Your data is your company's most valuable asset, its analysis provides crucial information. A little outside help here, business intelligence or BI therefore, seems more than welcome in function of your decisions. And why not rely on external infrastructure? Literally. Yet online business intelligence still in its infancy. CFO Magazine spoke with Belgian SMEs Verachtert, which implemented a so-called cloud solution for its Business Intelligence.
Dimitri Rombouts , Managing Director of Verachtert:
"The focus of our reporting is on the decisions that a manager must take
and not what you want to see as a manager. A subtle difference."
Companies need to take informed decisions faster and faster. The technology around business intelligence, which can help with this, has evolved considerably in recent years. Business intelligence systems (abbreviated BI) filter and analyze business data to thereby be able to present valuable information. This is to make organizations stronger and smarter. BI applications have been around longer, but are becoming more diverse: from useful reports to real predictions.
What's in a cloud?
In parallel with the rise of business intelligence, another trend is emerging: cloud computing. It is currently the hype in the IT sector, but at the same time, cloud computing is a term that covers many fields. Indeed, it is the collective name for all models where IT is placed outside the company walls. So it is as much about software, about storage or processing power as over your entire IT infrastructure which is rented for some time. Business intelligence and cloud seems a logical marriage, according to Stijn Vermeulen of element61, a BI service provider. As with other forms of cloud computing, the often cited advantages of cloud computing also apply to BI. The financial threshold for the hefty initial investment can be replaced by a periodic amount based on monthly consumption for example. From capex to opex in other words. Also around maintenance, configuration and deployment, many headaches are eliminated as the responsibility lies with the service provider.
"In this way, the traditional approach towards software fundamentally changes. Your provider, such as Microsoft or IBM, is responsible for the hardware and services necessary to make the business intelligence application work" emphasizes Stijn Vermeulen. "In addition, business intelligence is matter for management. The underlying technology is not that important. You can pass on a big portion of the technical work to your provider." Cloud computing can particularly offer SMEs an opportunity to benefit from Business Intelligence. "SMEs often do not have the financial means, knowledge or resources to really develop BI" emphasizes Vermeulen. Together with the Lessius Hogeschool, element61 initiated a project involving with seven SMEs where a BI cloud environment was fitted. Data was uploaded to the cloud (in practice: the data center provider) and was externally developed into a data warehouse, that served as a basis for further analyses, with the difference that these analyses also happened externally and not within the company walls themselves.
One step beyond the transactional
Verachtert, a Belgian company with 330 employees and four offices including one in Tunisia, has recently implemented a BI solution in the cloud. The company is a wholesaler of hobby items and specializes in crafts kits, sports textiles and flooring and decoration materials. Verachtert already had an ERP solution based on Microsoft Dynamics, which was implemented in 2009. But ERP deals mainly with transactional data for the daily operation of a business, and not for their analysis. "I know that many ERP packages today supply modules for business intelligence, but not in our case. That entailed that our ERP package was not easily accessible to non-IT people and moreover was too limited" says Dimitri Rombouts, managing director. Analyses where executed in Excel by individuals, so no real BI.
The goal for Verachtert was clear: faster results had to be made available. "For some products, which are trend sensitive, we need to be able to decide fast. Our traditional approach was that we focused on our turnover during the year, but only afterwards we could see whether the product was consistently profitable." For Verachtert cloud computing was an option because there was no BI solution yet. But also because the IT department is extremely limited and any external help is welcome. "From the data of the ERP system, we built an online reporting system. We have put in quite some time. The focus was on what decisions a manager must make based on a report rather than what he wanted to see. A subtle difference. The decision aspect, played a big role." said Rombouts.
The creation of such critical reporting was previously non-existent at Verachtert. Parameters that were built include the customer, the product, the representative, sales, margin and purchase. Through a tree - from product to product group - a structure was implemented to see sales volume and margin. "You also have to choices in business intelligence. You can collect and analyse a lot of data, but you have to focus on the data that really matters. You should critically examine your own data structure and adjust the scope of your analysis accordingly. Moreover, you should opt for a flexible solution for the future. Through cloud computing, you can start small and then gradually expand without having to worry about the necessary hardware." The reports of the managers at Verachtert are consulted in a so-called browser environment, the application such as Internet Explorer that you are using to surf on the internet." That is useful, because a lot of our employees work abroad. In addition to the standardized reporting, Verachtert can also use cubes for further analysis of data. This makes it possible to analyse for example remarkable profit drops using a multi-dimensional analysis. "That makes ad-hoc combinations of dimensions possible, while reporting is mostly standard" he explains.
Unlike many other technologies, business intelligence is usually still based on the traditional model on premises, which is simply software that is installed on the computers, not related to cloud. Important to know is that BI software today is often part of larger platform of technologies, such as IBM, Microsoft, SAP, Oracle and other parties that provide more than just BI applications. "Therefore, the choice of an analysis application is often made on the basis of the technological standard that many companies already possess. SAS, another leading specialist in BI software, is a bit outside this category because they only focus on analysis" says Stijn Vermeulen from element61.
Yet many BI providers are shifting their application more and more to the cloud. That is also shown by announcements of other and smaller providers like MicroStrategy that come with such applications on the market. For the technology of the seven SMEs in the study of Lessius, the technology chosen was either Microsoft or IBM. Verachtert opted for technology from Microsoft (Microsoft SQL Server Reporting Services) . "Because it was important to have an end-to-end technology. Both the traditional ETL component and the data warehouse are hereby in the cloud and therefore no longer with the company itself" says Hans Tubbax of Lessius Hogeschool. "The interface with the user is either the browser or Microsoft Excel, an application that is well known by most managers. With the advantage that you can retrieve data from the cloud using Excel. So you connect in other words with external data. This provides an answer to the traditional drawback of Excel, as the data often sits in the spreadsheets of the individual users." Despite all this beauty, it will still take time before cloud BI or BI as a service actually will become the standard. The technology and the demand from the market actually is still in its infancy.
"We had only considered in the cloud BI within a few years for our company. Remember that our ERP package was only implemented recently in our organization. But thanks to this project, we came in contact with it quickly and are happy with it" says Rombouts. Moreover it goes beyond technology. Not every manager is eager to migrate his company data, the highest good, externally to the cloud for analyses. A traditional reason that Tubbax counters with an equally traditional argument. "Habits are difficult to get rid of. But people do not have a problem with online banking or Tax-on -web, which are essentially cloud solutions. You would think that your data is more secure at a third party provider. A party that is better adjusted to the management, security and analysis of the data than the customers themselves."
William Visterin - CFO Magazine
Arguments for BI in the cloud approach
• You do not have to worry about the technology
• From capex to opex
• You can start quickly and grow on use(ers)
• An online application is universally accessible, including from abroad
Arguments against a bi in the cloud approach
• The cloud BI offerings in the market is still very limited
• Companies that already have internal BI solution see no reason to bring everything to the cloud
• BI, unlike other applications (CRM , e-mail, ... ), has not much of a tradition as a cloud formula
• Migrating data externally is difficult for many CEOs and CFOs