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THE BUSINESS VALUE OF TECHNOLOGY

NOV. 19, 2012

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Predictive analysis is getting faster, more accurate and more accessible. Combined with big data, its driving a new age of experimentation. >> By Doug Henschen

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CONTENTS
THE BUSINESS VALUE OF TECHNOLOGY Nov. 19, 2012 Issue 1,351 This all-digital issue of InformationWeek is part of our 10-year strategy to reduce the publications carbon footprint

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IN-DEPTH REPORTS
New Approach To Networks IT organizations believe that software-defined networking can reduce costs and improve network efficiency and security, yet few have implemented it. We offer a strategy for assessing this emerging technology. informationweek.com/reports/sdn Do You Need This Security Software? Answer these 10 questions to determine whether a security information and event management system makes sense for your company. informationweek.com/reports/siemsense

COVER STORY

7 Advanced Analytics
Predictive analysis is getting faster, more accurate and more accessible. Combined with big data, its driving a new age of experimentation.

3 CIO Profiles
Chasing technology doesnt work, says this CIO

4 Global CIO
Are project management offices a mistake?

5 Commentary
VMwares doing a tricky tango with open source

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CONTACTS
16 Editorial Contacts 17 Business Contacts

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CIO profiles

ANTHONY DECANTI UniGroup

The most common cause when IT projects go wrong: A breakdown in communication between IT and the business or a lack of support from the business is usually why projects fail. What I want from tech vendors: We need truly unique, innovative approaches to problems from our vendors instead of another repackaging of the same old ideas.

Title: Senior VP and CIO Degree: Creighton University, BS in computer science Favorite pro sports team coach: Mike Tomlin of the Pittsburgh Steelers, because he coaches his team like I feel I coach my team were both involved and personal Best book read recently: Unbroken, a well-written and incredible story about Louis Zamperini If I werent CIO, Id be ... a COO I love operations

ON THE JOB
IT budget: $30 million Size of IT team: 180 Top initiatives: >> Building a supply chain management system. >> Moving more systems to an open source stack from a mainframe

CAREER TRACK
How long at UniGroup: About a year at this logistics services company.

Career accomplishment Im most proud of: Making the transition from the business to IT. Education in IT made me a better business leader; business experience makes me a better IT leader. How I give my team room to innovate: I ask for individuals or teams to present ideas to me that they feel have potential to make a Decision I wish I could do over: In the past, I difference. This demonstrates initiative and made the mistake of chasing technology. passion for the idea. If an idea has merit, Theres a balance between implementing new technologies that offer a competitive advantage I free up their time to pursue the idea and ask for regular updates. and developing reliable, consistent systems.

The most overrated IT movement: Cloud computing. Its not that I dont support it or >> Engaging a colocation facility. believe that its going to happen, its just that there are so many case studies that are simVISION One thing Im looking to do better: I want to ply not true. Lets face it, there is still a lot of improve collaboration. We just have too many work to be done to make it easier and more affordable. walls today. Kids and tech careers: Im definitely trying to steer my kids toward technology careers. Theyre still young, but I believe that technology will always have a future.
Ranked No. 12 in the 2012

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globalCIO
Are Project Management Offices A Waste Of Money?
Will most companies that implement a project management office take on higher IT costs without improving performance? Thats the bold conclusion of a Hackett Group study of more than 200 organizations. And I agree that the risks of a disastrous PMO implementation have never been greater. PMOs can be incredibly valuable when they manage the right projects through to business-focused completion and kill the projects that dont measure up. Trouble is, creating a PMO under the wrong circumstances is likely to produce only more project overhead. The Hackett Group, a research and consulting firm, found that PMO use for companies of every stripe grew from 2007 through 2009 then steadily declined. Its report backs up some findings in InformationWeeks 2012 Enterprise Project Management Survey, which traced a reduction in PMOs and formal PMO skills. Hacketts bombshell: In some cases, IT performance actually improved once the PMO was eliminated. Hackett also found that more PMO oversight doesnt necessarily improve results. PMOs that dont spot and manage risks may only increase pressure to push through badly designed projects. In a weak PMO, poor management of time, resources, requirements or customer expectations encourages shortcuts that increase design weaknesses that drive higher maintenance and support costs, Hackett said. Many poor-performing PMOs have staff with Project Management Institute and other certifications, Hackett found. The problem is that those employees often lack a strong knowledge of the business or its technology infrastructure, so theyre mainly task-list keepers and process cops. Ive seen this problem most often when management doesnt want to pay extra for business leadership. Hackett found four practices as key to PMO success: centralized IT demand management, accountability for business benefits, standardization of processes and architecture, and program and project reviews. Translating consultant-speak into English: PMOs work with business units to review and set priorities for the IT services they use. Theyre responsible for results and cant say, Well, you didnt listen to me! They revisit projects after theyre comJONATHAN FELDMAN

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pleted to assess lessons and adjust practices. Yet those key practices still might not justify a PMO. Hackett said that using agile development and collaboration methodologies such as Scrum sometimes can eliminate the need for heavyweight PMOs. I dont think the PMO is dead, but given the research findings and my own experiences, proceed with caution. Watch out for career builders who prioritize padding their resums (I built a PMO!) over delivering hard benefits. Be minimalist: Anything that gets implemented should have a plain-English reason. Above all, ensure that the executive team is committed to the PMO. Without it, a PMO wont get the resources or executive attention it needs to succeed. That kind of PMO will linger on, inflicting cost and aggravation on both project managers and business units, until its put out of everyones misery. Jonathan Feldman is director of IT services for a rapidly growing North Carolina city. See more stories by him at informationweek.com/jonathanfeldman. You can write to us at iwletters@ubm.com.
Nov.19, 2012 4

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Commentary
VMwares Tricky Tango With Open Source
When it comes to the future data center, its well understood that servers and storage will function as pools of virtualized resources that can automatically switch from task to task. Virtualizing the network also will be essential, but its a much harder nut to crack than servers and storage. It remains unvirtualized and has lagged far behind the other two. But without it, well never get to the flexible, automated data center of the future whats envisioned as a private cloud. Thats why I sat down to talk to Martin Casado, the former Stanford grad student whose Ph.D. thesis turned into the OpenFlow networking protocol. Casado co-founded virtual networking firm Nicira, which sells software to program and manage virtual networks using the principles of OpenFlow. Nicira is the lead contributor to an open source virtual networking project, Quantum. Quantum is the networking piece of OpenStack, the broader open source platform for managing virtualized data centers. Heres the rub: VMware bought Nicira for $1.26 billion in July. (Not bad for a startup with 100 employees.) So I asked Casado: How can Nicira continue leading development of virtual networking in OpenStack? Its a key question because OpenStack competes with VMware to manage the virtualized part of the data center. It seeks to let IT create systems that allow employee self-provisioning, automated expansion to meet demand and charging business units for use all key options in a private cloud. VMware aims to manage private clouds through its vCloud Director and vCloud Suite. After listening to Casado, I felt I understood how these dissimilar pieces proprietary product line and open source code contributions fit together. See what you think. First, Casado notes that Quantum isnt a particular set of networking features or a new kind of hardware that combines switches, routers and controllers. It is a framework of open interfaces you use to build up virtual networking for a software-defined data center or a cloud. Virtualized networks are essential to private clouds because, without them, the virtual machines connection to a network is buried as a
C HAR L ES BA B COC K

software switch in a hypervisor. That software switch functions more efficiently by off-loading its processing to a nearby hardware fabric, as Cisco and Hewlett-Packard do. But it would be easier if the server, storage and networking could all be virtualized up front as a pool of resources, with capacity snapped together when a virtual machine is created. Quantum provides the virtual network platform, and OpenStack provides the harness where all three fit in, says Casado. The Quantum network virtualization platform embeds route-building and capacity-assigning capabilities into a network controller that manages the switches and routers as capacity needs change. (Nicira offers commercial software with the name Network Virtualization Platform.) If the size of a virtual server needs to be increased to match its growing traffic load, the network can be increased at the same time. Both VMware-owned Nicira products and the open source Quantum framework follow the principles of the OpenFlow virtual networking standard. OpenFlow was developed as a cooperative effort between adNov. 19, 2012 5

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Commentary
vanced networking groups at Stanford and Berkeley. (How often does that happen?) The OpenFlow protocol in many settings could gradually displace the widely used spanning tree networking protocol, which applies a hardwired answer to the question of what route and on what type of network a particular The vendor that provides this programmatic interface will be in a strong position to manage the whole private cloud. But if that interface isnt able to handle virtualized gear and software from many vendors, the private cloud wont function in the way it was conceived. OpenStack and VMware both say theyll provide that neutral virtualization management platform for the private cloud. The benevolent view is that both have reason to support Quantums development as the virtual network platform. Without Quantum, OpenStack doesnt offer a complete private cloud because it cant handle virtual networks. VMware needs the Quantum-based Nicira products to help companies build the software-defined data center it envisions. Asked about VMwares commitment to OpenStack, Casado says: It is important that we support our customers deploying on OpenStack and other open source technologies. VMware will add that support, keep making code contributions through Nicira and fund OpenStacks development foundation as a sponsor. Boris Renski, co-founder of OpenStack consultancy Mirantis, doubts VMware as an OpenStack backer: VMware cant promote OpenStack and compete with it at the same time. But Frank Rego, business development manager at Novells SUSE Linux unit, says VMwares open source strategy is changing much like Microsofts did, when Microsoft went from opposing Linux to now supporting SUSE Linux virtual machines in the Microsoft Azure cloud. VMware has had such an awakening, he says. I agree, except that VMware didnt have as big a conversion to make. While a strongly proprietary company, VMware never expressed vehement opposition to open source code. But the main point is that virtual networking is essential to the expansion of virtualization in general, and VMwares growth is tied to more companies running a highly virtualized, software-defined data center with VMware as the management software. VMware has as much interest as anyone in removing obstacles from the virtual nets path, and thats why it will keep backing OpenStack efforts. You can read more stories from Charles Babcock at informationweek.com/charlesbabcock, or write to him at charles.babcock@ubm.com.
Nov. 19, 2012 6

The benevolent view is that both VMware and OpenStack have reason to support Quantums continued development as the virtual network platform.
message should travel. OpenFlow lets a network controller react to demand, then determine what resources and routes to use. To make use of that flexibility, the Quantum part of OpenStack attempts to put a programmable, vendor-neutral interface between a human network manager and the network. The operational interface to the network has always been a proprietary one for the last 20 years, says Casado.
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[COVER STORY]
Predictive analysis is getting faster, more accurate and more accessible. Combined with big data, its driving a new age of experimentation.

Table of Contents

By Doug Henschen

Five years ago, companies were standardizing on one or a couple of business intelligence products. Broad interest in advanced analytics, especially the predictive kind, was just emerging. Today, companies of all sizes and industries are experimenting with and using analytics, and veteran users are going for new levels of sophistication, according to our new InformationWeek Analytics, Business Intelligence and Information Management Survey. Companies are embracing analytics to optimize operations, identify

risks and spot new business opportunities. Advanced analytics is all about statistical analysis and predictive modeling being able to see whats coming and take action before its too late, rather than just reacting to what has already happened. That latter practice, derisively known as rearview-mirror reporting, is associated with conventional BI. The more data companies use, the more accurate their predictions become. But the big data movement isnt just about using more data. Its

also about taking advantage of new data types, such as social media conversations, clickstreams and log files, sensor information and other realtime feeds. Experienced practitioners are taking cutting-edge approaches, including in-database analytics, text mining and sentiment analysis. In each of the past six years, respondents to our analytics and BI survey have rated their interest in 10 leading-edge technologies, and advanced analytics has always been the No. 1 choice. Advanced data visualization is No. 2 this

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year, up from being ranked third in 2009 (see chart at right). Last year we added big data analysis to the list of cutting-edge pursuits, and this year it ranked No. 4 along with collaborative BI. We also see clear evidence that companies are investing in software, people and advanced techniques. For starters, this year we added in-database analysis for predictive or statistical modeling to our list of leadingedge technologies, and respondents rated their interest higher than for more-established categories such as mobile BI and cloudbased BI. With in-database analysis, statistical and predictive algorithms are rewritten to operate inside databases that run on massively parallel processing (MPP) platforms. In-database analysis is faster than the old approach to data mining, where analysts moved data sets from data warehouses into specialized analytic servers to create and test predictive models. Data movement delays plagued the old approach, and the analytic servers were underpowered. As data sets have grown, time and power constraints limit work to small data samples rather than all available information, limiting the accuracy of the resulting models. Businesses that have embraced in-database

Whats Your Companys Level Of Interest In Analytics And BI Technologies?

1 Not interested
Advanced analytics (predictive and statistical analysis, etc.)
Extremely interested 5

3.6
Advanced data visualization capabilities (sparklines, treemaps, heat maps, etc.)

(Mean average)

3.5
Embedded BI (reports and visualizations deployed within enterprise apps, portals, etc.)

3.5
Analysis of big data, particularly unstructured and nonrelational data

3.4
Collaborative BI (tools promoting broad sharing and input on analyses)

3.4
In-database analysis for predictive or statistical modeling

3.3
In-memory BI and analytics (fast analysis and what-if planning on large data sets)

3.2
Mobile BI (alerts, reports and visualizations delivered to smartphones and other devices)

3.2
Software-as-a-service and cloud computing-based BI and analytics

2.8
Social media and social network analysis (sentiment analysis, customer influencer and behavior analysis)

2.7
Data: InformationWeek 2013 Analytics, Business Intelligence and Information Management Survey of 417 business technology pros at companies using or planning to deploy data analytics, BI or statistical analysis software, October 2012

approaches say they can develop models in less time for more precisely targeted segments, whether theyre trying to predict R customer behavior, product performance, business risks or other variables. Whats more, MPP power lets them crunch through massive data

sets, so they can use all available data and deliver far more accurate models. In-Database-Enabled Text Mining In-database approaches are maturing and breaking into new areas. Text mining, an adNov. 19, 2012 8

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vanced analytics technique applied to unstructured text, has become popular for social media analysis, according to our survey respondents. Areas include competitive intelligence gathering, customer behavior analysis, and brand and product reputation analysis (see chart, below). Health insurer UnitedHealthcare, for example, is testing text mining using SASs in-database High Performance Analytics software, which runs on Teradata and EMC Greenplum platforms, as well as commodity grids. Working in partnership with SAS and EMC, United-

Healthcare is using HPA to develop deeper, more accurate predictive models to analyze customers call center communications. In the past 18 months, UnitedHealthcare has collected more than 160 million rows of unstructured information from its call center notes and call recording transcriptions. It uses SASs text mining software to look for indications that customers didnt have their questions or concerns resolved during a call, email or postal mail interaction. The softwares predictive models identify suspect customer interac-

The Social Factor

What factors are driving, or would drive, your companys interest in using social media and social media analysis technologies?

Competitive intelligence

41%
Customer behavior analysis (spotting influencers and churn threats)

38%
Brand/product/reputation management (including voice of the customer apps)

34%
Customer service (including product and service quality and warranty apps)

27%
Customer segmentation (for up-sell and cross-sell)

tions that require follow-up calls or messages. The scale of all of this unstructured information, coupled with the comparatively meager performance of conventional symmetric multiprocessor servers running the analytics software, previously made this sort of analysis time consuming and inaccurate. UnitedHealthcare used a sample of historical data to train the predictive models on the data to be analyzed. The more data used, the more accurate the model becomes. Before, it used about 50,000 rows of data as a training set, but with SASs HPA in-database approach, UnitedHealthcare can use 50 million rows and develop the model in the same amount of time, says Mark Pitts, director of data science, solutions and strategy for the insurer. Our data scientists are more productive, and with more training data, our models are more discriminating, Pitts says. That means UnitedHealthcare is finding more calls that deserve follow-up and getting fewer false positives. Bottom line: Customer satisfaction stands to improve. Customer Retention 101 The University of Kentucky ventured into advanced analytics this year to improve student retention. Since the 2007 financial crisis, many colleges and universities across the
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25%
Compliance (financial services, insurance risk management and fraud detection)

24%
Social media and social network analysis technologies arent a priority for my company

27%
Data: InformationWeek 2013 Analytics, Business Intelligence and Information Management Survey of 417 business technology pros at companies using or planning to deploy data analytics, BI or statistical analysis software, October 2012
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country are seeing a higher percentage of their students drop out before they complete their degrees. Lower retention rates can lead to shrinking enrollment and contraction of
AT-RISK STUDENTS

courses, degree programs and faculties. The baseline measures universities use to predict whether a student will fit in and succeed include high school grade point average

and ACT and SAT test scores, of course, but UK also factors in ethnicity, socioeconomic background, alumni status of parents and other information in deciding whether to accept ap-

Small University Graduates To Advanced Analytics

aylor University, a small, private Christian university in Upland, Ind., with 1,900 undergrads, 320 distance learners and 120 grad students, is proof that analytics is filtering down to small organizations. Late last year the university bought Information Builders RStat module for its existing WebFocus BI deployment. RStat provides predictive analytics and modeling capabilities based on the R programming language. We knew it would be important for us to be able to do data mining to pull data together from divergent systems and begin to answer a variety of operational questions, says Edwin Welch, director of institutional research and associate registrar. Taylors student retention rate began to fall five years ago, and it wanted to turn that number around. Instead of hiring a statistician to lead the effort, Welch boned up on analytics and started experimenting with

the RStat software. With a Ph.D. in computerized instructional systems, he wasnt an analytics neophyte. He read up on the latest techniques and turned to Taylors sociology professors for advice on statistical methods. Nevertheless, Welch admits he faced a number of challenges. For starters, he had difficulty integrating data from disparate systems using batch extract, transform and load processes and was able to come up with only 6,300 complete student records, 460 of which pertained to students who had dropped out after their freshman year. Thats not a large sample, particularly when you consider that the Information Builders software splits that data, randomly choosing 70% of the records to build models and holding aside 30% for testing accuracy. Despite the thin sample, Welch built a variety of models that varied from 78% to 86% accu-

racy in predicting whether a given freshman would leave the university. He found that the best predictors were a students high school GPA, SAT and ACT scores, GPA in the fall term, percentage of credit hours completed in the fall term, number of midterm grades below a C- in the fall term and the number of credit hours the student registered for in the spring term. Not satisfied with the accuracy of his initial models, Welch combined the results of his six best models, improving overall accuracy to 90%, he says. The combined analysis predicted that 25 students wouldnt return at the end of the 2010-2011 academic year out of the 68 students who actually did drop out, Welch says. That result was significantly better than the nine students out of the 68 who had been identified by faculty and staff and put on Taylors academic alert list during that school year. Doug Henschen

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Where Analytics And BI Fit In

How does your company deploy, or plan to deploy, analytics and BI technologies?

We dont plan on deploying We have many products scattered throughout departments, operations and locations

3% % 17% 20% 2

We deploy them as part of other technology initiatives

We have standardized on one or a few analytics and BI products company-wide

30% %

3 30%

We deploy them on a project-by-project basis

Data: InformationWeek 2013 Analytics, Business Intelligence and Information Management Survey of 417 business technology pros at companies using or planning to deploy data analytics, BI or statistical analysis software, October 2012

plicants. Once students are enrolled, colleges and universities collect all sorts of new data that shows how theyre faring. How does UK predict whos in danger of R intervene? It anadropping out so that it can lyzes student record data going back to 1988 to model the characteristics of students who did and didnt drop out. In addition to taking into account preadmission variables, the university can tap information on scholarships, parental participation, courses of study, instructors, degree programs, dorms students lived in, extracurricular activities and, of
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course, grades and attendance. Given the fact that UK has about 22,000 undergrads and 6,000 to 7,000 grad students enrolled at any one time, thats a lot of data. UK began a proof-of-concept project in March, using the past six years of student data. Within two months, it had a baseline predictive model using high school GPA and college entrance exam scores, and since May a statistician hired from another university has been adding variables to the model from the universitys Blackboard learning management system. UK thinks retention is closely related

to the level of student engagement, so its adding data on the number of times students log in to their class Web pages, check syllabuses, download homework assignments, collaborate online with classmates and turn in homework assignments on time. The university is using SAPs new Predictive Analysis software in large part because it already uses SAPs ERP system and BusinessObjects BI software. UK is doing regression analyses and statistical modeling using the R programming language, deployed on SAPs Hana in-memory database so it can support fast, ad hoc analysis across a wide range of variables. Hana handles querying in RAM without the need to constantly build new multidimensional cubes and data aggregations. If we have people on campus who want to know what the prediction scores are based on certain socioeconomic backgrounds or certain combinations of any number of 85 variables, we can quickly ask those questions and adjust our model, as opposed to waiting for nightly [batch] loading jobs, says Adam Recktenwald, UKs enterprise architect. UK built an iPad-based application that lets the universitys business analysts drill down on data, selecting the dimensions theyre interested in. They can look at data across an entire cohort,
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or graduating class, examining segments and microsegments based on those 85 variables. Right now, the retention analytics that most large schools are doing tend to look at students in large swaths, such as high-performing students and low-performing students, Recktenwald says. We want to bring this down to microsegments, so we can better un-

derstand the needs of individual students. Once the retention program is proved, UK plans to develop models that will help it predict revenue and physical facility needs. Crowdsourcing Analysis As corporate data stores grow in volume, variety and complexity, they provide advanced

Whats Spurring Interest In Big Data Analysis?

What data sources or challenges are driving, or would drive, your companys interest in using big data analysis?

Finding correlations across multiple, disparate data sources (clickstreams, geospatial, transactions, etc.)

52%
Predicting customer behavior

45%
Predicting product or service sales

34%
Predicting fraud or financial risk

28%
Identifying computer security risks

23%
High-scale machine data from sensors, Web logs, etc.

22%
Social network comments for consumer sentiment

18%
Web clickstreams

11%
My company isnt interested in big data analytics

15%
Data: InformationWeek 2013 Analytics, Business Intelligence and Information Management Survey of 417 business technology pros at companies using or planning to deploy data analytics, BI or statistical analysis software, October 2012
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analytics practitioners with more fodder for predictive models. But they arent always sure theyre making full use of all that information. Property and casualty insurer Allstate came to that conclusion when it started working with Kaggle, a big data crowdsourcing firm. With more than 16 million customers, Allstate has no shortage of data. It also has no shortage of analytics experts a 50-person predictive modeling team analyzes that data for the companys product research group, helping guide coverage and rates. Allstates analytics gurus are passionate about what they do, so much so that some of them participate in Kaggle competitions in their spare time. Founded in 2010, Kaggle organizes competitions in which businesses, government agencies and researchers present data sets and problems. Kaggle has had some 61,700 participants submit more than 171,915 entries to more than 65 competitions. Sponsors pay prize money in exchange for the intellectual property behind the winning model. In early 2011, Allstates VP of product research, Eric Huls, overheard some of his employees talking about a Kaggle competition and was captivated by the idea. Within weeks, Allstate hosted a competition for which it supplied three years of auto policy data and
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asked competitors to beat Allstates baseline model for predicting which covered autos would be involved in bodily injury claims and how much those claims would cost. The models were created and trained using two years of data and then tested for accuracy against the third year of data. All personally identifiable information was stripped from the data, but still included were plenty of details about the make, model, horsepower, weight and length of the vehicles, along with the cost of any bodily injury claims. In the vast majority of cases, there were no bodily injury claims, so the cost figure was zero. Several Kaggle competitors handily beat Allstates baseline, and the winner beat Allstates model by 270%, meaning it was that much more accurate in predicting which vehicles would be involved in accidents and how much related bodily injury claims would cost. It was well worth the $10,000 in prize money that Allstate put up. The insurer has since incorporated some of the techniques used in that winning model, Huls says. The appealing thing about Kaggle and crowdsourcing, Huls says, is that the competitors approach problems from many different angles. Kaggles top competitors include astronomers, hedge fund quants, statisticians, physicists, econinformationweek.com

What Are Your Primary Concerns About Using Big Data Software?
Big data expertise is scarce and expensive

38%
Data warehouse appliance platforms are expensive

33%
We arent sure how big data analytics will create business opportunities

31%
Analytical tools are lacking for big data platforms like Hadoop and NoSQL databases

22%
Our datas not accurate

21%
Hadoop and NoSQL technologies are hard to learn

17%
We dont have enough data

13%
Hadoop and other NoSQL technologies lack management features

12%
I have no concerns about big data analytics

16%
Data: InformationWeek 2013 Analytics, Business Intelligence and Information Management Survey of 417 business technology pros at companies using or planning to deploy data analytics, BI or statistical analysis software, October 2012

omists and mathematicians, and they dont have preconceived we do things this way notions about how to solve a problem. By putting some of these problems out there for others to work on, it prevents us from being more satisfied with the job that were doing than we should be, Huls says. Were doing a good job, but this will push us to do better. Allstate started another Kaggle competition

in September to study customer churn, but this time its using an invitation-only format, whereby a select group of 15 competitors was invited to join the commercially sensitive project. To participate, contestants had to sign nondisclosure agreements so that Allstate doesnt have to worry about giving away its business secrets and it can share more data. Theres still no personally identifiable information involved,
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but Allstate has included details on prices paid for policies, coverage plans and other products purchased, and whether those customers stuck with Allstate or switched to another insurer. Allstate also offered contestants more context, more detail on the methods it uses internally, and insight into what has and hasnt worked for the company in the past, Huls says. From Standardization To Experimentation Veteran analytics users like Allstate that are trying out crowdsourcing and other advanced techniques have come a long way from 2009, when 47% of respondents to our survey said they had standardized on one or a few BI tools deployed throughout the company. That percentage has since declined to 30% of this years 417 survey respondents using or planning to use data analytics, BI or statistical analysis software (see chart, p. 11). Whats more, fewer respondents now report their companies have a standard BI platform. Why the reversal? For starters, the standardization movement started around the time of a significant consolidation of BI vendors that culminated in 2007 when SAP acquired BusinessObjects, Oracle acquired Hyperion and IBM acquired Cognos. Microsoft was moving aggressively into BI at that time, and all four of
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those companies were pushing customers to consolidate BI investments around their big, broadly capable BI suites. Market-share gains followed for the four vendors. Before they were acquired, BusinessObjects, Hyperion and Cognos had snapped up many smaller, innovative companies. A new wave of nimble and innovative BI companies in-

Our data scientists are more productive and with more training data, our models are more discriminating.
Mark Pitts, UnitedHealthcare

gory, with 35.2% and 16.8% of the 2011 market, respectively, according to IDC. Microsoft is third with just a 2.5% share. Dozens of smaller competitors each have less than 1%. Open source offerings such as the R project for statistical programming are also popular. R is gaining commercial adoption, and that uptake hasnt escaped the notice of BI vendors that have since introduced R-based analytics modules tied to their BI suites. Information Builders was among the first to make this move, in 2009, with the release of its RStat module. Tibco Spotfire followed, along with Oracle and SAP. Big Data Ambitions Where Allstates Kaggle competitions have involved highly structured data in subterabyte quantities, many Kaggle competitions involve big data tens of hundreds of terabytes of highly variable data with inconsistent structures, complex data such as clickstreams and log files, and minimally structured data such as text and social network data. This is the fastgrowing world of big data that many analytics and BI practitioners are eager to explore. What are the top reasons our survey respondents are interested in big data? To find correlations across disparate data sources, predict customer behavior, and predict prodNov. 19, 2012 14

cluding QlikTech, Tableau Software and Tibco Spotfire has since emerged, and they are now the fastest-growing BI vendors. IBM, Microsoft, Oracle and SAP hold more than half (53.2%) of the total BI software tools market, in terms of 2011 revenue, according to IDC. Their BI sales are also growing at double-digit rates, but theyre not growing as quickly as smaller, innovative rivals focusing on advanced data visualization and self-service BI (requiring minimal IT support). SAS and IBMs SPSS unit have long dominated the advanced analytics software cate-

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uct or service sales (see chart, p. 12). Their biggest concerns? Scarcity of expertise, expense of platforms and lack of a clear business case (see chart, p. 13). Hand in hand with the big data trend is a debate about the future of data warehousing, analytics and BI, sectors where relational databases and the SQL query language have held sway for more than 30 years. Companies are now experimenting with Hadoop and NoSQL databases, which let them work with unstructured, variable and complex data without all of the data modeling steps that relational databases require. Many of those adopting these new platforms are trying out new tools as well as new vendors, such as Datameer and Karmasphere. Theyre also raising concerns about finding people with the skills to use these tools. As companies embrace new platforms such as Hadoop and NoSQL databases, todays relational platforms will likely be focused even more on specialized analytical tasks and applications. Relational databases dont adapt quickly or well in places where new data types, such as complex data and varied data, are constantly showing up. And where data volumes are extreme, Hadoops lower costs will make it a winner. That means there will be a big opportunity for new analytics and BI tools built on Hadoop. These changes are likely to take another five years, but theyre coming. Read more stories by Doug Henschen at informationweek.com/ doughenschen. Write to him at douglas.henschen@ubm.com.
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