There is no single organizational initiative that warrants preparation, planning and strategy more than the decision to invest in a business intelligence program.  Fundamental to all BI programs is the core principle that BI platforms must be performance-driven.  Key performance indicators must be role-based, Specific, Measurable, Achievable, Realistic and Time Relevant.  An organization’s information strategy needs to be optimized to solve a business problem or create business opportunity. 

Business intelligence can be defined as: People, process and technology required to turn data into information and information into knowledge, and plans that drive effective business activity, gain business insight and achieve competitive advantage.

Understanding the quantifiable and strategic benefits is essential to the process of prioritizing and selecting candidate BI projects. From a governance perspective, there must be processes in place to assess, define and monitor success when determining cost savings or ROI realized from projects. BI platform support must, therefore, be a closed-loop process as depicted in Figure 1.


While there is little debate with regard to the soundness of BI’s core fundamentals discussed in this section, many tactical questions remain. The following sections provide a strategy to ensure a BI platform that truly is performance-driven with demonstrable quantifiable results.

Using Facilitated Sessions to Determine Actionable BI

A facilitated session or structured interview conducted by a BI analyst with business area groups will be necessary in order to understand how BI will be incorporated into various business activities. Each facilitated session is conducted either with each individual business function area or several function areas, if it makes sense from a business process perspective to do so.  Each initial facilitated session may last two to three hours, and sessions can be iterative in nature because open questions may exist once the initial session is completed.

Facilitated sessions are opportunities to get to know the end users as they provide insight for the BI analyst regarding what is important to the BI analyst role itself. It is important to focus on the impact of the role in terms of personal and corporate performance. The key is to use business terms to evolve a common understanding of actionable BI.

Facilitated sessions aid in data collection for the BI analyst. During these sessions, the following information is gathered:

  • Business function area team roles and responsibilities;
  • Determine an information usage profile for each business area group;
  • Understand key measures and informational (descriptive) data;
  • Current report preparation requirements;
  • Information refresh and delivery requirements;
  • Understanding of data quality, data availability;
  • Understanding of business impact (business justification);

The goal of the session is to keep the conversation relevant to business, not technology. 
The following topics can be posed as questions presented by the BI analyst to the business area teams during the facilitated session. Click here for a list of questions that provide insight as to the nature of the session.

The facilitated session is a great tool to understand what is most critical to each role within the organization.  Published results from each facilitated session will be consolidated by the BI Analyst to better understand how information is used. 

Understanding Business Process Workflows Key to Defining Analytical Pathways

Using the information collected from the facilitated session, the BI analyst will focus on each role and the manner in which information is consumed. The goal is to understand a true cause-and-effect relationship between the measures of highest intereste and other related measures that impact those measures. The relationship between measures is called an analytical pathway, and is the key to understand cause-and-effect as part of BI analytics.

Cause-and-effect measures may span across several business function areas.  To explain this concept, consider the following. Each business process is cyclical in nature. Workflows established between business processes exhibit inputs, a process and outputs, generally following a somewhat linear progression within the organization. This is shown as the top arrow within Figure 3.
 

From an analytical perspective, information consumption is not as rigid and will flow in multiple directions.  For example, the manufacturing business unit needs to have an understanding of sales pipeline activities, open sales orders, product costing, quality and defect issues, vendor performance and fulfillment. Manufacturing cannot focus only on its own processes or key performance indicators (performance measures) they own. It is important to demonstrate a true cause-and-effect relationship, not restricted to just measures owned by a specific group or individual.

Another way to represent analytical pathways is illustrated in Figure 4.  In this example, Total Revenue dollars (top right quadrant) is trending down as illustrated by the yellow color, and it is evident that Daily Bookings dollars is the reason for the downward trend. Recognizing the downward trend to Total Revenue dollars and Daily Booking dollars in itself is not actionable; we still need to understand what is causing Daily Booking dollars to trend downward.


In analyzing further, we can see New Customer Orders (lower right quadrant) has trended downward. This is caused by an alarming trend in Market Campaign Responses. Further, a number of trend impact the upcoming Scheduled to Ship (This Period) orders. For example, it seems that Business Mix, which represents an ability to sell in targeted industries, is trending downward. Also,  Product Mix, which represents a portfolio of products and services the organization provides to its customers, is trending downward 

Some key points here:

  • Analysis needs span across business units via the analytical pathways we understand and design into our BI platforms;
  • Focusing on business unit-specific deployments only (e.g., order management) does not provide the visibility needed for true cause and effect;
  • Understanding the way information flows through organizational business processes and related supporting roles is key to understand some of the concepts provided here;
  • Actionable BI relies heavily on cause-and-effect relationships between our measures – measures that we are interested in most, measures that we own, and measures that we share;
  • When considering new BI project candidates, it is critical to first understand opportunities for actionable BI, the technical feasibility for delivering actionable BI through analytical pathways, and such actions are in some part quantifiable.
  • Quantifiable actions make possible strong ROI or cost savings opportunities within a BI platform demonstrate. 

Business Justification – Defining BI Program Success

Business justification is a process within an organization to evaluate the likelihood and magnitude of quantifiable and strategic benefits of business intelligence programs. Candidate BI project evaluation, a critical step within project portfolio management, is the fundamental assessment and prioritization of several projects by committee. Projects selected by committee must be monitored for success and compared to the original benefits and expectations in order to validate project selections.  The process of monitoring for project success in itself promotes effective user adoption and continuous improvements within the BI platform and provides a feedback mechanism from the committee group.

Surprisingly, many organizations that have invested in BI have no formalized process in place to monitor quantitative ROI or cost savings as a consequence of adopting a BI strategy.  A TDWI study  of 1,600 companies showed only 13 percent of respondents tracked ROI across the value chain.  Thirty-seven percent mentioned they are planning to, while 27 percent have no plans to do so.

Challenges to the process of business justification may explain this trend, and are listed as follows:

  • Calculating ROI for information management platforms is a complicated and perplexing task.
  • “If you build it, they will come” mantra no longer acceptable with today’s decision-makers.
  • Soft statements such as “critical for the business to remain competitive” without quantification yield intangible benefits.
  • Approved projects deliver measurable, positive impact to the financial bottom line as either ROI or cost savings.
  • ROI is difficult to gauge because of the many intangible or qualitative benefits provided.
  • Dependency on BI adoption within the organization.

 
Challenges should not deter the critical need to justify BI programs.  To summarize, follow these steps:

  1. Use facilitated sessions as described to gather information requirements;
  2. Understand information flow to determine analytical pathways;
  3. Identify and quantify the benefits (tangible, strategic, intangible);
  4. Establish a measurement baseline;
  5. Calculate total cost of ownership, return on investment, payback period;
  6. Measure the investment and actual benefits;
  7. Determine how to retain benefits as the organization objectives change.

 
True organizational responsiveness begins with an alignment of business strategy to a business intelligence platform that can effectively measure business success supporting that strategy.  Information must be factual, timely and relevant, thus ultimately solving a business problem. A holistic view of the organization is critical.  Savvy organizations rely on every facet of BI - people, process and technology.  The people and process components are largely responsible for BI success, as it is highly unlikely BI projects fail on technology alone. 

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