One of the main functions—perhaps the most important one—of a business intelligence (BI) and business analytics (BA) application has always been to process data and transform it into actual information, by taking the “right” data, performing the “right” analysis, and showing meaningful results. But in some organizations this BA functionality has not been completely realized.
Why? This promise of BA applications needs more than just the nuts and bolts (data and applications) to be achieved, and many organizations have now come to realize that having only these components is not enough. Data is the raw material and applications are of course important, but there is another element that is crucial to completing the analytics ecosystem: business expertise and the ability to embed it complete a well-functioning data analysis cycle.
Having the ability to encapsulate data, applications, and business expertise to provide proper analysis for a concrete situation is not only an integral part of the process of data analysis in business analytics, it is also crucial for increasing the chances of successful analytics and business intelligence (BI) solution deployments. Thankfully, these capabilities have become much more widely available in BA applications in today’s BI space, and have been at the root of a trend towards BI solutions that meet users’ needs more easily than the more rigid solutions that were the norm in the past, providing a much deeper insight into business intelligence for the unique user in a specific space. In other words, this trend, one of the most interesting to date in the evolution of business intelligence, can be seen to have two main drivers: consumerization and verticalization.
On one hand, the combination of technology and business evolution being realized in the BI software marketplace today has enabled vendors to encapsulate and isolate BI functions and features within analytics tools—enabling business users to pursue their own data analysis efforts by offering applications that are easier to use, can potentially be integrated with office and other types of business applications, and are effortless to deploy and configure. This so-called consumerization of BA software is helping to make the software more accessible, allowing for use by people not trained specifically in analytics or software configuration.
On the other hand, many BI software providers, thanks to their accumulated experience working with clients from different industries and lines of business (LoBs) have gained expertise in providing specific configurations and functionalities for specific business niches. This shift, termed verticalization, is marked by a recent trend among vendors to acquire other software companies offering special analytics software devoted to specific business needs—reinforcing their existing set of analytics tools and providing their users with specialized data analysis functionality for particular industry or business processes.
The combination of technological advances, accumulated expertise, and particular methods used in a business area or industry is an important asset to any organization, and verticalization makes use of this information for business optimization. Specific pre-configured functionality in a specific area or type of business can provide users with the ability to shorten the deployment and production cycles of their software solutions, increase their return of investment (ROI), as well as hasten and improve their decision-making processes.
Ultimately, increasing levels of consumerization and verticalization in the business analytics software space provides customers with a variety of options for addressing specific data analysis needs with a “best-of-breed combination” of tools to reinforce their existing data analysis application portfolio.
The Rise of Business Analytics
Figure 1 (below) depicts interest in functionality by organizations seeking BI software solutions and shows how BA has gained prominence within the industry. The level of interest in BA has spurred both new and existing vendors to commit to the development and release of new products and technologies to fulfill this need. BA applications now occupy an important niche in the BI space, where technology, functionality features, and business expertise are combined to address the analysis of data for the purpose of meeting specific vertical business needs.
Current BA applications comprise a set of functional features that work together to enable organizations to take data from different sources, depending on the type of analysis to be performed, and then use a set of technologies, methods, and practices to conduct the necessary analysis using the proper business approach.
Figure 1. The top 12 functionality areas for business analytics applications requested by firms, 2005–2011 (as a percentage of all BI evaluation projects), with analytics-specific functions marked in red (based on TEC research).
Some of the features and functions of BA solutions, such as predictive and statistical analysis and data preparation techniques, are combined with different types of business-specific analysis methods and practices to facilitate the process of configuring and deploying an analytics solution for conducting business-specific analyses—e.g., to analyze and predict sales behavior, potential market campaign success, customer churn rates, etc. By applying these methods, customers have the ability to discover not only what has happened, but also what could potentially happen, particularly if certain conditions are met. Some examples of these types of BA applications are customer analytics, financial analytics, health care analytics, HR analytics, and social media analytics.
Going Beyond “How are we Doing Today?”
Business analytics tools have surpassed simply asking the premise question “how we are doing today?” and now embrace and try to discover what happened, what could have happened, and what would happen if a concrete scenario is met. Today’s BA solutions not only aim to address the analysis of data for specific functional niches and to be easier to use and able to be integrated with other BI solutions, but they can apply predictive analytics, and also help organizations find the root cause of issues, make predictions based on historical information, and reveal hidden patterns in data to help organizations better plan and execute their business activities. Figure 2 shows a partial schema of the business analytics data cycle, showing the basic components and functions of BA software, and some of the main vertical BA solutions available in today’s BI marketplace.
Figure 2. Business analytics data cycle
The data cycle process is also undergoing important changes, with implications for business decision making. Existing pressures within many types of organizations for more timely delivery of data analysis results to improve both strategic and operational decision-making processes, along with the need to align both processes with the company’s goals, have led to the emergence of new types of tools specifically designed to cater to an organization’s data analysis needs—in a timelier and more flexible manner.
In closing, any organization considering business intelligence solutions would be smart to keep in mind the potential benefits associated with deploying BA solutions, including:
Stay tuned—in further installments we will address some of the most important types of business analytics applications for industries and lines of business. In the meantime, please feel free to drop me a line below.