Companies are using business intelligence software for more than simple data mining. They're using it to identify hot sellers, cut costs and discover new business.

Reader ROI

• How BI software can help extract hidden value from data
• How to identify different applications for BI software
• Tips for rolling out BI software

It looked like your average faux fish, mounted on a faux wood plaque. But when you walked by, the fish would turn its head, open its mouth and start singing, "Don't Worry, Be Happy" or "Take Me to the River". Pure kitsch. And as it turned out, pure gold for the True Value store owners lucky enough to have them in stock. "It was a hit," says Neil Hastie, former CIO of TruServ, a member-owned hardware cooperative of 7000 or so independent retailers. "We ran out of them." So when the same company came out with a gopher singing "I'm All Right" - remember Caddyshack? - it seemed like a sure bet. "Everyone thinks: 'God, this is the second fish! Let's order the hell out of it.' So we did," Hastie says. "We ended up with truckloads of gophers we couldn't give away."

Fortunately for TruServ, the company had business intelligence (BI) software that helped it recognise the gopher fiasco early enough to liquidate the unwanted rodents and recoup some of its expenses. That ability to quickly make sense of oceans of data can be a competitive advantage, making BI software essential for many companies.

CIOs are hardly flush with cash these days, but they are interested in BI - very interested. A 2003 Forrester Research report found that 45 per cent of companies surveyed planned to shop for BI software this year, which explains why vendors such as Business Objects and Cognos have seen double-digit increases in their revenue. With today's BI tools, business folks can jump in and start slicing and dicing data themselves, rather than wait for IT to run complex reports. This democratisation of information access helps users back up with hard numbers business decisions that would otherwise be based only on "gut feelings".

A broad range of applications for BI is helping companies rack up impressive ROI figures. Business intelligence is being used to identify cost-cutting ideas, uncover new business opportunities, roll ERP data into accessible reports, react quickly to retail demand and optimise prices. TruServ's Hastie, for example, spent $US250,000 on BI software from Business Objects and says the investment paid off in about two months. Besides using it to track anomalies like the gophers through an executive dashboard, TruServ is also pressing it into service as a CRM tool and is using it to integrate data from disparate accounting systems, which will help the company close its books two days earlier every month.

Otherwise tight-fisted CIOs are spending money on BI software because its relatively low investment yields fast payback, says Larry Downes, strategy consultant and author of Unleashing the Killer App and The Strategy Machine. "[Unused data] is still a great source of untapped productivity and competitive advantage for most companies," he says. Just how much data is going unused? Downes guesses companies are extracting value from only about 20 per cent of their data.

Of course, the potential of any unused data is only as good as the quality of the data itself. The success of any BI implementation depends on having clean data to mine (see "Cleaning Up Your Act", CIO July 2003). Some companies are so gung-ho about BI that they've invested in multiple systems, which may be tough to integrate, says Forrester analyst Laurie Orlov. She says it's not unusual for larger companies to have at least five BI platforms. She also warns of information overload, citing as a cautionary tale a CIO who said his 100,000 employees all have access to hundreds of dashboards, what Orlov calls a "fire hose problem".