenge, said, Bhavish Sood, research director at Gartner. The extreme volume, velocity and variety of data will add stress to current approaches to BI and are increasingly capturing the attention of both the BI industry and buyers. BI software revenue in India is projected to total US$67.7 million in 2012 and grow to US$111.2 million by the end of 2016 (Table 1). BI will remain one of the fastest growing software markets, despite sluggish economic growth in some regions, as organizations continue to turn to BI as a vital tool for smarter, more agile and efficient business.. Table1 India BI Software Forecast 2012-2016 (Millions of Dollars) Sub segment 2011 2012 2013 2014 2015 2016 Analytic Applications and Performance Management12.4 14.2 16.8 19.9 23.5 27.8 CPM Suites 16.6 19.7 23.3 27.5 32.4 38.1 BI Platforms 57.4 67.7 76.8 87.1 98.5 111.2 Total Sum of Revenue 86.4 101.5 116.9 134.5 154.4 177.1 Total Growth (%) 26.6 17.5 15.2 15.1 14.8 14.7 *Gartner (September 2012) BI into the Cloud Cloud computing is an incremental innovation rather than a disruptive, a term that covers different technologies that used to be named separately and were consolidated prior to the creation of the cloud computing tag. Technologies of distributed or grid computing ; distributed and virtualized storage; virtualized servers and desktops; application services; web applications used to reach customers through the internet; software as a service - all these technologies and business models together, after being subjected to important incremental innovations that significantly reduced costs and risks and increased performance, is what we know today as the Cloud. While 21% of all companies are already using software as a service (SaaS) {Source: Forrester: BI in the Cloud? Yes, and on the Ground, Too, 2010} only Customer Relationship Management (CRM) and Human Capital Management (HCM) have made their way into the cloud. Business Intelligence does not have the same adoption rate. Nevertheless, 41% of all companies are strongly interested in moving BI into the cloud. The benefits that are driving customers to cloud computing are ease of implementation, costs and mobility. However, the top concerns that are impeding the adoption are security and integration challenges. BI applications need to consolidate all kinds of data from many different sources, and the biggest challenge comes from there. 7

CONCLUSION: Business intelligence is becoming an important strategic tool for business management. Business intelligence software offerings can help companies gain insight into their business, make better decisions and ultimately improve business performance. Nevertheless the integration of business and IT process management and Business Intelligence is the first step in managing business performance. It can now be easily concluded that since the worldwide Scope and Market size of Business Intelligence Software Solutions for better Decision Making for the Senior Management of any business unit, is increasing continuously since the past decade and shall continue to do so in next decade too, it is thus right time specially SMB s to be part of BI Tools for enhancement of Business Performance. BIBLIOGRAPHY: 1. Gartner, Market Share: Business Intelligence, Analytics and Performance Management Software, Worldwide, 2008. 2. Forrester Research, BI Software and Emerging Trends, 2010 3. Gartner, Forecast: Enterprise Software Markets, Worldwide, 2008-2013, 2009 4. Forrester Research, Market Overview: The Business Intelligence Software and Emerging Trends, 2010 5. Gartner, Magic Quadrant for Business Intelligence Platforms, 2010 6. Gartner, BI Platforms Use Survey: Customers Rate heir BI Platform Functionality, 2010 7. Forrester Research, BI in the Cloud? Yes, and on the Ground, Too, 2010 8. IDC, Worldwide Business Intelligence Tools 2009 Vendor Shares, 2010 9. Ballard, C (2006), Business Performance Management meets Business Intelligence available on line at http:/www.ibm.com/redbooks 10. BPM standard Group (2005) Business Performance Management: Industry Framework Document, available online at http:/www.bpmstandardsgroup.org. 8