'Operational' BI Enters The Midmarket - InformationWeek

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10/9/2005
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'Operational' BI Enters The Midmarket

Among medium-sized companies, business intelligence was once a domain exclusive to the executive class. Now midmarket firms of all stripes are pushing BI tools out to employees on the front line of operations to reinvigorate processes and increase efficiency.

When Administaff Inc., an outsourcer of human resources for small businesses, first broke ground on a Web-based operational BI initiative back in 1998, it had revenue of $284 million. Seven years later, its annual topline approaches the $1 billion mark, it handles the HR of some 86,000 employees working for 4,800 businesses, and it can hardly be described as a mid-size company.

While it would be silly to attribute that explosive growth to BI alone, Administaff's early roll-out of reporting and analytics tools certainly played a crucial role. For years BI vendors have trumpeted the need to bring business intelligence "to the masses." Long deployed by executives to tease out strategic corporate trends, BI capabilities have slowly trickled down to lower-level employees, to those workers charged with actually conducting a company's business "in the field." Such tools have been termed "operational BI," and their implementation has become common among large companies with vast resources and enormous IT departments.

To be fair, however, there are indications that BI's "to-the-masses" trend has been a bit overplayed. According to a report published this summer by The Data Warehouse Institute (TDWI), only 18 percent of potential BI users in any given organization are using BI tools, a percentage that seems to suggest a dearth of operational BI. In any case, vendors are very much attempting to sell such software. Says Wayne Eckerson, director of research at TDWI: "They're like oil companies that have tapped all their oil fields. They're prospecting for new markets."

Especially as Web-based technology has grown more robust, one of the new markets that BI vendors have begun targeting is the middle tier: those small and medium-size companies once believed to be far too unsophisticated to handle this kind of software. It is now considered by many vendors to be a faster growing market than the enterprise sector. (A few months ago, for instance, Business Objects came out with a new operational BI initiative, and it has aimed much of its push at small business and medium-size companies.) Administaff and its success represent the leading edge of this trend -- an example of an early adopter that has outgrown its mid-size roots. Nonetheless, its experience, along with that of other companies striving to give employees a clearer understanding of their jobs, demonstrate both the benefits and potential pitfalls smaller organizations face when attempting to introduce operational BI.

Based in Houston, Administaff handles recruiting, payroll and benefits -- from health insurance to retirement plans -- for small businesses and their workers. The company is actually the employer of record for its clients. Not surprisingly, then, Administaff trades heavily in information, and the need to deliver that data to its customers as efficiently as possible has always been a strategic imperative.

Before 1998, the company had a team of report writers who would manually compile employee information for two primary audiences -- the business owners and their staffs. To receive a payroll report, for instance, an owner would have to call Administaff headquarters and request one. Every report had a five to seven-day turnaround time. "And because of the nature of the data, we had to verify everything, which, typically, would create a backlog," says John Sheridan, director of business technology and development at Administaff. "That's what drove us to replace the old system. It was manpower-intensive and wasn't meeting our clients' needs. They didn't want to call us, and they didn't want to wait."

Enter Information Builders (IBI), whose founder and chief executive, Gerald Cohen, claims to have coined the term "operational BI." Seven years ago, Administaff installed an early version of IBI's WebFocus reporting tool. Essentially, the software allowed the company to put its payroll and benefits reports onto the Internet, where, through a portal, clients and their employees could log on and easily access their information. Cohen credits this innovation with allowing Administaff the room to expand its customer base, and thus its profits. Before it began using this kind of operational BI -- targeted at customers rather than its own workforce -- Administaff "had thousands of customers, and they wanted to know all kinds of information," Cohen says. "They were driving Administaff crazy, calling up and wanting to know this and that." The company didn't have the time or the resources, he says, to take on many new clients. "But then they put everything up on the Internet, and because now all their reports are done on computer, they're one of the fastest growing companies in the industry. I would argue that because they got into this, they were able to grow effortlessly. It became easy for them to add new customers."

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