Sometimes, you may wonder what’s the point of business intelligence (BI) anyway? BI is one of the keys to unlocking sustainable execution of an organization’s strategy. BI enables organizations to gather and analyze financial and operational information in order to make better-informed decisions faster. It answers the questions “How are we doing?” and “Why are we doing so well or so poorly?” This gathering and analysis also helps develop more realistic, fact-based business models and scenarios, which turn into realistic plans and forecasts that eventually answer the questions “What should we do?” and “How should we do it?”

Business executives want BI systems “to deliver the right information to the right people at the right time so they can make optimal business decisions, according to Wayne Eckerson of TDWI.”1

Role-based BI (RBI) acknowledges that different people responsible for different roles and activities in an organization need to look at information in different ways at different times. Yet, all the different perspectives and points of view must align with one another and ultimately with a company’s strategic objectives and targets.

This article looks at three critical success factors of RBI: focus, alignment and accountability. It demonstrates a new way of making RBI a reality in your organization.

Focus

It’s rather unlikely that one day every user in the enterprise will have a completely unique information dashboard or reporting system tailored to that individual. The amount of effort required to create, maintain, train and support thousands, or millions of dashboards is daunting. Rolling-out solutions for each job title could simplify things a bit – so that all accounts receivable clerks have the same dashboard, for example. But that could still require an enormous effort and investment.

Rather, the focus should be at the intersection of a user’s business function (marketing, sales, operations and finance, for example) and their “layer” in the organization: strategic, operational or tactical (see Figure 1). In this way, an organization has one dashboard for marketing operations (which would support dozens of job titles) and one for tactical finance (A/R, A/P clerks for example). Typically, organizations have eight to 12 main business functions that are industry specific, which means designing, building and maintaining 24 to 36 dashboards if you use the three-layers this article suggests. This will support 90 percent of the organization allowing for special “one-off” or “project-based” dashboards.

Alignment

One of the disciplines of designing and building BI solutions for this intersection focus is that intersections, and the information within each, must align with one another. There are at least four kinds of intersection alignment:

  1. Cross-functional alignment – This is where information from one function, perhaps marketing, is aligned with another, such as finance. So when marketing includes product-line or channel profitability information in their BI “lens,” it’s the same information that finance has on its profit and loss statements.
  2. Cross-layer alignment – Within a function, information is aligned top to bottom (strategic to tactical) and is generally more granular the further down through the layers. For example, using the example of marketing again, perhaps one of the top strategic measures on the marketing executive dashboard is market share. If you drill-down into marketing operations, you see that market share is made up of several key performance indicators (KPIs): sales price, sales volume, customer preference, channel efficiency and promotion effectiveness. Any one of these can be key measures on the marketing operations dashboard. If we look at customer preference, for example, and drill even further down, we come up with net promoter score (NPS) – the difference between the percentage of customers who would recommend and an organization those that would not. It is a tactical measure to be tracked at the tactical layer of the marketing function.
  3. Role-to-role alignment – There is also necessary alignment from intersection to intersection (or focus area to focus area). Consider the NPS information above for example. That would also need to be used (consumed and contributed to) by those in roles that are at the intersection of operations and any one of the three layers. For example, tactical operations works on product or service quality – a key factor that determines NPS.
  4. Alignment with strategy – BI solutions and information must tie back to what’s good for the company. How does your focus area perspective relate to company strategy? If your strategic objective is to improve overall customer satisfaction, NPS is a good measure to have – so our example is aligned.

Accountability

Line-of-sight visibility, up and down the hierarchy, of performance against a predetermined set of criteria (i.e., versus budget, versus prior period, versus comparable entities) tends to drive behavior. For instance, if I am measured on sales revenue versus plan, and everyone on top of me in the hierarchical chart can see how well I’m doing, I’m going to want to meet or overachieve that measure. And, if I don’t meet or exceed them, then the chain of command can investigate and work with me to remedy the situation. Also, if I personally have line-of-sight visibility into how what I’m working on contributes to the overall corporate goals, I will see how what I do makes a difference for the company - all the way from revenue generation to receivables collection. To further drive behavior, my company could tie my variable compensation to things that I have some control over, weighted by degree of control for instance:

  • Measures that I have some control over weighted at 50 percent,
  • Measures my department has some control over (that my performance has contributed to) weighted at 25percent and
  • Overall company measures (that my department has contributed to) weighted 25 percent.

Tools

There is also a role-based component for BI tools. Typically these are delineated at the layer of the business (not the function layer) and acknowledge different ways of consuming information depending on the “type” of user you are. Figure 2 is an example.

A New Way to Look at RBI

According to Gartner, the optimal number of metrics for each role is five to nine.2 The hard part is choosing the right five to nine. A role-based way to apportion the five to nine metrics - for each intersection in the matrix of Figure 1 could be:

  • Two or three strategy metrics,
  • Two or three function-wide metrics and
  • Two or three intersection metrics.

RBI solutions would deliver the most important drivers of value in the business, relative to my position within the organization.

This gives you focus, alignment and accountability. It provides: focus, because it takes into account my organizational perspective (business function and layer), alignment, by having visibility in my department’s key drivers as well as company strategy; and accountability, because everyone up and down my branch of the organization chart can see my performance, and I am rewarded for my performance.

The metrics need to be the right mix of financial and operational, leading and lagging, tangible and intangible indicators, and they need to follow a value-chain hierarchy in order to “drill down” into the details. A lot has been written about metrics already, so we will only comment on metrics in this article. If you have too many metrics to choose from, pick those that are most material (those that have the potential for the biggest financial impact on the business) and the most volatile (those that have the potential for the widest, fastest changes in the business).

Let’s look at an example using a generic software company. Say their strategic objectives for the year are 10 percent revenue growth, 20 percent operating margins and improved year-over-year cash flow. Using the organizational matrix from Figure 1, what are the role-based metrics would need? The strategic measures are: revenue growth, operating margin and cash flow. Some of the functional measures in marketing are: market share, net new customers, and average selling price (ASP).

Using the previously described RBI method, the marketing operations dashboard, to be used by vice presidents in the marketing organizations would include:

  • Revenue growth and margin (two strategy metrics);
  • Market share, net new customers, and ASP (three function-wide metrics); and
  • Customer conversion, sales by product by geography, price discounts (three intersection metrics).

A particular focus on the last three can have a direct effect on the three function-wide metrics, which in turn can have a direct effect on revenue growth and margin (the two strategy metrics). For instance, success in customer conversions drives net new customers, which in turn drives revenue growth. More intelligent price discounts (or reduced discounts through better product marketing) drives ASP, which in turn drives margin.

The whole point of RBI is to deliver the right tool and the right information so that businesspeople can make the right decisions and take the appropriate action.

To deliver the right balance of role-specific intelligence without overwhelming IT resources, focus on the intersection of business function and layer in the organization not on job titles. To ensure that the organization is keeping an eye on the right things, make sure each focal area is aligned with company strategy and functional goals. Driving the right behavior comes from measuring and rewarding based on a blend of the things individuals have the most control over, as well as their impact on the company’s overall success. Finally, to get the most BI buy-in across a company, use the right tool-based on the appropriate layer for various users within the organization.

This approach helps break down information silos and improve line-of-sight visibility across and down the organization, which improves for better communication, collaboration and ultimately strategy execution.

References:

  1. Wayne W. Eckerson, “Performance Dashboards: Measuring, Monitoring, and Managing your Business” TDWI, October 2005.
  2. Audrey Apfel, Ken Bergstrom, Craig Hekking and Michael Smith. “Business Value of IT - Non-financial Measurements,” Gartner, Inc., 2008 

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