Monday, October 03, 2005

Do we really all need Business Intelligence tools?

An article I read in in DM Review today highlights Forrester Research saying that "25 percent and 40 percent of all enterprise users" would eventually use BI software. I'm not quite sure what they are smoking over at Forrester, but this seems to me like another of those lessons in the danger of extrapolating. You know the kind of thing: "if this product growth of x% continues, within ten years everyone on the planet will have an iPod/Skype connection/blog/whatever." The flaw with such thinking is that there is a natural limit to the number of people that will ever want a particular thing. In the case of enterprise software that number is, I would suggest, much lower than commonly supposed. This is for the simple reason that most people are not paid to do ad hoc analysis of data in their jobs. Sure, some finance and marketing analysts spend their days doing this, but how many powerful BI tools does the average sales rep/bank clerk/shelf stacker really need? I'm thinking none at all, since their job is to sell things or do whatever it is that bank clerks do, not be musing on the performance of their company's products or its customer segmentation.

In my experience of implementing large data warehouse systems at large corporations, there are remarkably few people who need anything more than a canned report, or just possibly a regular Excel pivot table. A salesman needs to work out his commission, a support manager needs to track the calls coming in that week, but these are for the most part regular events, needing a regular report. In a large data warehouse application that has 1,000 end users of the reports produced from it, the number of people setting up these reports and doing ad hoc analysis may well be just 10 i.e. around 1% of the total. Once you get past management and the people paid to answer management's questions, there are just not that many people whose job it is to ponder interesting trends, or explore large data sets for a living. For this reason a lot of companies end up procuring a lot more "seats" of BI software than they really need. In one case I am intimately familiar with, even after five years of rolling out a leading BI product, the penetration rate was always much lower than I had expected, and never went as high as 5%, and much of this usage was not for genuine "BI" usage.

Of course this is not what the salesmen of BI vendors want to hear, but it is something that IT and procurement departments should be aware of.

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