Key Performance Indicators to Evaluate the Success of Business Intelligence - Literature review Example

Topic: How should a company measure the success of its business intelligence Gone are the days when successful businesses were recognised merely on the basis of the profits earned or the dividend declared to the shareholders. In today's competitive global business scenario, information is supreme. Any business house that has had a record of windfall profits and success knows how and where its competitors stand. With business, howsoever small or big going digital, information is accessible at the click of a button: information that could be intelligently used to further one's own interests or glean vital facts that could give the competitors a run for their money. Howard Dresner, a Research Fellow at Gartner Group in 1989, established the term "Business Intelligence", to describe a set of concepts and methods to improve business decision-making by using fact-based support systems. http://www.heesenonline.de/BI.htm In "Business Intelligence: The Savvy Manager's Guide" David Loshin describes the basic architectural components of a business intelligence environment, ranging from traditional topics such as business process modeling, data modeling, and more modern topics such as business rule systems, data profiling, information compliance and data quality, data warehousing, and data mining. David Loshin has described Business Intelligence on the basis of Data Models, Data Standards. He has also extensively appreciated the use of XML as a framework that is gaining in popularity for developing data standards. While XML is not used to prescribe a standard; it is used to define standards for the exchange of information through conforming documents. Data values in an XML document are surrounded by tags (labels), that identify where the data content begins and ends. "To leverage business intelligence, business users need to understand the value of business intelligence and how it can help them. One of the more popular tables: promoting BI to increase adoption. It was simple, soft selling - business intelligence is value added and not obviously essential to many users. It requires a more proactive, promotional approach. Business intelligence also demands promotion because it is still relatively new as a technical innovation so few business users know all the myriad ways BI can be leveraged. To effectively promote business intelligence, you first need to apply some marketing concepts to your BI deployment. Fail to do this first and at best you will have zero impact and at worst come across as a glorified technocrat trying to justify your existence." Promoting Your Business Intelligence Initiative, Cindi Howson, 8th October 2008. http://www.b-eye-network.com/view/8656. As any marketing guru would confirm, the success of any business depends on marketing. Marketing as a concept has to keep in mind various factors and has to be managed in a planned and strategic manner. In "Promoting Your Business Intelligence Initiative", , 8th October 2008, accessed on 3rd Nov,2008, http://www.b-eye-network.com/view/8656. Cindi Howson, states the following: "Marketing is about focusing on what customers need so providers can build better products they'll actually use. It's the strategy that goes into the BI application before you begin touting it as your company's killer app." In common terms, business intelligence can be described as the sum total of factors, which help take major decisions in any business. These factors include customers, competitors, business partners, economic environment and internal operations. Customers are the key to any business' success. The entrepreneur must make it a point to keep the customer's preferences in mind while designing a product. Again, geographical and cultural factors need to be given due importance while designing a product for a certain market. Business intelligence can be used to align businesses and products according to customers' preferences. Business Intelligence is used to collect data from customers within the marketplace. Customer surveys and polls are tools to gauge the market trends and customer habits. It is also common to hire marketplace specialists who watch customer behavior in the marketplace and report back to the companies, customer response to stores, personnel and product and services that a business sells. This information can then be used by the business to appropriately align the business to maximize customer satisfaction. In today's fierily competitive market, each company is trying to poach on another's loyal customers. With purse strings tightening and a flood of products to choose from, customers are spoilt for choice and do not hesitate to shift loyalties to companies which offer goods at a discount or in promotional schemes. Thus, gathering information related to competitors' strategies and business plans also forms the backbone of market intelligence of a company. Business partners, like suppliers, manufactures etc. form the next important link in the chain of business intelligence. Partners should be in sync with each other and be able to anticipate market needs for the near term. Business intelligence also involves forecasting the economic environment, not only at a regional or local level, but also at a global level. While demand for a particular product can fall in the developed economies, it may grow in a developing economy. Thus, enterprises must learn to gather, analyze and use data to their benefit. There are popular methods and indicators to measure the success or performance of a business. Logically speaking, a company can measure the success of its business intelligence by measuring the market share it has captured during a given period. Key performance indicators can be used to measure the success of business intelligence. Some of the popular ways to create Key Performance Indicators are through Goal Alignment Queries, Baseline Queries and Metrics related Queries. Key performance indicators (KPIs) are measures by which you can chart your company's progress and deficiencies. It is important to choose the indicators that can improvise for the present and plan for the future. Communication between departments is essential in choosing which measures to consider and analyze. Data integration and oversight are critical to a KPI program. Fred Bayles in "How to determine the right KPIs for your business" 12 July 2006, accessed on 3rd November,08, (http://www.microsoft.com/uk/business/businessvalue/businesskpis.mspx) discusses the various points to be considered while attempting to measure the success of business intelligence. Just as analyzing the objectives of the business and aligning it according to these objectives is crucial for a business, identifying the right Key Performance Indicators is equally important. Setting up of wrong Key Performance Indicators can give a false start to the business and make the management over-confident of the results. While defining a KPI, all risks and vagaries must be considered or else, a numerical figure in terms of sales will hold no meaning. If the sales department doesn't know what the research department is working on, the whole effort of deploying business intelligence is futile. There must be coordination and information sharing among different departments to make the whole effort an integrated and successful one. Cindi Howson is of the opinion that "Gut-feel decision making" may be one of BI's biggest competitors. She also feels too are renegade spreadmarts, information hoarders and even the source systems themselves. Cindi feels that applying management principles and carrying out a SWOT analysis can be an effective tool in discovering the BI solution's strengths as well as identifying low cost opportunities for improvement. Another hurdle in effectively achieving the objectives of business intelligence could be the quality of data and frequency at which it is uploaded. In today's fast paced world, data released a few days back becomes obsolete. Thus, data that is collected and analyzed more frequently, even on a daily basis may be more effective in bringing about effective changes in the business model. Howson feels that custom-coded reports against the ERP system expanding, departments buying their own BI tools and writing their own extracts are the potential threats faced by the whole process of implementing decisions with respect to business intelligence. There might also be a gap between the perceptions of the implementers and the real user. While the IT professionals might be stuck about quality issues of the data warehouse, real users might be satisfied with average quality data supplied at weekly intervals. Another hindrance to the successful implementation of business intelligence might be the hesitation of IT professionals to the introduction of the product in different media. BI teams are generally reluctant to use a variety of media to promote a product/service. The logic in using a variety of media is to get the message across as effectively as possible. When the same information is fed to the consumer over and over again, its benefits sink in. Webinars, roadshows, newsletters, training classes, brown bag lunches, Internal user conferences and regular staff meetings are ways to ensure the success of the BI. Another innovative approach suggested by Howson is the elevator pitch, where a BI team member gets a chance to speak to a prospective customer for almost a minute. Howson suggest that this time could be used to put across the process of BI. Thus, it is upto individual enterprises to successfully gather market information, suitably classify and analyze it and identify key areas where improvement can be done and business intelligence can be successfully deployed and made use of. References 1. http://www.heesenonline.de/BI.htm 2. Loshin, David Business Intelligence The Savvy Manager's Guide 3. Howson, Cindi Promoting Your Business Intelligence Initiative, , 8th October 2008. http://www.b-eye-network.com/view/8656. 4. http://www.tech-faq.com/business-intelligence.shtml 5. http://www.microsoft.com/uk/business/businessvalue/businesskpis.mspx) Read More