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Putting the Business Back into BI

Although BI means “business intelligence,” it sometimes seems that the technology interests supersede those of the business. If your BI program gives more attention to dashboards, scorecards, OLAP, and data warehouses than to finance, R&D, marketing, operations, and customer support, then you likely need to put the business back into BI.

The sole purpose of business intelligence is to deliver information that makes a difference—substantial, bottom-line business impact that is achieved through increased revenue, reduced expense, and risks avoided. The challenge of BI lies in making the connection between these business goals and the information that is actually delivered. All too often, BI delivers the metrics that are available, obvious, and easy, and misses opportunities to deliver truly high-impact information.

Managing big-picture BI is a challenge that demands clear relationships between business impact and information services. This article proposes a framework to meet that challenge by intersecting concepts of business management, business measurement, and corporate governance. At a macro level, the framework looks at BI program management as a multi-dimensional discipline, as illustrated in Figure 1.

Figure 1. Managing “big-picture” BI.

The Business Management Dimension

Business intelligence is, first and foremost, about business. Yet all too frequently the basics of business don’t have a place in the overall structure of BI program management. Virtually every business has processes, functions, and organizations with responsibility for each of eight business management disciplines:

  • Strategy and planning, including business mission and goals, business strategy to achieve the goals, and the business processes, functions, and plans that carry out day-to-day actions to meet those goals. A high-value BI program must connect with business strategy and support planning processes.
  • Financial management with all of its many sub-functions—budgeting, cash management, credit and debt, revenue and expense, fixed assets, general ledger accounting, and more—is central to every business. Financial metrics are common in BI applications. Strong connection of financial measures with other business measures is more difficult, but a core element of real intelligence.
  • Research and development is crucial to the long-term viability of commercial enterprises. In a rapidly changing, technology-driven consumer marketplace, continuous market and technology research are essential to managing a competitive pipeline of new and exciting offerings to customers. R&D intelligence is a key component of a well-rounded BI program.
  • Marketing defines the market position of a company, its products, and its services. Knowledge of market segmentation, pricing, distribution channels, customer relationships, and campaign effectiveness are all significant factors of competitive positioning, and they are all information-dependent processes that benefit from BI solutions.
  • Sales, customer support, operations, and human resource management round out the eight dimensions of business management with the disciplines, processes, and functions that translate strategy and positioning into actions and business results. Each of these benefits from informed management, and each is a supplier of feedback data into a comprehensive BI system.

The Corporate Governance Dimension

The most effective BI solutions are corporate systems that integrate across the organizational, functional, and data boundaries of the enterprise. As with any enterprisewide resource, coordination is best achieved, and value is maximized, through governance. Seven elements of corporate governance have a role in big-picture BI:

  • Business organization defines the structure of business units, relationships among those units, and responsibility and accountability structures. Successful BI has cultural impacts that change the nature of responsibility and accountability, and frequently drive organizational change.
  • Business ethics regulate the behavioral culture of an organization. Increased availability of information through BI systems brings new considerations about privacy, security, and policies governing appropriate use of information.
  • Legal counsel is the counterpart to ethics—ethics provides a regulatory framework, but legal counsel provides enforcement and remedy structures.
  • Business policies and procedures are inevitably affected by BI. As metrics and measures impact organizations and decision processes, policies and procedures must change to keep pace.
  • Compliance, risk management, and audits complete the seven elements of corporate governance. Each is information-dependent, readily enabled through intelligence, and essential to sustained corporate success.

The Business Measurement Dimension

BI delivers business measures, which are the essence of dashboards and scorecards. But measures alone don’t assure success or value. This truth is effectively illustrated in a statement that I heard from Aaron Walz, business architect at the University of Illinois: “You can’t make a pig fat by weighing it.” This short quote makes two important points: Measures aren’t useful unless they are actionable; and they aren’t valuable unless they are acted upon. Moving from measures to value demands attention to six principles of business measurement:

  • Data is the raw material from which information is created. Every business measure is a data point from which higher-level measures and metrics are constructed. You can measure only where data is available and where measurement systems can be put into place.
  • Information is data in context. Measures alone have little meaning for decision-making processes. When translating measures (data) into metrics (information), be clear about the level of detail and the benchmark or threshold criteria against which the metric is evaluated for decision purposes.
  • Knowledge is a human thing that is unique to organizations and to individuals. Consider those to whom information is delivered, and how best to align information with knowledge in ways that enable informed decisions and drive continuous knowledge growth.
  • Actions, outcomes, and value complete the six principles of business measurement. Action means doing something. Weighing the pig suggests that a change of diet may be needed, but it is actually changing the pig’s diet that might make it fat. Outcomes are the results of action. When the pig gets fat, a desired outcome has been achieved. As well as providing input to decision processes, measures help to evaluate the effectiveness of the decisions made. Value is derived through the achievement of desired outcomes, completing the data-to-value chain.

Putting the Pieces Together

Intersecting the eight disciplines of business management, the seven elements of corporate governance, and the six principles of business measurement yields more than 300 perspectives to manage BI. Each point of intersection provides an opportunity to build strong connections—and the right connections—between business value and BI programs.

When examining the intersection of business management with corporate governance—financial management with compliance, for example—ask questions such as:

  • What dependencies exist here?
  • What decision processes need to be supported with information?
  • What information is needed here? And what information is created here?

When looking at the intersection of business management with business measurement, ask questions such as:

  • What are the related business strategies, and what information supports them?
  • What information tracks achievement of goals?
  • What information discovers opportunity?

At the intersection of corporate governance with business measurement, explore questions such as:

  • What information exposes risk?
  • How does information enable compliance?
  • How does information support business policies and procedures?

Systematic attention to business management and corporate governance first, followed by consideration of business measures, and finally the technology to deliver measures, will build BI systems that are truly business driven—putting the business back into business intelligence.

Dave Wells is director of education for TDWI.