CCID Consulting: Application, Competitions and Development of BI in China

BEIJING, Aug. 1 /Xinhua-PRNewswire/ -- CCID Consulting, China's leading research, consulting and IT outsourcing service provider, and the first Chinese consulting firm listed in Hong Kong (Hong Kong Stock Exchange: HK08235), analyzed the market status of BI industry in China and forecasted the development trend.

Currently, business intelligence (BI) has been understood by more and more enterprise managers. It also has become one of the important information application systems. CCID Consulting's surveys show that sales revenues in China's BI application market (including software authorization and services) reached 1.587 billion Yuan in 2006, up 56.3% over 2005.

I. BI -- a valuable weapon for Chinese banks to compete with foreign competitors

As the government is transforming towards a services-oriented institution, business models in all industries is changing. Business-specific models are giving way to customer-specific models. Also, more personalized services are provided. As competitions in all sectors intensify, opportunities and risks exist side by side. Using information technology to save cost and build fast-responding and services-oriented enterprises has become an important measure for businesses to improve their competitiveness. As an important data mining tool, BI saw a further expansion in the breadth and depth of its applications in 2006.

In 2006, the banking, insurance and telecom industries are still the main application market for BI software. Meanwhile, the BI application fields are also expanding. Since 2002, as their IT investment and information system building deepened, the energy and manufacturing industries have gradually become the "new" market for BI. Demand for BI has also been rising in the government sector. Attempts to apply BI have started in the retail, logistics, medical care and real estate industries. A growing market demand is the main driving force for the development of BI.

Table 1 Sales Revenues in China's Horizontal BI Application Markets

in 2006

Horizontal Banking Insurance Telecom Energy Manu-

Market facturing

segment

Sales 3.65 2.69 1.74 1.75 1.59

revenues (100

million Yuan)

Percentage 23% 17% 11% 11% 10%

Horizontal Govern- Retail Others Total

Market ment

segment

Sales 1.43 0.95 2.06 15.87

revenues (100

million Yuan)

Percentage 9% 6% 13% 100%

Source: CCID Consulting, Jul., 2007

In fact, BI applications in China at present still mainly remains at the stage of basic statistical analysis and data integration. In other words, it is still a report form software market. There are very few applications that have achieved in-depth analysis. Due to pressures for innovation and a good IT foundation, the banking industry has both internal and external conditions for BI applications. Currently, it takes lead in BI applications in China.

Following its accession into the WTO, China has fully opened its banking industry. Banks are now speeding up financial innovations to cope with competitions for financial resources from new competitors both at home and abroad. Under this general situation, domestic banks have a strong demand for change. A series of measures, including joint-stock system, mixed operations, opening of financial services and greater data centralization, are now becoming the main theme of grand change in China's banking industry in the new era. Using BI systems to make risk analysis and business decision has become a main choice for domestic banks to improve their international competitiveness.

Currently, business data in the banking industry have been, or are being "centralized". Greater data centralization lays a good foundation for raising the success rate of BI systems, shortening project cycles, lowering system implementation cost, and increasing returns from project investment. Surveys show that an important reason why banks choose BI system is that such systems can solve the major problems that currently exist: such as statistics lag, poor data sharing, low report form processing efficiency, and lack of systematic support for decision analysis etc.

Refined management is already brought before domestic commercial banks. After most commercial banks complete data centralization, how to well analyze and mine data and support management decision making the banking industry will be long-term hotspots for banking information system building. In the past 2 years, the BI market in China's banking industry has been growing over 50%.

II. M&As and restructuring are frequent, and industry competitions are dominated by three major forces

A 56.3% growth rate and a wide application scope are sufficient to attract domestic and foreign firms to compete. M&As and restructuring are frequent. M&As and restructuring of international enterprises have also pushed forward the development of BI. For example, BO acquired Crystal Report, Hyperion Brio, IBM SRD and Oracle PeropleSoft. In 2007, Oracle acquired Hyperion, and Chinasoft International acquired Hinge Software. We can see that competitions in the market have changed from competitions by many firms to a pattern of competitions by thee major forces, namely:

The first consists of international IT giants, such as IBM, Oracle and Microsoft. Rich product diversity and technology R&D strengths, powerful brand influence and many years of experiences and customer accumulation are their main advantages. The second force is foreign professional BI firms, such as Cognos, SAS and BO. Mature products, leading technology and advanced data mining and information integration ideas are their main advantages. The third force is of domestic firms, such as FEnet, Longtop Group, Advanced Digital Technology and Boke. In 2006, the professional BI firm FEnet continued to represent domestic BI firms and carried high the homemade banner. Software enterprises such as Longtop Group, Advanced Digital Technology and Boke are now showing their market potentials. Their main advantages include localized products and services. Meanwhile, MDIT and Rinpak (Shanghai) also entered China's BI market in 2005. In March 2007, HP disclosed that it had started to develop its won data warehouse platform. The entry of these firms as a new force has further intensified competitions in the BI market.

Massive data processing capacity can be said to be the primary barrier for entering the BI field, followed by technical talents, implementation methodology, match with existing system, data portability and implementability. On the whole, maturity, technical leadership and adaptability are the 3 most important factors for customers to select BI solutions.

III. "Climate sickness" of BI applications triggers off

As enterprises grow in size and become more competitive, the locality problem of the Chinese market has also surfaced. For examples, domestic and foreign enterprises have very different BI demands and expectations of BI application effects. How domestic enterprises can successfully graft successful foreign experiences and attain a technical level as their foreign peers do and how to combine BI applications with specific services have become important themes for BI enterprises. BI applications inevitably meet with the problem of "climate sickness":

1. Conflict between strong real time BI demand and difficulties of realization

Currently, a common problem with BI applications in various industries in China is that the BI information seen at the head office is detached from the BI information seen at the operational department. The head office hopes to see a real time BI. This requires the BI system to capture information instantly, make immediate analysis and application. Real time BI is a demanding trend for the user. But, resources integration difficulties and centralized and decentralized management are not problems that can be solved overnight.

2. There is lack of successful and reproducible experiences in China

BI applications in China are still in an exploratory stage. Vendors, users and enterprises are all talking about BI. However, their understanding of BI is different. The effect which they can get from applying BI also varies. This is similar to the situation when ERP first entered the Chinese market: enterprises both small and large were talking about ERP. But, the most successful ones were still those manufacturing enterprises. As for BI, we think that enterprises need to possess certain conditions to apply it. This is particularly the case of the high-end functions of BI.

Between 2003 and 2005, industry users' main understanding of the achievements of BI applications was complicated report form system. Their further understanding came with OLAP multi-dimensional analysis systems. Since 2006, users have paid growing attention to data warehouse infrastructure building. In 2006, among the most frequently used presentation forms, KPI, in addition to complicated report forms and OLAP, found more favors with industry users. In the future, it is expected to become an essential front-end exhibition tool for BI systems. CCID Consulting predicts that the focus of BI building in the future will shift from enterprise report form making to data mining and intelligence analysis, turn historical data into resources, and provide powerful data reference basis for enterprise executives to make decision. Of course, this is a trend, and will not become a common phenomenon in the next 3 years. The banking and telecom industries with good IT applications should be the first to verify this trend.

3. Foreign firms need to adjust strategies to adapt to the Chinese market

Several years ago, BI competitions were not fierce. Before 2004, Brio was the only one of the mainstream BI firms in the world to operate in the Chinese market. The other BI firms had no residential branches in China. They only operated in the Chinese market through agents. Their application effect and business development were not very good, causing inadequate management and poor guarantee for prices and implementation quality. The main reason was that they ignored the situation of Chinese enterprise. Software and system applications can only give play to their vitality when they are combined with specific services. Technology migration alone will not guarantee application effects.

Currently, IT applications are deepening in the various industries, particularly banking industry in China. The demand for BI services is gradually growing. Future competitions in the BI field will intensify. Foreign firms have started to increase their inputs into and step up their efforts to nurture the Chinese market. These include acquiring local enterprises, building their own channel systems and getting a profound knowledge of the Chinese market.

4. Domestic firms speed up technological progress and take the "foreign route"

The high-end market and users have long been occupied by foreign vendors. Their evaluation of domestic firms is inadequate understanding of business philosophy and less advanced technologies. In fact, local BI enterprises have also been developing and changing themselves in the past 2 years. By acquiring foreign enterprises or setting up global technical support teams, they improve their technology and products.

Table 2 Local BI Firms' Internationalization Strategies to

Improve Their Technologies and Brand Values

Firm Strategies to Improve Technology and Brand Values

FEnet In 1997, it was the first to introduce the BI

concept into China. It is a BI solution and

CRM provider in China. It has set up branches

in New York, Beijing, Shanghai, Chengdu and

Shenzhen.

Longtop Group It has set up 5 major technical centers in

Xiamen, Beijing, Shanghai, Guangzhou and

Chengdu, and 36 services branches across

China. In 2006, it established overseas

branches in the United States and Canada. It

has also set up a global technical committee.

Advanced Digital Headquartered in Beijing, it has set up

Technology branches in Shanghai, Chengdu, Guangzhou,

Hong Kong and Japan. In 2006, Advanced

Digital Technology built the application

front end namely feature services platform

for 10 branches in China Construction Bank's

centralized data reconstruction project.

Hinge Software Founded in Shanghai in April 2003, it has set

up R&D centers in Beijing, Shanghai and

Hangzhou. Hinge Software shareholds Viador.

Typical customers include Beijing City

Commercial Bank-Financing Center and CITI

Bank. In 2007, it was acquired by Chinasoft

International.

Bi-soft A wholly-owned hi-tech company registered in

Zhongguancun, Beijing by the US BI-Soft, Inc.

BI-Pilot BI Development Platform (TM) has been

successfully applied in the fields of

telecom, postal services, social security,

finance taxation, banking, E-business and

large-scale enterprise ERP and CRM.

IV. Outlook for China's BI application market

As BI technology matures and industry application gradually deepens, CCID Consulting predicts that in 2007-2009, enterprises' investment in information resources integration and data mining will increase gradually. China's BI application market will grow at an annual rate of over 40%. As for functions, KPI will become an essential front-end exhibition tool for BI systems. As for industry application, the manufacturing industry is expected to become a new growth point in the BI field. In addition, BI-related services will become an important factor for BI firms to improve their performance. In the future, as BI applications deepen and technologies develop, services, particularly consulting services, will play a bigger part in BI firms' competitions.

About CCID Consulting

CCID Consulting Co., Ltd. (also known as CCID Consulting), the first Chinese consulting firm listed in the Growth Enterprise Market of the Stock Exchange (GEM) of Hong Kong (stock code: HK08235), is a direct affiliate of the China Center for Information Industry Development (hereinafter known as CCID Group). Headquartered in Beijing, CCID Consulting has so far set up branch offices in Shanghai, Guangzhou, Shenzhen and Harbin, with over 300 professional consultants and industry experts. The Company's business scope has covered over 200 large- and medium-sized cities in China. Apart from home market development, CCID Consulting is establishing international cooperation links across the United States, the Asia-Pacific region and Europe, by setting up agents in the U.S., Japan, South Korea, Australia, Singapore, Italy and Russia, with the aim of going global.

Based on four major competitive areas of powerful data channels, industrial resources, intense knowledge and deep understanding of information technology, CCID Consulting provides customers with consulting, research and IT outsourcing services covering strategy planning, IT application, marketing strategy, human resources and information technology outsourcing. Our customers range from industrial users in IT, telecommunications, energy, finance, automobile, to government departments at all levels and diversified industrial parks.

CCID Consulting is committed to becoming the No. 1 brand for strategy consulting, the No. 1 consultant for enterprise management and the No. 1 expert in market research. For more information, please visit our website at http://en.ccidconsulting.com/.