Business Intelligence Market Trends Study€¦ · and ROI/payback analysis (58%) to support purchase decisions for BI. However, when considering their BI solution, information from

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.

2The Gantry Group, LLC Copyright 2005 , All Rights reserved. Confidential

Study Objectives and ApproachRespondent ProfileKey FindingsStudy Results

Table of Contents


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


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


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


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


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)


Key Findings Summary


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.


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


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%


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.


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


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.


Study Results

16The Gantry Group, LLC Copyright 2005 , All Rights reserved. Confidential Results

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”


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.


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).


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%


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%


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%


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


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%


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

Documents

Business Intelligence Market Trends Study€¦ · and ROI/payback analysis (58%) to support purchase decisions for BI. However, when considering their BI solution, information from