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Trends in BI Applications

Anthony Politano
Source: Information Management Magazine (information-management.com)

September 1, 2008

I started my career in the 1980s, assigned to the controller’s IT department at a major insurance company. My first project was a custom-built general ledger system. More than 20 years later, it seems almost unthinkable that someone would build a general ledger system instead of buying one. In a lot less than 20 years from now, we will be looking back at our business intelligence (BI) systems with similar amazement. This article examines the convergence of custom-developed and prebuilt BI applications.

History Repeats Itself

To understand the trend in applications, one needs to look no further than the history of enterprise resource planning (ERP), which has gone through four levels of maturity.

1. Custom code. Until the mid-80s, the type of project I described was the norm. Organizations designed their own databases, code, screens and architecture.
2.  
• Individual, off-the-shelf applications. The next wave was a series of individual applications that came mostly prebuilt. Two examples are general ledger systems and manufacturing floor systems. Both came as prebuilt applications that required configuration rather than custom coding. In most cases, the applications were standalone. For example, an organization’s data processing department (as IT was known in those days) was required to code a custom interface from each related financial system (payroll, etc.) to get transactions into the general ledger. There were a limited number of off-the-shelf applications, and many of the financial feeder systems were still custom systems.
• Integrated applications. Following the success of individual applications, software companies started offering integrated application suites with similar functions or users. An example of this was the general ledger/accounts payable/accounts receivable combinations that formed the basis for the next wave.
• End-to-end applications. Moving beyond integrated applications, the focus became end-to-end processes. Two examples are procure to pay, handling all functions from procurement through payment, and hire to retire, designed to handle all employee functions through the duration of employment.

Currently, BI and performance management are undergoing their own maturity evolution.

3. 

4. Where are We Now?

   The industry is currently between level three and level four. Most organizations using any type of BI and performance management systems combine prebuilt applications and custom platforms.

   As stated earlier, finance organizations were early adopters of prebuilt applications. There are three main reasons why finance adopted BI and performance management applications first. The first reason is availability. Vendors offered prebuilt applications to functional areas such as finance years before they offered them to other functional areas. Second, the standardization that exists in the finance business area, such as adherence to Generally Accepted Accounting Practices (GAAP), made it more economical and easier for both vendors and customers. Third, finance is very metrics-based and was a natural fit for the adoption of BI and performance management.

   BI and performance management applications are not limited to finance, though. Other key areas where prebuilt applications have taken hold include HR, supply and customer service.

   Build, Buy or Both

   As new business requirements in BI and performance management emerge, organizations should take a structured approach to evaluating whether to build, buy or do a little of both. This involves a multistep evaluation process:

   Seven Tips for Deciding to Build, Buy or Both

   Understand your business problem. Without a defined business problem, you will be shooting at a moving target. Take the time up-front, either by using in-house experts or outside consulting help, to fully define the business problem and requirements. Evaluate all portions of the application. Consider more than just the front end of the BI application. Take the time to understand the applicability of the data model, ETL and metadata. They are the biggest factors in driving down TCO.

   Be prepared to both buy and build. Because most organizations are somewhere between maturity levels three and four, it is highly likely that the final application will be both build and buy.

   Learn from example. Most organizations have some form of BI or performance management application in their finance organization for functions such as consolidation, planning or budgeting. Take the lessons learned from these teams of how a prebuilt application works within your environment. They can speak from real- life experience.

   Understand your architecture. Prebuilt applications may offer architectural options ranging from database configuration to ETL frequency. Be sure to investigate architectural alignment with your organization. Also, by digging into the data models with the prebuilt applications, you will get insight into how to scale your storage to meet these robust models.

   Keep business involved. Even with a business case in hand, do not squander the opportunity to keep the business involved in decisions of build versus buy. Form a business steering committee from the start and keep accountability within the combined realm of business and IT.

   Keep abreast of updates. As your organization makes a move from build only to build and buy, new opportunities will arise for retiring older custom applications. By staying up to date with the product direction of your BI and performance management application vendors, you can continue to monitor and/or drive down TCO.