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19/01/2010
The Next Evolutionary Step
The Next Evolutionary Step
Information Management Magazine, August 2007
Jonathan Wu
It has become apparent that the field of business intelligence (BI) is moving to a new level. At
this next evolutionary stage, we observe organizations achieving greater optimization of
resources and better business outcomes. We also see a significant increase in the
awareness and understanding of BI at the executive and board levels of organizations. With
the pervasive understanding that accurate, timely and relevant information leads to informed
decision-making and better business outcomes, these executives and board members are
changing the manner in which BI is deployed and used.
What are some causes of this progression? While numerous factors play a role in the
successful deployment of BI so that business value is achieved, three significant
characteristics associated with the momentum behind BI are business leadership, IT
governance and enterprise data warehousing. Let's explore them.
Business Leadership
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In the early years of BI, initiatives were technology driven. BI solutions were developed by IT
with the hope that business users would find it helpful - similar to the Field of Dreams
concept, "If you build it, they will come." Unfortunately, this approach yielded low attendance
and acceptance. Learning from those mistakes and changing approaches to include greater
business representation on BI initiatives soon followed. Over the years, BI success has been
widely professed. Most business executives have a good understanding of BI, which can be
attributed either to their own firsthand experience or a steady stream of compelling success
stories published in various business publications.
Business leaders understand the importance of information given the heightened awareness
of compliance with legislation such as the Sarbanes-Oxley Act or the Health Information
Portability and Accountability Act. In addition, managing an organization in today's business
environment requires business leaders to have a broad understanding of their organization's
performance while creating or identifying new ways to increase shareholder value. There is
great recognition that BI is the key to unlocking the value in the wealth of information that an
organization collects, processes and stores. From the BI research study conducted by
BusinessWeek Research Services and HP last year, the primary sponsorship group of BI
initiatives among organizations surveyed was found to be business executives 1 This
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initiatives among organizations surveyed was found to be business executives.1 This
movement of greater business involvement and sponsorship is helping to shape the new
direction of BI. Business leaders are influencing the vision of BI within their organizations
from a business analytics standpoint and beyond, such as how BI is to be used by
individuals at numerous levels.
With many BI initiatives now driven by the business, innovative uses of technology are
transforming organizations while challenging business models. Given that business leaders
want to know what can be done with the wealth of collected information and also seek to
improve operations by measuring activities to evaluate effectiveness and areas for
improvement, a variety of approaches can be used to optimize business results. One
financial services organization started by embedding BI into their process of evaluating the
revenue growth potential of products in a portfolio; it then determined the amount of total
investment to be made, prioritized the investments to achieve near-term and long-term
growth strategies and monitored the returns from those investments. In other cases, senior
management mandated the incorporation of analytics and selected measures into daily or
weekly status reports, thereby quantifying progress for all to be informed.
As an organization becomes information driven, greater awareness of its activities and
performance occurs with such consistency and accuracy that a continuous process of
operations evaluation and improvement naturally evolves. At this level of activity and mindset, executive-level positions such as director of corporate analytics or chief analytics officer
very well could be created, allowing organizations to fully reap the value of their information
more than most do today. Positions such as these require a thorough knowledge of the
business, extensive experience with key performance indicators and measures, and
expertise with BI.
Better Business Outcomes
The process of managing IT as a business function within an organization is the primary
theme of IT governance. According to Professor Peter Weill, a leading academic researcher
on IT governance at MIT's Sloan School of Management, companies with the most effective
IT governance systems enjoy 10 to 25 percent higher profitability.2 IT governance effectively
aligns business priorities, people, processes and technology in order to realize value from
the investment in IT. Understanding business needs and requirements for IT initiatives is
always the starting point. Ask questions such as: how will technology help to achieve the
business needs, and how will it drive better business outcomes? What are the resources
and financial needs required for the IT initiative, and what is the timing of those needs? What
is the anticipated and actual ROI? How does this initiative rank within the portfolio of
business and IT activities? What are the lessons learned from the IT initiative?
Business technology is the application of software to drive business activities and serve as
a catalyst for growth. It is a shift beyond the mind-set of IT delivering only on technology
service level agreements or IT managing technology for the sake of technology. With
business technology, IT management is focused on IT governance and measuring the overall
impact of technology on business outcomes. For example, organizations implement BI to
provide monitoring analysis and reporting capabilities to meet their information needs
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provide monitoring, analysis and reporting capabilities to meet their information needs.
While BI creates efficiency, if the previous process of information access and delivery was
manually intensive, cumbersome or ineffective, it provides no value if no one is using it. By
applying IT governance principles, information requirements would be clearly defined by the
business and organizational change management activities would be deployed to ensure
that the BI solution was used. To deliver better business outcomes, embedding BI into
processes to help identify cross- or up-sell opportunities to increase revenue or to
streamline product movement through supply chain analytics enhances the ROI. Simply put,
delivering better business outcomes is the usage or application of technology in a manner
that creates efficiencies and growth opportunities for the organization.
Enterprise Data Warehousing
Another aspect of the next evolutionary step of BI is the consolidation of reporting
environments that have proliferated in many organizations over the years into an enterprise
data warehouse. In the past, the typical response to satisfying urgent information needs was
to create a reporting solution such as a data warehouse, data mart, operational data store,
multidimensional cubes, flat files or spreadsheets. In most cases, these reporting initiatives
were "one-off" solutions that multiplied, thereby creating isolated and disparate reporting
environments that are costly to maintain, resource-intensive, hinder enterprise analysis and
cause reporting discrepancies. This phenomenon appears most often with large
multinational organizations, companies that have acquired other organizations as part of
their growth strategy or organizations that did not embrace the Corporate Information
Factory or dimensional warehousing architecture as their sole approach to their BI
information environment.
Using an example that typifies many organizations' situations, HP had more than 700
reporting solutions throughout the company that were either created over many years or
were folded in as part of an acquisition. In order to realize operational efficiency while
satisfying the information needs for the whole organization, enterprise data warehousing is
now being embraced at HP. With enterprise data warehousing, all of the legacy reporting
solutions are being consolidated over time into a more efficient and comprehensive
information environment. Through the leadership of HP's CIO, Randy Mott, the entire legacy
reporting solutions are being consolidated into an enterprise data warehouse. The expected
benefits are projected to be significant from a financial and an operational perspective,
which will lead to better information in a timelier manner to foster better business outcomes.
The appreciation of BI, the maturing nature of the technology and the desire to have
significant positive impact on the successes of organizations have influenced the next
evolutionary step of BI.
Leading the way are management teams using BI as a competitive advantage by optimizing
their operations, identifying new business opportunities and rethinking their business
models. Not every organization is taking this evolutionary next step of BI, which is creating a
greater advantage for those that do.
References:
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1. BusinessWeek Research Services & Knightsbridge Solutions. "Getting Smart About
BI: Best Practices Deliver Real Value." www.knightsbridge.com.
2. Peter Weill & Jeanne Ross. IT Governance: How Top Performers Manage IT
Decision Rights for Superior Results. Boston: Harvard Business School Press, June
2004.
Bibliography:
1. Anthony. Politano. Chief Performance Officer: Measuring What Matters, Managing
What Can Be Measured. iUniverse, September 2003.
Jonathan has over 20 years of experience designing, developing and implementing
information management solutions. In December 2007, he completed his employment
agreement with Hewlett-Packard and is now focused on mentoring start-up companies and
investing. While at HP, Jonathan was the Public Health Practice Area Leader within the
Information Management practice. In December 2006, HP acquired Knightsbridge
Solutions where Jonathan was a member of the executive management team and board
member. Prior to Knightsbridge, he was the chairman and co-founder of BASE Consulting
Group (acquired by Knightsbridge in 2003), an advisory business services manager at
Price Waterhouse, and a senior accountant at Ernst & Young. He is a Certified Public
Accountant in the State of California and a Certified Information Technology Professional.
Jonathan earned a degree in Business Administration from the University of California,
Berkeley. He can be reached at [email protected].
For more information on related topics, visit the following channels:
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DW Design, Methodology
Strategic Intelligence
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