Posts Tagged ‘competing on analytics’

Reaching Corporate goals using Business Intelligence

by Matthew Carmen on December 20, 2010

Most companies have a mission.  This mission, many times, is some morally high statement that the company will, say, help all the people of the world live in harmony.  While this is a noble gesture, is it realistic?  Unless you’re the Bill & Melinda Gates foundation, probably not.  What a company really needs is an actionable strategy that leads it to meeting and/or exceeding business goals: those of higher revenues, margins and market shares, amongst many others.  A company can still be benevolent, like Ben and Jerry’s Ice Cream for example, who give a portion of their profits to charity.  This is a fantastic thing they do, but their shareholders want value for their investment as well.

What is more important is the corporate strategy that allows a going concern to reach its goals.  The main problem with any strategy is that the people who make it happen very rarely know what it is.  The “workers”, which make up probably 80 percent of employees only know that the company making money is good, and that losing money is bad (and this is probably all they really care about too).  These “workers” however, are the operational portion of the company.  Since the operational portion of the company has little or no knowledge of the company’s strategy, and probably cares about it just as much, how does a company’s leadership align its operations so as to reach its corporate goals?  Many tools are needed, including leadership, management of human and financial capital, logistics, etc.  All of these tools are fed by information and the better the information, the more intelligent the tool’s results. Business Intelligence (BI) is key to successfully aligning corporate operations with its strategy in order to achieve its goals and mission.

What exactly is BI?

Ask 5 people, you will probably get 6 answers.  Wikipedia defines BI as: “computer-based techniques used in spotting, digging-out, and analyzing business data, such as sales revenue by products and/or departments, or by associated costs and incomes.”  I guess this is one way to explain it.  My view:  BI is the use of technology to intelligently analyze raw data which is collected from each operational group.  This analysis is performed in many ways;  reporting, online analytical processing, analytics, data mining, business performance management, benchmarking, text mining, and predictive analytics are just some of the many techniques used.  Once all of the raw data is mined, processed, and analyzed, it becomes usable information that can be reported on, ‘dashboarded’ and presented.

This information often reflects a company’s competitive intelligence or advantage in the marketplace, and one way in which a company can differentiate itself from is competitors.  For example, Netflix and Harrah’s Entertainment are two companies that have benefit from BI initiatives.  These two companies collected raw data and utilized BI tools to analyze that data, ultimately resulting in advantage gains against their competitors – they were able to lead their industries in profit margin, sales and customer service, according to the book, Competing on Analytics by Davenport and Harris.  By efficiently analyzing sales data through the use of BI, a company can make sure that stores in different geographical areas keep the right products on the shelves.  One example of this is Kroger:  they were able to keep the right varieties and quantities of soup in colder weather stores.  Some of BI is basic common sense that is taken to the next level, this is the starting point.  Experts in BI need to take a company to the next level and beyond.

The keys to a successful BI implementation include:

  1. Realizing that your company does not use the data it has to make decisions and wanting to change the dynamic.
  2. Bring in experts where helpful (for example, Stixis and their BI Center of Excellence) to ask the right questions and properly architect and launch BI initiative.
  3. Make sure employees and management participate in the development of Key Performance Indicators (KPI’s), designing dashboards, and providing input to the system designers.
  4. A company must decide on BI deployment, maintenance, and continuous improvement.  By doing these things, a company will be able to gain a competitive advantage over competitors and lead its industry.

The key to successful implementation and usage of a company’s new or expanded BI environment is complete buy-in from all employees and communicating corporate mission, strategy and operational need.  Through this effective communication with the workforce, employees will become contributors of the new corporate culture and help move the company forward.