The document discusses business intelligence (BI) investments. It notes that while organizations spend hundreds of millions annually on BI software, only 20% of investments have been used for descriptive analytics like reports, with the rest needed for more advanced diagnostic, predictive, and prescriptive analytics to gain more value from data. Moving to these more advanced analytic styles requires new skills like statistical analysis and data science. The global BI software market is dominated by five major players, and two growing areas are cloud-based solutions and big data analytics. Organizations that effectively adopt analytics see lower costs and greater impacts from their investments.

1. 14 Issue 43 | Quarter Three 2013
I
t's widely recognised by business leaders that
a change needs to happen: we need to treat
information as an asset. But not all organisations
treat information the same way or in fact use it
the same way. Investment in business intelligence
(BI) in the last decade has been seen as the way to
make better use of this supposed ‘asset’.
Last year, Australian organisations spent more
than A$436 million on BI software (including
corporate performance management and analytics
applications), an increase of 11.2% over 2011, and
in New Zealand, spending grew 7.8% to NZ$68.7
million.
If you're investing in BI today, what are you
actually investing in? Are you investing in
technology, are you investing in analytics, are
you investing in organisational change, are you
investing to help make a better decision, or are you
investing in managing data more effectively?
Essentially it's yes to all of these and more, but
the extent of (and benefits from) your investment
depends on the maturity of your organisation today
and its willingness to bite the bullet on managing
the information of tomorrow.
Organisations make hundreds if not thousands
of decisions every day at different levels, with
different degrees of impact, complexity, frequency
and use. The only thing that's constant is change,
and BI and analytics represent a way of adapting to
change. Identifying patterns, anticipating outcomes
and responding proactively will be the basis of
competition in the future.
Increasing analytics maturity
There are many styles of analytics needed
for organisational decision making. It's the
combination of these styles that will increase the
maturity of business analytics capabilities within an
organisation.
Figure 1, opposite, outlines what we at Gartner
call the analytics continuum, which explains
the analytic styles from descriptive through to
prescriptive analytics. Descriptive analytics is all
those hundreds, if not thousands, of reports that
we all generate but then never do anything with.
I say that flippantly, but in many cases there's
a regulatory or compliance reason for having
invested in the reports, so it’s being done for all the
right reasons. It’s not money wasted, rather it’s a
great foundation to build upon.
So far, 80 percent of analytics investments have
been to produce historical/descriptive reports from
information often aggregated in data warehouses
and data marts. This is what has commonly been
known as BI and investment will continue in this
area. However, to get more value out of the data
we manage, we then need to invest in diagnostic
analytics such as interactive visualisation. This
makes the data more consumable and usable.
Finally there are the more advanced styles
of analytics such as predictive and prescriptive
analytics. Predictive analytics uses technologies
such as modelling, machine learning statistics
and content analytics, while prescriptive analytics
uses technologies such as decision/mathematical
modelling, simulation and optimisation. These
new styles have been pursued in silos within
organisations today. That’s not necessarily a bad
thing. The challenge is to harness the capabilities
that are being developed and use those skills more
broadly across the business.
There is a desire to shift capabilities towards the
more advanced end of this analytic continuum,
but skills will remain the biggest challenge for
organisations. These additional capabilities often
require new roles with additional quantitative,
content and analytical skills, perhaps statistical
analysts or data scientists.
Global trends
The global BI software market is highly
fragmented with more than 50 vendors identified
by Gartner with more than US$10 million in
BI-software-related revenue. Despite this, it is fair
Business intelligence: what
are you really investing in?
Gartner’s Ian Bertram looks at the evidence on business
intelligence and asks whether it’s worth the investment…
OPINION

2. 15Issue 43 | Quarter Three 2013
to say that the market is dominated by five major
players, led by SAP with 22.1% market share in
2012, followed by Oracle, IBM, SAS and Microsoft.
Combined these market leaders dominate more
than 70 percent of the BI software market globally.
There is a growing trend towards CIOs
combining analytics with other technologies to
create new capabilities, such as analytics plus
supply chain for process management and
improvement, analytics plus mobility for field sales
and operations, and analytics plus social media for
customer engagement and acquisition. New buying
centres are also opening and expanding outside
the IT department in line-of-business initiatives, and
they are taking an increasingly large stake of the
spending pie.
Two notable growth areas in the past 12-18
months are cloud-based buying and big data.
Cloud-based buying is showing substantial
growth from a small base, especially for domain-
specific analytic applications. Descriptive analytics
has largely been completed for most big
companies in traditional subject areas, such as
finance and sales. As companies are now moving
to more diagnostic use cases, growth opens up in
numerous subject areas – such as HR, marketing,
social and so on. New data sources, especially
outside the firewall, have opened up for cloud-
based vendors, which showed the most aggressive
growth in 2012. However, cloud computing still
accounts for a smaller portion of the BI market
compared with other application markets.
Analytics plays squarely into the big data trend,
where volume, velocity and variety aspects need
to be taken into consideration. In that journey
analytics pervade deeper in organisations, moving
far outside the traditional ‘bread and butter’
BI domains and buying centres. But that also
makes analytics bigger and more complex than
we've been used to with traditional BI. Increased
confusion around new hype terms and where
the tangible benefits lie most likely contributed to
a slowing of sales cycles in the BI market, while
budget holders are trying to identify the tools and
business value. In the medium term, we believe the
much-hyped ‘big data’ will give way to what it has
been all along – just ‘data’.
There is no doubt that organisations will continue
to spend and earmark money for BI, despite
constrained budgetary environments. What is
becoming increasingly clear is that BI projects
remain relatively shielded from budget cuts, while a
healthy portion of any discretionary money will be
available for upcoming analytic initiatives.
In short, organisations that are effective in
adopting analytical capabilities and the integration
between analytical capabilities and business
processes are seeing lower costs and greater
business impact from their investments.
ABOUT IAN BERTRAM//
Based in Sydney, Ian Bertram
is managing vice president of
Gartner’s worldwide analytics
and business intelligence
research team and head of
research for Asia Pacific. Prior
to joining Gartner in 1998, he
was with IBM for 10 years.
What
happened?
Descriptive
Analytics
Diagnostic
Analytics
Why did it
happen?
Predictive
Analytics
What will
happen?
Prescriptive
Analytics
How can we
make it happen?
Hindsight
Insight
Foresight
Information
Improving business performance
Optimisation
Difficulty
Value
Source: GartnerFigure 1