11-10-2012, 02:02 PM
The Top 10 Trends for 2010 in Analytics, Business Intelligence, and Performance Management
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In the wake of the long-running massive industry consolidation in the Enterprise Software industry that reached its zenith with the acquisitions of Business Intelligence market leaders Hyperion, Cognos, and Business Objects in 2007, one could certainly have been forgiven for being less than optimistic about the prospects of innovation in the Analytics, Business Intelligence, and Performance Management markets. This is especially true given the dozens of innovative companies that each of these large best of breed vendors themselves had acquired before being acquired in turn. While the pace of innovation has slowed to a crawl as the large vendors are midway through digesting the former best of breed market leaders, thankfully for the health of the industry, nothing could be further from the truth in the market overall. This market has in fact shown itself to be very vibrant, with a resurgence of innovative offerings springing up in the wake of the fall of the largest best of breed vendors.
So what are the trends and where do I see the industry evolving to? Few of these are mutually exclusive, but in order to provide some categorization to the discussion, they have been broken down as follows:
1. We will witness the emergence of packaged strategy-driven execution applications. As we discussed in Driven to Perform: Risk-Aware Performance Management From Strategy Through Execution (Nenshad Bardoliwalla, Stephanie Buscemi, and Denise Broady, New York, NY, Evolved Technologist Press, 2009), the end state for next-generation business applications is not merely to align the transactional execu tion processes contained in applications like ERP, CRM, and SCM with the strategic analytics of performance and risk management of the organization, but for those strategic analytics to literally drive execution. We called this “Strategy-Driven Execution”, the complete fusion of goals, initiatives, plans, forecasts, risks, controls, performance monitoring, and optimization with transactional processes. Visionary applications such as those provided by Workday and SalesForce.com with embedded real-time contextual reporting available directly in the application (not as a bolt-on), and Oracle’s entire Fusion suite layering Essbase and OBIEE capabilities tightly into the applications’ logic, clearly portend the increasing fusion of analytic and transactional capability in the context of business processes and this will only increase.
2. The holy grail of the predictive, real-time enterprise will start to deliver on its promises. While classic analytic tools and applications have always done a good job of helping users understand what has happened and then analyze the root causes behind this performance, the value of this information is often stale before it reaches its intended audience. The holy grail of analytic technologies has always been the promise of being able to predict future outcomes by sensing and responding, with minimal latency between event and decision point. This has become manifested in the resurgence of interest in event-driven architectures that leverage a technology known as Complex Event Processing and predictive analytics. The predictive capabilities appear to be on their way to break out market acceptance IBM’s significant investment in setting up their Business Analytics and Optimization practice with 4000 dedicated consultants, combined with the massive product portfolio of the Cognos and recently acquired SPSS assets. Similarly, Complex Event Processing capabilities, a staple of extremely data-intensive, algorithmically-sophisticated industries such as financial services, have also become interesting to a number of other industries that can not deal with the amount of real-time data being generated and need to be able to capture value and decide instantaneously. Combining these capabilities will lead to new classes of applications for business management that were unimaginable a decade ago.
3. The industry will put reporting and slice-and-dice capabilities in their appropriate places and return to its decision-centric roots with a healthy dose of Web 2.0 style collaboration. It was clear to the pioneers of this industry, beginning as early as H.P. Luhn’s brilliant visionary piece A Business Intelligence System from 1958, that the goal of these technologies was to support business decision-making activities, and we can trace the roots of modern analytics, business intelligence, and performance management to the decision-support notion of decades earlier. But somewhere along the way, business intelligence became synonymous with reporting and slicing-and-dicing, which is a metaphor that suits analysts, but not the average end-user. This has contributed to the paltry BI adoption rates of approximately 25% bandied about in the industry, despite the fact that investment in BI and its priority for companies has never been higher over the last five years. Making report production cheaper to the point of nearly being free, something SaaS BI is poised to do (see above), is still unlikely to improve this situation much. Instead, we will see a resurgence in collaborative decision-centric business intelligence offerings that make decisions the central focus of the offerings. From an operational perspective, this is certainly in evidence with the proliferation of rules-based approaches that can automate thousands of operational decisions with little human intervention. However, for more tactical and strategic decisions, mash-ups will allow users to assemble all of the relevant data for making a decision, social capabilities will allow users to discuss this relevant data to generate “crowdsourced” wisdom, and explicit decisions, along with automated inferences, will be captured and correlated against outcomes. This will allow decision-centric business intelligence to make recommendations within process contexts for what the appropriate next action should be, along with confidence intervals for the expected outcome, as well as being able to tell the user what the risks of her decisions are and how it will impact both the company’s and her own personal performance.
4. Performance, risk, and compliance management will continue to become unified in a process-based framework and make the leap out of the CFO’s office. The disciplines of performance, risk, and compliance management have been considered separate for a long time, but the walls are breaking down, as we documented thoroughly in Driven to Perform. Performance management begins with the goals that the organization is trying to achieve, and as risk management has evolved from its siloed roots into Enterprise Risk Management, it has become clear that risks must be identified and assessed in light of this same goal context. Similarly, in the wake of Sarbanes-Oxley, as compliance has become an extremely thorny and expensive issue for companies of all sizes, modern approaches suggest that compliance is ineffective when cast as a process of signing off on thousand of individual item checklists, but rather should be based on an organization’s risks. All three of these disciplines need to become unified in a process-based framework that allows for effective organizational governance. And while financial performance, risk, and compliance management are clearly the areas of most significant investment for most companies, it is clear that these concerns are now finally becoming enterprise-level plays that are escaping the confines of the Office of the CFO. We will continue to witness significant investment in sales and marketing performance management, as vendors like Right90 continuing to gain traction in improving the sales forecasting process and vendors like Varicent receive hefty $35 million venture rounds this year, no doubt thanks to experiencing over 100% year over year growth in the burgeoning Sales Performance Management category. My former Siebel colleague, Bruce Cleveland, now a partner at Interwest, makes the case for this market expansion of performance management into the front-office rather convincingly and has invested correspondingly.