Poor business intelligence causing significant losses

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By: Wise Marketer Staff |

Posted on October 12, 2007

Business intelligence systems are failing to improve either operational performance or decision making within US and UK companies, with Fortune 500 companies seeing an estimated combined loss of some US$250 million each year, according to a study conducted by market research firm Dynamic Markets.

The research, based on interviews with 218 operational executives and front line management, found that although many companies have whole-heartedly deployed business intelligence (BI) tools, often buying thousands of user licenses, many such systems have not yet met expectations.

Key findings
The results of the survey included several worrying findings, including:

  • 76% of executives surveyed said they found themselves forced into a position where they have to make decisions before the information they need is available.
  • 66% said that the data is often out of date or arrives too late to be of any practical use.
  • 63% believe that most BI reports end up being reference documents that are only consulted to justify decisions that have already been made.
  • 74% said they do not receive any kind of report that provides predictions about potential problems, and 78% do not receive any reports about potential business opportunities.
  • 58% admitted that business opportunities have been missed or problems have not been spotted as a result of not having access to relevant information at the right time.

The true cost of poor BI
The impact of inadequate business intelligence appears to be significant, with the average business cost (in terms of lost revenue) being US$478,686 (approx. 260,000). One operations manager interviewed admitted a direct US$5 million cost to his area of the business, according to Dynamic Markets. By extrapolating this annual average across the market, Dynamic Markets estimates that the Fortune 500 are losing a combined total of some US$250 million each year in missed business opportunities.

According to Charles Nicholls, CEO and founder of business intelligence systems provider SeeWhy Software (which commissioned the survey), "What is clear from this research is that all is not well in the world of business intelligence. BI tools are perceived as being hard to use, reports are often out of date and largely irrelevant to daily operational decision making, and BI is seen as inherently retrospective. Yet managers strive for more, seeking information that can make a difference, that is relevant to operations, and that can give early warning of problems or can indicate opportunities."

Moving to a new model
Although respondents were aware of the problems that exist with current BI implementations, they were also aware of the benefits of moving to event-driven approaches that provide real-time rather than retrospective intelligence. Almost all (90%) agreed that there would be significant benefits if they could build greater intelligence into their daily operational processes.

Among the benefits cited:

  • 72% believe that their company would be able to employ more efficient processes.
  • 71% felt that there would be an improvement in customer service.
  • 65% thought that there would be an increase in revenues, and 65% anticipated an increase in profitability.
  • 59% believe there will be lower levels of risk to the business.
  • 57% felt it could make their company more competitive.
  • 52% felt that it would enable better compliance with regulations.

National differences
The research also noted some key differences between the use of business intelligence systems by companies in the US and the UK. More UK managers receive reports to help them run their respective parts of the business, and UK managers also receive a greater variety of reports that can be used in an operational context for daily tactical decision making. For example:

  • 68% of UK operations managers receive snapshot reports, while only 44% of their US counterparts do so.
  • 62% of UK managers receive reports alerting them to problems that have already occurred, compared to only 44% in the US.
  • US managers find themselves more pushed for time to check all the facts and figures, compared to their UK counterparts.

The full report has been made available for download from SeeWhy's web site - click here (free registration required).

For additional information:
·  Visit SeeWhy Software at http://www.seewhy.com
·  Visit Dynamic Markets at http://www.dynamicmarkets.co.uk