Why do most executives still rely on gut instinct to make decisions in today's complex business environment? Most likely because the tools for making better decisions more quickly aren't being used properly or at all.
Back-office applications, front-office applications and enterprise application integration technologies that link application processing logic and data in a data warehouse all exist in some form in most companies today. However, they aren't being accurately or effectively utilized to assist the executive in making timely, fundamental business decisions. The information is present in many organizations; however, there is a lack of integration of these complex environments that is preventing knowledge-workers from obtaining a comprehensive view of the organization.
Why do so many companies fail to obtain the maximum benefit from their investments in the business intelligence (BI) tools and technologies? The answer seems to be that most organizations take a fragmented approach to the implementation of these tools and technologies. Despite the market shift toward ERP application suites and analytical applications that are part of these suites or developed from third-party vendors, nearly one-third of the organizations evaluated by Hackett Best Practices indicate that they have not fully implemented these technologies or have implemented them in an inconsistent manner. Thus, companies are unable to achieve any maximized benefit from their business technology investment. Organizations that are considered world-class are three times as likely to follow an implementation practice of consistently adopting and implementing decision support technologies across the organization. In attempting to implement these technologies, most companies take a varied approach as opposed to an approach of selecting several key tools and technologies and implementing them fully to take advantage of the data that is contained in the enterprise in a consistent manner.
The Proof is in the Numbers
Hackett benchmark data shows that world-class companies adopt BI technologies as follows:
- 72% utilize consolidation engines
- 57% utilize and have embraced OLAP
- 57% utilize analytical applications
- 57% utilize performance management systems
On the contrary, average companies adopt these technologies as follows:
- 25% utilize consolidation engines
- 25% utilize OLAP
- 25% utilize analytical applications
- 20% utilize performance management systems
The Hackett data shows that a growing number of world- class organizations have embraced and utilized BI tools within their environment and infrastructure. However, most organizations are still moving forward on a piece-by-piece basis and have not implemented or instituted any consistent standards for business analytics across the organization. It is often left up to the line of business or department managers to select the tool or technology that best fits their needs. This inconsistency limits the analysis that can be accomplished across the organization. Without a set of concise standards for the use and analysis of data across the organization, multiple data marts materialize, each with its own view of the data and analysis of this data. Employees are forced to ask this question: Which view is correct and which becomes the trusted view for decision making?
Time Well Spent
In the 2002 Strategic Decision Making (SDM) benchmark conducted by Hackett Best Practices, it was determined that, on average, most individuals spend 50 percent of their time gathering and collecting the information for standard report analysis and the remaining time analyzing the information. At those companies where BI tools and technologies have been implemented in a consistent manner, roughly 20 percent of an individual's time is spent gathering and collecting, while 80 percent is spent reporting and analyzing the information for trends, business opportunities, forecasting and other related value-based analysis. When analyzing the ad hoc analysis capabilities that are available with tools such as OLAP and other analytical applications, Hackett research indicates that 48 percent of the analyst's time in an average organization is spent analyzing the data. In world- class organizations, the analysts are able to devote more than 73 percent of their time to analyzing the information.
Companies which have embraced BI tools and technologies and have put the necessary infrastructure and processes in place to capture, scrub, merge and store the data in the appropriate analytical structures or applications are achieving a higher value in their decision-making abilities. Does this mean that these organizations will get ahead of the competition or that these organizations will take advantage of various trends or opportunities? This cannot yet be determined; however, these organizations will have a greater opportunity to understand their business and take advantage of opportunities. These organizations are also utilizing their internal data assets in a more effective manner than those organizations that have not fully embraced decision support and BI technologies.
To further prove this conclusion, Hackett data shows that the world-class organization has 20 percent of the staff allocated to the decision support process while the average company has allocated only 11 percent.
Back to Paper
What kinds of data are these organizations analyzing? Most organizations primarily analyze financial data that is captured within the organization through the use of an ERP or accounting application. In analyzing financial information, it becomes apparent that when there is a lack of a consistent environment for analysis, most managers rely on the general ledger as the proxy data warehouse and primary reporting and analytical environment. Hackett's 2002 Strategic Decision Making benchmark determined that less than 33 percent of all senior executives take advantage of electronic decision support tools. Instead, a paper report approach remains deeply entrenched in the financial environment due to the lack of standards or consistency in the implementation of the analytical environment. The use of the paper reports proves that most companies have not embraced BI technologies or are not fully using these tools for the benefit of the organization.
In a volatile economy, strategic decision making is an especially crucial part of an executive's job. With investments in BI technologies growing each year, why is there a disconnect in today's decision support environments? It is clear that BI systems integrated across an organization create a consistent environment that allows executives to make better decisions more quickly. With more time to spend analyzing the data than collecting it, executives will be ahead of the game instead of playing catch up.
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