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After talking about Topic Overview, Reasons to implement and Value Drivers, it is time for „Challenges” in Business Intelligence. As it appears from Gleanster`s report, departments and divisions need to be convinced of the benefits of sharing information for analysis, rather than hoarding it for other advantage. „Data quality problems must be overcome before managers will have confidence in the analysis produced. And to produce better business decisions, the analysis must be focused on core business problems”, it is shown in the report. And, according to „BI Best Practices Brenchmark Report”, none of this is easy.

This is the Top 9 of challenging aspects:

1. Breaking down data / departmental silos.

- this was the top challenge cited by all companies surveyed.

- business units that have been accustomed to managing their own data may be reluctant to share it, even when that sharing is essential at the corporate level. Consolidating data from many databases can be a challenge, but it’s also one of the things BI tools are built for.

2. Integrating with CRM and other systems.

- much of the data that’ll be consumed by the BI system is likely to be found in packaged enterprise applications (ERP, CRM).

- an overarching BI strategy needs to address these integrated reporting tools and how they can be coordinated with the broader platform.

3. Achieving acceptable data quality.

- data quality needs to be high enough that all the most important broad measures of business performance are reflected in the BI system.

- once users of the system learn to doubt the accuracy of the information contained within it, winning back their trust will be extremely challenging.

4. Generating actionable insights.

- the data needs to be meaningful and suggest an appropriate course of action.

- this means working with different constituencies to understand what data they find most useful and the ways that they commonly act upon it.

5. Tracking and measuring success.

- measuring the success of a BI initiative requires imagination, but it’s essential to the program’s success.

- track progress in every area from data quality to user satisfaction with the answers they are getting.

6. Getting managers to use data over “gut instinct” decisions.

- managers who have been successful in the absence of good data may have trouble adjusting to its easy availability.

- unless data-driven decision making is integral to the corporate culture, many managers will continue to go with their gut instincts, even when the data says those instincts are wrong.

7. Securing the right organizational resources.

- to provide proper training or build a BI-competency center may mean hiring employees or consultants.

8. Deploying the right enabling technologies.

- besides securing the budget for purchases, determine which technologies will be most effective.

- balance risks versus rewards.

9. Making the business case in terms of ROI.

- Business Intelligence by itself does not improve business efficiency or profitability.

- anyway, selling or expanding a BI initiative requires a convincing argument, one that ultimately will translate into financial rewards.

According to the „BI Best Practices Benchmark Report”, „investments in BI pay off the most for organizations that are serious about doing it right. They take the time needed to fight the political and technical battles needed to ensure the information they analyze is complete. They root out errors to make sure the analysis the tools produce is trustworthy. And most of all, they create custom views of the data for key constituencies, so that leaders from the CEO and CFO on down have immediate access to information on the trends, opportunities, and threats they must address for better performance”.

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BI implementations are driven by a variety of immediate business needs and long-range strategic goals. Organizations in pursuit of operational excellence are often motivated to promote data-driven decision making. According to BI Gleansight study, „just as often, the move to establish or enhance the BI platform is driven by a recognition of gaps in current analytic capabilities, where information that should be readily available is too hard to obtain”.

Analyzing all 273 responses received, Gleanster achieved a top 9 of the most important reasons why a company should use BI tools.

1. Make smarter business decisions.

According to Gleanster`s study, BI provides an organization with the opportunity to run its business more intelligently:

- by making the facts of the business readily available, BI eliminates guesswork.

- by making the meaning of facts and statistical trends easier to understand through techniques like visualization, BI promotes better interpretation of information.

2. Identify new revenue / growth opportunities.

Top Performers put a premium on this use of BI, finding answers to questions like:

- which products and categories are hottest now, based on total revenues or growth?

- what do customer service calls tell about customer frustrations or new and improved products and services?

3. Reduce operational costs and waste.

When it’s time to examine the budget, all companies need to know where the money is going.

- while some of that information is available in standard financial reports, BI proves its worth by allowing a drill down from high-level summaries to more detailed information.

- at a minimum, one can identify the areas with the greatest cost growth to be scrutinized and the managers whose cost control discipline deserves to be rewarded.

4. Make timely course corrections.

- by speeding the collection and analysis of key metrics, BI gives managers the information they need to make adjustments throughout the month.

5. Identify competitive threats and risks.

- by gathering the right information and presenting it in the right way to the right people, a company can expect to have an early warning system for dangerous trends.

6. Increase customer profitability.

More than three out of four Top Performers set this as a goal for their BI initiatives. Why? Because:

- one of the best applications of BI is in the context of customer analytics, specifically learning who are the most profitable customers and why.

- BI can help with the process of segmenting customers according to common characteristics and track whether changes in strategy or tactics are having the desired effect on customer profitability.

7. Improve employee productivity.

- BI systems make important and commonly requested information readily available, improving the productivity of managers and workers alike.

- BI can power a performance management dashboard that tracks employee productivity in general.

8. Reduce time to market of new products and services.

- by using BI to systematically track operational efficiency and tie it to a program of continuous improvement, you should be able to impact operational metrics like time to market.

According to „BI Best Practices Benchmark Report”, this was one of the areas where they saw a gap between Top Performers and Everyone Else, with the leading companies giving a 10% higher ranking to reducing time to market as a reason for implementing BI.

9. Measure employee and departmental performance.

- BI provides a consistent and systematic way to measure the performance of companies, departments and people.

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As promised, I will begin to present the main elements of a successful Business Intelligence strategy, as its appear in „BI Best Practices Benchmark Report”. So...

 

Part 1: Topic Overview

As most respondents involved in Gleanster`s study said, the most successful organizations today don’t simply gather and record data, they put it to work. Why that? Because data helps them optimize everything: sales, margin, inventory and supply chains, identifies new product and market opportunities.

What BI Gleansight study („BI Best Practices Benchmark Report”) priority reveals is the fact that „BI initiatives stand out for their potential to improve corporate performance through better use of the data gathering by disparate systems”. And, furthermore, that „most BI vendors sell vertical applications that build on top of their base platform, providing a customizable starter set of analytics and dashboards for a given industry.”

What else shows this study? Well, take them in order:

1. Compared with many enterprise IT projects, BI requires relatively modest investments.

2. The foundational capabilities of BI tools are more basic, such as the ability to pull data on the fly from operational systems or analyze the contents of a more neatly organized data warehouse or data mart.

3. The every BI platform goal is to achieve „one version of the truth”, by gathering and analyzing data consistently and creating standard definitions for common measures of corporate performance.

4. BI practitioners seek to reconcile different data models and definitions in topical or divisional data marts and company-wide data warehouses.

5. BI practitioners promote standardization of the use of query tools and integration protocols wherever possible, and promote those as criteria for selecting new applications.

Therefore, the majority of respondents, who as I have shown in the first material are SVP/VP, Director, Manager & Staff, concluded that „Business Intelligence is as much about management discipline as technology.”

As Business Intelligence Group member on LinkedIn, I found a very interesting „BI Best Practices Benchmark Report”, which takes a close look at the elements of a successful BI strategy, including the drivers and obstacles, as well as the metrics for tracking and measuring success. The report also goes into detail of some of the best examples of rapid ROI from BI projects and that they are associated with tactical implementations that emphasize immediate results over perfect system architecture, as long as it is easily accessible to the decision makers who need it.

So, according to the report, most organizations today have BI tools or at least some way of releasing reports. But only fewer have a true Business Intelligence strategy. On the other hand, some of the best examples of rapid ROI from BI projects are associated with tactical implementations that emphasize immediate results over a perfect system architecture. And no matter how great the analytic technology, a BI solution is only useful if it is easily accessible to the decision makers who need it. The Gleansight „BI Best Practices Benchmark Report” takes a close look at the elements of a successful BI strategy, including the drivers and obstacles, as well as the metrics for tracking and measuring success.

The report has seven parts (Topic Overview, Reasons to Implement, Value Drivers, Challenges, Performance Metrics, Success Story, Vendor Landscape), which I will try to present them separately, in a serial way meant to convince you that in 2011, BI solutions are no longer a fad but a necessity.

Survey Stats
The research findings featured in this Gleansight benchmark report are derived from the Q3 2010 Gleanster “Lead Nurturing” survey.
There are some statistics:
- Total survey responses: 273
- Qualified survey responses: 211
- Company size: Very Small (9%); Small (36%); Medium (23%); Large (24%); Very Large (8%)
- Geography: North America (65%); Europe (20%); Other (15%)
- Industries: Software and Hardware (31%); Financial Services (24%); Retail and Consumer Goods (15%); Other High Tech (19%); Other (11%)
- Job levels: C-level (6%); SVP/VP (14%); Director (31%); Manager & Staff (49%)
- Sample survey respondents: Director, IT, Hilton; Vice President, Wells Fargo; Manager, Operations, Comcast; Director, IT, Home Depot; Vice President, HP; Marketing Manager, Safeway; Director, Operations, General Motors; Manager, Cisco;

Any manager who decided to implement an ERP solution did this to improve his/her business and save monies, earn more monies and more customers. Monies saved, monies earned and more customers equals return on investment. (ROI) There’s no other reason to invest in an ERP solution except for a future return on investment (ROI).

An ERP has the ability to offer you great returns. But only if you use it properly. And at its entire capacity. Not using functionality is wasted money. According to statistics published on a LinkedIn ERP Group, more than 75% of companies purchase robust ERP solutions and only use sixty percent or less of the functionality. It’s like buying a large pizza and only eating half of it.

So when decide to make the step to implementing an ERP and you want to calculate ROI, you must absolutely take into account all these aspects:

- unexpectedly long implementation times due to unexpected roadblocks and training costs;

- factor in your business case if you are going to use just a part of ERP;

- the real training costs (if your employees aren’t well trained, they will not use all of the ERP functionality to its full potential);

- take all the time you need to explore all of your options and ERP solutions on the market.

As a friend of mine (salesman, of course!) always tells, „don’t sell yourself rapid”, by taking the first ERP solution that seems like it will work. Take the preparation and selection process seriously to ensure the longevity of the company.

Why is that after the successful deployment of state of the art ERP and Business Intelligence software folks in strategic areas of the company still struggle to make sense of the data?

The reason is pretty simple. Strategic Marketing is the headlights of the business; their job is to predict the future and exploit that prediction in a manner that increases market share, revenue and profitability. Their focus is mostly outside and in the future while ERP data is all about inside and in the past.

When companies populate their BI systems solely with internal data from the ERP, this only supports the back-office or day-to-day operation but it does not help folks in strategic functions. Marketing, sales or line of business management need a much wider perspective to impact the bottom line.

Marketing needs a 360 degree view of the market-business-profit reality. This includes both internal and external sources of data usually not found in the transaction system. They need to access external market intelligence to compare it with company performance metrics. This can be market and customer segmentation, updated customer and competitor merger and acquisition status, competitive opportunities, business and products under threat, market size, forecasts, etc.

In my experience, using Business Intelligence software to integrate internal and external data has always a positive change in the company’s culture, where instant access to strategic knowledge helps folks in charge of strategy to accurately answer complex business questions within minutes.

Marketing becomes an avid Business Intelligence user when the configuration of both data and BI software provides the key measures and dimensions, in a user-intuitive way, to monitor business direction against the company’s strategy. They can quickly find the root cause of problems and opportunities, with no intervention of IT or business analysts, and take immediate action faster than their competition.

by Bill Cabiro and Strat-Wise LLC

„Please visit their web site at www.strat-wise.com for additional articles and resources on the strategic use of Business Intelligence and Analytics”

A well organized strategic BI implementation transforms Marketing from Art to Science while unfolding an analytical competitive advantage that translates in bottom line impact. I found that Marketing deems BI indispensable when its deployment passes the Strategic IQ test.
I. Select ten questions you find most valuable to have answered in your organization.

II. Ask these questions independently to six people (marketing, sales, financial analyst, IT, accounting or business management) requesting confidentiality and a prompt response.

III. Keep track of the time it takes to obtain each answer.

IV. Compare the answers for quality and consistency between respondents.

Note that answering most of these questions should take a few minutes and the answers need to be consistent across the different respondents.

Sample Questions

1) Where are we more profitable: strategic customers, key customers, distributors, agents or dealers? Why? Is it due to pricing, volume or product mix?

2) What is our current market share in a particular business unit in Europe?

3) Are our differentiated brands more profitable than the commodity ones? Why?

4) Are our new products more profitable than the old ones? How much? Why?

5) Who are the top 5% of my customers that generate 50% of profits? Why?

6) Who are the customers and what are the products that drain our cash? Why?

7) How much of which product is Sales-rep X supposed to sell to each of his customers in September of next year? What will his profit margin be?

8) Why is profitability by customer / region / country / business / market segment or sales territory significantly down this month?

• Is this because we lost volume?
• Is it product mix?
• Too many price exceptions?
• Has raw material cost increased?
• Has manufacturing cost increased?
• Have freight / distribution expenses gone up?
• Combination of which factors?

9) Show me a comparative Profit & Loss (P&L) statement

• By region / country / state
• By market segment / sub-segment
• By sales representative / distributor / dealer
• By brand / SKU
• By product technology
• By customer location
• Differentiated products versus commodity products at our distributors

10) Who do our distributors, agents and dealers sell to?

• In what markets / segments / sub segments?
• What is their mark-up? / Profitability?
• What is their new versus old product ratio?

11) What does our opportunity pipeline look like?

12) Which pieces of business are under competitive threat? (By product, competitor and customer location, in units and dollars.)

13) What is each of our competitors’ current market share by segment?

Scores

• If you got less than 6 answers, they took longer than one day, or the answers are completely different; your BI deployment maybe supporting the back-office operation but it’s unlikely to drive profitable growth since most strategic decisions are based on raw data and intuition.

• If you got more than 5 answers within one hour with 50% of the analysts in agreement, you are in the right track but need to refine the process further to compete on analytics.

• If you got more than 8 answers within one hour and both analysts and casual BI users from different areas agree; your BI deployment has become a competitive advantage that allows the organization to perform strategic and competitive analysis on-the-fly while ensuring a single version of the truth.

How does your organization score?

by Bill Cabiro and Strat-Wise LLC

„Please visit their web site at www.strat-wise.com for additional articles and resources on the strategic use of Business Intelligence and Analytics”