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Industry Risk – Poor Business Intelligence Costing Fortune 500 Companies Millions

A study conducted by market research firm Dynamic Markets has yesterday revealed that business intelligence systems are failing to improve operational performance or impact decision making within US and UK businesses.

A study conducted by market research firm Dynamic Markets has yesterday revealed that business intelligence systems are failing to improve operational performance or impact decision making within US and UK businesses. The research, based on interviews with 218 operational executives and front line management and conducted between November 2006 and August 2007, provides a snapshot of current use and satisfaction with Business intelligence systems and their impact on operational performance.
Although many organizations have adopted BI tools in quantity, buying thousands of user licenses, results of this research show that the majority fall short in meeting the expectations of their promise. For example, in many cases, IT executives find themselves forced into a position where they have to make decisions before all the information they need is available (76 percent), believe that BI reports end up being simply reference documents to justify decisions that have already been made (63 percent), and do not receive reports that provide predictions about potential problems or provide potential opportunities (more than 70 percent).

The impact of inadequate intelligence on the business is huge. The average cost – discovered by the research – in lost revenue to an organization is $478,686. In fact, one operations manager admitted to a direct $5,000,000 cost to his area of the business. By extrapolating this annual average as representative across the market, then the survey indicates that the Fortune 500 companies are losing approximately $250 million per year in missed business opportunities as a result of inadequate business intelligence.

Business intelligence was developed to help make businesses more efficient, and to give managers the information they needed to make smarter decisions. However, the research, commissioned by SeeWhy Software, has unearthed interesting insights into the apparent failure of BI systems. Charles Nicholls, CEO and Founder of SeeWhy Software, commented, “What is clear from this research is that all is not well in the world of BI. BI tools are perceived as hard to use, reports are out of date and largely irrelevant to daily operational decision making and BI is seen as inherently retrospective. Yet it is clear that managers strive for more, seeking information that can make a difference; that is relevant to operations now; that can give early warning of problems; or can present opportunities for the business.”

Although managers were very aware of the problems that exist with their current BI solutions, they were also aware of the potential benefits of moving to event driven approaches that provide real time operational ‘event intelligence’ rather than retrospective ‘business’ intelligence. Almost allmanagers surveyed (90 percent) believed that there would be significant benefits to the business if they could embed greater intelligence into daily operational processes. Benefits mentioned included:

72 percent believed that their company would employ more efficient processes.
71 percent felt that there would be an improvement in customer service.
65 percent thought that there would be an increase in revenues and 65 percent saw an increase in profitability.
59 percent believed there will be lower levels of risk to the business.
57 percent felt it would make them more competitive.
52 percent said that it would enable better compliance with regulations.
Charles Nicholls explained, “We’ve seen order of magnitude increases in performance when business intelligence is built into operational processes. In some cases the improvement exceeds 10x (1000 percent). It’s clear that operations managers in the US in particular are becoming increasingly aware of the potential to transform key operational processes in this way.”

The survey also examined use of alerting technologies in daily business operations, and these too are failing to deliver what is required in the majority of cases: 55 percent of all managers stated that their current operational alerts arrive after the event, are not specific enough, or are not delivered in an operational context. This means that the alerts cannot be acted upon to improve business performance.

Nicholls commented, “This research has highlighted the need for a new, better and more business focused way to aid decision making. SeeWhy gives customers an easy way to inject intelligence into their business processes and to gain a competitive edge from doing so. Building in-memory analytics into business processes produces dramatic results.”

A surprising result from the research was the difference between the US and the UK. The survey found that more UK managers compared to US managers receive reports to help them run their respective parts of the business. UK managers also receive a greater variety of reports that can be used in an operational context for daily tactical decision making:

68 percent of UK operations managers receive snapshot reports with only 44 percent of their US
colleagues doing so.
62 percent of UK managers receive reports alerting them to problems that have already occurred compared to only 44 percent in the US.
US managers find themselves more pushed for time to check all the facts and figures, compared to the UK sample group.
Source: RiskCenter.com

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