BI for SMBs, Part 2: Managing Your Data
We examine how companies are managing data growth and an often complex data infrastructure in order to drive value from BI tools.
By Michael Lock and David Hatch
Last week (see http://www.tdwi.org/News/display.aspx?ID=9203) we examined how organizations are leveraging a wide variety of options for deployment of BI solutions. In this article we examine how companies are managing data growth and an often complex data infrastructure in order to drive value from BI tools.
Business intelligence tools provide the clarity and insight into business performance that drives enhanced decision making. However, that insight and visibility is only as good as the underlying data. Rapid organizational growth coupled with mergers and acquisitions can lead to challenges in data heterogeneity, but these are issues faced largely by the enterprise level.
When it comes to smaller businesses, the sources might be different but the challenge of data management is still very much alive. Expansion in data volume and complexity challenges small to midsize businesses (SMBs, defined as those with less than $500 million in annual revenue) in a way that inhibits the type of decision making necessary for growth. The key for small and large organizations alike is to deliver relevant information to the right person at the right time. To facilitate this, many organizations have adopted formal strategies for data management that involve capabilities, methods, and technologies that companies may employ separately or in combination to alleviate the challenge of data expansion.
Focusing on the SMB world, Aberdeen’s research examined almost 650 organizations to identify the primary business pressures driving companies to focus on data management strategies. According to the research, 53% of SMBs believe that the need to reduce time-to-information for end-users is the predominant pressure driving companies to adopt new data management strategies for BI applications.
The Challenge of Data Complexity
Perhaps the biggest inhibitor to delivering the right information at the right time is the disparity of data. Key corporate data might reside in a warehouse or database associated with stove-piped organizational departments or it may be stored in a disorganized collection of spreadsheets. Either way, the more unique data sources in play, the greater the difficulty in managing that data. Not surprisingly (due to their sheer size), large enterprises (those with over $500 million in annual revenue) are managing a greater number of unique data sources, although SMBs aren’t working in a homogeneous data environment either (see Figure 1).
Figure 1 - SMBs Have Fewer Sources, Same Growth
Source: Aberdeen Group, October 2008
The challenge here is not just the number of data sources but the expansion as well. With 27% more information flowing through the organization each year, SMBs can no longer afford to ignore a formalized strategy for data management as a crucial ingredient to success in BI implementation.
The Right Tool for the Right Job
Part of a winning strategy for data management involves utilizing some vital organizational capabilities that will facilitate better preparation for data management. The research shows that Best-in-Class SMBs are utilizing several of these capabilities -- such as methods for prioritizing high-demand data and query optimization -- at a far greater rate than all other SMBs.
Another important part of the data management equation is the technology that can be leveraged for cleaner, more relevant data. Aberdeen’s research also shows that Best-in-Class SMBs have made a significantly higher investment in technology than all other small and midsize companies. This further illustrates that data management for BI encompasses several capabilities and technical requirements and should not be viewed as just one function within the IT organization (see Figure 2).
Figure 2 - Best-in-Class Technology Enablers Used
Source: Aberdeen Group, October 2008
Data management strategies may also require external assistance to ensure successful implementation and deployment. Forty-five percent of all SMB respondents list "the lack of IT resources" as the top inhibitor preventing successful BI implementations. For companies that fall into this category, a lack of IT resources can often be remedied by establishing partner relationships with IT services firms or consulting divisions of software technology vendors.
The Returns from Best-in-Class Data Management
To reduce time-to-information, deliver BI capability to more end users, and other areas identified as top challenges of data management, Best-in-Class SMBs leveraged a solid foundation of organizational capability to produce substantial business improvements. Aberdeen used three key performance criteria to distinguish the Best-in-Class SMBs from Industry Average and Laggard SMBs:
- Number of end users receiving access to BI applications: Best-in-Class SMBs achieved a 9% mean average increase in the number of users receiving access to BI applications in the past 12 months, compared to 4% among Industry Average SMBs and 3% among Laggards
- End-user productivity and efficiency: Best-in-Class SMBs achieved a 11% mean average improvement in end-user productivity and efficiency (measured as time spent looking for business information within BI applications), versus 2% Industry Average SMBs, and 8% among Laggards.
- Data management infrastructure costs: Best-in-Class SMBs achieved a 5% mean average decrease in data management infrastructure costs (hardware and software) to support BI applications in the past 12 months versus the prior 12 months, compared to 2% among Industry Average SMBs and a 2% mean average increase among Laggards.
Successful BI implementations depend upon the ease and speed by which relevant and actionable information can be delivered to business users. Best-in-Class performance toward this goal is determined by several factors that must be taken into account at all points within a data management project, including on an ongoing basis. This starts with gaining a deep understanding of business-user information requirements before a data management roadmap or strategy can be developed and executed.
Several data management capabilities and technology enablers are required to ensure success, and no one "silver bullet" exists that can provide a shortcut. Best-in-Class companies have illustrated that performance improvement comes from a holistic approach that includes both organizational and technological elements.
Editor's Note: You can access the report at http://aberdeen.com/summary/report/benchmark/5463-RA-business-intelligence-smb.asp. A short registration is required.
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Michael Lock is a senior research associate in the technology markets group of Aberdeen Group. You can reach him at email@example.com. David Hatch is vice president and principal analyst at Aberdeen Group; you can contact him at firstname.lastname@example.org.