Data Doghouse - performance management, business intelligence, and data warehousing

People, Process & Politics: Integration Portfolio

Rick Sherman — Tue, 14 Jul 2009 12:23:07 -0400

In our previous post “People, Process & Politics: Business & Integration” we discussed how to create the business and IT case gather sponsorship and enlist funding for an enterprise-wide approach to data integration. With the green light to proceed it is now time to start breaking the integration silos.

Enterprise data is a key investment, so treat data integration projects like investment portfolios. Set priorities, determine budgets and expect a return on investment. The portfolio should include any project that involves data - from its creation in your transaction systems all the way through reporting and analysis.

Establishing the portfolio

Creating the integration portfolio involves assessing where you are, determining where you want to be and how you are going to close the gap.

First, you need to take an inventory of what data integration is already occurring in an enterprise. Existing IT projects may be under the label of: Corporate Performance Management (CPM), Master Data Management (MDM), Customer Data Integration (CDI), Product Information Management (PIM), Enterprise Information Management (EIM), Data Warehousing (DW) and Business Intelligence (BI). The technologies that may be used: ETL (extract, transform and load), data virtualization (formerly EAI Enterprise Application Integration), EII (Enterprise Information Integration), SOA (service oriented architecture) or yet another variation of what used to be called middleware. And do not forget data shadow systems or spreadmarts that are used extensively across enterprises using SQL scripts, ODBC/JDBC, Microsoft Access and Microsoft Excel to “integrate” data.

When assessing this inventory examine what has the most significant impact on the enterprise either in terms of business benefit or IT cost. You are not going to be able to “boil the ocean” so concentrate on the areas that provide the best rate of return for your efforts. Since there are generally many areas that need to be address, it is generally best to go after the “low hanging fruit” efforts.

Second, you need to determine what you want your integration portfolio to be in the future. You cannot succeed unless you have an agreed upon goal, i.e. architecture, that supports what the information needs of the business. The integration portfolio needs to be an integral part of your information architecture and systems.

Finally, you need to create an integration roadmap to move from your existing data silos to your desired information architecture. This will involve integration initiatives providing new capabilities along with projects that renovate or replace existing silos.

Portfolio Management

The best way to ensure funding for the right projects is a data integration investment portfolio. With this approach, each project is examined to determine if a data integration component exists. If so, that component is examined in the context of all the other data integration components of other projects. This review will determine if there are any overlapping or complementary aspects between projects, thereby eliminating redundant expenditures and leveraging work across projects. Looking at data integration efforts from an enterprise perspective often enhances these efforts because you are no longer sub-optimizing the data integration efforts of each project to fit within that individual project's budget and resource constraints. A more robust effort can be undertaken when the enterprise is being used as a focus. In addition, some aspects that may have hindered other projects' efforts may be modified in order to reach a better solution.

Money talks. You absolutely must have financial incentives such as budgeting to get buy-in for data integration projects. Enterprise-wide data integration, while appealing to many in the IT industry, is just an esoteric concept that will be overshadowed by short-term and parochial projects unless backed up by budgetary allocation and review.

Next Steps

With your integration portfolio guiding integration investments, it is time to organize your enterprise integration efforts. In our next “People, Process & Politics” we will discuss creating an integration competency center and its best practices.

Analysts Upgrade Tech: Is the Party Over?

Rick Sherman — Mon, 13 Jul 2009 11:35:00 -0400

Last week, Goldman Sachs analyst David Bailey raised his rating for the hardware sector to attractive from neutral. He remains cautious "although we are not calling for an immediate improvement in corporate IT spending" but he does expect "greater upside than downside to estimates into the seasonally stronger half of the year and in 2010." Next year he forecasts increased IT spending and corporate tech upgrades. With an eye towards the glass being half full rather than empty he states "This, combined with a 25% decline in the Goldman Sachs Technology Index since the peak in August 2008, creates a compelling buying opportunity".

Also last week, Goldman Sachs software analyst Sarah Friar her rating on the U.S. software industry to attractive from neutral. She feels that the worse of the IT spending cuts or restraints is over ; IT spending surveys indicate software is a priority; and, like the other analyst, that the second on half of this year and 2010 will be see increased IT spending. And specific to software she sees that software has lagged telecom and media performance year-to-date (YTD); software valuations are in-line with the average S&P valuations where they usually carry a premium; currency headwinds should abate or at least be less of a factor in year-over-year comparisons; and finally, M&A activity in software is heating up.

Healthy skepticism should always be one’s first reaction to analyst upgrades and downgrades. Analysts try to base their ratings on evidence so it appears they are often late to the party, i.e. miss most of the move up or down. When the market is a full-fledged Bull or Bear then being late is fine since the momentum will continue but in a volatile market and uncertain economy we cannot be certain that price movement will continue in the same direction.

Some of the key questions to ask: is the US in a recovery or a double-dip recession; will unemployment increasing and consumer confidence lowering be a self-fulfilling cycle causing businesses to not hire and spend; will regulatory changes (regardless of how necessary) cause uncertainly and inhibit business growth; and, will the overhang of the US overspending its inflows by trillions of dollars for the next decade hinder business growth.

The Business Intelligence & Data Warehouse (BI/DW) Index and On-Demand or SaaS (software as a service) software index have both gained 25% YTD gains outpacing the 11% YTD gain of the NASDAQ. The broader indexes, the Dow and S&P, are both negative for the year.

The On-Demand Software index had jumped significantly ahead of the Business Intelligence index but its momentum has been halted, at least for the moment, as the overall market has decline over the last month. With approximately half of the on-demand firms not making a profit and the other half having "priced for perfection" P/E ratios; with some requiring outside investment to continue operations; and with a couple private firms shutting down recently, it would be prudent to remain cautious when investing in these firms or at least consider those investments speculative. There are many viable business models amongst these firms but cash and time are critical for emerging firms. M&A is sure to pick-up in this space but the buyers may wait for more distressed prices.

The BI firms, on the other hand, are almost all making a profit and cash flow positive. These firms have been around for a while, have solid customers and proven technologies. In addition, business intelligence and data integration are the top of most IT spending priorities (although sometimes components of larger business initiatives.) As the Goldman sacs analyst stated the next 18 months bodes well for these stocks but the market remains volatile and IT spending cautious for at least the remainder of the year.

Disclosure: The analyst or his family does have current stock positions in the following companies listed in this index: INFA, NZ, ORCL, TDC, TIBX, SAP, ATHN

Top CPM Deployment Mistakes

Rick Sherman — Tue, 07 Jul 2009 07:11:00 -0400

Whether you're still using outdated spreadsheets or just looking for additional help with financial consolidation, budgeting, planning and forecasting, CPM offers many business benefits to large organizations. In this expert podcast, hear about the top CPM deployment mistakes and how to avoid them. I will address areas of potential concern, including selecting a vendor, choosing build vs. buy and negotiating contracts.

>>> Listen to my podcast Top CPM Deployment Mistakes

Pervasive Business Intelligence Solutions

Rick Sherman — Wed, 01 Jul 2009 07:05:00 -0400

Pervasive BI is on the rise, offering everyday business users access to BI. Extending BI to frontline users opens up new venues such as rooting business culture and enhancing employee training. In this expert webcast, learn more about the pros and cons of pervasive BI solutions, specific vendor offerings and ways to get executive buy - in.

>>> Listen to my webinar on Pervasive BI Solutions

Data Integration: Beyond ETL and Data Warehousing

Rick Sherman — Tue, 30 Jun 2009 07:35:00 -0400

Data integration suffers from an image problem. It has become synonymous with extract, transform and load (ETL). Likewise, ETL has been regarded as a data warehousing (DW) technology. Both of these viewpoints do not reflect current capabilities and greatly inhibit enterprises in their attempt to integrate data to provide the information their business needs.

Because of this short-sightedness companies have lost opportunities to harness information as a corporate asset. It increases the cost of integrating data, encourages the creation of data silos and forces business people to spend an inordinate amount of time filling the information gaps themselves through data shadow systems or reconciling data.

>>> Continue to the rest of my article, Data Integration: Beyond ETL and Data Warehousing, on the Information Management website.