It has become apparent that the field of business intelligence (BI) is moving to a new level. At this next evolutionary stage, we observe organizations achieving greater optimization of resources and better business outcomes. We also see a significant increase in the awareness and understanding of BI at the executive and board levels of organizations. With the pervasive understanding that accurate, timely and relevant information leads to informed decision-making and better business outcomes, these executives and board members are changing the manner in which BI is deployed and used.
What are some causes of this progression? While numerous factors play a role in the successful deployment of BI so that business value is achieved, three significant characteristics associated with the momentum behind BI are business leadership, IT governance and enterprise data warehousing. Let's explore them.
In the early years of BI, initiatives were technology driven. BI solutions were developed by IT with the hope that business users would find it helpful - similar to the Field of Dreams concept, "If you build it, they will come." Unfortunately, this approach yielded low attendance and acceptance. Learning from those mistakes and changing approaches to include greater business representation on BI initiatives soon followed. Over the years, BI success has been widely professed. Most business executives have a good understanding of BI, which can be attributed either to their own firsthand experience or a steady stream of compelling success stories published in various business publications.
Business leaders understand the importance of information given the heightened awareness of compliance with legislation such as the Sarbanes-Oxley Act or the Health Information Portability and Accountability Act. In addition, managing an organization in today's business environment requires business leaders to have a broad understanding of their organization's performance while creating or identifying new ways to increase shareholder value. There is great recognition that BI is the key to unlocking the value in the wealth of information that an organization collects, processes and stores. From the BI research study conducted by BusinessWeek Research Services and HP last year, the primary sponsorship group of BI initiatives among organizations surveyed was found to be business executives.1 This movement of greater business involvement and sponsorship is helping to shape the new direction of BI. Business leaders are influencing the vision of BI within their organizations from a business analytics standpoint and beyond, such as how BI is to be used by individuals at numerous levels.
With many BI initiatives now driven by the business, innovative uses of technology are transforming organizations while challenging business models. Given that business leaders want to know what can be done with the wealth of collected information and also seek to improve operations by measuring activities to evaluate effectiveness and areas for improvement, a variety of approaches can be used to optimize business results. One financial services organization started by embedding BI into their process of evaluating the revenue growth potential of products in a portfolio; it then determined the amount of total investment to be made, prioritized the investments to achieve near-term and long-term growth strategies and monitored the returns from those investments. In other cases, senior management mandated the incorporation of analytics and selected measures into daily or weekly status reports, thereby quantifying progress for all to be informed.
As an organization becomes information driven, greater awareness of its activities and performance occurs with such consistency and accuracy that a continuous process of operations evaluation and improvement naturally evolves. At this level of activity and mind-set, executive-level positions such as director of corporate analytics or chief analytics officer very well could be created, allowing organizations to fully reap the value of their information more than most do today. Positions such as these require a thorough knowledge of the business, extensive experience with key performance indicators and measures, and expertise with BI.
Better Business Outcomes
The process of managing IT as a business function within an organization is the primary theme of IT governance. According to Professor Peter Weill, a leading academic researcher on IT governance at MIT's Sloan School of Management, companies with the most effective IT governance systems enjoy 10 to 25 percent higher profitability.2 IT governance effectively aligns business priorities, people, processes and technology in order to realize value from the investment in IT. Understanding business needs and requirements for IT initiatives is always the starting point. Ask questions such as: how will technology help to achieve the business needs, and how will it drive better business outcomes? What are the resources and financial needs required for the IT initiative, and what is the timing of those needs? What is the anticipated and actual ROI? How does this initiative rank within the portfolio of business and IT activities? What are the lessons learned from the IT initiative?
Business technology is the application of software to drive business activities and serve as a catalyst for growth. It is a shift beyond the mind-set of IT delivering only on technology service level agreements or IT managing technology for the sake of technology. With business technology, IT management is focused on IT governance and measuring the overall impact of technology on business outcomes. For example, organizations implement BI to provide monitoring, analysis and reporting capabilities to meet their information needs. While BI creates efficiency, if the previous process of information access and delivery was manually intensive, cumbersome or ineffective, it provides no value if no one is using it. By applying IT governance principles, information requirements would be clearly defined by the business and organizational change management activities would be deployed to ensure that the BI solution was used. To deliver better business outcomes, embedding BI into processes to help identify cross- or up-sell opportunities to increase revenue or to streamline product movement through supply chain analytics enhances the ROI. Simply put, delivering better business outcomes is the usage or application of technology in a manner that creates efficiencies and growth opportunities for the organization.
Enterprise Data Warehousing
Another aspect of the next evolutionary step of BI is the consolidation of reporting environments that have proliferated in many organizations over the years into an enterprise data warehouse. In the past, the typical response to satisfying urgent information needs was to create a reporting solution such as a data warehouse, data mart, operational data store, multidimensional cubes, flat files or spreadsheets. In most cases, these reporting initiatives were "one-off" solutions that multiplied, thereby creating isolated and disparate reporting environments that are costly to maintain, resource-intensive, hinder enterprise analysis and cause reporting discrepancies. This phenomenon appears most often with large multinational organizations, companies that have acquired other organizations as part of their growth strategy or organizations that did not embrace the Corporate Information Factory or dimensional warehousing architecture as their sole approach to their BI information environment.
Using an example that typifies many organizations' situations, HP had more than 700 reporting solutions throughout the company that were either created over many years or were folded in as part of an acquisition. In order to realize operational efficiency while satisfying the information needs for the whole organization, enterprise data warehousing is now being embraced at HP. With enterprise data warehousing, all of the legacy reporting solutions are being consolidated over time into a more efficient and comprehensive information environment. Through the leadership of HP's CIO, Randy Mott, the entire legacy reporting solutions are being consolidated into an enterprise data warehouse. The expected benefits are projected to be significant from a financial and an operational perspective, which will lead to better information in a timelier manner to foster better business outcomes.
The appreciation of BI, the maturing nature of the technology and the desire to have significant positive impact on the successes of organizations have influenced the next evolutionary step of BI.
Leading the way are management teams using BI as a competitive advantage by optimizing their operations, identifying new business opportunities and rethinking their business models. Not every organization is taking this evolutionary next step of BI, which is creating a greater advantage for those that do.
- BusinessWeek Research Services & Knightsbridge Solutions. "Getting Smart About BI: Best Practices Deliver Real Value." www.knightsbridge.com.
- Peter Weill & Jeanne Ross. IT Governance: How Top Performers Manage IT Decision Rights for Superior Results. Boston: Harvard Business School Press, June 2004.
- Anthony. Politano. Chief Performance Officer: Measuring What Matters, Managing What Can Be Measured. iUniverse, September 2003.
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