Intelligence and performance management accept a merger

Rather than considering business intelligence (BI) and performance management software as two distinct solutions sets, leading manufacturers now see them as complementary tools. Using them in concert brings increased understanding of enterprise conditions, and how to act appropriately to improve business performance.

By Jim Fulcher, Contributing Editor July 1, 2007

Rather than considering business intelligence (BI) and performance management software as two distinct solutions sets, leading manufacturers now see them as complementary tools. Using them in concert brings increased understanding of enterprise conditions, and how to act appropriately to improve business performance.

Consider Vicor Corp. , a manufacturer of modular power components and systems for the communications, data processing, industrial controls, test equipment, medical, and defense electronic markets. The Andover, Mass.-based company is using BI and corporate performance management software from Cognos to track and analyze production processes.

“The Cognos solution allows us to use resources to solve a problem, not just understand that it exists,” says Joe Jeffery, director of manufacturing systems, at Vicor. “That facilitates continuous improvement.”

Essentially, Vicor and a growing roster of other manufacturers realize that simply being efficient is no longer enough.

“Enterprises can no longer stay competitive just by squeezing more efficiency from operational applications,” declares Boris Evelson, principal analyst, business intelligence, with Cambridge, Mass.-based Forrester Research . “They need BI applications to help make business processes and business operations more effective and, in turn, improve performance. For example, workflow and rules can be used to efficiently process customer credit applications, but BI analytics are needed to effectively segment a customer population so the company can extend credit offers to much more targeted customer segments, which results in better response rates and higher cross-sell/up-sell ratios.”

That realization translates into higher demand for BI and performance management solutions, such that analysts forecast healthy growth for the market. Boston-based AMR Research expects companies to spend $5.9 billion on BI/performance management software alone in 2007. However, the firm’s research indicates total expenditures for BI/performance management—including software, integration, consulting, hardware, and internal head count—will hit $23.8 billion for the year.

Problem resolution

That type of forecast doesn’t come as a surprise to Paul Hoy, manufacturing industry director at Cognos. As he sees it, not only do manufacturers need to improve performance, they also know they can’t afford to see the same problems quarter after quarter. The result is demand for solutions that show how a company is doing, and offer the means to improve performance on an ongoing basis.

“Many market dynamics come into play, but the bottom line is manufacturers need to fight for every bit of market share,” Hoy says. “And while they want to be lean and avoid using more IT solutions than necessary, they also need one point of access to view performance of finance, inventory, customer service, production, and even demand. That way if there is a problem, they can first drill down to look for causes such as plant, supplier, or material performance. The next step is to use the solution to determine the best way to make necessary changes.”

To simplify deployment of those types of capabilities, there’s a trend afoot among solutions suppliers to make BI more pervasive throughout the enterprise. One way is to incorporate more functionality that allows general users to leverage the tools and enterprise information.

One such vendor leading the charge is SAS , a pioneer in the BI space whose products use complex mathematical algorithms to mine nuggets of useful information from the mounds of data flowing through a business. Its early solutions required trained specialists to make sense of the data, but that—like the entire BI/performance management industry—has changed.

“SAS’ biggest strength is that even nonstatisticians can quickly produce simple reports and benefit from very sophisticated analysis and forecasting models—all with the same software,” says Mahinda Yapa, director of credit and portfolio management at Pitney Bowes , the Stamford, Conn.-based company known for its comprehensive suite of mailstream software, hardware, services, and solutions. “You don’t have to buy several tools.”

Using solutions from SAS , the global financial group at Pitney Bowes reduced its credit and portfolio risk reporting process by three weeks—saving hundreds of thousands of dollars in the first year alone. With SAS, financial reports that once took weeks to compile are done in just hours, and the company finds it easier to identify cross-selling opportunities, Yapa says.

Intelligence to go

Solution suppliers also offer tools that help workers make better business decisions, which in turn can improve performance at all levels of an organization. Making BI solutions compatible with mobile devices is a big step in this direction, as it makes many of the dashboards and other tools that feed users relevant information more readily accessible.

In May, Cognos and Business Objects both introduced mobile solutions. Cognos 8 Go! Mobile enables executives or front-line mobile workers to view and manipulate current company performance information via Blackberry smart phones.

The BusinessObjects Mobile solution enables users to view and interact with a full range of reports and metrics from BusinessObjects XI Release 2. Users can respond to problems quickly by updating data or triggering remote processes directly from mobile devices, says James Thomas, senior director, product marketing at Business Objects.

“The concept of making BI more pervasive and widely available has been a goal for a couple of years, and it’s really come to attention now,” says Thomas. “What it does is offer the means to take data from multiple solutions, add other relevant content, and present it in a way that’s consumable by people who aren’t IT experts. That makes it easier for them to make decisions quickly.”

With so much market potential at stake, it’s only logical that the traditional BI vendors such as SAS, Cognos, and Business Objects aren’t the only solution providers vying for manufacturers’ business. Enterprise solution vendors also figure prominently.

SAP , for instance, positions its BI Accelerator appliance to address high-performance BI needs. Recently, Oracle acquired performance management software supplier Hyperion, and integration and business process management vendor TIBCO Software acquired data visualization and business analytics supplier Spotfire. Other parties striving for part of the business include Hewlett-Packard , IBM , and Microsoft .

Nontraditional players

There are other well-known software companies not strictly seen as BI or performance management solution suppliers, yet are focused on bringing their own expertise to the business performance sector. Google in particular touts the appropriateness of its technology for business searches, while Adobe Systems offers product suites that streamline business processes by aggregating data from multiple systems into interactive documents that can be shared throughout the enterprise and supply chain. Even has introduced an integration platform that allows customers to create new business processes by linking third-party applications to the on-demand CRM solution set.

John Hagerty, AMR VP and research fellow, calls it a “battle royale” between new entrants, data warehouse specialists, appliance vendors, and multipurpose database suppliers that are jockeying for a prominent part of that BI/performance management market. Ultimately, Hagerty says, this will be good for users.

“The greater BI/performance management market space is undergoing significant transformation,” maintains Hagerty. “Acquisitions, alliances, repositioning, and spin-outs are part of today’s landscape, and more changes are sure to come. As competition intensifies, buyers will have more options than ever before.”