the analytics edge

Number one Hot IT Job for 2009, according to Baseline, is Business Intelligence Experts. That is bad news for business managers. It means there is a shortage of the skills needed by businesses. These people help “in a lot of decisions having to do with how the customer base is changing, market differentiation, pricing and services”.

To BI Experts, this is received as good news - salaries will go up because of demand; jobs will become more interesting with less mundane report writing and more strategic analysis work; and career paths will open up as you gain more exposure to things outside IT.

Business executives, though, may not have the reaction you expect. They believe they are paid the big money because they make the tough decisions, and when others try to move into that space, they react. This is not necessarily political in nature - it is just good business sense. They are always looking for better ways to do things, and if the BI guru suddenly becomes a cog in the gears of success, alternatives should be considered.

Fortunately (or unfortunately for the BI experts), there are a number of new BI solutions appearing on the market that are geared to providing BI-like answers without the need for ‘expertise’. They require less technology infrastructure at a lower cost using a cheaper skillset. I am proud to be associated with one. The pendulum is swinging back from a technology-centric, expert-driven ’business intelligence solution’ to embedding easy to use business analytics into applications. They do not require experts to run them.

So I caution the BI workers out there — your position might be hotter than you think.

A long time ago, I graduated from an engineering program with the concepts of effectiveness and efficiency held in high regard. Truly elegant solutions could produce phenomenal results with very little resource or effort. By contrast, overly large and complex designs that relied on brute force to get the job done have always seemed to be the scourge of civilization. As the computer industry developed, I saw a number of elegant solutions emerge, packaged as lean, purpose-built objects that delivered results as no other product before it. These alternatives usually took the market by storm simply because they offered a better way to get the job done; the Return-On-Effort ratio was very high.  This is what attracted me to Nextanalytics.

In the business intelligence and reporting space, the various players have been battling it out for decades. Innovation has dwindled to feature creep as products have matured and grown bloated. One fact has held over the years – only 15% of the population actually have the desire and ability to conceptually analyse the data available. This has nothing to do with the ‘tools’ or making them easier to use; most people’s brains simply do not work that way (http://lsn.curtin.edu.au/tlf/tlf1995/whitefield.html). The big B.I. players have known this for a long time, and with many of the analytical types working in other roles, the few that actually use the BI tools to create new reports, dashboards and scorecards are in very high demand.

As we all know, high demand means high priced, so when it comes to generating new reports, those in control ‘do the math’ and decide where the effort ‘is worth it’ and where it isn’t. Because their effort is so expensive, a lot of potentially insightful reports never make the cut – if you don’t know the answer will be worthwhile, you’ll never do the work to prove it. That explains why there is a growing investment in analytics (http://www.tdwi.org/News/display.aspx?ID=9269). But is spending more the right answer?

The market has shown, time and again, that when demand for complex and expensive solutions climb steadily, something disruptive usually occurs. People don’t like spending lots of money on big, complicated things they don’t understand. I feel it is time for solutions like Nextanalytics that change the rules, change how things are done, change who can do them. It’s time to reduce the effort, reduce the investment, but still get the returns.

I came across the first of a two-part article by Ned Madden today that does a great job of exposing the range of opinions about analytics and what it means to different organizations.

I particularly liked the IDC quote defining business analytics software as “solutions used to access, transform, store, analyze, model, deliver and track information to enable fact-based decision-making.” That sums up the general feelings people would associate with the words ‘business analytics’ when not encumbered by dictionary definitions. And it is that emotional attachment to the words that will elicit investments by senior managers. I have to note that the definition could have been written in 1985 and is the fundamental reason behind virtually all business investments in computer technology.

Managers want more information to better run their business, and the role of computers in maintaining and understanding daily operations continues to grow. The speeds and feeds have been producing lots of reports with even more numbers, yet managers are increasingly challenged to find the time to look at them. BI and application vendors know that most of the reports in their systems are never looked at. IT organizations know that a change in management or disappointing quarterly results means a spike in new report requests.

You can see the dynamics in the market — there is a pent-up demand for something new that will make people’s lives better. Mr. Madden has captured some of the excitement building in the industry –terms like custom fit and competitive edge are headlines, and there are lots of niches for vendors developing. I look forward to seeing part II of the Breakthrough in Analytics.

And so it goes…trying to define the word ‘analytics’. Well, maybe we can start off by agreeing that we won’t agree, as James Taylor says. But try we will.

This is predictable, and was evident more than two years ago when the term was just beginning to be picked up by mainstream marketing minds. With the aging of the “BI” term and the changing landscape in the industry, the players need new magic phrases to get a piece of the lucrative IT spending priorities (full disclosure: yes, I work for one of them and I want some of it, too). We have probably all heard that analytics are an enabler in high performing organizations, and books like Competing on Analytics are reinforcing the point in the executive ranks.

Marketing knows what that means — they may not say it outright, but their unspoken desires are building. Every competent executive is uncomfortable with what the future may bring. They need information to make decisions, and they see the word ‘analytics’ popping up in the business press. They don’t try to define it, but they start to feel positive towards it. The more they see it bandied about by others, the more they are attracted to it, and their very own marketing VP is probably talking about things she’s learned from the web analytics.

If someone, like the CIO, picks up on an opportunity to use a buzzword to fix a dwindling budget, then an investment in ‘analytics’ has been born. It could be anything, so long as you can stretch the term to fit the actual spend in some way. Now, I am not suggesting people invest in unnecessary projects just because they used some fancy buzzwords, but anyone that’s been in the IT leader position knows you need to drop those words to get over the resistance hurdle for the projects that the business does need. Once the project starts, vendors pick up on the new ‘analytics’ investment, and they use the same technique: drop the words to get over that initial resistance.

So, should we define ‘analytics’? Absolutely NOT! Leave it as wishy washy as we can get it, and leave the door open to interpretation. Everyone wins! The CEO gets to brag about his new investment in analytics, the CIO gets his project budget approved, the vendors….we get past the gatekeepers to talk to the people that matter.

[oh, and NextAnalytics actually does sell a product that does ‘analytics’ :-)]

As a long-time IT exec, I’ve seen the studies, listened to the sales pitches, questioned the case studies, and lived through the hype cycles. In organizations, there is a perceivable cycle that repeats itself -the current strategy is getting long in the tooth, so management searches for the next ‘thing’.

Someone in marketing recognizes a festering annoyance in a few leading organziations and coins a new phrase that others start to rally around. They know that management spends money to deal with festering annoyances, but they hate pouring money into the same thing, year after year after year. That is why it is so important for marketing to supply their new phrase with some nice sounding “differentiation”.

I remember the need for “reporting systems”, the fancier “decision support systems”, robust “data warehouses”, the more agile “data marts”, prestigious “executive information systems”, the all-encompassing “business intelligence” solutions. All of these were supposed to give management a better understanding of the business while dangling the elusive carrot of competitive advantage.

So that festering annoyance put business intelligence applications at the top of Gartner’s technology priority list for the third year in a row. Management is still not happy with the information they have available to them. They think they can get better reports, and will soon get tired of investing in the same old thing. The BI industry is in a really bad state to respond. The Big BI Consolidation has distracted all the wrong people, and there hasn’t been a lot of innovation to hook a new marketing phrase to.

We all know that the lack of a product would never stop a good marketing group, so is it any surprise that, after Google Analytics helped them understand their web site usage, they are identifying a bigger requirement for ‘business analytics’?

Business Intelligence is dead (as a phrase). Marketing is killing it. Long live business analytics.

Well, three years at least…