But after months of attending BI conferences, talking with numerous vendors and creating a presentation that showed how a simple BI Web tool could help the car washes to staff more efficiently, Boebel was ready. His careful research and early test results helped him line up support with the CFO, operations manager and some key business unit leaders to argue for a bigger investment in BI. In 2004, he got an OK from Delta Sonic's family owners to invest $US250,000 in Cognos's 8 BI application; this was a large investment for a company with annual revenue of $US200 million, as reported by Hoover's. In early 2006, after deploying some simple analysis of convenience store sales — showing which promotions were increasing beer sales and why, and which brands of cigarettes were the biggest sellers — Boebel and his team expanded the system to other business units such as the car wash and oil change business. The information gleaned from the convenience stores and car washes — based on knowing which promotions work best and generate sales of other products and services plus the ability to better track cashier statistics to prevent losses — have returned enough to recover half of the initial investment. "It's really paid off," Boebel says.
Delta Sonic is part of a growing trend. An increasing number of small- and mid-market CIOs are justifying the cost of BI applications to the business by showing how the insight into customer behaviour these tools provide can be harnessed to drive incremental revenue to the bottom line. Also driving the adoption of BI by this market are less costly applications. BI no longer requires an expensive and complicated set of solutions to access and organize the necessary data, database and storage applications (see "Smart Tools and How to Pick Them", end).
"That adds up to a significant IT investment," says Jim Baum, president and COO of data warehouse appliance provider Netezza. Instead, the new BI tools can provide an appliance-based approach that works within an existing IT infrastructure, which is easier to operate and maintain — and cheaper, he says.
In short, BI isn't just a technology for megacorporations any more.
"BI is showing signs that it is picking up for the midlevel market," says Greg Belkin, a research analyst at Aberdeen Group. "The midlevel market is under a lot of pressure to think out of the box so it can compete against the big guys."
For the midlevel market making the argument for BI can be harder than at larger companies. BI can be a relatively large investment (the investments for the small- and mid-market companies CIO spoke to were in the low six figures). It demands a serious time commitment from a smaller IT department that is likely overtaxed by user requests. But the business case for BI can be compelling, say small- and mid-market CIOs. While there is no research on BI's returns in the mid-market, anecdotal evidence from IT executives suggests that careful investments can pay off. They say a successful implementation relies on four ingredients: negotiating up front with business colleagues about how to invest in BI; establishing quick wins to build trust; giving users a stake; and making sure data is clean before launching an application. In that way, these IT leaders have established BI applications that are beginning to generate more ways to drive sales and curb costs.
"It's taken us time to get people used to it, but it has been worth it," Boebel says. "It's really beginning to show up in sales and cost savings. More will come over time."
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