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Business case for real-time BI tools rests on data-access speed needs

Justifying investments in real-time business intelligence systems depends on demonstrating the business value of faster decision-making capabilities, according to analysts and IT pros.

Real-time business intelligence makes sense for some applications but not for others – a fact that organizations need to take into account as they consider investments in real-time BI tools.

Claudia Imhoff, president of Boulder, Colo.-based consulting firm Intelligent Solutions Inc., said the trick to deciding whether a real-time BI strategy would pay dividends is to understand your business needs and determine whether end users require immediate access to data for analytical purposes – or if something less than real time is fast enough.

According to Imhoff, the business case for a real-time BI implementation primarily revolves around the need to make fast decisions with timely data – for example, to provide better customer service on the fly or to improve supply chain management through just-in-time delivery of goods and materials and tighter control of inventory levels.

“Timeliness of intelligence is extremely valuable, and that’s why real-time BI is in demand,” said Sandeep Kumar Sharma, a consultant at Deloitte Consulting India Pvt. Ltd. Many organizations have a need to reduce decision-making latency in order to “bring the business back on track” after operational mistakes are made or unexpected situations arise, Sharma said. In the case of an airline, that could mean improving the ability of workers to redirect passengers, baggage and crew members when flights get canceled or are running behind schedule.

From Sharma’s perspective, the potential need for real-time BI spans midsized companies up to the largest enterprises. But he thinks real-time BI tools can be especially valuable for companies that do business globally and want to be able to closely monitor their operations and adjust budgets and plans as needed. “I strongly believe that it can make a whole lot of difference for taking operational efficiency and effectiveness to the next level,” Sharma said.

Real-time BI and ROI: Not a formulaic matter
He added, though, that attempting to use traditional return on investment (ROI) calculations to justify real-time BI strategy and deployment decisions can be frustrating: There’s no standard ROI formula to apply. But there are other ways to demonstrate the potential value. Real-time BI technology often opens the doors to new business opportunities, Sharma noted. In addition, he recommended highlighting scenarios of how business operations might otherwise suffer and then assessing the financial damage that could be avoided through the use of real-time BI data.

At U.S. Xpress Enterprises Inc., which deployed a real-time BI system last summer, there was recognition from the top levels of management that faster decision making was needed for competitive reasons, according to Timothy Leonard, chief technology officer and vice president of information management at the Chattanooga, Tenn.-based trucking company.

Our CEO said he didn’t want information on demand but information at his fingertips.

Timothy Leonard, CTO, U.S. Express Enterprises Inc.

“Unless information got in the hands of the people making decisions so they could make quick decisions, we weren’t going to win [in the marketplace],” Leonard said during a session at The Data Warehousing Institute’s BI Executive Summit 2011 in Las Vegas. “Our CEO said he didn’t want information on demand but information at his fingertips.”

Even so, Leonard thought that quickly demonstrating some tangible benefits was crucial to building broad-based support for the real-time BI initiative. Instead of taking a traditional waterfall approach and building the system as a whole, his team used an agile BI development methodology to deliver functionality on an incremental basis.

And once the BI tools were in place, it became easy to track their financial impact. The system provides fleet managers at U.S. Xpress with information about truck locations and engine-idling levels; the data, captured from on-board systems in trucks, is updated every 13 minutes. Leonard said the use of the system initially was saving the company more than $3 million per quarter, primarily through reductions in gas consumption made possible by the idling data.

The serendipity of real-time BI tools
Scott von Kleeck, chief information officer at TCIM Services Inc., a Wilmington, Del.-based company that provides call center outsourcing services, said his experience with a new BI system that includes near-real-time reporting capabilities validates the idea that the real-time approach can produce serendipitous results.

In evaluating the potential ROI of the BI system, TCIM “took a conservative view of the increase in operational effectiveness” that it would enable, von Kleeck said. Ultimately, though, the system yielded “some real gems that were unexpected,” he added. For example, the BI tools helped reveal that an electric utility had been overcharging the company. “That was $20,000 recouped right away, plus the savings going forward,” von Kleeck said. “You can’t say how many of those you’ll find, but they can make a big difference [in the ROI].”

James Kobielus, a senior analyst at Forrester Research Inc., said the Cambridge, Mass.-based consulting firm isn’t seeing much of a push for real-time BI capabilities from high-level executives. Typically, “the CEO doesn’t make split-second decisions,” he said, noting that most of the corporate executives among his client base still want to see data on a daily or weekly basis.

However, real-time BI can be a valuable tool for middle managers and operational workers, according to Kobielus.

“With real-time updates, the users have a greater degree of confidence in their decision making,” he said. For example, being able to assess up-to-date sales figures at any given moment can provide business managers with a more accurate picture than they would get from traditional batched BI data, which could be a day or more old. “With batch,” Kobielus pointed out, “you know your numbers were correct then but not now.”

Alan R. Earls
is a Boston-area freelance writer who focuses on business and technology.

(Executive Editor Craig Stedman contributed to this story.)

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