An Intelligent Insight for SMBs

Up-to-date analysis of business processes, customer and supplier data, internal sequences and dynamic planning will “bring competitive advantages in future and will therefore be indispensable for business controlling,” is how Carsten Bange, Managing Director of the Business Application Research Center (BARC), describes the demands put on Business Intelligence (BI) in an article. BI is gaining ever greater strategic importance for SMBs, helping them to make important business decisions. “BI has long been an important focus for SMBs too” explains Jörg Narr, an analyst and BI specialist at the Würzburg-based BARC.

Strategic importance

“Successful BI can be defined as a company’s ability to retain a realistic view of its operations so that decision-making processes relevant to the business can be expanded in scope,” says Howard Dresner, Vice President and BI research specialist at the US market research institute Gartner Group. He concludes that using BI solutions to this end is “a very strategic move.” Dan Vesset, senior analyst at market research company IDC, explains the “increasing strategic importance of BI” with trends on the market indicating ongoing expansion of BI concepts, growth of BI software tools and companies being flooded with enormous amounts of data.
High growth rates are being predicted for the Business Intelligence software market. Gartner Dataquest estimates the world market volume in 2003 at USD two billion rising to USD 2.3 billion by 2005. Market researchers from IDC expect total revenue of USD five billion this year, doubling by 2005. Dan Vesset is predicting the BI market will grow by 10 percent on average each year, a much higher rate than in other software segments. A report entitled “Worldwide Business Intelligence Forecast and Analysis, 2003-2007” by IDC divides the market for Business Intelligence into the following areas: Tools for end user inquiries, reporting and analysis, data mining tools, and out-of-the-box data mart/data warehouse tools.
META Group claims modern BI solutions with the “core data warehouse feature” address a broad spectrum from employees to the boardroom. Market researchers have discovered in a study on the German BI market that 73 percent (as at 2002) of data in data warehouses originated from ERP (Enterprise Resource Planning) sources. They predict this figure will rise to almost 85 percent this year. Other data sources have hardly any role to play now. SAP is consolidating its position as the best known BI provider thanks to its strong ERP focus and the SAP subsidiary SAP SI is the number one BI service provider.

Flexible analysis

Although BI supports all applications including SCM (Supply Chain Management), CRM (Customer Relationship Management) and ERP, smaller SMBs in particular have only limited financial resources and employees for operating BI solutions. They need to know from the outset whether their BI solution is to be a “simple” reporting tool or a more complex version that reveals relationships between individual data sets. META Group advisor Raymond Tischendorf stated that companies are looking to improve their efficiency with BI solutions. Business Intelligence is therefore being used increasingly to raise business performance, he adds. He has noticed a trend which can be seen in the gradual closing of the information chain and the increased demand for closed loop solutions. In an ideal scenario, these integrating architectures comprise planning and controlling processes for the entire company. Up to now only a few companies were aware “of the possibilities and potential that integrated BI solutions offer,” says Thomas Greutmann, member of the management team at SAP Business Partner syskoplan, commenting on the results of an analysis by IDC for META Group.
SMBs in particular need flexible and scalable e-business solutions that can grow with the company and represent secure investments. mySAP Business Intelligence (mySAP BI) is a solution that can be tailored to suit SMBs’ requirements. According to the Walldorf-based company, the performance, scalability and e-business functions in mySAP Business Suite are also available for SMBs with a cost-effective and fast solution based on tried and tested processes (best practices) and sold via system providers.

SMBs set their sights on BI

As BARC analyst Jörg Narr underlines, the relationship between BI and SMBs is particularly relevant at the current time. IDC analyst Christina Steensboe has noted that SMBs with around 100 employees are also showing greater interest in BI solutions. “Business Intelligence is slowly filtering into this sector,” she explains in a recent interview with the Austrian IT magazine Monitor. She believes analytical programs will also be used increasingly in many small firms alongside BI tools for queries and reporting with Web interfaces because they do not require large internal IT resources. These are often sector and/or company-specific applications that can answer complex operational questions in areas like consolidated financial reporting, budget forecasts based on data from sales organizations, customer sales analysis or cash (pooling) management analysis.
For Jörg Narr from BARC, the increased demand for Business Intelligence among SMBs stems from current economic requirements and economic regulations such as Basel II. The BI specialist also points out that, after reaching a particular size, SMBs basically have to handle the same tasks as larger firms, e.g. company planning, reporting, business analysis and forward planning. He says that “running a business can often be incredibly complex.” Experience shows that SMBs require a similar range of functions from their BI software as large companies. The only differences being a lower number of users and lower requirements for process support from software solutions, e.g. for coordinating planning processes.

Separating the wheat from the chaff

META Group and Gartner agree that users look firstly at ease of integration, stability and quality when choosing BI software. Support is also an important criterion. A study by Networks Technologie Marketing quotes an interviewee as saying it is difficult to “separate the wheat from the chaff when it comes to providers, making it hard to choose.” This implies that users would like to see some market consolidation to ensure greater transparency and more investment protection. Market researchers from IDC, which is currently talking of “consolidation in the BI market” fully support this view. Providers like SAP that currently focus on the SMB market are profiting from this development just as much as SMBs, since “we are seeing very attractively priced offers emerging,” says Jörg Narr, explaining the benefits.

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Dr. Andreas Schaffry
Dr. Andreas Schaffry