Saturday, January 3, 2009

Value Generation With Business Intelligence #1

Value Generation with Business Intelligence

Part 1: Why Value Matters


A lot is being discussed here on SDN and elsewhere about the technical challenges and possibilities around Business Intelligence. Another main discussion point, however, is how to turn BI from a cost driver into a value generator - and make it being perceived as such.

The tricky part, as always, is the "how": What do I need to think about so that "my" Business Intelligence delivers added value to the company? In this and the following blogs I would like describe how I see this "how".

Another question is: Why would the "normal" BI project team member care about value generation? Is he or she able to influence it? Or may he or she even be impacted by it? This is another aspect I would like to share a few thoughts about.

This is the first part of a short series of blogs about value generation with Business Intelligence:

  • 1. Why value matters
  • 2. The role of a sound BI strategy
  • 3. Elements of a successful BI strategy
  • 4. Bridging the gap: How a BI strategy solves technical issues

What are we talking about?

"Business Intelligence" is a frequently used term. You will likely find dozens of different definitions for them, all of which will be good and correct in their own way and context. For what I am trying to do here, let me use the following definition:

Business Intelligence is the entirety of all applications but also people, processes, standards and methods that make sure that the right information gets to the right place at the right time.

This is of course a very wide definition. However, I think there are a few very interesting elements in it:

  • BI is not a single tool. Neither is it a single project or implementation. It is rather an ongoing "support process" (in lack of a better word) for the business that requires the right people, guidelines, organization - and of course also tools. However, let's keep in mind that the tools are the means of BI, not its purpose.
  • That means at the same time that BI is not equal to a single tool or project. Business Intelligence will not be "implemented" with a single project or tool. It may be initiated by it, but we cannot ignore the question around what comes after that.

To sum it up: I think that Business Intelligence will only be able to give me added value when I look at it from a higher level than mere technical implementations or tools. When I am looking for business value, I will never find it in some piece of technology. I will only find it in the strategic objectives of the business:

To generate business value with Business Intelligence, I need to make BI help my company fulfil its strategic business objectives.

And to enable BI to do that, I need to provide a wide framework of prerequisites so that my BI projects run smoothly, that my BI systems run smoothly and that my reports deliver the right information. That framework will only partly consist of technology but also of standards, methods, people etc.

This is all still too theoretical? It probably is, yes. But I will shed more light on all this in the next two blogs that will focus more on the BI strategy. For now, let me spend some more time on writing about why the business value of BI is important.

Why should I care?

Does this sound familiar to you: "Gee, I have put that much hard work into this BI solution - why does hardly anyone want to use it? Why does everybody complain?" Well, it's what I wondered sometimes. Then I learned to look at it from a different angle: Do you think that anyone would seriously complain about BI if they felt that it gave added value to them, or the company as a whole?

I think that is why it is important to care about the business value of BI. The perception of business value is closely linked to user acceptance - and therefore user satisfaction. Of course you could say all this as well about IT in general. But it is definitely also true for BI - and that is easily forgotten. It is easily forgotten because BI can be a technically challenging area. But in the end I see it like this: happy business people mean happy BI people! That is one reason why you should care.

A second aspect: As soon as management sees BI as a value driver it will assign appropriate funds (and attention) to it. In the end, why should a company spend any money on BI if it feels that it destroys value rather than generate it? My experience is that many of the bothersome budget discussions in the area of BI become a lot easier as soon as people talk about value rather than costs. And again - that helps with the overall happiness of the average BI worker...

Which brings me to a third aspect: Many of the usual misunderstandings and mutual frustration between business and IT are based simply on language. I think that this is especially true for BI thanks to its technical complexity - even more so when a data warehouse is involved. But business users want something very non-technical. My experience is that talking about business terms - decision making, business processes and of course business value - helps bridging the gap and simplifies the start into a good cooperation. Technology will always be a critical topic for BI - but it usually is not a good one to start with. I think that sometimes it helps remembering that ‘BI' starts with ‘Business'.

I just recently heard an interesting BI case where a company spent a lot of money on new information gathering technology. But they did not spend it because someone thought it might be cool or fancy. The company had recognized that they would be able to improve their profitability significantly if only they had certain information. To get the information they had to invest all that money. In the end, the investment paid off after only 18 months! These cases show me that

  • It is possible to build business cases specifically for BI and
  • With the right business case, it is possible to get proper BI budgets.
That may be a good way to finish this first blog about value generation with BI. Thanks for reading this far! I hope I managed to get some of your intention so that you will also look through the next blog of the series. That one will look closer at the role that a company's BI strategy plays for value generation.

1 comment:

  1. Its all matters while considering bi implementation, the value generation it can do towards the respective business. The reports or BI dashboards tell only what they are told to tell, its just us who decides what dashboards have to tell which can help towards the business. So deciding the KPIs will be critical.