Gap analysis: IDC issues wake-up call to companies lagging in BI use for operations
Business intelligence (BI) solutions supplier Teradata announces what it calls a landmark study from Framingham, Mass.-based IDC that puts business decision-making at a critical crossroads, with BI technology now an important component in differentiating between leading and average companies.
While information continues to explode and the pace of business decision-making is faster than ever, BI technology is at the intersection of a crossroads, with leading companies on one path, using BI for operations as well as the traditional strategic decision-making. On the other path, average companies are using gut instinct to make important business decisions with their management far behind the leaders in investing in BI technology.
“This is a wake-up call to companies that are not using BI for their operations as well as for strategic business decision-making,” says John Gantz, chief research officer, IDC.
In the IDC white paper, Taming Information Chaos: A State of the Art Report on the Use of Business Intelligence for Decision Making , principal author Gantz writes, “We are able to observe both where the technology is capable of taking us, and where the market really is. In a way, this is a gap analysis.”
The study quantifies the gap between market leaders and average organizations in the use of technology to support decision making: 66 percent of leaders rate their management’s understanding of the need to invest in BI as excellent compared to only 15 percent of average companies.
Leaders also are more likely to use BI on their front lines and to push it out to customers and suppliers—and more leaders say there would be “immediate” negative impact if their BI system was down.
Leaders are more likely to rate BI as their top business initiative and to measure ROI from BI.
“Market leaders are making decisions in noticeably different ways from average companies. It is evident from the study that management support for business analytics and dependency on real-time information are critical to taming information chaos and enabling smarter better decisions,” says Darryl McDonald, chief marketing officer of Teradata. “This study extends our previous surveys on global business decision making over the past five years and pinpoints important issues and trends. These range from information overload and decision complexity to democratization as critical business decision-making spreads from the corner office to cubicles and out to the front lines.”
Other key findings:
• 75 percent cite information overload, led by government and health-care respondents at 81 percent. Many claim up to half of all information available to them is useless for their decision-making.
• 37 percent of all business decisions remain primarily “gut” or instinctive. “Gut” decision-making is more common in the APAC region, as compared to more mature markets in the Americas or Europe.
• 58 percent say business decisions are more complex, and decision complexity appears greater in the Americas.
• 98 percent of the study’s senior-level decision-making participants have included BI solutions in their 2007 top 10 organizational priorities.
The study also reveals that the decision-making process is continuing to shift down and out in organizations, signaling a vital need for new business analytics tools to provide better supporting information.
Evidence of this diffusion includes:
• 48 percent of respondents said their front-line staff members were making more decisions this year than in 2006.
• 54 percentsaid front-line staff had BI solutions to support them. This is critical as three out of the top five applications of business analytics in the organization support customer-related activities.
Responding to the IDC survey were 1,072 executives from 22 countries, with 39 percent in IT management roles, and 61 percent in line-of-business management.