Business Intelligence Lecture -1 : 12.09.

11

N.P. Singh Professor (IT) E-mail: Knpsingh@mdi.ac.in

Coverage

Business Intelligence
Definition Components Vendors & Products Architecture Examples

BI Defined
Gartner Group says: Business Intelligence (BI) encompasses the processes, tools, and technologies required to transform enterprise data into information, and information into knowledge that can be used to enhance decision-making and to create actionable plans that drive effective business activity. BI can be used to acquire
Tactical insight to optimize business processes by identifying trends, anomalies, and behaviors that require management action. Strategic insight to align multiple business processes with key business objectives through integrated performance management and analysis.

BI Technologies

Each technology has its place in BI

Datawarehouse, data marts- historical analyses, predictive trends, understand what has happened. ODS- Integration of current events and ability to take quick actions.

Information Hierarchy
Business Value Drivers

Business Intelligence

Decision Support

Management Reporting

Operational Reporting

What is Business Intelligence?

BI is not a single computer system, but a framework for leveraging data for tactical and strategic use.

ERP & Business Intelliegnce

ERP: How to reduce the cost of operations BI: How to increase Profits.

Major Trends

Trend # 1:
Consolidation of BI Companies

Trend #2:
Moving from Strategic BI to Operational or Right-Time BI

Trend # 3:
More Sophisticated Analytics and Data Visualization

SN 1 2 3 4 5 6

Vendor SAP Business Objects SAS Cognos IBM Oracle

7
8 9 10 11

Hyperion
Microsoft Micro Strategy SPSS Information Builders

2003 123.9 (2.72) 649.9 (14.26) 473.4 (10.39) 415.5 (9.12) 163.4 (3.58) 195.2 (4.28) 262.8 (5.77) 125.0 (2.74) 142.2 (3.12) 140.9 (3.09) 112.0 (2.46)

2004 2005 152.0 181.8 (3.02) (3.24) 730.1 835.0 (14.50) (14.89) 514.5 582.4 (10.22) (10.39) 511.5 566.9 (10.16) (10.11) 65.1 64.0 (1.29) (1.14) 164.5 184.6 (3.27) (3.29) 258.6 287.1 (5.13) (5.12) 299.1 374.5 (5.94) (6.68) 188.9 215.8 (3.75) (3.85) 158.5 176.2 (3.15) (3.14) 143.0 170.0 (2.84) (3.03)

2006 1214 (19.51) 679 (10.91) 692 (11.12) 510 (8.19) 480 (7.71) 249 (4.00) 198 (3.18) 182 (2.92)

2007 1350 (19.19) 791 (11.24) 762 (10.83) 597 (8.49) 555 (7.89) 266 (3.78) 226 (3.21) 180 (2.56)

2008 1589 (20.41) 879 (11.29) 800 (10.28) 701 (9.01) 649 (8.34) 282 (3.62) 237 (3.04) 178 (2.29)

12 13 14 15 16 17 18 19 20

Actuate Corporation Qlik Tech TIBCO Panaroma Software Fujitsu ArcPlan Open Text Teradata Lawson Software

88.6 (1.94) 7.2 (0.16) 31.2 (0.69) 20.0 (0.44) 16.3 (0.36) 31.0 (0.68)

88.6 (1.76) 12.9 (0.26) 22.7 (0.45) 36.5 (0.72) 22.0 (0.44) 18.4 (0.37) -

89.9 (1.60) 22.1 (0.39) 22.7 (0.41) 38.1 (0.68) 23.7 (0.42) 20.6 (0.37) -

99 (1.59) 39 (0.63) 52 (0.84) 38 (0.61) 33 (0.53) 26 (0.42) 28 (0.45) 20 (0.32) 28 (0.45)

111 (1.58) 70 (0.99) 53 (0.75) 57 (0.81) 34 (0.48) 29 (0.41) 26 (0.37) 23 (0.33) 19 (0.27)

106 (1.36) 104 (1.34) 73 (0.94) 62 (0.80) 40 (0.51) 31 (0.40) 25 (0.32) 24 (0.32) 23 (0.30)

21 22 23

CA Fair Isaac Kalido

27.4 (0.60) -

29.0 (0.58) -

29.3 (0.52) -

29 (0.47) 7 (0.11) 15 (0.24)

34 (0.48) 13 (0.18) 16 (0.23)

20 (0.26) 18 (0.23) 17 (0.22)

24
25 26 27 28 29 30 31 32 33 34

KXEN

41.4 (0.82) 37.4 (0.74) 17.7 (0.35) 1524.3 (30.26) 5036.7

42.9 (0.77) 38.7 (0.69) 21.5 (0.38) 1618.2 (28.86) 5606.2

8 (0.13)
15 (0.24) 9 (0.15) 12 (0.19) 13 (0.21) 9 (0.15) 7 (0.11) 1533 (24.63) 6224

12 (0.17)
13 (0.18) 11 (0.16) 13 (0.18) 14 (0.20) 10 (0.14) 9 (0.13) 1741 (24.74) 7036

16 (0.21)
15 (0.19) 14 (0.18) 14 (0.18) 13 (0.17) 11 (0.14) 10 (0.13) 1832 (23.54) 7784

Targit Infor Data Watch Corporation Advisor Solutions Unica Corporation Hummingbird Visual Numerics ProClarity Others Total

38.2 (0.84) 36.8 (0.81) 13.0 (0.29) 1444.0 (31.68) 4557.9

Big Tickets
SN 1 2 3 4 5 Oracle Oracle Oracle Acquirer SAP Acquired Business Objects Cognos PeopleSoft Seibel Hyperion Amount US$6.8 Billion Year October 2007 US$5.0 Billion November 2007 US$10.3 December Billion 2004 US$5.85Billio September n 2005 US$3.3 Billion March 2007

6 7 8

Microsoft IBM SAP

ProClarity SPSS Sybase

US$50 Million US$1.2 Billion

April 2006 July 2009

US$ 5.8 Billion May 2010

Reasons to Acquire

To get rid of the shortcomings of transaction-based ERP systems (Greenbaum (2007)). To overcome the weaknesses of the tools-based BI systems (Greenbaum (2007)).

ERP systems lag in delivering top-notched analysis to the customers who have created large databases (Greenbaum (2007)) Inability to take the domain knowledge that exists within a vendor like SAP and turn that into pre-built, highly-verticalized, analytical solutions that anticipate problems, identify them to the relevant users, and suggest or direct corrective action due to too much growth of back office transaction systems. (Greenbaum (2007))

Continued- IBM

It has a strong backend BI infrastructure (Data Warehouse, Relational database, ETL tools, query software) without a complementary suite of front end tools (Except for OfficeConnect with MS Excel interface). With the new Information on Demand strategy, the company wants to draw it BI portfolio closer to its other data management technologies. (Computer Business Review (2005))

Continued-Oracle

Oracles strategy of diversification of its revenue streams led to its foray into business analytics area. Its buying out of Peoplesoft and Seibel and the subsequent acquisition of Hyperion would contribute a large chunk of its revenue and it would not be dependent on its primary area of database and infrastructure software. (Morris et al (2005))

Continued-MS
Microsoft until now concentrated on the Server market through its series of SQL Servers. In the meantime, it was working with partners who would provide front end analytic solutions. With the potential of the BI market increasing, it wants to foray into this market and prompted Microsoft to acquire its own strategic partner ProClarity. It is expected to consolidate Microsoft position as a serious BI vendor of future years (Montalbano (2006)).

Propositions Singh & Nayeem (2011)

Propositions Proposition 1: Acquire a company to add customer base that increases market share and revenue. Proposition 2: Acquire a company to add engineering skills. (new) Proposition 3: Acquire a company to add new product line that fills a market gap Proposition 4: Acquire a company to have new technology that improves core capabilities. Proposition 5: Acquire a company to compete in the market. Proposition 6: Acquire a company to achieve innovation through products and technical skill integration (provided products are designed to be integrated) Proposition 7: Acquire a company to beat internal innovation stagnation. SAP IBM Oracle Microsoft 10 10 10 9

9
7

8
9

7
9

9
9

10

Impact- Brand
The three vendors SAP, IBM, and Oracle will retain the brand name of their strategic buyouts. Their product offerings will be known as SAP Business Objects, IBM Cognos, and Oracle Hyperion. On the other hand ProClarity will loose its brand to Microsoft. Even the SAP BO offerings are evolving to be SAP-centric (Schiff (2008)). However, they may be selective. To mention, Oracle retained the name of a product as Oracles JD Edwards EnterpriseOne which was created by PeopleSoft and J.D. Edwards (Kristine (2010)).

Impact Market Size

Swoyer (2008) said that in the year 2007 Business Objects was number one in terms of overall BI platform revenue with nearly 20 percent of the entire market, followed by SAS Institute Inc. (15 percent), the former Cognos (14 percent), Microsoft (11 percent) and Oracle (9.4 percent). With SAP's acquisition of Business Objects, the combined entity accounted for more than a quarter (26.3 percent) of global BI revenues. IBM's BI tally to that of Cognos catapulted the pair into a "virtual tie" with SAP. It resulted in overall third place for SAS an independent vendor in the BI domain. Meanwhile, combination of Oracle and Hyperion was in a virtual tie with Microsoft for fourth place overall.

Impact Integration in Few Areas

Siebel's acquisition by Oracle has multiple long-term implications for the CRM market and the CRM ecosystem such as (i) end of the road for stand alone applications at enterprise level, (ii) focus of vendors on pre-integrated CRM, ERP, and supply chain software as their offering. The reason is bottom line for CRM successful implementations. It requires deeper links between customer data and business processes across the enterprise.

Impact- Small Customers

The increasing market shares of the big four will leave fewer choices to the customers and create a lock in situation (Daniel (2007)). The application (BI + others) of BI vendor will become more integrated and customers may be pushed into buying the whole stack that may not be required by them. It may in turn reduce return on investment for the user which in turn will make applications less attractive. It may

Impact- Best of Breed

The acquisition of these vendors by big players will stop development of best of breed features as efforts will be diverted towards integration of these buyouts with the products of acquirer. The resources will be consumed by integration activities. The development of new best of breed features will take a back sheet. To mention, SQLBI (2008) reported that Microsoft acquisition of ProClarity stopped most of its development because of the need to integrate it with PerformancePoint.

Impact- in General

The worst negative impact of the inorganic growth strategies is loosing best of breed and useful functionality in the process of consolidation of old products in to new offerings in the face of business compulsions.

Few more Remarks

The worst negative impact of the inorganic growth strategies is loosing best of breed and useful functionality in the process of consolidation of old products in to new offerings in the face of business compulsions. The gaping holes had to be filled in their BI product armor either organically or through acquisition and assimilation for the next stage of market expansion.

Continued

The spate of big ticket acquisitions since 2007 highlights inorganic expansion strategy adopted by the big four vendors. The main contents of their strategy are - Expand BI technology offerings by integrating the more sophisticated and advanced acquired products from pure-play vendors, which in turn adding to the already large customer base. They are also sustaining the old products to satisfy their customers. However, it does mean end of pure play vendors. SAS, MicroStrategy, Tibco Spotfire, Qlik Tech, Actuate, Panorama Software, and Board International are also growing and will continue to grow organically by developing new offerings to their client organizations in future. T he pure play vendors will continue to occupy very special place in BI industry. ebizQ (2009) report about

Continued
QlikView 9 from QlikTech is an ideal product for companies frustrated with failed attempts to implement BI from vendors such as SAP Business Objects, IBM Cognos and Oracle Hyperion. (7.2 million revenue in 2003 and 104 million revenue in 2008 for QlikTech), it can be inferred that users are attaching very high value to the products of pure play vendors. The size and composition of the industry may change but all players of BI ecosystem will continue to be around.

Consolidation of BI Companies

Acquisitions / relationships seem to fall into one of three categories Data quality Vendors Data quality vendors are being scooped up. Few standalone data quality vendors these days. Part of full suite vendors Add to data integration capabilities EII vendors: Purchased or forming exclusive partnerships with other BI vendors. Data integration capabilities of either the standalone ETL or full-service vendors enhanced to deliver real-time integration capabilities. Small niche players are being acquired before they even make a name for themselves. IBM and Oracle, Additions give big companies quick solutions such as master data management (MDM) or (CDI) applications.

Plus Side
Consolidating your business intelligence solution into the hands of a single vendor makes life simpler in terms of contracting, a single vendor interface and a reduction of finger-pointing when things dont go according to plan. There is no doubt an appeal to the one-stop-shopping mentality. The goal of the full-service vendor is to provide a fully integrated, end-to-end solution that satisfies the majority of your needs. Reduce the cost and implementation time. Simplification of maintenance, make enhancements easier and shorten the learning curve for implementers.

Negative Side
Purchasing technology is not instant integration. Question of focus.

The best-of-breed vendors have a single mission in life to make the best solution for a particular problem. Their solution is usually a surgical strike complete, fast and elegant. The full-service vendors usually cant afford to expend that kind of energy on a point solution. Main Reason -Integration

Trend # 2: Moving from Strategic BI to

Operational or Right-Time BI

Right Time BI Focus on Operational BI Integrate BI functionalities in to day to day business operations
Close the gap between analytical and operational (Closed Loop business)

Examples:

Event driven operational dash boards/ Score boards BI analytics as a service

Available when needed (On demand) Embedded in operational Applications

Major Thrust

Shorten the latency between when a business event happens and an action is taken

Business value

Business Event Data latency

Three Component of Latency

Value Lost

Analyse s latency

Data ready for Analysis

Information Delivered

Decisio n Latenc y

Action Taken

Action Time or Action Distance

Tim e

Business value Data latency

Business Event

Data is ready for Analysis Value Lost Analyses Latency Information Delivered Decision Latency Action Taken Value Gained

Time Action Time or Action Distance Reduced Time to Action

Right Time BI Trends

Moving data from operational systems to the data warehouse more than once a day or continually. Integrating data to create a single view with up to date business context for analysis Extending access to analytical tools and information across the organization. Encapsulating BI functionality as reusable service.

Implementing Right Time BI

Analyze Business Processes

Data Latency Analyze Latency Decision Latency

Find opportunities to increase business value by shorting the decision cycle. Assess technologies, products, processes to achieve a right time BI Solutions

Trend # 3More Sophisticated Analytics and Data Visualization

Simple reports and queries; Multidimensional analysis. Cubes and star schemas are still very popular, Movement now toward more complex, deeper analytics using data mining, statistical methods and technologies that support pure ad hoc, unplanned forms of analytics. It is just the natural evolution of business intelligence toward a more mature environment. Certainly, the level of business expertise is much

Continued
These technologies have raised the awareness of predictive analytics or guided decision-making capabilities, making it possible to embed these in operational flows. Companies are now able to perform operational or right-time BI, giving the frontline workers the ability to access and use the results of these analytics, combined with operational data, for their daily activities.

BI Components/Technologies
Data Warehousing Analytical Processing & Analytics/ Business Analytics Customer Intelligent Systems Customer Scoring Data Marts DTEAMM/ ETL/ EMT Data Mining, Web Mining, Web harvesting, Web Farming Filtering and House Holding ODS, OLAP & OLTP, OODB Information Database Legamart, Operational data

Data warehouse architecture