In my February 2007 column, I wrote about putting the business back into business intelligence (BI). In that column, I talked about the need to shift the focus of BI initiatives from tactical to strategic to align BI efforts with corporate strategy. When the DM Review editors asked their columnists to write about what we see as shifting or emerging BI trends, I thought it would be a good idea to delve more deeply into that February discussion and talk about the reasons I think BI strategy should shift - and is shifting - from the tactical to the strategic.
The importance and value of information has become elevated in the C-suite. Now, many CXOs want to know the details behind business performance. They may not care about the numbers at a granular level, but they see the value of slicing and dicing information to gain insight into business performance on multiple levels and across multiple dimensions. In other words, they understand that BI at the tactical level rolls up to help achieve goals at the strategic level. Thus, BI is moving from a tactical tool to a strategic catalyst.
Many companies are seeking to fold strategic initiatives from different business functions into the overall corporate strategy to more effectively engage in and track corporate performance management. Therefore, information from BI applications in corporate finance, marketing, sales, supply chain management, etc. must be used to analyze and tweak corporate strategy. If the focus of the BI applications in these various departments is not aligned with overall corporate strategy, the information drawn from them most likely will not support efforts to analyze how well the company is meeting its strategic objectives overall.
I believe that change - both to business cycles and to the business itself - happens more frequently than in the past, and it affects multiple, disparate processes and business functions when it does. Trying to fine-tune tactically focused BI applications to meet this constant change can be like shooting blindfolded at a moving target - it's almost impossible to get it right. Instead, when BI efforts are focused on meeting strategic objectives, rather than hitting tactical targets, there is more consistency in the way BI is implemented enterprise wide.
Another reason for the strategic BI shift is that an increased focus on regulatory compliance has created an intense need for information at the strategic level. Over the past half decade, a plethora of laws and regulations (e.g., the Sarbanes-Oxley Act of 2002, the Basel II Accord of 2004 and others) has created a charged atmosphere of tightened scrutiny in the finance function at public companies.
Companies simply can't afford to make mistakes in their regulatory compliance process; it would be a strategic blunder. Penalties are severe and include fines, sanctions and possible loss of investor confidence. Because noncompliance is a strategic gaffe, compliance efforts should be moved to the strategic level. Compliance activities are more easily maintained with sophisticated BI capabilities, so BI must shift focus to the strategic level to help with compliance strategy.
Finally, BI is shifting to the strategic level because fragmented business structures have created the need for a universal view of the company that is sorely lacking at many companies. Companies that have grown via merger and acquisition activities - or simply through rapid growth without a cohesive growth plan - often become fragmented, especially in terms of business processes and IT infrastructure.
As a result, at the enterprise-wide level, it becomes difficult to track business performance. Companies can track performance at the functional level, perhaps - or maybe even at particular subsidiaries - but it's often very difficult to coalesce information at the enterprise level to get the big picture if BI efforts are stovepiped at the operational, tactical level. To tie all the fragments together and understand overall business performance, I believe it's essential to shift the focus of BI to the strategic, enterprise level.
The results of BI shifting from tactical to strategic are mostly positive. Due to the increased visibility and perceived value of BI in the C-suite, I think BI initiatives will receive more funding at many companies. This is certainly positive. On the flip side, however, CXOs will likely view BI efforts with more scrutiny than ever before. They'll probably demand positive results early and often, and they'll want to see tangible returns on their investments.
That's the only downside of the shift from tactical to strategic, though. Ultimately, because of the shift, I predict that BI will become a more integral part of the enterprise planning and forecasting processes; whereas now, from my experience, BI efforts are often focused at the operational level on functions, such as demand planning. Moreover, I think the shift in focus will also mean that BI capabilities will improve throughout the company to meet the more onerous demands placed on them.
Of course, I don't have a crystal ball, and I can't really predict the future. I can just make educated guesses based on what I see and can interpret through the lens of my 25-plus years of experience. So, take a look at your current BI strategy. Is it prepared for the future?
This publication contains general information only and Deloitte Consulting LLP is not, by means of this publication, rendering business, financial, investment or other professional advice or services. This publication is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified professional adviser. Deloitte Consulting LLP, its affiliates and related entities shall not be responsible for any loss sustained by any person who relies on this publication.
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