The economic recession will force many organization to cut IT costs, but the one area where belt tightening can lead to better efficiency is in business intelligence.

The value of BI becomes more apparent in tough economic climates, when smart information and knowledge management professionals use the technology as a corporate asset to continue to survive, compete and thrive, according to a recent report by Forrester Research.

So rather than across the board cuts, Forrester recommends a more targeted approach of BI consolidation and optimization, as well as an evaluation to see if lower-cost technology alternatives will do. "These approaches can enable you to do more with less, leading to a win-win scenario that contribute to both your top and bottom lines," said the report, entitled "BI Belt Tightening In A Tough Economic Climate" and written by analyst BorisEvelson.

Forrester has yet to see a trend in which BI applications and infrastructure in companies are being cut in the economic downturn. However, the researcher recommends that companies reintroduce fiscal and IT disciplines and best practices that tend to slip during good times.

For example, companies should reduce the use of BI tools often adopted by individuals or small groups when money is more readily available and force information and knowledge management workers into using an IT standard BI tool.

"To produce a win-win scenario for you and your organization: Leverage your existing investments, do more with less, cut out shelfware, and consider alternative, less expensive BI approaches," Forrester says. "At the same time, don't jeopardize current and future BI capabilities and continue to use BI as a tool to provide better insight into external and internal processes, which will lead to better decision-making. This will ultimately lead to business survival and success."

One way to make use of BI tools in an economic slowdown is to use the technology to find previously untapped revenue sources. Data about customers and products that's already being used to support internal processes can be offered as a paid service to trading partners, such as suppliers, manufacturers, wholesalers and distributors.

Forrester, for example, is working with a large global retailer that is offering internal point-of-sale data to provide customer buying behavior, such as seasonal patterns, market baskets, effect of promotions, as a for-a-fee service. "The retailer has also solved potential privacy and conflict of interest concerns by showing each manufacturer and supplier its ownPOS data at the lowest level of detail, but the data for competing products only at an aggregate level," Forrester says.

More effective use of BI tools can lead to more successful sales and marketing efforts. In addition, the technology can also be used to motivate employees by creating performance management environments that reveal each worker's productivity relative to his peers, stimulating healthy competition, the researcher says. "Not only does this information help these workers make better decisions, it encourages them to work harder to improve their standing in the organization."

While Forrester does not recommend wholesale cuts in BI resources, tools, applications and projects, there are ways to cut expenses. For example, when negotiating contracts, approach the entire BI product ownership life cycle as a whole.

"In addition to typical negotiating points such as volume discounts, Forrester recommends creative and risk mitigating tactics like business-based license metrics (e.g., tied to IT budget), negotiating rules for removing shelfware, and using third-party contract advisers (e.g., management consultants, industry analysts) that have extensive experience with similar deals," the report says.

In addition, learn a vendor's priorities and use them to negotiate better deals. Microsoft, for example, is eager to shed its image as a small and medium-sized BI vendor, so large companies can get a more favorable deal by offering to be an enterprise reference customer.

The same tactic can be used against independent BI vendors that claim they are a better choice than the larger companies such as Oracle and SAP that fold BI into other products. Independent vendors that may be willing to offer a discount in exchange for being a reference customers includeTibco, Actuate, Information Builders, MicroStrategy, Panorama Software, QlikTech and SAS Institute.

Forrester also recommends using component-based, loosely coupled architectures to make applications more flexible and agile, while also decreasing vendor dependency by making it easier to switch a vendor product from any BI component.

"Separate business, security, presentation, data access, and other logic into separate components," Forrester says. "Build loosely coupled components and isolation layers such as database views, staging tables, and parameter- ormetadata-driven configuration."

The analyst firm also recommends organization enable self-service BI as long as different user types and their unique requirements are taken into account. In addition, use no-cost bundled BI software already in-house through the purchase of BI appliances, database management systems and application licenses.

"Consider using these few free licenses for additional functions such as testing, QA, and prototyping," Forrester says. "Look around and don't waste money on BI products you may already have!"

Finally, consolidate BI vendors and products. "While there's no easy way to consolidate BI tools and migrate all of your BI applications to a single environment, the good news is that all top BI vendors have rich functionality and robust, scalable, and stable architectures, so that enterprises can feel relatively safe with their decisions and investments," Forrester says.

Along with the above recommendations for optimizing investments in large enterprise BI tools, Forrester also suggests considering low-cost alternatives for smaller organizations, departmental use or to complement, not replace, mainstream BI tools. These alternatives include BI software-as-a-service, open source BI and many smaller BI vendors that offer lower initial costs or subscription-based licensing models that may be attractive in the current economic climate.

However, Forrester warns against getting too excited about lower initial costs in deploying these options. Forrester estimates that at least 80% of any BI effort lies in data sourcing, data integration, data cleansing and modeling, which are steps that do offer a cheap and quick work-around. "So while lower-cost BI alternatives will save you some dollars in building reports and dashboards, that's only 20% of your cost and effort," Forrester says.

New, innovative vendors that automate some of the data discovery process include Composite Software, Exeros and Syperlink, according to Forrester. Others offering "end-to-end BI lifecycle management include Kalido, WHERESCAPE and BIReady.

The full Forrester report is available on the firm's Web site at no charge. Registration with the site is required.