If the recent scenes of CEOs and CFOs being led into court in handcuffs hasn't made management more cognizant of their fiscal responsibilities, then business intelligence and business performance management (BI/BPM) vendors are definitely going to champion that set of self-serving images. It's hard to argue that access to data that can provide information about key performance indicators (KPIs) for an enterprise is a bad thing. The combination of requirements demanding higher accountability standards and the need for increased competitive advantage are definitely driving businesses to look at the latest and greatest BI/BPM toolsets, regardless of the costs.
With the increased movement toward these toolsets, prospective clients should be aware of some of the basic definitions for these items. There are many half-formed ideas and misconceptions about exactly what these things are. While vendors want you to believe that these items are products, the truth is that what you are really talking about is a set of business rules, practices, processes and philosophies that are tightly coupled and supported by underlying technology products. No salesman can sell you five units of BPM or 10 BI CDs. Instead, the vendors are selling toolsets, or the technology layer, that enable individuals to build applications that use, interpret and manipulate existing data to produce information in a usable format. That format might be a spreadsheet that allows you to manipulate pre-aggregated information based on how you the user needs to see it; or, alternatively, that format may be a dedicated data repository built to support online analytical processing (OLAP) activities.
These toolsets can provide an enterprise with an extremely powerful set of applications that may be used to view KPIs and model and predict outcomes based on current markets and competitive situations. The advantages come from the fact that massive quantities of raw data can be fashioned and processed with some business rule application to formulate critical tactical operational information that will be used to put very strategic goals and objectives into place. Large volumes of data without any means of organizing it into useful information are just a vast amount of data with very limited use.
All technology-based solutions to business problems have a price. The costs for operational systems are very easy to assess because the issues usually revolve around acquisition of hardware and/or software, implementation, rollout and training for the end users. BI/BPM implementation costs are not as clear-cut, and there are many areas of hidden costs that are very rarely identified upfront. Unfortunately, companies that embark on these implementations sometimes find themselves in the unenviable position of having purchased an expensive toolset that produces an incomplete implementation. Worse, they find themselves either too far into the process to end the commitment or proud owners of a set of applications that don't get the job done. Companies that fail to adequately prepare find that their BI/BPM implementations are like an inverted funnel: lots of dollars going in and very little value coming out.
Having been involved in many BI/BPM implementations, it has become evident that many of the failures share some commonality. When the finger of blame starts pointing, the classic tug of war occurs. Customers complain that the vendor wasn't honest, and vendors complain that the customer didn't adequately disclose all the pertinent facts. It must be clearly understood that BI/BPM tools are not magic cures for companies' shortcomings. When you take a step back and remove the emotionality and heat of failure, most negative outcomes were a result of a combination of client and vendor factors. Ultimately, there is always enough blame to go around, but had both sides taken the time to do their homework, most failures would have resulted in successful outcomes.
The BI/BPM space is extremely competitive. Sales individuals are under tremendous pressures to put new toolkit licenses into the field, and this leads to a situation in which they are trying to match an enterprise's needs to their product capabilities. In truth, most of the existing BI/BPM toolsets in the marketplace deliver some common basic level of functionality. Vendors all stress some differentiating qualities or features. The problem is that vendors focus on product differentiators and key unique features rather than defining core functionality in detail. They want their products and services to stand out and focus on overshadowing everything else with how well their products fit any special needs identified within an enterprise. Most assume that the core needs of an enterprise will be met, so very little time and effort is spent verifying that this is true. Unfortunately, it is rarely the case. Often, the most basic needs of an enterprise are poorly met, not met or can only be met with a series of processes or iterations that drive up the costs of the implementation.
From the client side, during the sales process, some clients assume that the vendors: will be able to get all of the information required to build an accurate requirements assessment and a corresponding realistic pricing model that satisfies those requirements, will be able to fully understand the client's business and will uncover all the business needs during the two to four hours of sales meetings covering project scope. Simply stated, the problem is that the vendor and the enterprise are on opposite sides of the fence. The vendor is trying to sell as many licenses and satisfy as many requirements as they understand at a perceived client cost tolerance. The client is trying to get as many requirements satisfied as cheaply and quickly as possible. Given the dichotomy and diversity of the situation, there should be little wonder that many of these implementations are underfunded and underestimated.
What are the costs of a BI/BPM implementation? On the surface, it is the cost of the required hardware, software and manpower. You may also include the cost of vendor or third-party consulting services based on the vendor's proposal. These are the primary costs associated with the implementation, but they are by no means the only costs. In some cases, they are not the most expensive. This article focuses on the direct costs: those of hardware, software and services. To get a full picture, you also need to read our companion article, "Business Intelligence and Business Performance Management - What Does It Really Cost?" available at http://www.dmreview.com/authors/author_sub.cfm?authorID=1001159. This companion article focuses on the indirect/hidden costs of a BI/BPM implementation.
When we discuss BI/BPM implementations, many people think only of the software component of the solution. Before an enterprise even looks at software, it needs to understand the scope implied by BI and BPM. BI provides the analytical insight into a company's business. The current offerings provide varying levels of sophistication, but all will support canned and dynamic reporting from a company's data assets. Some will require differing levels of data manipulation during the implementation. Usually, this is where consulting services costs are incurred because the effort requires the implementers to understand the tool and the underlying data sets. Higher-end BI vendors also provide analytical capabilities via pivot reporting capabilities and various OLAP offerings. BPM, on the other hand, is BI plus. BPM incorporates the robust BI capabilities and extends the list of features to include budgeting, planning, financial consolidation, financial modeling, scorecarding and predefined regulatory (Sarbanes-Oxley and Basel II) reporting. The most common BI players are: MicroStrategy, Business Objects/Crystal Reports and Microsoft Analysis Services. The most common BPM players are Hyperion/Brio and Cognos.
Each of these vendors provides a robust set of products with its own differentiators. When trying to choose a BI/BPM vendor, key determining factors include: software budget; target server platform(s) and infrastructure; number and types of users; and business requirements (reporting, analytics, budgeting, planning, financial management, tight integration with underlying source data, "what-if" analysis via write-back to the BPM data repository, etc.).
When making the decision on a software vendor or vendors, a company should also evaluate its own IT infrastructure (current networks, PC standards and server standards). For example, if all existing in-house server hardware is Sun/Solaris, then Microsoft Analysis Services is probably not a viable choice for the analytical layer, as its engine must reside on a Windows-based server. Likewise, each BI/BPM product will work and play better with one combination of server hardware and ancillary tools, such as database server or ETL (data migration) tools, than with others. Implementers must assess the requirements of each hardware platform and identify unique benefits/detriments each component brings to the solution, being careful to ensure that the choice of hardware/software is based in fact and on an objective review of capabilities versus requirements.
The last direct expense companies tend to budget for is consulting services. BI and BPM implementations consist of much more than the installation of software. Requirements include mapping the current business processes and defining modifications to those procedures as required, assuring that the information necessary to support the requirements is available. This may mean the development of new data stores and/or the integration of data from several disparate sources. In every vendor proposal, there is a section dedicated to services. For the most part, the vendors try to evaluate the required level of consulting support that will be necessary for a given implementation and will offer these services as an estimate of time at the present rates. Unfortunately, it is next to impossible to gather a thorough understanding of all of the business needs and technical issues during the sales process; therefore, this is the most difficult budget number to estimate. It is also the number that is most likely to change as the true level of effort is not usually uncovered until after the deal is signed and detailed requirements sessions uncover the final scope of work. Regardless of a company's relationship with a given vendor or sales representative, the proposed services number should always be increased by a moderate percentage to cover for the inevitable realization that the effort is greater than originally understood. It is typically easier to get project money approved up front than it is to go back to the well two months into the project.
Every company must decide what the driving factor for their engagement will be: hardware, software or custom services. In some cases, the choice will be predetermined due to network infrastructure plans set up by the CIO, or by the fact that other groups within the company already use software from a given vendor and the decision that negotiating an increase in licensed units is the way to go. Regardless of what the process used to determine the hardware, software and/or consulting vendors, a company must perform all due diligence activities when reviewing the offerings to ensure that all the direct costs are quantified, clarified and validated prior to the final selection of toolsets and prior to presentation to senior management for the executive sign-off on the budget and purchase orders.
An enterprise must also recognize that in addition to the direct costs, there is a set of indirect costs associated with a BI/BPM implementation. These costs include: internal manpower, politics, environmental issues and vendor or client misunderstandings. Failure to anticipate and account for these will ensure that you will have cost overruns and that management will be scrutinizing the implementation costs.
This article presented an overview of BPM and BI and the direct costs associated with its implementation. For more information on BI/BPM and an in-depth look into the hidden and indirect costs, please read "Business Intelligence and Business Performance Management - What Does it Really Cost?" at http://www.dmreview.com/authors/author_sub.cfm?authorID=1001159.
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