Interview: Cognos CEO: BI ROI a 'fuzzy' metric

Interview: Cognos CEO: BI ROI a 'fuzzy' metric

Rob Ashe, CEO of Ottawa-based business intelligence software vendor Cognos, spoke with Computerworld US about the challenges associated with BI initiatives -- including an inherently 'fuzzy' ROI.

At the Business Intelligence Perspectives conference here in Palm Desert, California, Rob Ashe, CEO of Ottawa-based business intelligence software vendor Cognos, spoke with Computerworld US about the challenges associated with BI initiatives -- including an inherently "fuzzy" ROI. You've said there's a lot of enthusiasm among your customers about Cognos' product portfolio. What, on the other hand, is their biggest gripe? I would say that with the transition of our business to be more strategic to our customers, our customers' expectations are higher around things like regulatory compliance. And we need to do a better job of servicing them to those higher expectations, as opposed to servicing them to the departmental expectations that we grew our business on. That involves the way we approach our services business -- the way our sales business and services business are more well-integrated.

Our customers really want Cognos now to deal with them the way they're dealt with by their most strategic suppliers. And that involves us growing up a bit and evolving our distribution and services strategy.

Some analysts say that more than half of BI projects experience limited acceptance or outright failure. Why is the BI failure rate so high? I don't see a high BI failure rate. I see a high warehousing failure rate, where people have tried to build the warehouse in the sky and have approached it wrong -- they have not built a warehouse that's suitable for BI and analysis. I've had a number of customers say to us that they're now realizing that performance management is the killer app for data warehousing. If you think about a data warehouse for performance management as opposed to an IT infrastructure initiative, that's going to help you understand how you're going to build your data warehouse, what's going to go into it, what the dimensions are going to be.

On the BI side, our renewal rates in our business are close to 90 percent -- they're at historic highs and don't point to us to failure around BI projects. And while we've gone through this evolution of the data warehousing business, BI can operate independent of the data warehouse. Because investments are low and results tend to come fairly quickly, I think people start small. So any failures tend to be small failures as opposed to big failures.

Speaking of results, there seems to be a general consensus that BI yields an ROI, but nobody seems to be able to put a tangible metric on it. Would you agree? I'd say it's a fuzzy metric. Unfortunately, running a business involves some fuzzy metrics. It's kind of an accumulation of things that gives you more than a gut feeling -- it gives you a sense that you're moving in the right direction. If we can improve a process in a company -- BI around spare-parts tracking for a car manufacturer that reduces the downtime of the machines that stamp out those spare parts by 1 percentage point, for example; it's an annual US$5 million or $10 million savings against a $1.5 million capital investment -- that's pretty good ROI. Is it fuzzy? It's a little fuzzy, because there may have been other factors that led to the reduction in downtime of the machines. But it's what I would call an approximate indicator, and therefore you get ROI that's fuzzy, but you can touch it. So you don't know if it's 10 or 8, but it's certainly more than 5.

Are companies demanding more of a tangible ROI? Absolutely. People group investments in two categories: transformational, where the ROI tends to be more fuzzy, where you just know that better consistency around customer data is going to enable you to service your customers better and that's going to pay off; and then there is the fundamental, "show me the hard ROI" calculation. And it's a challenge for us to do that. We have our ROI calculators, but it's a challenge. It's a sign of the new IT buyer, the new business buyer, which is not buying infrastructure. They're not buying feel-good stuff; they're buying tangible results.

BI tools are now being put in the hands of many users across an organization rather than being limited to use by a few analysts. Is that a good thing or a bad thing? It's a good thing. We've always talked about the democratization of data, getting data out of the glass house and into the hands of the people who need it to make decisions. The users become hubs in the network, to move the data faster along where you need human intervention.

Now, how do you satisfy IT that the place isn't going to run amok? We thought about this about four years ago -- pervasive business intelligence enabled through Internet technology. How are we going to make IT feel good about how they're going to get this done? That's why we built a platform that allows users to use their own security systems, their own application server, their own portal -- integration with the environment so IT could breathe a sigh of relief. The problem comes when you have 10,000 users; 1,000 of them are looking at reports one way, 1,000 of them are looking at reports another way, and 1,000 a different way, and it all comes back to IT. That's what's driving enterprise standardization.

Is Cognos doing anything in the area of providing BI capabilities as a hosted service? We're thinking about it. We're thinking about whether there are specific applications where we would be entrusted with our customers' data. We haven't come up with any yet, but it's something on our radar that's interesting to us.

There's been a lot of controversy about that quality of the intelligence available to U.S. government policymakers with respect to the war in Iraq. Is the analytical technology available to help those policymakers make better decisions? The need to have a single version of the truth is only amplified in a public-sector context, where all these agencies have all this data. I don't think the technology was available to do large enterprise standardizations around BI capability until recently. I think it's a need, I think it's going to be compelling, and we're certainly working to make the tools available to do it. -- Computerworld (US online)

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