From left: Edmond WONG, IT director – global MIS of Johnson Electric; CHONG Woon Sun, senior vice president of Enterprise Services, Technology & Operations, DBS; Anna OR, manager of CIS & CRM Programme, Cathay Pacific; Toa CHARM, chairman of the Hong Kong Computer Society’s Business Intelligence Special Interest Division; and Benny LI, senior data quality analyst, data quality management, risk management department of Bank of China.
HONG KONG, 10 DECEMBER 2008 – BI solutions will remain the top priority for ICT applications in 2009, according to a survey on BI practices in Hong Kong.
The survey was done by the department of information systems at the City University of Hong Kong, in collaboration with the Hong Kong Computer Society’s (HKCS) business intelligence special interest division (BISID).
Toa Charm, chairman of the HKCS-BISID, said this at the first ‘vendor-neutral’ gathering organised by the BISID last week where Hong Kong information technology professionals shared their business intelligence best practices.
The next priority for ICT applications that follow BI include enterprise applications; legacy application modernisation; security technologies, server and storage technologies; service-oriented architecture and software-as-a-service; and technical infrastructure management and development.
About 70 per cent of respondents to the survey indicated that spending, at least in key areas such as BI, will remain steady over the next five years or even increase despite the poor economic conditions.
Facilitate sharing
The BISID was founded in February 2008 operated under the HKCS. One of its aims is to facilitate the sharing the local and international best practices of business intelligence (BI) business users, BI vendors, and IT professionals in Hong Kong. BISID is chaired by Toa Charm, currently the regional head of the Business Intelligence Competency Centre, enterprise data, HSBC technology services Asia Pacific.
The HKCS-BISID’s ‘The Current BI Practices in Hong Kong’ survey was conducted on major BI vendors’ clients and HKCS’ members. Started from November 2008, the survey will continue till the end of December 2008, with the final report available in early January 2009. The interim results, of which 60 survey respondents are represented, announced at the event, were only initial findings.
“[Of the] respondents to the HKCS-BISID survey, the majority of whom (45 per cent) were from mid-sized to large organisations with at least 3,000 employees, showed clearly that technology has a role to play,” said Charm.
BI is already making inroads in the decision making process in many organisations. Nearly 80 per cent of survey respondents acknowledged that the main BI users in their businesses were management staff, with middle management coming in at 41 per cent and senior management at 36 per cent.
“The reach of BI is definitely spreading among management personnel. It is also spreading into more functional areas. According to the survey, the top three today are sales and marketing, strategic planning and accounting, with risk management also taking a healthy interest,” said Charm.
BI tops CIOs’ list
Another survey, the ‘Gartner CIO Agenda 2007 – Top CIO Priorities’ indicated that BI topped CIOs’ priorities last year, followed by enterprise applications [enterprise resource planning (ERP), supply chain (SCM) and customer relationship management (CRM)] and virtualisation.
At present, however, BI tools and BI applications have a much lower user penetration rate in the world compared to ERP, SCM and CRM, which account only for 30 per cent (for BI tools) 10 per cent (for BI applications) respectively, according to the Goldman Sachs Estimates & Department of Labour survey.
In the same survey, Goldman Sachs estimated that the combined number of licences of BI tools and applications will reach 98 million by 2010. According to Charm, the low saturation rate and huge potential market of BI call for a bigger emphasis on the technology.
The low saturation of BI technology in enterprises, indicated by a Cognos survey conducted worldwide in 2007, can be explained by the lack of executive sponsor, and their technology approach being tactical (serving specific needs) versus strategic (serving as a platform for generating immediate results).
Driving business
Charm said BI helps drive business in various ways. In the banking industry, BI empowers bankers to answer questions in the following areas: customer value optimisation (How can I predict Customer Life Time Value?), increase customer retention (How can I timely identify branch service quality issues?), performance management (What is my profitability by lines of business and products?), risk management (Can I track delinquent behaviour?), and compliance management (Am I effective in preventing money laundering?).
As with retailers, said Charm, BI also empowers retailers to answer questions to drive accurate inventory decisions (How can I maximise in-store selection while minimising inventory?), optimise profit (How can I avoid deep discounting and improve the return on inventory investment?), loss prevention (Can I track over/shorts by store, shift, cashier, register or any combination?), store optimisation (How can I optimally rationalise real estate costs and store layout effectiveness?), and maximise customer relations and marketing (Can I perform multi-dimensional customer segmentation leveraging demographic information, prior history, and campaign responses?).
Challenges to adoption
In his keynote titled ‘BI for survival in financial tsunami’ at the event, Edmond Wong, IT director – global MIS of Johnson Electric, shared his user experience with BI at the Johnson Electric.
The case sharing was followed by a panel discussion titled ‘Best practices in BI implementation’, with IT professionals from the Bank of China (Hong Kong), Cathay Pacific, DBS Bank, HSBC, Johnson Electric, and academics from the University of Hong Kong and the City University of Hong Kong.
The HKCS-BISID survey also tracked the challenges that organisations face when it comes to developing a BI infrastructure. The two main bottlenecks for implementing BI are the lack of interest from business users and the lack of internal expertise.
“I think it is critical that company management plays a more active role in the BI process. This is undoubtedly already happening in larger firms, however smaller businesses with less management bandwidth may find it harder. One of BISID's key objectives is to help business managers understand the business values of BI and provide them the best practices for realising these values in their businesses and operations,” said Charm.
“One solution might be for the government to support small and medium enterprises (SMEs) and help them gain access to more IT resources in implementing BI. It is also BISID's key goal to enable the SMEs to leverage on BI to improve their competitive edge and seek support from the government to make it happen,” he said.
“This survey has been significant in highlighting the importance organisations are putting on the role of ICT applications to support their business in today's economic environment,” said Raymond Lau, assistant professor at the department of information systems, City University of Hong Kong. “Applications such as BI will be the key to assist businesses in optimising their performance and making better informed business decisions.”
Weathering the financial crisis
Patty Wong, director of special interest divisions of HKCS, said: “The survey has provided a lot of insight, but it also raised a lot of really interesting questions. Such as whether the world would be in the situation we are today if international financial institutions had received and acted on early warning from business intelligence solutions.”
“I think the answer is probably yes. Moreover, solid BI systems may help prevent the current nightmare from recurring”, she said.
During the discussion, three panellists from the banking sector were asked to what extent were they able to predict the coming of the financial tsunami with the use of BI tools and to come up with preventive measures.
Chong Woon Sun from DBS Bank said: “If we [DBS Bank] started BI earlier, we could have a better chance to deal with the financial tsunami.” Chong is the senior vice president of enterprise services, technology and operations. Some products that the DBS Bank sold were complicated, said Chong, and the bank had limited progress yet to measure the risk of counter-parties with the use of BI. In terms of BI adoption in the remedial aspect, “what we are at can help the aftermath [of the financial tsunami], and we can start to analyse its impact with BI.”
Toa Charm from HSBC said the bank had not done well with BI in various areas. “With proper BI in place, we could minimise the damage [brought about by the financial tsunami]. For most banks in Hong Kong, BI isn’t 100 per cent done, and there are many steps for them ahead including the implementation of query, predictive modelling and forecasting. Traditionally, the senior management at large organisations might have made decisions by their own experience, intuition, or instinct. Today, with proper BI adoption, they can make informed decisions, with less chance of bad ones,” said Charm.
Predicting the turmoil
Benny Li from the Bank of China (Hong Kong) said: “We don’t think BI predicted the financial crisis, because the [associated] data, such as ratings from the Big Five, reside on the outside [of BOC’s systems].” Li is senior data quality analyst, data quality management, risk management department of the Bank of China (Hong Kong). He foresaw that Basel II will be put under review soon, and there may be changes to bank regulations.
Louis Ma from the Hong Kong Computer Society reminded the audience that BI is not a one-stop solution to everything. “We should also be aware of the limitations of BI,” he said, because BI leverages on internal data with an external database. And CIOs need to examine multiple databases on a horizontal basis to obtain a complete view of the current scenario. Ma is the director of education, training and certification at the Hong Kong Computer Society.
