It took High Liner Foods Inc. in Lunenburg, Nova Scotia, 10 years to find a viable and affordable business intelligence solution, said chief financial officer Kelly Nelson."What we had was JD Edwards' [enterprise resource planning system] and another sales reporting system. It was OK for people to use, but not so user-friendly," said Nelson. "All the BI applications were very expensive and took too long to install, so you lost cost from the expense of the system and the effort of installing it."
Today, High Liner uses a BI system, Q4Bis, for "everything" - from financial statements, budgeting and forecasting, to inventory management and sales management. But while High Liner is a midsized concern with about $300 million in annual revenue, most other small and midsized businesses still have yet to jump on the BI bandwagon, according to providers.
"Business intelligence is still a new concept to many companies," said Daniel Schwartz, founder and chief executive officer at NexVue Information Systems, a New York-area project management and accounting solutions provider in Stamford, Conn. "There is no real penetration of BI products in the mid-market; we're just getting there now."
Business intelligence systems are normally a set of software tools and applications that work together to collect, process, analyze and report on a company's financial data. They pull information from various databases - i.e., customer relationship management systems and back-office accounting systems - across a company for a single view into the data.
Business intelligence software has become more robust as prices have fallen, competition has increased and implementation time has dropped. BI providers reported anywhere from 30 percent to more than 100 percent growth in sales revenue over the last year. Tech researcher Gartner estimated a 6 percent growth in BI industry sales over the 2005 figures.
Meanwhile, last July, Forrester Research surveyed 798 technology decision makers at SMBs across the U.S. to gauge their technology priorities. Some 37 percent of that sample with under 500 employees indicated that they would purchase a BI solution, while the figure dropped to below one third among businesses with less than 100 employees.
With costs ranging from $10,000 to hundreds of thousands, many SMBs can't afford intricate BI systems, nor can they expend the time it takes to learn or implement them.
"We haven't looked into them yet," said IT director Mark Linny at Tonneson & Co. CPAs PC in Wakefield, Mass. "We go for stuff on the hot burner, and right now, this isn't it. It's not a hindrance for us [to operate without a BI solution] and it doesn't tend to be as important as other solutions, like Web Services."
The most sought-after and SMB-accessible feature within BI packages today are dashboards - graphical representations of a company's financial data in the form of alerts, charts, gauges, spreadsheets and tables.
"People love them," said Nils Rasmussen, principal at Solver Inc., a Microsoft partner and analytics and BI provider in Los Angeles. "[But] dashboards are relatively new; my rough guess is only 5 percent or less of organizations have a dashboard in place. We find ourselves doing a lot of education about what a dashboard is."
In a performance management spending report released in April, AMR Research predicted that the dashboard and scorecard segment would grow to $5.22 billion in 2006, or 26 percent over last year. AMR also projected that the BI segment would grow at a 10 percent clip over last year, to hit $6.35 billion.
Differentiation between BI systems and dashboards is starting to increase as dashboards become increasingly sought after by those who can't afford an entire BI system. Companies like Solver Inc. and Executive Dashboard of Qualitech Solutions Inc., in Charlotte, N.C., offer SMBs the option to just buy the dashboard tool and not a whole BI system. The savings are significant - one half to one fifth of the cost of a full BI system - but the capabilities are limited.
Reach in, reach beyond
"We needed a more granular look into the company, and we wanted to involve more non-financial users, especially in budgeting and planning," said Microsoft FRx user Scott Lamape, chief financial officer at Hendrick Motorsports, a NASCAR racing team in Charlotte, N.C. "We [the financial staff] were in a vacuum trying to figure all that out. We wanted to match up and get more involvement from other operating groups."
Most companies buying BI apps or dashboards are still looking internally to analyze data, monitor key performance indicators, or see a snapshot of personnel performance. Once these users have mastered those skills, developers have already laid the foundation to look outside the company with competitive analysis tools.
Microsoft FRx, NexVue, LogiXML, QlikTech, Q4Bis and Solver all offer the ability to create and customize their dashboard platforms to fit a competitive analysis focus. One way to create a dashboard with a competitive analysis focus is to streamline news about competitors into the dashboard. Another useful tool for companies whose competitors are publicly traded is to have graphics similar to thermometers showing their rivals' stock value.
BI gets faster and cheaper
Microsoft Office 7.0, due out early this fall, will upgrade MS Excel with a new graphics engine and an increase in the number of rows possible from about 65,600 to 1 million. Many small and midsized companies and firms use Excel as their budgeting, forecasting and reporting application today, said Rasmussen. "My guess is that upper-mid-level companies will be using Excel as their scorecard/dashboard tool."
Another way that SMBs are gaining interest in BI solutions for a cheap price is through vendor promotions. Many providers offer a free trial period for potential customers, and LogiXML goes so far as to offer a free Web-based reporting system - LGX Report.
Things will also speed up as SMBs move toward 64-bit servers, such as Microsoft's Server 2003 64-bit server, which became available in April 2005, making BI apps even more attractive. On a 64-bit server, there can be more users on at the same time without slowdowns, users can save larger files, and the server has more memory and computes data faster than a standard 32-bit server - key qualities for BI apps that pull from multiple data sources, generate large files and rely on real-time data for accurate company views.
"As the 64-bit computing becomes more widely adopted and the architectural approach more accepted, our memory approach will become even more prevalent," forecast QlikTech's vice president of marketing, Anthony Deighton, whose company uses a memory approach to transfer data from ERPs, CRMs and other systems to their BI products.
The move to online and on-demand services that other software has taken, however, is not spreading rapidly over to BI solutions just yet. While some already offer a hosted or online solution, the bulk of sales are still coming from server-based BI applications.
"Once ERPs become hosted more prevalently, BI will follow suit, but you need ERPs to go first," said NexVue's Schwartz. "It's a cause and effect, like the cart and the horse."
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