Business Intelligence Gets Smarter

Rapid innovation in this software sector is putting useful data at the fingertips of executives, workers -- even customers

In a pilot program O.K.'d by the State of New York, suburban Rockland County announced earlier this year that it had uncovered $13 million in improper Medicaid claims made over a 21-month period. Because the problems were discovered before the reimbursements were made, Rockland saved itself the headaches it would have faced if it had paid out the money first and asked questions later.

The credit goes not to a crew of hard-working sleuths but to search and analysis software created by IBM (IBM) that automatically sorted through thousands of forms, plucked out key bits of information, and sized them up against Medicaid rules. Government officials believe that if the program were to be applied statewide it could deliver $3.8 billion in savings per year. "This may change the Medicaid industry in New York," says Rockland County Supervisor C. Scott Vanderhoef.

This is just one example of a change in the way corporations and governments find and use information. Data are becoming much easier to access and vastly more useful.


Organizations have huge amounts of data that pass through their computer systems as they place orders, record sales, and otherwise transact business. Much of this information is stored for future use and analysis. But advances in software make it easier for companies to analyze data in real time -- when it's first whizzing through their computers -- and make it available to all kinds of employees.

Technological innovations also make it possible to analyze so-called unstructured data, such as Rockland County's Medicaid claims, that don't easily fit into the tables of a traditional database. The result of all these changes: It's now possible for companies to understand what's happening in their businesses in a detailed way and quickly take actions based on that knowledge.

These improvements have come largely as a result of advances in business intelligence software, or BI. This software -- a $3 billion segment growing at about 7% a year -- gathers information in so-called data warehouses where it can easily be reviewed, analyzes the data, and presents reports to decision makers . In the past, the reports had to be painstakingly assembled by tech-savvy business analysts and were typically made available only to top tier people.


Now the information is easily available to anybody in an organization who can use it -- a phenomenon industry folks have dubbed "pervasive business intelligence." "Companies are moving from a place where only the more technical people had access to information to more of a self-service situation. People can get information themselves," says Christina McKeon, global business intelligence strategist for software maker SAS Institute, based in Cary, N.C.

SAS and other BI software makers are reaching out to the masses in a variety of ways. Several of them have hooked up with search leader Google (GOOG) to give businesspeople easier access to those data warehouses via the familiar Google search bar. They have redesigned their business intelligence Web portals so people who do Google searches get not just documents that include their keywords but also others that are thematically related.

For instance, if a business-unit leader searches for first quarter financial results, he might also get reports on the 10 largest customers in the quarter and the customers who bring them the most profits. "The data warehouse is starting to go mainstream," says analyst Mark Beyer of tech market researcher Gartner (IT).


Business intelligence is also being added to other standard run-the-business applications, such as order fulfillment, logistics, inventory management, and the like. Consider a busy warehouse with a limited number of loading docks. Trucking companies don't want their rigs to wait in line for hours, so some of them charge fees for waiting time at the warehouse.

To avoid those costs, companies can build business intelligence into their logistics planning systems that lets them know when trucks are stacking up and directs supervisors in the warehouse to load the trucks that charge waiting fees before those that don't. The supervisors get this information via their PCs or handhelds on the warehouse floor. "People are getting the benefit of a data warehouse without knowing it," says Randy Lea, vice-president for product and services marketing at Teradata, a division of NCR (NCR), a leader in data warehousing software.

This kind of real-time, behind-the-curtains intelligence is even becoming available to end customers. Travelocity, one of the leading travel Web sites, has long used business intelligence software to help it analyze buying trends and segment customer types so new services can be tailored for them. Now it has rigged its vast data warehouse directly to its consumer Web site so it can gather and analyze information about what's going on as it's happening.


Travelocity links the profile of individual customers who are on the site to a monitor of their current activity and to information about available airplane flights, rental cars, and vacation packages. If a customer begins asking about flights to Orlando over the 4th of July weekend, Travelocity's system will understand that the customer is probably planning a family vacation and will place advertisements that are relevant to that kind of trip and even pitch the customer special travel promotions. "If we want to, we could give every customer a custom offer," says Mark Hooper, Travelocity's vice-president for product development.

What's next in easy-to-use business intelligence? Gartner has a concept it calls "Biggle" -- the intersection of BI and Google. The idea is that the data warehousing software will be so sophisticated that it understands when different people use different words to describe the same concepts or products. It creates an index of related information -- á là Google -- and dishes relevant results out in response to queries.

In computer science, they refer to this capability as non-obvious relationship awareness. "Nobody's doing this yet," says Gartner's Beyer. Judging from the speed of recent advances in business intelligence, though, it may not be long before companies add the term "Biggling" to their tech lexicon.

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