Aspects of Business Intelligence Robert Mackinnon Analyst, IBRS .

Aspects of Business Intelligence

Robert MackinnonAnalyst, IBRS

www.ibrs.com.au

Outline

Context – the changing Business Intelligence (BI) landscape

Executive expectations of BI and their current frustrations with it

The utility and potential of BI technology Strategic and tactical considerations for

initiating and mobilising successful BI projects

We’re drowning in data…..

Volumes of structured and unstructured data are growing at extraordinary levels

Quantitative and qualitative research shows that senior (C-level) business executives are largely unmoved by many BI initiatives:

Projects take too long and cost too much Multi-source BI systems are a particularly vexing issue

Also, we find senior and middle-ranking IT executives are frustrated with gaining traction on BI initiatives

”A manager is responsible for the application and performance of knowledge.” - Peter F. Drucker

Meeting CEO expectations

IBM Global CEO Study 2006: 65% of CEOs expect to radically change their organisations over the next 2 years

They believe they have no alternative due to competition

There are three fundamental classes of business change:

Product/Service innovation Operations innovation Business Model innovation

Many organisations have already squeezed efficiency out of operations through ERP systems

”The world is changing very fast. Big will not beat small anymore. It will be the fast beating the

slow!” - Rupert Murdoch, Chairman/CEO, News

Corp

Business Model Innovation and BI implications

CEOs focusing nearly 30% of their innovative efforts on business model innovation

Organisations focusing on business model innovation experienced significantly better operating margin growth than their peers:

28% increase over their competitors in 5 years

CIOs will be called upon to help drive innovation

Source: The IBM Global CEO Study 2006

CEOs identified ‘insufficient access to information’ as one of the top 6 internal obstacles to innovation

Global Business & IT Priorities

Source: Gartner/Forbes 2006 CEO Survey

Business Intelligence issues permeate 2, and arguably 3, of the top 8 issues - in both positive and negative ways

Top CEO priorities1. Growth – especially in a slowing economic environment

2. Competition – ongoing pressure from lower cost regions

3. IT as an Enhancer – we want agility and information!

4. IT as an Inhibitor – it takes too long to achieve outcomes

5. Information Overload – information juggling frustrating

6. Mergers & Acquisitions

7. Regulation

8. Return on Assets

Better Decision Making In general, business decision-making depends on

finding the answers to three core questions: How are we doing? Why? What should we be doing?

Gut Feel or Fact Driven? “Managers spend 25% of their time searching for the

information necessary to their jobs, and when they do find it, it is often wrong” - Accenture

“75% of leading companies are incapable of creating a unified view of the customer” - Gartner

Reliable, timely information prioritised by strategy drives better decisions, in turn driving better

performance

Market consolidation – then there were five…..

2007 was the most turbulent of BI years yet as major vendors vied for market dominance: Pilot Software SAP who took over Business

Objects (and already had SAP BW and SAP Netweaver BI)

Hyperion Oracle Cognos IBM Microsoft SAS

This makes it especially challenging for the IT executive making long term plans whilst trying to deliver for ‘tomorrow’

What is Business Intelligence?

Business Intelligence takes large quantities of corporate data and transforms it into information that is meaningful to the business

Starting as a technology over 20 years ago with EIS (Executive Information Systems), BI has spawned a raft of technologies that, when well executed, can assist in taking the risk out of a company’s ability to execute

BI has been in existence since business began; now technology enables the concept

The Information Value Chain

Good BI strategies unlock the value generated from transactional data

Plan Market Make Sell etc.Processes

ApplicationsDataWhat did we do?Integrity <-> OperationsAll users

ReportingInformationHow well did we do it?Efficiency <-> ExecutionManagement

AnalyticsIntelligenceWhat should we be doing?Effectiveness <-> StrategyExecutives

5 Major BI danger signals

Build it and they will come Assemble organisational data &

the value will be self-evident Can be IT or business unit lead

Spreadsheets rule Multiple versions of the truth Can be an audit nightmare Questionable data integrity

Data ownership unclear or non-existent

IT is a steward, not the owner Who is responsible for data

quality?

With good reporting tools users can serve themselves

Assumes power users speak for the business users

Self-service is important but BI is more complex than this

Lack of executive engagement in BI initiatives

IT is held responsible for success

Executives and managers are not held accountable for the realisation of benefits

Results in no value and no ROI

Six Steps To BI Success Begin with the end in mind Know what BI technology is capable of Deliver incrementally Focus on the mantra: ‘A single version of

the truth’, to drive appropriate behaviours Data quality and integrity is paramount Strong leadership and change management

strategies are essential for success

Begin With The End In Mind

What is the problem the business wants to solve? Sharpen business performance? React more quickly to customer

spending patterns? Improve the integrity of financial

reporting and forecasts? Eradicate multiple spreadsheets?

Know what BI technology is capable of

Practice the art of the possible Understand what can and can’t be

done with the technology Seek out successful BI projects/users What will work best within the

business context? Allow senior executives to attend

demonstrations/site visits

The BI capability spectrum

BI is an umbrella term covering many capabilities

Deliver Incrementally Start small, grow strong

Our research indicates that many BI projects run over time and budget and fail to meet user expectations

Choose a small project that can deliver tangible benefits in just a few months (if possible)

Once stabilised and organisational confidence has grown, use a roadmap approach to articulate planned, long-term directions

A Single Version of The Truth

Seemingly a truism, unless this principle is upheld the project will fail Call upon this mantra to bring about required

organisational behavioural changes. A management mind-set such as: ‘…if it’s not in

the data warehouse, then the information has little or no credence…’ is required

Unless this is done, individually managed spreadsheets and Microsoft Access databases will burgeon and subvert the overall objective

Data quality and integrity is paramount

Data qualitywill be a problem: Consider the data equivalent of the ‘songlines’;

understand that they exist in most organisations and use them as a means of understanding data transformations, as a way of getting the data right

Caution: this can take considerable time

Where data is aggregated by the BI platform, a ‘drill down’ capability is essential to allow specialist users to fully comprehend the data

Leadership & Change Management

Establish a mandate from the top and create strong business involvement Sponsorship needs to be with a (very) senior

executive Consider using the system to link executive KPI

performance to incentive payments where applicable Caution: a new, fact-based BI performance regime

may trigger political resistance and challenge the very basis for the BI initiative

Be sensitive to and understand the impact of the new technology on those that have to use it e.g. Avoid SMS alert ‘noise’ from event/data triggers

Tactical approaches to BI success

If using multiple data sources, carry out a Data Quality Maturity Assessment (DQMA)

Use licences for analytical tools sparingly Consider establishing a Business

Intelligence Service Centre (BISC) at an early stage, not when you need it

Don’t commit to a BI technology choice, until you look carefully at vendor roadmaps

The Intelligent Business

"It is not the strongest of the species that survive, nor the most intelligent, but the

one most responsive to change.“- Charles Darwin

Robert Mackinnon, IBRS

www.ibrs.com.au