Over the past few years the number of businesses implementing business intelligence (BI) projects has grown. Yet despite this, analyst Gartner predicts that by 2012 more than 35% of the top 5,000 global companies will fail to make insightful decisions about significant changes in their business and markets, because they lack the right information, processes and tools. In today's competitive environment, this can mean the difference between success and failure.
The challenge for companies looking to implement BI with standalone systems, and those that will add it onto an existing ERP system, is how can the data that is gathered be used effectively? If they fail to consider this it is easy for organisations to find themselves investing in a BI product and having nothing to show for it, and certainly no way to demonstrate value to the business.
Common BI mistakes
There are several mistakes that businesses make when implementing a BI project. Most organisations fall into the trap of having a loose BI reporting strategy, but no idea of what processes to use and why. This can leave the project floundering because there are no guidelines about what data to gather and how it will be used.
Companies also underestimate the time and effort required to implement BI properly, or the impact it will have on existing processes. Underestimating the business resources needed, how long it will take, and failing to plan how the organisation can continue "business as usual" operations during the project, can all cause serious productivity strains.
If the project runs over time and over budget, the first item to be cut is usually training for users. This is a serious error. Users directly experience the impact on existing processes and will need to be trained in the new processes. Without training to demonstrate why new processes are necessary and how they work, staff will be reluctant to use them resulting, in lower productivity, confusion and errors. Consequently, user buy-in is as important as senior level support, and without it many organisations fail to deliver demonstrable value from BI.
Finally, most businesses fail to undertake post-project analysis to see what value they are achieving from the implementation. Once a project is completed organisations are often gathering data but don't know whether they are using it correctly. As a result, there is no quantitative or qualitative proof to justify the expense of the project. In addition, there is no way of creating budgets, predicting expenses or trends, or creating sound forecasts which would allow them to take calculated risks to increase profitability.
How should BI tools be used?
While mistakes are easy to make, adopting a few good practices can turn BI implementations into successful, value-creating projects. One of the most important tips is not to treat it as a standalone system for just gathering data - it should be integrated into business processes, ideally throughout the entire organisation. However, support is essential to do this. Many firms mistakenly leave the championing of BI to the IT department, when IT should only be in charge of supporting the processes. Board sponsorship is crucial, as is having as many senior stakeholders involved as possible. For example, the chief financial officer and chief executive officer should be involved, as well as stakeholders in each business unit such as HR, procurement and IT.
What are the benefits of BI when done properly?
Once BI has board-level support and is integrated into the organisation's business processes, many benefits result. For instance, BI can extract data that was previously held in silos which can be used to establish where the organisation is and forecast where it wants to be. Planning and budgeting can then help the company move towards achieving this goal, and BI can provide feedback information to help evaluate how successful the decision-making has been.
Furthermore, BI can provide this data to all levels of the business in the detail required for decision-making in different areas. For instance, BI can provide key performance indicators that allow high-level decision-makers to see at a glace how the company is performing. Rather than providing reams of detailed information, BI can be tailored to show upward and downward trends, which enable decisive action.
On the other hand, BI can provide middle managers with high-level information, which can be drilled down into to generate reports. BI can give managers the data they need to see daily, weekly or monthly trends such as sales figures. Managers who take care of daily operations, meanwhile, can gain value from BI data that is no more than a day or an hour old, or even less. This can be used to set daily goals and make decisions about allocating resources for the next week, day or even the next shift.
Pulling it all together
After spending significant funds on a business intelligence system, business units and IT need to work together to determine exactly what information is required and when they need it. Organisations should carefully plan their strategy to ensure maximum value from BI.
When done correctly, BI can arm organisations with the critical information they need to become more agile and flexible, allowing them to respond faster to changing markets and giving them an edge over the competition.
Paul Aitkenhead is chairman of the BI Special Interest Group at the SAP UK & Ireland User Group