Even so, by now there are well-documented instances of companies with market dominance directly attributable to DM/BI effectiveness. Shareholders of companies like Amazon.com, Harrah’s and Wal-Mart would agree that DM/BI systems have delivered very tangible benefits over the past decade.
So what do you do if it is your job to write the business case for a new BI effort, with the responsibility for recommending and estimating the outcome of a major BI expenditure?
Follow this step-by-step primer for the BI advocate in a large organization as well as a suggested process that sets the stage for a BI business case, including likely tangible benefits.
Business Value Basics
We’ll start with these basic assertions:
- Intangible benefits don’t count.
- DM/BI has no inherent value.
- Senior managers often make decisions about future outcomes with insufficient data.
Intangible benefits don’t count. An effective business case communicates tangible future value in a convincing way. An argument has a chance of convincing a skeptical reader if the reader agrees that argument’s assumptions are reasonable and that the conclusion follows logically from the assumptions. Quantifying financial metrics like ROI or net present value help build the case, but such measures are credible only if readers agree with the underlying assumptions and the logic built upon them.
DM/BI has no inherent value. We in the DM/BI field believe that any organization’s fortunes would improve if it integrated data rationalized data stewardship, and applied analytics creatively. However, that view must ring true to senior business managers. Without a compelling and motivating story about how a new system contributes to revenue or reduces costs a business case stops dead in its tracks. Sometimes someone at a high level just wants BI, but organizations don’t often embark on DM/BI efforts without first evaluating tangible costs and benefits.
Senior managers make decisions about future outcomes with insufficient data. Although DM/BI practitioners must make a convincing case for future business value, there’s room for uncertainty. Executives and senior managers aren’t highly compensated for playing it safe, but rather for understanding current conditions and setting direction based on educated but sometimes courageous predictions of future conditions. A successful DM/BI business case matches or extends the executive’s knowledge of current conditions and expands his or her view of potential future outcomes of near-term actions.
The Value Foundation of the BI Business Case
Before starting the BI business case, the DM/BI advocate should do the homework required to ensure its success, including these essential steps:
- Know the organization’s goals and objectives.
- Identify a BI champion.
- Identify and work with BI stakeholders.
- Identify an application with tangible business value.
- Define and quantify a quick win prototype project.
Know the organization’s goals and objectives. It is human nature for any of us, including executives, to be receptive to help with our own goals and objectives but less receptive to new ideas that aren’t related to our own goals. Furthermore, senior executives facilitate intensive strategic planning processes to set the right corporate goals and objectives. A proposed DM/BI initiative should clearly and tangibly help achieve strategic objectives already in place.
Identify a BI champion. BI is in a unique position within the application stack. Most organizations can operate without a DM/BI strategy. However, most companies would greatly improve their market position with a comprehensive DM/BI solution. The impetus for deploying such a solution needs to come from a leader within the corporation who champions the value that DM/BI brings to the organization as a whole. Often, this champion is someone at the top level of the business chain of command with a solid grasp of the BI’s potential.
Identify and work with BI stakeholders. BI projects should be driven by BI stakeholders, those who will see direct effects (good or bad) from the BI project. Some stakeholders look to benefit from BI-based solutions to concrete problems. Other stakeholders will have to be convinced about the potential value of BI. Both types of stakeholder must be involved in defining and supporting the goals of a BI project.
Identify an application with tangible business value. Again, in order for the BI application to return value, it must focus on achieving business goals. These goals should be measurable so that the value of the BI application can be determined, and the application should contribute to overall organizational strategy. The next section provides ideas for identifying such a project in your organization.
Define and quantify a quick win prototype project. Businesses must quickly see the value that DM/BI brings in order for it to catch fire in the organization. A prototype project is often the best way to showcase BI’s value proposition. These projects should typically produce tangible results in a matter of weeks and target a well-defined business area. The prototype should have a well-defined goal and ROI metric, and produce data or case studies that show progress toward, if not achievement of, that goal.
Business Value Examples
The references available on DM/BI value cite many BI success stories with tangible value. Analysis of those success stories reveals that BI value tends to fall into these categories:
- Enhancing the value of existing assets,
- Improving customer or supplier value and
- Generating revenue from data assets.