Leading Analyst Firm Issues “Wake-Up” Call

Leading Analyst Firm Issues “Wake-Up” Call to Companies Lagging in Use of Business Intelligence (BI) for Operations
 

New global study on business decision making shows:

·        Widening gap between BI “haves” and “have-nots”

·        Decision making and BI moving from the corner office to the field operations and beyond

·        Dependence on BI technology rising as fewer businesses  tolerate even short down-time

·        Yet, over one-third of business decisions still based on “gut feel”

Teradata Corporation, the global leader in enterprise data warehousing, today announced a landmark study from IDC that puts business decision making throughout the world at a critical crossroads, with business intelligence (BI) technology now an important component in differentiating between leading and average companies.

While information continues to explode and the pace of business decision making is faster than ever, BI technology is at the intersection of a crossroads.  Leading companies are on one path, using BI for operations as well as the traditional strategic decision-making.  On the other path, average companies are using gut instinct to make important business decisions with their management far behind the leaders in investing in BI technology.

“This is a wake-up call to companies that are not using BI for their operations as well as for strategic business decision making,” says John Gantz, chief research officer of IDC. 

In the IDC white paper, “Taming Information Chaos: A State of the Art Report on the Use of Business Intelligence for Decision Making,” principal author Gantz wrote, “We are able to observe both where the technology is capable of taking us and where the market really is.  In a way, this is a gap analysis.”

The study quantifies the gap between market leaders and average organisations in the use of technology to support decision making.  Sixty-six percent of leaders rate their management’s understanding of the need to invest in BI as excellent, compared to only 15 percent of average companies.  Leaders are more likely to use BI on their front lines and to push it out to customers and suppliers – and more leaders said there would be “immediate” negative impact if their BI system was down.  Leaders are more likely to rate BI as their top business initiative and to measure return on investment from BI.

“Market leaders are making decisions in noticeably different ways from average companies.  It is evident from the study that management support for business analytics and dependency on real-time information are critical to taming information chaos and enabling smarter better decisions,” said Darryl McDonald, chief marketing officer of Teradata.  “This study extends our previous surveys on global business decision making over the past five years and pinpoints important issues and trends.  These range from information overload and decision complexity to democratisation as critical business decision making spreads from the corner office to cubicles and out to the front lines.”

Other key findings

Seventy-five percent cite information overload, led by government and healthcare respondents at 81 percent, and many claim up to half of all information available to them is useless for their decision-making.

Thirty-seven percent of all business decisions remain primarily ‘gut’ or instinctive. ‘Gut’ decision-making is more common in the APAC region, as compared to more mature markets in the Americas or Europe.

Fifty-eight percent say business decisions are more complex – and decision complexity appears greater in the Americas.
 

·         Almost all – 98 percent of the study’s senior-level decision-making participants – stated they have included business intelligence solutions in their 2007 top 10 organisational priorities.

In addition, the study revealed that the decision-making process is continuing to shift down and out in organisations and that there is a vital need for new business analytics tools to provide better supporting information. Evidence of this diffusion, includes:

48% of respondents said their front line staff – gate agents, cashiers, call center reps, bank tellers, etc. – were making more decisions this year than in 2006
 

54% said front line staff had business intelligence solutions to support them; this is critical as three out of the top five applications of business analytics in the organisation support customer-related activities. 
 

“The exploding universe of digital information and the hastened pace and increased complexity of decision-making are creating a ‘perfect storm,’ that will drive companies to make a quantum leap in their use of and sophistication in analytics,” said Gantz.  “It's easy to see the forces driving an ever increasing pace for decision-making. Depending on your view, these forces create either a virtuous circle or a vicious cycle, where the need to compete in a globally integrated marketplace forces companies to develop what could be

Responding to the IDC survey were 1,072 executives from 22 countries, of whom 39 percent are in IT management roles and 61 percent in line-of-business management.

 
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