Between February and April of 2008, the Aberdeen Group conducted a survey of more than 1150 companies that asked them about their data management, deployment strategies, and management total cost of ownership (TCO) for their BI implementations. Of the 1150 respondents, about 650 of the companies were considered to be SMBs (as defined in this study as companies with annual revenues of less than $500 million). Out of this survey, the Aberdeen Group put together the “Business Intelligence for the Small to Medium Sized Business (SMB): Analytics Reaches Down Market” benchmark report. Recently, I got the chance to speak with the Aberdeen Group’s Michael Lock, a research analyst for business intelligence (BI), and David Hatch, vice president and principal analyst of BI, about this report.

The Aberdeen Group has conducted 14 or 15 studies around BI and found that small-to-midsized businesses (SMBs) are slow to adopt BI. “The goal of this study was to really find out what’s going on in the SMB space when it comes to BI, what are the capabilities that they have, and what type of tangible performance improvements they’ve been able to achieve,” says Lock. To get this information, the Aberdeen Group asked companies how quickly they’re able to provide information to users, how well they’ve been able to deliver self-service BI capabilities to non-technical users, if they’ve been able to improve employee productivity, and how well they’ve been able to manage the TCO for their BI solutions. Of the 650 SMBs, those companies that scored in the top 20 percent were considered to be best-in-class.

The study found that 58 percent of best-in-class SMBs were able to provide their end users with access to key information in real-time or near real-time, compared with only 5 percent of laggard SMBs (i.e., companies in the bottom 30 percent of aggregate performance scorers) that were able to do so. In addition, 100 percent of best-in-class SMBs were able to provide self-services BI capabilities to their end users. When it came to employee productivity, best-in-class SMBs reported that they saw an improvement, whereas laggard SMBs saw a decline. “Something that defines productivity when it comes to analytics is how long does it take you to find information, is it the right information, and how long does it take you to deliver it to the person that needs it the most. So best-in-class companies saw a mean class average 11 percent improvement in productivity defined that way, again compared to an 8 percent actual decline for the laggards,” says Lock. The reports also shows that 9 percent of best-in-class SMBs were able to reduce their cost-per-user of BI applications compared to laggard companies, which saw a 6 percent average increase in the cost-per-user of BI applications.

So why are some SMBs performing at a much higher level than others? According to Lock, it’s because best-in-class SMBs are “establishing an information culture around the company that values analytics and BI capabilities.” Lock told me that there were two things that he took away from this survey. The first is that the top performing companies in this survey were those companies that made an effort to build a culture of information and showcase the value of having accurate information delivered to the right people in a timely fashion. Lock believes that culture of information is something that has helped increase the adoption of BI solutions and spread them to a wider audience within organizations. The second thing Lock said he took from the survey is that “The ability to understand and properly manage the full BI stack—from databases, data warehouses, \[and\] ETL all the way through to reporting tools like dashboarding and scorecarding—that whole BI stack or value chain is something that’s very difficult for a resource-weak company to manage. So a lot of them have turned to solutions that automated some of those elements of the BI stack.”

Another topic that this report touched on was what tools SMBs are using successfully in their organizations. According to Hatch, “It’s in underlying data management where companies are really struggling, where we’re seeing a real diversity between a best-in-class approach and a laggard approach.” Hatch believes that data quality is a real best-in-class delineation capability. Hatch told me that the Aberdeen Group made data management such an important part of this research so that they could gauge companies’ capabilities when it comes to handling information from its raw data form to something that’s actually actionable for end users.

According to Lock, part of the research that this report was based off of was the TCO of BI solutions. “As you might imagine, in the SMB world something else that impedes their deployment or is a barrier to adoption is, of course, cost,” says Lock. When talking about total cost of ownership, the study is aimed at not only the upfront licensing costs, but also the ongoing management, maintenance, and support costs, as well as some of the hidden costs, that come with deploying an enterprise-wide BI solution, according to Lock.

With the recent economic crisis, many companies are cutting back on their IT spending, and I was curious to find out what effect the economy has had on BI purchases. Because this study was conducted before the economy really began to get bad, this report didn’t  contain that information. However, Lock and Hatch said that the Aberdeen Group has been asking companies if the economy is affecting their BI spending. “The question that we’ve been asking is not so much new purchases, but around the renewal of the maintenance and support contracts, and to us that is the real leading indicator because that tells me of companies who have seen the value in business intelligence and have already made an investment, are they going to continue to support that investment at the levels they have been?” says Hatch.  He went on to say that he has seen that BI spending has been going down, but not drastically. According to Hatch, the average maintenance contract that he saw a year ago was somewhere between 17 and 18 percent of the software purchase price. He says that number has now dipped down by a full percentage point. Lock thinks that if companies are spending money in BI, they’re going to be spending it on squeezing every ounce of value that they can from their existing BI investments.

Has the economy affected whether your company has purchased a BI solution? If your company is continuing to spend money on BI solutions, is the money being used to get every bit of value out of your existing BI implementation possible? I would love to hear from you in the reader comments section of this article page or at mkeller@sqlmag.com.

You can download a free copy of the “Business Intelligence for the Small to Medium Sized Business (SMB): Analytics Reaches Down Market” report from www.aberdeen.com/link/sponsor.asp?cid=5463. I recommend reading the following SQL Server Magazine articles if you’re considering implementing a BI solution in your environment: