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Business Intelligence Strategy

A Practical Guide for Achieving BI Excellence

MC Press Online, LLC

Defining Your Business Alignment Strategy

What strategic approach do top-performing, breakaway organizations share? According to the IBM Institute for Business Value study Breaking Away with Business Analytics and Optimization, it is the use of business intelligence and analytics. Using BI, analytics, and performance management eliminates information overload by making sense of the massive amount of information that is now available in the enterprise. In order to become a breakaway organization, companies need to establish both a vision about the strategic use of information and a plan to implement this vision.

We know that most organizations have an understanding of one or more of the basic elements of corporate business strategy. They typically define, at least on an annual basis, their top corporate objectives and business unit strategies. They analyze their markets, determine their direction, and create a plan to ensure that resources are available and stakeholders informed. However, it is apparent that most organizations do not sufficiently link these plans to daily operations or manage execution effectively. And while it is recognized that BI technologies can be an enabler to successful execution, many do not have a business alignment strategy that allows them to plan their strategies via data-driven metrics and BI or to map these corporate objectives in order to effectively monitor results to ensure objectives are achieved. This area is often either overlooked completely or implemented on an ad hoc basis versus as part of the basic success of the business strategy.

In fact, according to a study conducted by IBM in September2010, only 22 percent of organizations are successfully linking strategy to execution with BI and performance management. And we know that when companies fail in strategy execution, company results can suffer.

On the flip side, however, this means that roughly one in five companies is successful in its strategy execution. Such organizations can reap the benefits of overall performance improvements, gaining competitive advantage, finding new opportunities, and creating business impact that is aligned with their goals. They have enabled visibility into the information that matters and improved decision-making capabilities. With the ability to understand, anticipate, and shape outcomes through innovative technologies, these organizations can help to increase efficiencies and effectiveness throughout the key areas of the organization.

Our task in this chapter is to explore considerations and identify steps in developing an effective business alignment strategy for a strategic business intelligence initiative. It should map to corporate business strategy to enable successful execution, a critical first step in the strategic BI initiative. This includes the following:

1. Assessing Your Current Situation — Understanding the corporate strategy and identifying how your organization is currently managing its business strategy and monitoring and measuring outcomes

2. Developing Effective Strategies for Linking the Business Strategy to BI Initiatives — Examining strategies that are used today and determining how your organization can develop an effective business alignment strategy that improves outcomes and results

3. Involving Key Stakeholders and Priority Business Areas — Understanding how to determine, prioritize, and involve key stakeholders who can influence the business and execution strategies

4. Implementing Sound Solutions — Learning how proven practices can transform the effectiveness of the organization

An Introduction to Strategic Management Approaches

So how can strategy be managed to achieve the desired outcomes? Many different strategic management approaches may be in use within the organization.

Organizations use various methods today, and others have been used in the past. As examples, some of the highly common ones include, but are not limited to:

• Balanced Scorecard (BSC) — A strategic planning and management system that aligns business activities to the strategy of the organization. BSC offers the following:

[much greater than] Stresses the communication of the strategy — both internally and externally — and monitors the progress of the organization against strategic goals

[much greater than] Adds strategic non-financial performance measurements to the financial metrics to provide a more balanced view of organizational behavior

[much greater than] Applies metrics to the decision-making areas of finance, customer, internal process, and innovation BSC became popular in the 1990s and is used today by entrepreneurial firms as well as some government departments.

• Six Sigma (6S) — A very rigorous system of management tactics that seeks to improve the quality of process outputs by identifying and removing the causes of defects (errors) and minimizing variability in manufacturing and business processes. 6S does the following:

* Uses a set of quality management methods, including statistical methods

* Creates a special infrastructure of people within the organization (Black Belts, Green Belts, and so on) who are experts in these methods

* Follows a defined sequence of steps and has quantified targets; these targets can be financial (cost reduction or profit increase) or whatever is critical to the customer of that process (e.g., cycle time, safety, delivery)

Six Sigma was originally developed by Motorola in 1981 and was used first in manufacturing. Its roots are based heavily on Japanese quality improvement initiatives in the automotive industry. It focuses on quantifiable bottom-line results that are tied to strategy.

• Total Quality Management (TQM) — A management concept that is often associated with developing, deploying, and maintaining organizational systems required for various business processes. TQM achieves these goals:

* Reduces the errors produced during the manufacturing or service process

* Increases customer satisfaction

* Streamlines supply-chain management

* Modernizes equipment and ensures workers have the highest level of training

TQM is closely associated with Six Sigma and differs mainly in its approach. W. Edwards Deming is considered the founder of this management model, which preceded Six Sigma.

All of these are solid approaches to managing strategy, and chances are good that management decision-makers use more than one of these, in addition to other management tactics, to control and direct the organization. However, whichever one is used, some common themes arise from these approaches:

• Goals — The definition and selection of strategic objectives and/or goals

• Measurements — The consolidation of measurement information relevant to an organization's progress against these objectives and goals

• Indicators and Metrics — Key Performance Indicators (KPIs) and metrics defined with specific targets and attached to specific objectives

• Performance — The interaction and/or interventions made by managers in response to these indicators to apply corrective actions and improve future performance against the goals

Our business alignment strategy process isn't designed to replace any individual approach; rather, it's recommended to orchestrate activities within the organization so that these approaches work together seamlessly. In other words, our process is to help transform strategy definition into strategy execution using BI, analytics, and performance management.

What do we mean?

In a 2010 survey conducted by IBM, more than 50 percent of organizations indicated that there was a disconnect between what the business needs and what IT delivers. The alignment between these groups can often lead to the inability to work together toward the goals that matter in an organization.

What type of goals matter?

Put simply, the goals that matter most are the ones that are most closely linked to the top corporate objectives. Most often, they are also the goals that tie most directly to revenue and expense management.

Therefore, the key to executing the strategy is to a) communicate the strategy across the organization and then b) act on new directions identified by the strategy. This can be done using the tactical tools and measurements implemented within the key decision areas to provide visibility and the ability to anticipate and drive future outcomes.

Assessing Your Current Situation

How closely is your organization connecting strategy to execution? What are your company's top objectives? How are they currently executed? How are you measuring and monitoring whether you are on or off track?

As we assess our current environments, it's often easy to see where an organization is aligning business strategies to a BI initiative.

However, as our organizations have grown, separate silos of information have evolved over years or generations. Some of these silos may be viewed as proprietary within an individual department or subsidiary. Some may have been created by processes that are invisible to those outside that area of responsibility or may be based on processes that are no longer current or common.

In order to create a comprehensive business alignment strategy for a strategic BI initiative, collaborative teams need to make progress in revealing these information sources and strategically managing that information to create insight that produces high-value results. The high-value areas important to the business alignment strategy need to be harnessed, and the political cultures representing those organizational entities need to be brought together in a collective to produce results as cross-functional teams rather than individual groups.

The outcomes of a business alignment strategy for business intelligence — the business goals we are we trying to achieve — will help define how to get there and produce better collaboration across teams to work together to achieve those results. Without a clear vision of the connection to strategy, operating in silos and within communities or cultures is a natural instinct. Though there might be substantial effort and complexities, with good vision that is tied to the practicalities of a given business, a strategy can be created that moves the company from the tactical use of information to a focused organization that uses the information strategically in everyday processes.

Where Do We Start?

If your organization is like many, you likely already have a number of BI initiatives taking place — some successful and many that are producing less value. The key to transforming these multiple projects into a high-value strategic initiative is to assess which ones are successful, why they are successful, and how they connect to priority objectives. You can then use this information to create a business alignment strategy for BI and analytics that will define a roadmap of high-value endeavors linked to business objectives that produce valuable outcomes in a series of small successes.

Many of us remember the 1997 book entitled The Multidimensional Manager (Richard Connelly, Robin McNeill, and Roland Mosimann, Cognos, Inc., 1997). It examined the partnership between decision-makers in companies worldwide and the people who provide them with better information using BI to drive better decisions. One of its key insights was that, as the complexity of businesses has grown, the majority of successful decision-makers concentrate their focus on a relatively small number of sweet spots of information that flow through the corporation.

If we take the advice of the authors in The Performance Manager, we can take this concept and follow those sweet spots in our effort to create a solid business alignment strategy. In other words, we can use the information trail to drill into the organization and investigate its core decision-making areas, which are typically these:

• Finance

• Marketing

• Sales

• Customer Service

• Product Development

• Operations

• Human Resources

• Information Technology

We know that we will, of necessity, be required to analyze the data, systems, reports, processes, and functions of these areas. Based on this information, we will be required to develop metrics and analytics, rate the effectiveness of the information to drive execution of the business strategy, and evolve our metrics to become more effective drivers of strategy execution. But who should be involved in this rocess?

This overall process will be much larger than any single individual because it impacts every area of the organization. This is not merely an IT project, nor simply a BI project. And it is not just a business unit project. It touches every key decision area in the organization. So identifying the stakeholders is a key element of success. These are the people in the organization who have an interest in ensuring that strategy moves smoothly to execution. And each of these people will have a role to play.

In other words, we need to assemble a team of key representatives from the following areas:

• Executive Involvement — The executive team representatives who will champion the initiative, help define the business alignment strategy through prioritization, and create the performance management culture

• Business Involvement — The line-of-business representatives or subject matter experts who will define the business processes and metrics that are to be tied to corporate strategy and support and champion the management and execution

• BI Team Involvement — The BI team representatives who will innovate and define how different business metrics can be applied with data, systems, and processes and help to create successful execution within a BI environment

• IT Team Involvement — The various IT representatives who will ensure that all technologies are integrated and interconnected. They will apply technology to enable the business strategy — from information integration to database administration, security, and infrastructure

These representatives will act as the key leaders for the various areas within the organization that hold a stake in the outcome of the business alignment strategy. They must also be key players in helping to establish credibility for the overall team within their individual areas. It's a two-way street: they bring the knowledge of their decision-making culture from within their areas, but they must also communicate back — and champion — the vision of the business alignment strategy as it is formulated by the team. And working in partnership together, they can define the roadmap of initiatives that can be executed effectively through people, process, and technology to produce business impact.

Mapping Corporate Objectives to Bottom-Up Needs: Top-Down vs. Bottom-Up

All of us have experienced the difficulty of mapping the diverse operational needs of the company's managers and departments to the requirements and strategic goals of the larger organization. For many organizations, the conflicts between top-down (strategic) and bottom-up (tactical) approaches have sometimes become battlegrounds between business groups. And this difficulty manifests itself in the business alignment strategy: how do you prioritize these initiatives when an abundance of bottom-up tactical approaches exist in addition to the top-down strategy? Should we focus on individual business problems and roll solutions upward to a corporate -wide strategy? Or should we direct the strategy from the top, where the executive goals for the entire organization are more clearly understood? Understanding the pros and cons of both modalities will help us craft the best business alignment strategy for the organization.

The Bottom-Up Approach

When an individual decision area identifies a business problem, the first response is to implement a business solution that helps to solve the immediate goals of that entity. The solution may touch multiple departments or reach across to other decision areas. An example of this might be to provide a reporting or analytical tool that is easy to implement or to apply a legacy solution that has been customized to meet the specific needs of the decision-making area.

Many organizations may also approach business intelligence from a sequential technology perspective. A reporting system may be implemented on a silo of data, and one by one, the IT team may add additional data repositories from various business areas. Over time, there is the accomplishment of having a reporting system on a number of data sets, but it lacks a solid business alignment strategy that understands the outcomes and that links to top business objectives on what it is being used for. The initial reason, pain, or business need was not articulated, and when members of a business unit use the system, some of the information they need is not available or the information cannot be trusted. Little value might be recognized from the initiative.

There are pros and cons in approaching your business alignment strategy in this manner.

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Excerpted from Business Intelligence Strategy by John Boyer, Bill Frank, Brian Green, Tracy Harris, Kay Van De Vanter. Copyright © 2010 IBM Corporation. Excerpted by permission of MC Press Online, LLC.
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