Happy Christmas and New Year

Thanks to all of you that have shown an interest in this new blog. I really only started it to play around with Blogger, but the interest shown has been more than I expected, with only a handful of posts so far, so I'll keep it going next year.

I'll be a little slack for a couple more weeks, but back with lots of new BI-ROI news by the middle of January.

I hope you all have a enjoyable and safe New Year, and I'll see you soon.

Marcus.

Beautiful Evidence

Ok, this isn't directly related to the purpose of this blog, but I've been a fan of Edward Tufte's work for some time now, and this warrants a post.

For those of you punters out there looking for light in the visual display of data darkness, Tufte's new book, Beautiful Evidence is the answer to your problems.

For those of you unfamiliar with Tufte's work, he's a Professor at Yale University, specialising in graphic design, political economy, and statistics. He coined the term 'chartjunk', referring to meaningless, and non-informative elements of graphical displays. In my mind, however, he is most famous for his harsh criticism of Microsoft's Powerpoint presentation software, in his essay 'The Cognitive Style of Powerpoint', where he gives Powerpoint's emergent properties a good ribbing.

So, what's the relevance to BI? Well, the way that we present data to information consumers is crucial. At the extreme, we can present the same data in two different formats, which could lead to two different decisions! The way we frame our data, and present it to users should be of the utmost importance to developers. The way we present, or 'frame' our information should be an extremely important consideration for those developing DSS, BI and information systems in general, as it concerns the impact of the structure of information displayed on human information processing.

Please, someone, explain to me the benefit of a 3-dimensional doughnut-shaped pie chart?! We need to be clear, to the point, and avoid confusion. The decision making process in complex enough.

The more we can learn on effectively presenting data, the better placed information consumers will be to make better decisions.

More can be found on his website.

Business Objects and IBM Strike Strategic Alliance

Good news for those companies with both platforms - two of the largest software vendors, Business Objects (BO) and IBM have just announced a global strategic alliance. So what does this mean? The word is that the new agreement will provide enhanced support for those companies with both bits of software. What the agreement really means is that it will put BO and IBM in the position to capture even greater market share.

Both companies have announced they will be upping their spending in joint development areas, and product integration. The two companies have, in fact, been working together for over a decade.

Although some segments of the software industry are doing it tough, adoption in BI continues to go up. Gartner recently listed it as a top priority for this year. Forrester Research predicts that the BI software and systems segment will top US$7.3 billion by 2008. Underlying a lot of this growth are changes in the way BI software is being packaged and delivered. The monopoly a handful of BI vendors once held by selling premium, high priced tools to a small number businesses might be drawing to an end. BI is getting more affordable, and the market more competitive.

Read more here, and here.

The next 12 months will be interesting. Open source BI is starting to gain some momentum, and the major players are getting bigger. Where do you see BI in the next 12 months? 5 years? Will Oracle own everything?

(Not so incidental, Oracle has just purchased Stellent and SPL, in the most expensive buy-out since they took Siebel for around US$6 bill. earlier this year)

Data Centre in a Can (albeit a big can)

Sun Microsystems have announced a new plan to ship ready-to-go data centres housed in a shipping container! Project Blackbox is the brainchild of Danny Hillis, supercomputing guru. He said that the project will "be attractive to customers that need to expand computing capacity quickly." Just plug it into some juice, hot and cold water, and away you go.

An original idea? Perhaps not. There have been reports that Google have had a similar puppy in their basement carpark for more than a year.

Adding fuel to the fire of Nick Carr's commodization of IT? I think so.

401 Percent: An Introduction

A couple of people have asked me "why a blog titled '401 Percent'?". So, here's the story:

Cast your mind back to 1996, the UK was struck with an outbreak of bovine spongiform encephalopathy, gangsta rappar Tupak Shukur was gunned down in Las Vegas, and International Data Corp (IDC) published the largest study of data warehousing return on investment (ROI). Bells ringing? Tupak? No?..I'll move on..

IDC presented a 'Foundations of Wisdom' study, which revealed, on average, a 401 percent three-year return on investment for 62 companies possessing active data warehousing deployments. Vendors have used this 401 percent ROI figure as a carrot to wave in front of hungry investors for a number of years, and, given my research interests, I felt it a fitting title for this new blog.

While we're looking at the IDC study, and because I have editorial control over this blog, it may be worth delving a little deeper into IDC's Foundations of Wisdom. 401 percent, pretty good right? Why wouldn't we invest? Well, 401 percent isn't the whole story, in fact, far from it. Andrew Lang, once said (or words to this effect), that statistics are often used like a drunken man uses lamp-posts, for support, rather than for illumination. Rather than bore you with my very limited knowledge of Scottish literature, let's ponder the mysterious '401 percent'. One of the most interesting parts of the IDC study was the quite significant range of ROI's that were found in the report. In fact, ROI's disturbingly as low as -1,857 percent! (and also as high as 16,000%, to be fair). These figures already place the 401 percent in a different light. At best, the record for data warehousing success is patchy. It's not hard with a quick Google search to find failure rates for data warehousing projects quoted from 10 to 90 percent! Figures such as these put the DW decision-maker in a precarious situation, the BI industry is predominately industry-driven, and largely self-evaluating. Those with most to gain out of a 'research' finding, are usually those in control of reporting their results. Those of us absorbing that information should be wary. There are very few completely independent research analyses in the BI field (three cheers for Nigel Pendse's wonderful OLAP report), and we should take what we read with a grain of salt. Have you ever read a vendor white paper that does anything but preach positive outcomes and significant returns on investment? It's understandable their reluctance to disseminate stories of failure and underperforming implementations. Scratch a little below the surface of many research reports and you often find those organizations that rank the highest, whatever the focus, are often clients of the analyst firm. Even organizations such as the data warehousing institute (TDWI), a leading data warehouse research body, admits that almost 70% of a recent surveys participants were IT vendors or consultants - those with the most to benefit from their findings (rather than stakeholder organizations making up the majority).

If you look at the nature of benefits from DW and BI, it's a little easier to understand why it's so difficult to arrive at reliable ROI figures. Much of the benefits to be gained from these systems are in the form of what I would call "BI-enabled business change". Much of the success of BI goes far beyond simple operational cost savings, these are relatively easy to quantify, but come through business transformation and improvement through BI technologies. These benefits are much more difficult to quantify, are more numerous, and intangible. Traditional accounting methods do not perform well when applied to strategic, soft benefits. Much of the benefits from DW and BI are filtered through other areas of the business. One of the biggest challenges in obtaining consensus for BI and DW ROI is concerned with the accountabilities associated with using qualitative measures of success. In organizations where quantitative measures play the biggest role in determining business performance, justifying DW or BI with ROI will be challenging.

I'm not saying that industry research findings are useless, but what I am asking is for us to take what we read in context. Look at who is publishing the research findings, what do they have to gain? How was the research conducted? What is the researcher/analysts' experience? Is there a sponsoring organization? Armed with a little more knowledge, and perhaps a tiny bit of skepticism, we give ourselves more opportunity to gain the most out of what we read; "are these findings useful for me? Or is the research methodology a little contrived?" Happy reading.

Nicholas Carr at it again.

Former executive editor of Harvard Business Review, business writer, speaker, and unfailing trouble maker, Nicholas Carr is at it again. Carr, author famous (or should I say infamous) for his 2003 HBR article "IT Doesn't Matter" appears poised to stir fresh controversy in the IT industry, warning organizations to stop spending on technology.

Recently, in front of a London audience, Carr told listeners that organizations have been misled to believe that buying technology can make them more productive. He said "smaller firms are more productive than large firms and yet they have less technology", and went on to call for companies to question the importance of IT. Carr stated that "successful IT management comes down to successful management and not just those who are more innovative or take more chances." and that "companies should spend less on IT"

James Governor, industry analyst at Red Monk, welcomed Carr's comments, noting that our industry was short on comedians, but acknowledged a greater relevance in some of Carr's statements. Governor said "frankly we should all be shifting uncomfortably in our chairs", noting that Carr's statements would ring true with a number of businesses who may have forgotten past over-spending or poor purchasing decisions.

I find a lot of holes in Carr's original article, but there is no doubt it has become a seminal piece in the field. His main proposition was that businesses have overestimated the strategic value of IT, and he gives voice to the many senior executives frustrated by the increasing spend on IT, and the little demonstration of its value. One of the most unfortunate problems with the paper is its title. Carr doesn't actually argue that IT doesn't matter, his assertion is that IT is diminishing as a source of strategic advantage. It concerns me that many readers will remember the article title, but fail to remember its nuances. I agree, in part, with his assertion, and yes, some forms of IT have lost their strategic value, however, even as IT becomes ubiquitous, the skill and insight needed to harness IT's potential will not be so omnipresent. Organizations have spent millions of dollars consolidating their data layers, capturing terabytes of data. If that just sits there, taking up disk space, then Carr is right, there is no value, but in the hand of a trained analyst, the information obtained could be priceless.

If we have learnt anything from the past few decades, it's that IT, in itself, rarely bestows strategic advantage. The value of IT is in it's potential. Here lies the strategic advantage possibilities.

A Soon-to-be-BI-ROI-blog

So it may not be much to look at yet..but it soon will be, one day..maybe...