Business IntelligenceMarket Trends Study
May 2005May 2005
The Gantry Group, LLC30 Monument SquareSuite 214Concord MA 01742
Phone: 978-371-7557Fax: 978-287-0043Web: www.gantrygroup.com
Business Intelligence Review and SourceMedia are registered trademarks of SourceMedia, Inc.
Use, duplication, or sale of this information, or data contained herein, is strictly prohibited. Copyright © 2005 Gantry Group LLC, SourceMedia, Inc. All rights reserved.
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Study Objectives and ApproachRespondent ProfileKey FindingsStudy Results
Table of Contents
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Study Objectives
Gain further insight into the needs, preferences, and characteristics of the market in the context of Business Intelligence solutions, particularly:
Market perceptions about BI
The role of ROI in BI purchase decisions
Importance and understanding of BI solutions
Metrics to track BI solution business justification
BI benefits
BI purchase influences/selection criteria
BI spend patterns, trends
Corporate use of BI solutions
Objectives
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Study Approach
Gantry joined with BI Review to develop a conditionalized, 36-question online survey questionnaire to address study objectives.Incentives for all qualified participants:
! Executive Summary of the study results! 40% discount to Business Intelligence Review Conference Forum! Free copy of Gantry Group’s whitepaper
ROI Thinking: The Best Practice Approach to Outsourcing
Participants (~75,000) recruited from selected SourceMedia publications’ subscriber lists:
! U.S. Banker! American Banker! Bank Technology News! Health Data Management
Survey conducted over ~ 1 month.! Launched: 12/09/04! Completed: 1/3/04
Approach
! DM Review! Security Industry News! Insurance Networking News
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Target Audience: Upper management: C-suite, S/E/VP, director/manager
Geography: U.S.
Industry: 5 segments! Financial Services! High Tech! Insurance! Healthcare! Manufacturing
Company Size: Neutral
Study Approach
Approach
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Respondent Profile
Response Profile
2%
3%
6%
7%
24%
27%
29%
0% 5% 10% 15% 20% 25% 30%
CEO/President
Director/Manager
SVP/EVP/VP
CIO/CTO
Other
CFO
COO
Treasurer/Controller
Board of Directors
1%1%
32%
5%8%9%11%12%
18%
0% 10% 20% 30% 40%
ITSales
MarketingFinance
OperationsProduct Development
OtherHR
Supply Chain/PurchasingManufacturing
Executive/Corporate Management
3%1%1%0%
Base = 551
Role Groups
DepartmentalFunction
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Respondent Profile
Response Profile
2,810 EmployeesMean
Base = 551
8%
8%
16%
28%
30%
0% 10% 20% 30%
Financial Services/Banking
Healthcare
High Tech
Insurance
Gov/Public Sector/Education/Non-Profit
Manufacturing
Retail/Wholesale
Publishing/Media/Entertainment
Other
Professional Services
4%
2%2%
2%
1%
Industry
# Employees
(Includes marketing, legal, business, IT, consultancies)
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Key Findings Summary
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Understanding of BI
Study Results
BI has attention and visibility at the highest executive levels as it is perceived to be an enabler of key corporate imperatives across industries and sizes.
The most important respondent corporate objectives for revenue growth and profitability are seen to be highly dependent upon the ability of an enterprise to….
• Plan
• Have executive access to accurate, timely scorecard data (KPIs)
• Model potential new opportunities
• Consolidate enterprise data – work from a “single version of truth”
• Improve accuracy of budgets and forecasts
…..all of which are benefits from BI technology implementation in operations.
Most respondents have made (or will within 12 months) investments in BI technologies indicating a strong need for the potential benefits.
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Propensity to Buy BI
Study Results
The majority of respondents share an understanding of the capabilities of BI functions and are technology-ready (or soon will be) to implement e-wide solutions.
Data Mining (42%)Data Management (59%)
CRM (30%)Data Mining (30%)Analytics (43%)Data Warehouse (61%)
Executive Dashboard (31%)Predictive Modeling (33%)Data Warehouse (44%)Analytics (61%)
Data Warehouse (35%)Analytics (30%)Spreadsheets (66%)Query/reporting (61%)
BI Analytics (35%)Executive Dashboard (38%)Reporting (71%)Data Mining (67%)
InvestmentsTools PlannedTools in UseTools Associated
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Use & Perceived Importance of BI
Study Results
A majority of respondents perceive BI as useful for analyzing (81%), reporting (80%), forecasting (78%), decision support (74%) and trending (71%) data from two departments: CRM (70%) and Finance (74%).
Specifically, BI is seen as very important for attaining major corporate imperatives: improving revenue and profitability (78%), improving competitive advantage (72%), and improving customer acquisition and retention (70%), cost reduction (69%); BI is seen as less useful for achieving compliance (38%) and decreasing time to market (43%).
The functionality and benefits of BI make this technology category well suited to helping executives with their top business initiatives:
• Customer-centric marketing (improving customer acquisition and retention,revenues) – 75%
• BPM (improving profitability) – 74%• Customer profitability (improving profitability) – 73%• Market competitiveness (customer acquisition) – 73%• Revenue growth (improving revenue) – 72%
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Use & Perceived Importance of BI
Study Results
Please rank the importance of the following potential benefits of a BI solution
to your organization.
To what extent do you think BI solutions will help you to address your key business
initiatives?
Which business initiatives are you pursuing most aggressively between now and the
next 2 years?
How important do you think BI solutions are in helping you achieve the following
corporate objectives?
Improve Accuracy in budget/business forecastingRevenue GrowthNew Product IntroductionDecrease Time to Market
Consolidate Enterprise ReportingMarket CompetitivenessMarket CompetitivenessReduce Costs
Improve Ability to Model New OpportunitiesCustomer ProfitabilityCustomer ProfitabilityImprove Customer
Acquisition, Retention
Provide Execs w/Reliable Scorecard/Dashboard ToolsBusiness Performance MgmtBusiness Performance MgmtImprove Competitive
Advantage
Improve Ability to PlanCustomer-Centric MarketingRevenue GrowthImprove Revenue & Profits
Importance of BI Benefits
BI & Addressing Business InitiativesTop Business InitiativesBI & Achieving
Corporate Objectives
There is strong alignment between what executives need and where they perceive BI solutions to be of greatest benefit.
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ROI for Pre/Post Implementation
Study Results
The vast majority of executives use or plan to use ROI (79%) and payback (31%) analyses to track the economic impact of their current/planned BI implementation.
Nearly half of all respondents who have already implemented a BI solution or who are in implementation, have realized or expect to realize a positive ROI –in the range of 11%- 50% (64%).
Overall – the most common metrics for measuring success of a BI solution are value drivers for tangible ROI analysis:
Cross/Up Selling Revenue
Maintaining Clinical Practice StandardsCustomer Lapse RatesCustomer Service CostsRepeat Revenue
Net IncomeIncreased Market ShareCross/Up sellProfitability (EBITDA)
Key Clinical IndicatorsCross/Up SellNew Customer AcquisitionNew Customer Revenue
Staff Productivity RatiosCustomer Retention RateCustomer RetentionTotal Revenue
HealthcareInsuranceFinancial ServicesHigh Tech/Prof Services
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Buying Habits
Study Results
The overwhelming majority of executives rely on cost-benefit analysis (81%) and ROI/payback analysis (58%) to support purchase decisions for BI.
However, when considering their BI solution, information from peers at other companies (52%) will be just as important as the ROI analysis (50%), and alignment of IT investments with corporate objectives (47%).
CFO (56%), CEO (45%) and COO (44%) are expected to be the most active users of the BI solution in companies with 500+ employees. However, 39% of executives from companies with 500+ employees report that the CIO/CTO is the single most influential person the BI purchase decision, followed by the CEO at 23%.
While ROI is a critical decision factor when analyzing the solution category, proven ROI (31%) is superceded by feature/function (57%), ease of integration with other systems (64%), and ease of use (48%) when selecting a specific vendor’s product.
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Study Results
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BI & Corporate Objectives
How important do you think BI solutions are in helping you achieve the following corporate objectives?
Base = 855
" BI solutions are seen as most important for improving revenues and profits across companies of all sizes.
38%
43%
69%
70%
72%
78%
0% 20% 40% 60% 80% 100%
Automate compliance
Decrease time to market
Reduce costs
Improve customer acquisition, retention and loyalty
Improve competitive advantage
Improve revenue and profits
% Respondents answering “Very Important”
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To what extent do you think BI solutions will help you to address your key business initiatives?
BI Addressing Business Initiatives
" BI solutions are seen as playing an important role in addressing top business initiatives across industries and company sizes.
Overall mean scores of importance
1 = Least Important
3 = Most Important
2.2862.157
2.364
2.413
2.467
2.498
2.552
2.579
2.622
2.653
2.667
2.702
2.711
2.743
1 1.5 2 2.5 3
Other [14]Outsourcing [89]
Reducing HR costs [129]Sarbanes-Oxley/Basel II/ HIPPA Compliance [268]
Merger and acquisitions [138]Supply chain efficiency [120]
Workforce alignment with corporate objectives [229]Six-Sigma implementation [91]Optimizing human capital [223]
New product/service introductions [363]Organizational agility [250]Opening new markets [326]
Improving market-facing functional consistency [95]Business Process Management [259]
Increasing market share [405]Product & service intelligence [269]
Increasing new account business [337]Improving customer satisfaction [486]
Increasing cross-selling/up- selling opportunities [336]Financial reporting and analysis [352]
Revenue growth [513]Customer profitability [380]
Market competitiveness [360]Business Performance Management [382]
Customer-centric marketing [269]2.725
2.708
2.670
2.653
2.647
2.618
2.555
2.543
2.473
2.467
2.407
Top uses of BI align with top initiatives.
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Business Intelligence Benefits
Please rank the importance of the following potential benefits of a BI solution to your organization?
" The top potential benefits of BI solutions are consistent across companies of different sizes and industries.
19
30
43
48
90
104
128
147
161
0 20 40 60 80 100 120 140 160 180
Other [35]
Improve ability to model investment outcomes [274]
Improve compliance [309]
Increase frequency of business performance reporting [439]
Improve accuracy in budget and business forecasting [542]
Consolidate all enterprise reporting [393]
Improve ability to model new opportunities [538]
Provide execs w/ a reliable scorecard/dashboard tool [528]
Improve the organization's ability to plan [573]
The graph depicts the # of respondents selecting a particular benefit as #1 (most important to their organization).
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Current Decision Support Tools
Which of the following decision support tools do you use/plan to use in your organization?
" Organizations with more than 10K employees are much more likely to use automated decision support tools such as OLAP (44%) and data warehouses (63%) than smaller organizations.
Overall breakdown of current and planned DS Tools
Current Base = 684
Planned Base = 592
22%
1%24%
20%
38%
33%
16%
23%
25%
33%
42%
43%
44%
66%
71%
0% 10% 20% 30% 40% 50% 60% 70% 80%
I don't knowOther
Enterprise Information IntegrationStratification of member population
Web/text miningOLAP
Data visualizationExecutive dashboard
Predictive modelingData integration
Data miningAnalytics
Data warehouseManual spreadsheets
Reporting 22%
11%
24%
30%
29%
26%
26%
22%12%
18%
12%14%
8%
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BI Purchase Analyses
Which of the following analyses did (will) you conduct to support your decision to purchase a BI solution?
" Cost-benefit and ROI/payback horizon are the primary methods of analysis when considering a BI solution purchase for companies of all sizes.
Base = 586
21%
58%
81%
0% 50% 100%
Cost-benefit analysis
ROI/payback horizon
TCO
IRR
EVA
Other
None
I don't know
We have not yet purchased a BI solution
15%
5%
3%
2%
2%
1%
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BI Purchase Decision Guidance
Which of the following did (will) you use to guide your decision to purchase a BI solution?
" Overall, peers’ opinions as well as ROI analysis are the primary sources of guidance when it comes to purchasing a BI solution.
Base = 568
Professional Services companies rely most of ROI analysis to guide them in this purchase decision.
12%
25%
30%
32%
36%
38%
47%
50%
52%
0% 20% 40% 60%
Peers at other companies
ROI analysis
Alignment of IT investments with objectives
Recommendation by consultant
Desire to stay current technologically
Company case studies
Online websites and industry leaders
Vendor sponsored white papers
Competitive pressure
Other
I don't know
Pilot program
4%
2%1%
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Expected BI Solution ROI
Are you realizing or do you expect to realize measurable, bottom line ROI from your BI investment?
" About half of the sample (48%) are expecting to realize or are currently realizing a tangible bottom line ROI from their BI investments. This is consistent across industries and companies of all sizes.
" 61% of companies currently using BI solutions operationally are realizing measurable ROI [mean = 43.09%]
Base = 579
18%
4%
30%
48%
0% 10% 20% 30% 40% 50%
Yes
It is too soon to tell
No
Don't know
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BI Impact Tracking
What analysis method do (will) you use to track the economic impact of your BI solution?
" ROI is the most widely-used method of tracking bottom line impact of BI solutions across industries and company sizes.
Base = 447
15%
18%
31%
79%
0% 20% 40% 60% 80%
ROI
Payback
TCO
IRR
Other
I don't know
3%
1%
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Q&A Session
Full Research & Analysis Report available at Gantry’s or Business Intelligence Review’s websites. The full research report includes
differences in respondents by industry and company size. Research Reports can be customized by data cut such as industry vertical results and analysis, or other customized data selection. For more information
please go to:
http://www.gantrygroup.com/research/bir.cfm