Mar 24, 2004 (10:03 AM EST)
Q&A With IBM Business Intelligence VP Karen Parrish

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The market for enterprise data warehouses and business intelligence has reached $4 billion and is expected to grow to $10 billion by 2008, according to Meta Group. Karen Parrish, VP of business intelligence solutions at IBM, talked with Business Intelligence Pipeline about what's driving BI demand, the challenges involved in BI deployments and how IBM plans to keep up with the market.

Business Intelligence Pipeline: Can you quantify the extent to which the demand for BI is growing, and discuss what's driving it?

Parrish: If you compare it to about 3 years ago, it's exponential growth. We're seeing things in the marketplace driving this growth. The first has everything to do with regulatory compliance. For example, HIPAA was a major compliance requirement for healthcare and it drove the acceptance of business intelligence. In the post-Enron era, we're finding that Sarbanes-Oxley is also driving the need for business intelligence solutions. In financial services, we're finding that compliance with risk management standards such as Basel II is a major driver for business intelligence solutions. Basel II is about the management of your cash portfolio and how you determine risk.

Business Intelligence Pipeline: Has RFID become a major driver? If deployed as it's envisioned, radio frequency identification will produce a lot of data for many companies.

Parrish: RFID is indeed going to be another driver of business intelligence. I agree with you that the mounds of data collected through RFID will need to be analyzed. We absolutely believe that there's a growth in demand around information management. Here I mean both data sitting in the warehouse and unstructured data, like that in content management applications. I think there will be a convergence of these data that will require deep analytics. RFID will certainly be one of the technologies that will drive this convergence.

Business Intelligence Pipeline: Do you see recurring pain points that come up for companies attempting business intelligence initiatives?

Parrish: Yes. There's one very specific one. The fundamental pressure point is that there must be a marriage between the line of business and the IT community. We have found that when the line of business deploys a business intelligence solution in the absence of IT, they usually don’t get their biggest bang for the buck. We've also found that when IT deploys in the absence of business, it becomes a sort of "build it and they will come" kind of scenario. Neither will work. IBM really does have success in bringing the line of business and IT communities together to talk about the problem. They can work together to design a solution that meets the needs of both sides of the business. When that pain point is removed, our customers have much greater success.

Another pain point I would mention deals with the idea of organic growth. Many of the enterprise data warehouses out there grow organically. It's very important that our customers plan for that growth. If you build the infrastructure the right way for an enterprise data warehouse, it will grow with you naturally. If you don’t, it could be very expensive to grow. So we spend a lot of time with our customers building the infrastructure in a way that we believe will grow with them. This means having an open environment that they can plug into their existing infrastructure. It's also about accessing data where the data sources reside, and it's about providing a middleware and hardware stack that can scale when the customer needs it to scale.

Business Intelligence Pipeline: Is it really necessary to build an enterprise data warehouse to carry out successful BI? What about smaller companies that lack a data warehouse?

Parrish: I do not believe that business intelligence is only for the high-end organizations with enterprise data warehouses. I believe that a data warehouse is usually the way to go for a big company because of the mounds of data they deal with. But I absolutely believe, and it's part of our strategy, that the smaller customers will have to be adaptable if they're going to survive in their markets. Business intelligence is going to help them do that. They need a single view of the customer just like the big guys do. They have the same requirements, just without the big IT staff. They also don’t always have all the data themselves. That is, sometimes they have to pull it from elsewhere. We have an edition of DB2 Data Warehouse for mid-tier customers who want the same functionality at a lower price, and want it to be more turn-key. We've already seen major growth in the SMB space for business intelligence.