Posts Tagged ‘business intelligence’

Does your company’s leadership think that having a robust Business Intelligence function is only viable for large corporations? Think again. In today’s global world, with information shared in the blink of an eye it is imperative that all companies know their numbers and manage by them. The information that a Business Intelligence (BI) function can provide can mean the difference between growth and competitive decline. Utilizing BI has been proven to result in significant competitive advantages both for small companies as well as large corporations.

Business Intelligence Planning

Initiating a Business Intelligence function in your company does not need to be excessively expensive but does require careful planning. There are five key steps in developing a plan for a BI function that, if followed, increase your chance for success. The level of complexity required for these steps is dependent on the size and complexity of your organization. Small companies can rapidly design a BI program to accelerate the process with the help of a consultant with BI experience.

The five steps are:

  1. Evaluate the company’s  strategic objectives for critical success factors;
  2. Design the Performance Measurement Blueprint;
  3. Perform a Gap Analysis;
  4. Develop Key Performance Indicators (KPIs); and
  5. Develop the high level plan for Reporting – Scorecards, Dashboards, Reports

It is important to involve top management early in this process. Their support will be critical to getting funding for the BI program once the analysis has been done.  Depending on the company culture however a draft of a proposal detailing the potential costs and benefits early on may be beneficial. A clear demonstration of the need for a BI program can facilitate its approval and funding.

It is always best to start the planning process with an evaluation of the company’s strategic objectives. To maximize the probability of success, any BI program should be aligned to the mission, vision, and the strategic objectives of the organization. Another critical success factor is documenting the benefits of a BI program up front in order to garner the support of top management or ownership.

Once you have determined how to align to the strategic objectives take a look at what are the expected levels of performance in order to meet or exceed these objectives. Determine any dependencies between objectives in this review. This will help you determine where you can expect cost savings and cost avoidances. An initial draft of non-tangible benefits should be developed at this time. Common benefits include improving quality, improving customer retention, gaining market share, reducing costs, meeting regulatory requirements, and fostering continuous improvement and innovation.

The next two steps are to identify the high level requirements for data collection and to perform a gap analysis. The gap analysis will identify any gaps in current capabilities to measure, analyze, and present the elements of the performance plan.  From there you can start to develop the KPIs that are needed to track performance. The last step of the planning process is to determine the high level plan for what reporting components will be needed. Generally scorecards and reports will be needed for managers and staff while dashboards will be needed for management.

Before you can complete the proposal for establishing a BI program you will need to determine the expected costs and benefits for presentation to management. This involves determining how the program will be designed. There are several options to consider in developing your capabilities for initiating a BI function. Each option will have different costs, timelines, and pros and cons associated with it.

The most popular options for launching a BI program are:

  1. Outsourcing a portion or the entire function;
  2. Purchasing a package through one of the many BI vendors; or
  3. Starting small with an in-house team.

The costs and the benefits for each of these options should be included in the BI program proposal. For a small company the third option is often the best initial choice due to the lower cost. However the cost of outsourcing and vendor packages can often be competitive and can decrease the time to adoption.

With all aspects of the BI plan identified the last step is to put them together in a proposal that clearly shows the associated costs and the benefits of having a BI program. The most compelling benefit in today’s increasingly competitive environment is to gain the advantages that an analytically focused strategy can give to your company’s success regardless of its size.

Business Intelligence in a Wiki World!

by Linda Williams on March 28, 2011

The role of the Business Intelligence (BI) function within the organization has become critical to thriving in today’s evolving business environment.   The ultimate purpose of Business Intelligence is to provide management with analytical insights that can be used to improve business performance and competitive position. Analytics provided by the BI department while intended to focus the organization on their core operations and progress toward aligning to their strategic objectives, increasingly can be the impetus for transformational change.

A review of top companies in their industries clearly shows that they all mange their performance using some sort of BI techniques.   The standard tools of BI are based upon gathering actionable metrics that can be used to increase the effectiveness and efficiency of their operations. This data is analyzed and compiled into reports including dashboards, scorecards, and predictive models. As an added service in  more evolved companies, the BI team generally provides consulting on metrics to propose ways to help make better decisions about operations and suggest improvement initiatives.

Often the development of these insights is closely guarded within the company to ensure at least a temporary advantage in the marketplace. The intent is that analytical capabilities will provide them the edge of a first mover as they develop new markets or approaches for their business.

The Problem

This advantage does not last for long in today’s connected world.

The basic analytical tools of BI however are well known in the public domain. Implementing basic BI has become not a luxury but a standard cost of doing business. Books such as Competing on Analytics give many examples of the types of analytics that can be collected and analyzed. There is also a tremendous amount of open information on BI and Key Performance Indicators (KPIs) on the web. Companies can use this information to identify enhancements to their current analysis through their own review of wikis and blogs and even competitors websites.

The Dilemma

The dilemma of what to hold close and what to open up is increasingly becoming a key decision point in a BI project’s lifecycle. The discussions weigh the pros and cons of when it is best to foster creativity through opening up their research to collaboration and when Intellectual Property (IP) should be preserved.  Often the decisions are not clear cut and there may be lively discussions between the BI team and the executive team around what is the best approach for this situation. At the heart of these discussions is whether competitive advantage would be better served by keeping their intent secret, for the short term, or whether in the interest of speed and expertise it would be better to tap into the wiki community.

Wikis

The overall purpose of Wikis is to provide a place to share content, ideas, links, and collaborate on information, technical documentation, or the development of new ideas. The Wiki world in contrast to the traditional BI world thrives on openness and transparency. Some of the key advantages of the wiki approach are:

  1. The potential to leverage the talents within the wider community;
  2. A reduction in the time to innovation; and
  3. The ability to incorporate social purposes that may go beyond the core competency of the company. An example is using external assistance in developing approaches to help the organization move into to being “green”.

Clearly there are compelling advantages to be gained by developing analytic dimensions with the help of the larger wiki community. Precedents for using this approach are also becoming more common. Some well-known examples of advances made by opening up IP include: the development of Linux; Netflix’s contest to develop an algorithm for customer preferences; and Google’s opening up application development for the Android. In each case the advantages of using the wiki world to enhance what may have been considered to be IP was outweighed by the benefits of collaboration.

Final Thoughts…

Secrecy in all areas of analytical review is no longer possible or even preferable in a world that is increasingly transparent with the pervasive use of social media by today’s employees who are mobile, connected, and less likely than previous generations to remain in one job for long periods. There are significant advantages to a business in tapping into the networked intelligence to speed up problem solving or make breakthroughs. These benefits may in some cases outweigh the potential risk of the competition using the same information or approach. The final decision however cannot be rote but must rest with the complexity of the use and the expertise of internal resources to meet that need.

ROI for Business Intelligence

by Matthew Carmen on January 3, 2011

When beginning or continuing an investment in a Business Intelligence (BI) system, a company must look at how it will be able to garner the largest Return on Investment (ROI) for such an initiative.  There are many factors to take into consideration in reaching the largest possible ROI.  These factors can be grouped into direct and indirect benefits:

Direct Benefits

  1. Quantifiable cost savings related the more efficient access to data.  This allows analysts to spend time analyzing and not gathering information.
  2. Automation of process, leading to real time savings and greater productivity.
  3. Shorter budgeting and financial planning cycles with reduced effort, allowing staff to continue doing their jobs.
  4. Improved efficiencies in operational groups such as inventory management, IT, facilities management, etc.
  5. Reducing support costs associated with reporting while terminating legacy reports and systems that go unused.

Indirect Benefits

  1. A single version of the “truth”, official company records and reports, leading to less rework and manipulation of data by individuals to justify differing views of what that data means to their groups.
  2. Facilitates containment of costs based on targeted areas as opposed to just saying every group’ cuts costs by 20%, as an example.
  3. Allows for the ability to run “what-if” analyses, the results of which often lead to better decision making.
  4. Improved customer service, resulting in increased sales.
  5. Allows for the long-term alignment of operations and strategy.

There are many other direct and indirect efficiencies and benefits that can be realized through the proper planning and implementation of BI tools and systems.  The more end-user groups that participate in the planning of a company’s BI system, the easier it becomes to change the ultimate corporate culture. Once the buy-in from the users is attained, the real savings begin, and a platform to accelerate corporate growth now exists.

Business Intelligence or lack thereof?

by Brian Beedle on March 29, 2010

In these difficult economic times, companies are creating processes that are not consistent with the ways in which they have traditionally managed their business.  Whether you are the CFO or an entry-level analyst, everyone must actively learn how to re-engineer and strategically manage in this new economic environment.

The expectation of companies’ Board of Directors is simply to increase top and bottom-line revenue (and by extension, profitability), with little concern for everything in the middle. Before you can even consider instituting measures to contribute to the Board’s expectations by implementing cost savings initiatives, it is necessary to develop a well thought out and orchestrated operating plan.  There are many approaches to this. Some companies prefer the “top-down” method, where management dictates the spending of the operating units and it is then up to the operators to manage within their allocated budgets. On the other extreme, management may prefer to push down the responsibility of planning to the operators and ask for a “bottoms-up” approach.  This approach requires the operational managers to develop assumptions and create a detailed operating plan with very little finance intervention.  Typically, the results of the “bottoms-up” approach may not be what you expect, but merely a wish list that even Santa Claus cannot deliver!  Sure, these may very well be extreme cases – most likely the process your organization uses falls somewhere in the middle. In any case, it is imperative that the process be organized and well executed.

PERFORMANCE MANAGEMENT:

Q: “Why would a company be willing to invest the capital in a tool that provides little or no tangible Return on Investment (ROI)?”

A: This question is certainly justified, and the answer is surprisingly very simple: This perception is incorrect.  There is statistical proof which supports a direct correlation between implementing performance management tools and its downstream, positive impact to shareholder value.  Among this positive impact is increased accuracy of strategic capability.

Taking the leap to performance management is a major commitment for any organization and should not be made hastily or taken lightly.  Performance management initiatives do require careful planning, decisive action, and ongoing support from within the organization.  When it comes to performance management implementations, there is a fine line between success and failure.  A well planned-out and executed implementation will yield great success and gain acceptance.  However, a sub-par, marginal implementation with little or no added user benefit, will lead to frustration for the legacy users, leading to further resistance to the new technology and potentially the perception of a failed implementation.  The fine line between success and failure is extremely important to keep in mind.  Moreover, there are several factors that also need to be considered before beginning the journey to performance management, so that the end product delivers results not only in a positive ROI, but also in true business “intelligence”, and not a lack thereof.

A few of these factors are:

  • Before the decision is made to move forward, it is important that a thorough assessment is conducted of the current business planning and intelligence environment. One of the most common mistakes that many stakeholders encounter when implementing this type of a solution is poor design.  Take this opportunity to think outside of the box. Challenge the operational business managers who are responsible for preparing the physical operating plans and forecasts to research what is needed to successfully manage their business. Take a look at your current reporting – does it provide value?  You may be surprised to find out that the need of the finance team may differ greatly from the needs of the overall operation.
  • When preparing a proof of concept and statement of work, a best practice would be to set milestones and plan in phases. Establish reasonable expectations.  It is okay to under promise and over deliver.  Keep in mind, less may be more. Over complication of models and tools may only cause frustration and not be helpful in gaining user acceptance.
  • A successful implementation will require commitment by leadership within the organization. It is true that many of the leading enterprise planning and business intelligence solutions companies pride themselves in offering applications that are typically implemented and maintained by finance departments and require little or no IT support. This in many cases may be true, depending on the skill set of your administration team. However, for small to mid-size companies, these finance department resources may not be available as in larger organizations. Engaging network/server and database administrator resources up front will result in a far easier and more successful configuration of the environment. Before purchasing any hardware, it is advisable to discuss the requirements with your server team/consultants to ensure that your solution is being configured optimally, yet in the most economical fashion.
  • Provide training to users with relevant materials and be sure to seek feedback.  (Just because a solution is implemented, does not mean there is not room for continued development and improvement.)

Some of the points discussed in this article may sound quite elementary in concept,   however it is important to step back and not lose focus of these basic principles –  ultimately gaining a deep understanding of what it takes to successfully implement performance management initiatives.