Implementing A Business
Intelligence Strategy
White Paper
!
A Practical Guide to Business Intelligence
Author: Timo Elliott. [email protected] Contributors: Stuart Rowland, Kelly Byrne, Brad Surak.
Audience: This paper is intended for information technology and business-line executives who wish to understand how best to implement an organization-wide business intelligence strategy within their organizations.
Contents
Executive Summary ... iiiiiiiii iii
Why Implement A Business Intelligence Strategy?
The Value of Business Intelligence...1
The Problem Today... 333 3 The Value of Business Intelligence Standardization ... 777 7 Implementing A Business Intelligence Strategy Step 1: Decide If You’re Ready...9
Step 2: Limit The Problem ... 11
Step 3: Build A Long-Term BI Strategy ... 15
Step 4: Sell The Strategy... 34
Conclusion ... 45
Executive Summary
Business Intelligence (BI) technology gives business users the ability to access, analyze, and share information within an organization. BI is becoming ever more strategic, as organizations try to unleash the value of the information stored in their operational systems. The average BI project has an average return on investment of over 430%1
, but the fragmented implementation of these projects has limited the ability of organizations to benefit from more global, cross-functional analysis of information.
BI tool standardization provides a strong return on investment, by reducing BI
purchase, implementation, and training costs. These benefits were detailed in a previous white paper, entitled “Business Intelligence Across The Organization — Why
Standardizing Business Intelligence Is Critical”2.
This white paper is a companion to the first, and aims to address the more practical aspects of implementing a BI standardization project. Based on research and the experiences of BI pioneers, it outlines the necessary steps to implement an effective BI strategy within your organization. An outline of these steps is summarized below.
! Decide If You’re Ready
The ability of your organization to implement a successful BI strategy depends on its “BI maturity”. If both IT and the business users believe in the benefits of BI, and have
previous experience of successful BI projects, then your organization may be ready for BI standardization. If there is inertia on either side, cultural change may first need to be driven at an executive level.
! Limit The Problem
As new BI projects proliferate, there are a number of steps that can quickly be implemented to ensure that the costs of BI fragmentation are not increasing.
• Do an audit of existing BI projects. Calculate the costs and benefits of each
existing BI project.
• Build a case for standardization. Based on this research, build a strong business
case for BI standardization in order to ensure adequate project resources.
• Develop unambiguous criteria. Define a standard set of non-overlapping tools
for the BI needs of the organization
1
2002 International Data Corporation study
2
• Start enforcing the standard. Implement a mechanism for ensuring the standard
tools are used, such as formal project reviews or budget incentives.
! Build A Long-Term Business Intelligence Strategy
To ensure the full benefit of BI, a long-term strategy is essential, with the following steps:
• Build trust between IT and business users. BI stands at the intersection of the
businesses and the IT organization. Many organizations have a history of mistrust that can prevent the successful implementation of any new BI strategy.
• Implement a BI center of excellence. The BI center of excellence is responsible
for developing and sharing BI best practice throughout the organization. Ideally, the center should be headed by a business person, and report to the core business departments in a collaborative environment with IT and the other departments. A program management office can be used as an intermediary step to the creation of a full center of excellence.
• Align BI initiatives around a framework. Map available BI functionality to the
technical, functional, organizational and business needs of the organization.
• Implement a BI methodology. Implement a formal BI implementation
methodology that details the roles of different groups (IT, business users, technical support, etc.), covering both the technical and user-oriented phases of the project lifecycles.
• Create an acquisition/deployment process. Ensure that financial incentives are
designed to promote business use of the center of excellence.
! Sell The Strategy
The biggest threat to BI standardization projects is the under-investment in proactive communications about the project goals and status.
• Monitor and communication the implementation plan. Constantly evangelize
of the benefits of BI and the standardization project.
• Avoid common BI project challenges. Anticipate potential problem and use
them as growth opportunities.
• Formal BI center reviews. Review the BI center on a regular basis to ensure that
it has been able to maintain the trust of the business organization, and that the processes and methodologies put in place still meet the needs of the end users.
The Value Of Business Intelligence
! What Is Business Intelligence?
Business Intelligence (BI) refers to the use of technology to collect and effectively use information to improve business effectiveness. An ideal BI system gives the employees, partners, and suppliers of an organization easy access to all the information they need to effectively carry out their roles, and the ability to analyze and easily share this
information with others. With its roots in early databases and “executive information systems,” BI has evolved to become a powerful set of technologies suitable for different types of users and information analysis needs.
! The Value Of Business Intelligence
Business intelligence is fast becoming a strategic differentiator for today’s leading organizations. According to Keith Gile of Giga: “BI has evolved during the past three years from a niche, departmentally focused solution to a strategic enterprise asset”1
In today’s tough economic environments, enterprises need to manage and reduce operational costs. The key benefit of BI is empowering executives and mid-level or line managers and employees with the information they need to drive operational
efficiencies. BI allows easy analysis of expenses across multiple information systems, to get a global overview of travel costs, for example, or to be able to make headcount reduction decisions based not only on salary overhead, but also on related expenses such as office space and communications.
BI helps target expenses while protecting the core business — for example, one UK supermarket chain was poised to cut some of their least profitable products from their shelves, only to find through BI analysis that the products in question were generally purchased by high-profit customers. By cutting these “non profitable” items, the store would have run the risk of driving its most valuable customer segment into the arms of competitor chains.
BI is also key to improving top line revenue growth. With increasing competition, the ability to understand and target particular customer segments with appropriate,
profitable products and services is a key differentiator. BI helps the drive towards higher service levels and increased revenues, by bringing to light the latest trends in customer behavior, determining which customer segments are the most profitable, and identifying cross-selling opportunities.
1
A BI strategy is a fundamental foundation for enterprise performance management (EPM), a process that connects goals, metrics, and people in order to drive improved management, analysis, and action across the organization. More information about EPM is available at www.businessobjects.com/solutions/epm.
! BI Leverages Your Existing Data Assets
The last decade has seen huge investments in operational information systems, but many organizations have yet to see many concrete benefits to these investments. According to a 1999 survey of large multinational companies conducted by META Group, organizations took on average of 23 months to implement an ERP system (such as SAP or Oracle Applications) and over a five-to-six-year period the average company incurred a net return on investment of negative $1.5 million.
The study stressed that the implementations eventually produced a return, but the real value of these systems was to establish a strong information foundation for the
organization. The problem today is that the information is often “locked away”, unavailable to business users.
Unleashing the value of ERP systems requires BI. According to a 2002 International Data Corporation study, the average return on a BI investment was greater than 430%. Since BI projects rely heavily on the underlying data infrastructure, it’s clear that much of this value comes from the previous ERP architecture investments.
Figures like these have meant that BI continues to be an area targeted for increased IT spending in the years to come.1
But success brings its own problems. In the next section we’ll take a closer look at the problems that have arisen as companies have started implementing BI throughout their organizations.
1
The Problem Today
BI is present in some shape or form in all of today’s large organizations. But in most cases, it has been implemented in an ad-hoc way, at a departmental level, without any overall guiding BI strategy. These individual projects have generally shown the types of high return that we saw in the previous section, but BI has so far not delivered its full potential in most organization —for example, only 19% percent of companies say their employees have all the data they need to make informed decisions1.
! BI Fragmentation Is Increasing
BI has generally been implemented as part of individual projects, for a particular area of the business, with little attention paid to projects in other areas, or existing software choices. In many cases, BI has been acquired incidentally through, for example, packaged applications such as ERP and CRM systems.
And this leads to problems — most enterprises still purchase BI applications on a ‘one-off’ or tactical basis in response to specific user demands. This can create a patchwork of applications that is difficult to maintain and support.
Marketing Sales Finance International divisions Manufacturing Reporting product 2 Statistical analysis Dashboards OLAP Reporting Product 1 •
A contributing factor has been the complexity of the BI technology market. Although consolidation is now starting to occur, the BI market has traditionally been a crowded one, with many competing offers from a variety of different companies: small and large, new and established, niche and enterprise, accessing a smaller or wider set of different
1
HP-Business Objects study, 2001 ! ! ! ! Figure 1: Most organizations today have fragmented BI implementations, with many departments using multiple overlapping products
data sources. As META Group notes: “Proliferating business intelligence (BI) tools, with overlapping functionality, are a common problem in large organizations.”1
The average number of BI users today is expected to jump 50% in the e next two years2
, and without a coherent BI strategy, fragmentation is set to increase in the future.
! BI Fragmentation Is Expensive And Dangerous
Clearly, having multiple, disconnected BI projects leads to inefficiencies — fragmented BI squarely places the burden of integration, operation and recurring support on the IT organization. Procurement costs are higher, projects take longer to implement, training costs are higher, employee cross pollination within the firm is virtually impossible, information inconsistency is rampant, and required technical headcount is higher. But perhaps even more importantly than these inefficiencies, BI fragmentation impedes companies from realizing many of the benefits of business intelligence. And the danger is very real. As Gartner puts it, “through to 2004, more than half of Global 200
enterprises will fail to properly use BI, losing market share to those that do (0.8 probability).”
! BI Fragmentation and ERP
One tempting solution to the problem of BI fragmentation is to turn to the ERP vendors whose systems store much of the organization’s information. Increasingly, these vendors offer “integrated BI” as additional options to their applications.
There are two problems with this approach. The first is the question of data dependence. The ERP systems are inevitably linked strongly to a particular data source — and for successful BI, organizations need a solution that can independently access information from any of the different systems.
According to IDC, the number of discrete data sources storing mission-critical
information has increased exponentially, with an average of four dozen applications and 14 databases deployed throughout the typical Fortune 1000 company. And each of these operational systems should eventually have its place in the organizational data
warehousing strategy. Over time, the number of distinct data sources that are consolidated into the DW is steadily rising.
1
META Group, Business Intelligence Tools: Setting the Standard, 2001
2
Source: Gartner group multiclient study
Turning to any one of those data sources for a BI solution is therefore not an ideal solution. The view of META Group: “for enterprise-strength analytics such as business performance management (BPM) across multiple divisions employing diverse mega application packages (e.g., SAP for financials, PeopleSoft for HR, etc.), it is
recommended that enterprises use staged data from the ERP packages' integrated
analytics as a source of information to feed the enterprise data warehouse (DW). Such an enterprise DW or operational data store strategy will provide the enterprise with the flexibility to adapt new analytical tools when they offer competitive advantage regardless of the vendor.”
The second problem is one of specialization. As META Group puts it: “A key reason for ERP vendors’ poor track record in BI solutions is the fundamental philosophical
differences between operational systems and analytical systems…BI vendors have been honing their analytics for more than a decade, and ERP vendors are now playing catch-up”1
1
META Group, Business Intelligence Solutions for ERP Packages: Best Practices 2003/04. ! ! ! ! Figure 2: Organizations have multiple data sources that they want to use BI against
Most organizations are heeding the analysts’ advice. A Gartner study of US
organizations indicates that they would prefer to purchase BI software from a vendor that focuses primarily on BI, rather than from the ERP vendors.
Provides software in > 1 category 30% Focuses primarily on BI 26% Focuses primarily on DB/DW 13% Focusing primarily on ERP/CRM 18% No preference 13%
Source: Gartner Multiclient Study, 2002
! ! ! ! Figure 3: Organizations want to purchase from BI specialists
The Value Of BI Standardization
We’ve seen that BI brings strong ROI for individual projects, but standardizing on a BI strategy across the organization brings additional returns.
! BI Is Infrastructure
BI is increasingly becoming part of the standard infrastructure of the organization. Just as employees today receive a desk, electricity, network access and access to email, they are increasingly also provided business intelligence access to relevant data sources. According to META Group1: “BI… must be subjected to the same standardization processes used for other technologies widely deployed throughout the organization (e.g., productivity tools, workgroup databases, corporate databases, web servers, browsers).” And in a 2002 study2
, the Gartner Group found that over 50% of IT managers had plans to standardize on BI across the enterprise.
! The Return On Investment Of BI Standardization
BI standardization can bring considerable direct and indirect return on investment: Direct cost benefits:
• Reduced project costs. With a standard approach, new BI projects can more
easily be implemented on time and on budget, with less rework and fewer cost overruns.
• Reduced technical infrastructure costs. With a standard BI architecture, multiple
projects share technical components, which results in less duplication, less need to prototype alternative solutions, lower training costs. In addition, the best and newest products and product features can be brought to bear on each project.
• Greater leverage with vendors. A standard approach means more leverage with
suppliers and a more coordinated support for the BI solution as a whole. Indirect benefits:
• Higher end user acceptance. Having a consistent look and feel across different
applications, and a clear help desk and training policies, helps increase end user acceptance and use of the solution.
1
META Group, “Business Intelligence Tools: Setting The Standard”, 2001
2
• Higher IT satisfaction. IT teams have more time to focus on customer delivery
aspects of the projects and higher-level architecture issues.
• Better use of BI. A standard approach makes it easier to get the full value of the
information available in the organization. Gartner1
estimates that by 2002, business management in 50% of large enterprises will identify BI as a strategic initiative, forging an alignment of goals, objectives, and resources to better support the enterprise with insight.
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Step 1: Decide If You’re Ready
A successful BI strategy must be matched with the information maturity of the
organization. One of several different situations may exist in your organization today:
General low interest in BI
In this scenario, companies are narrowly focused on solving problems and don't fully understand (or care) how information access could improve their business. The IT group thinks of BI only as a technical infrastructure, while executives give too little attention to the strategic importance of BI.
To successfully implement a BI strategy in this case, cultural change must first be driven by executive level initiatives, which in turn may be triggered by external events or a changing business environment.
Fragmented BI
This is one of the more commonly found situations in today’s organizations. BI is
installed a project-by-project basis by the business units in order to resolve critical needs, but without the support (or sometimes even the knowledge) of the IT organization, which is seen more as a utility than as a partner.
These projects can bring strong benefits, but the businesses are often ill equipped to evaluate the BI products’ technological foundation and architecture, and may end up choosing feature-rich products that conflict with existing architecture and technology choices. This in turn leads to a fragmented BI deployment, with all the direct and
indirect costs discussed earlier, and business users not able to access high-level strategic BI metrics that require several information sources (such as customer profitability) because of the difficulty of communicating data between the different BI “silos”.
In this case, a cross-business initiative is required to ensure that the needs of each line of business and the needs of the enterprise are taken into account. This initiative will generally involve the need for a more robust IT infrastructure for BI.
One-size-fits-all BI
This scenario can arise where, in an effort to save money in the buying and support of BI technology on top of existing information systems, IT attempts to standardize software tools and solutions. Standardization implies the reduction in technologies, but can be taken too far, if IT seeks a single BI technology or product without really understanding the end users’ needs. The result can be significant investment in technology that remains largely untouched by the business users.
In order to avoid this scenario, IT should work on BI areas that provide the biggest returns, in terms of resolving “business pains,” in order to engage the end users and learn more about their needs.
BI alignment
In the ideal scenario, both IT and end users are keen to implement and use BI. But note that even here there are potential problems.
In particular, if there is little trust or communication between the business and IT teams, an organization may find that there is simultaneously an IT department pursuing a one-size-fits-all strategy while the business users create new BI silos.
Another real-world scenario is where an existing BI standardization effort did not develop into a fully-fledged strategy, and fell victim to budget cuts or reorganizations, or lived on, but only as a centralized support facility.
In each of these cases, to benefit from this BI alignment, organizations need to implement a BI strategy around a BI center of excellence and a BI framework. The following section outlines how organizations should prepare for and create such a strategy.
Step 2: Limit The Problem
Whether or not your organization is in a position to implement a fully-fledged BI
strategy, there are a number of steps that should be carried out to ensure that the costs of BI fragmentation are not increasing as new BI projects start to proliferate.
! Do A BI Audit
The first step is to do an audit of the existing BI projects within the organization. The goal of these audits is to determine the costs and benefits of each project, and how they are being used by the businesses. This information can then be used to establish
standards for different categories of BI technology, and through standardization, reduce management and training costs.
A BI task force should be established that includes IT managers with experience in setting corporate-wide standards, members from existing BI and data warehouse projects, and key end user representatives. The extent and complexity of the audit will vary greatly according to the BI maturity of the organization and the extent of existing BI strategy.
Key information to be collected includes the number of users, versions of tools in use, planned upgrade schedules, and supported platforms. Some of the more advanced BI suites have mechanisms that allow their usage to be tracked — thus considerably speeding up the process. Software license status should also be determined (type of license, upgrade conditions, maintenance payments).
For each project, the task force should associate the number of users with the total costs of implementing and running the solution, including software licenses and training. The project should also be analyzed by type of usage (such as reporting, analysis,
dashboards, or statistics), in order to provide a foundation for a set of non-overlapping functional criteria for standard tools.
These costs must then be matched to the benefits that the projects have brought. This can be much harder to measure. In general, the users of the solution should bear the burden of defining the value, assuming that the BI solution is better, faster or more scalable than what was formerly available. In order to have cross-functional comparisons, there must be a consistent way of assigning a number to the end user value — but how the values are derived is usually less important than having general agreement on the process used.
Note that during the audit, technical issues and requests for improved functionality will inevitably arise. This should be anticipated and responded to with appropriate internal or external technical resources. Organizations usually find that by simply having carried
out the audit, and involved the end users in the process, the overall satisfaction and use of BI in the company has increased.
! Build A Strong Case For Standardization
Using the research gathered across all the individual BI projects, the task force can usually build a strong case for BI standardization, by showing the total cost of BI projects today, and the functionality that are overlapping. By making some reasonable estimations of projected costs savings, the standardization project will be assured the executive attention and support required to ensure that the rest of the project is completed.
Only once this executive support is engaged should the task force attempt the next steps, the politically more difficult ones of defining and implementing new standards.
! Reduce Functional Overlap Through Unambiguous Criteria
The next step is to create a set of BI standards for the organization. Note that the goal is to reduce functional overlap as much as possible without creating an unachievable “one size fits all” strategy.
Before implementing new standards, the task force should carry out a thorough review of BI tool requirements, which may or may not be aligned with the existing tools being used. Determining architecture requirements is usually a relatively straightforward extension of existing technical standards, but assessing end-user BI requirements can be more difficult.
Surveys can be used, but it can be hard for end users to articulate strong requirements for functionality or data before they are used to the tools and what can be achieved with them. More accurate information about requirements can be obtained by careful
interviewing of business users after making them aware of the costs associated with various alternatives. The needs of business users outside the organization should also be taken into account — increasingly, customers, partners and suppliers and other
members of the “extended organization” are key users of BI information.
The end user and IT requirements should be used to create an unambiguous list of criteria that will be used to make (and defend in the future) the standardization decisions.
Product 1
Product 2 Product 3
Product 4
Database ETL Reporting OLAP Analytics Dashboards Data Mining Data
warehouse
Product 1 Product 3 Product 3
Product 5
In general, these criteria should be in three main areas:
Functional capabilities. The ability of a product to cover one or more of the identified BI needs of the users. Ease of use is an important criteria and product families that enable smooth transition from basic to more-sophisticated tools should be preferred. Additional key criteria include the availability of associated management tools and the future product vision. A full consideration of all of the tools that make up a BI solution should include capabilities in the following areas.
• Data management
• Information delivery
• Data mining and analytics
• Business specialization (i.e. functionality for a particular horizontal or vertical business domain, if relevant)
• Support for collaboration and goal-setting
Infrastructure. The extent that the short-listed tools meet the infrastructure needs of the organization.
• Architecture (scalability, security, extensibility)
• Integration • Consistency • Globalization ! ! ! ! Figure 4: A set of unambiguous criteria should be used to reduce BI functional overlap
Vendor criteria. Preference should be given to first-tier products that are already widely
installed within the organization, and standards groups should vigorously oppose political pressure to include obsolete or second-tier products. In turbulent times, the ability of a vendor to weather the storm can be an important factor in choosing a strategic vendor. You should also look for a vendor that has previous experience in the type of BI standardization projects that you are undertaking.
• Vendor strength (market leadership, market vision)
• Cost
The selection process will usually yield a small number of acceptable product choices. The final choice is often made based on financial terms and a subjective assessment of the business relationship with the vendor (e.g., support, mapping of user needs to vendor strategy).
! Start Enforcing The Standard
When the final choice is made, it is critical to deal with user populations dependent on products that did not make the standards list. You should proactively inform these "orphaned" users of plans for future support.
Note that BI standardization is often applied to new projects, rather than trying to convert existing projects. This is because although a proliferation of different existing products does impose extra ongoing costs, in terms of training and maintenance, these costs rarely outweigh the costs of retraining existing users — unless they are unhappy with the solution provided today. Over time, however, there are inevitably changes in technology or in the organization that provide an opportunity to swap over to one of the new standard tools. In the meantime, large populations of orphaned users should be supported but contained, with little or no growth allowed.
If the standard proves hard to enforce, it is usually because one or more of the previous steps has been omitted or rushed. If there is a strong case for standardization, executive support, a cross-functional task force and a clear set of unambiguous criteria, the standardization efforts should provide the planned-for value.
These steps, as outlined, will cut the costs associated with BI fragmentation, but will not on their own result in optimal use of BI. Over time, the standards effort will degrade unless the organization evolves the task force and implements a true long-term BI strategy — and this is what will be covered in the following section.
Step 3: Build A Long-Term BI Strategy
In order to align BI with the business needs of the organization a fully-fledged BI
strategy is required. The tactical standardization steps that we’ve covered so far serve as a foundation for this strategy, which requires more fundamental changes to the way the organization works with BI.
! Overview
Optimal use of BI requires organizational changes to ensure the proper coordination of different roles. As Howard Dresner of Gartner notes: “smart enterprises are beginning to recognize the strategic impact of BI. They understand the need for the investment, the need to move past tactical and isolated implementations, and the need to involve every department and every function, especially senior management, in the BI
implementation.”1
The long-term goal is to implement a BI center of excellence (COE) that embodies the business and technical best practices of the organization. Experience has shown that BI standardization without implementing a COE is destined to be a short-term solution that ends with higher costs, frustration for both end users and decreased trust that in turn makes it harder than ever to implement a successful strategy.
Without a COE to champion and reaffirm the value of standards, keep abreast of technology changes, and ensure that projects are synchronized, the standardization efforts quickly grind to a halt. As technology and the business changes, the standards that are first imposed quickly look dated, slowly degrading into centralized
procurement contracts and technical support. Enterprising business units are wooed by non-standard tools, and argue successfully for exceptions, which grow in deployments, and the ugly head of BI fragmentation rears again, with all its associated costs.
Rather than trying to build a COE from scratch — which may be politically difficult in today’s cost-cutting culture, many organizations find that a good first step towards creating a COE is to establish a BI program management office (PMO) that is responsible for running initial projects under the direction of the executive team. This can lead to direct operational efficiencies and, as the team develops expertise, it can take over the best practice role.
The roles and responsibilities of the PMO and COE are discussed in more detail for the rest of this section.
1
! Build Trust
Before a successful COE can be built, an important first step is to establish a high level of trust between the business users and IT. BI stands at the historically troubled
intersection of the business unit and the IT organization. Many organizations have a history of mistrust that can prevent the successful implementation of any new BI strategy.
This situation can arise because of the traditional separation of roles that we have seen in earlier sections — with IT responsible for managing the data assets and security, while the business assumes ownership and responsibility for purchasing, managing and developing applications for its own use.
This can lead to problems, with businesses forced to perform the technology administration tasks that IT should be doing (such as hardware and software administration, security implementation, application design, requirements
specifications, and results tracking), and with IT left to resolve problems when the solution becomes too large for the business to manage or too complex for the power users to work with. This in turn leads to IT frustration, increased friction between IT and the business units and high integration costs.
Trust may already have been rebuilt through the process of auditing existing BI projects. If not, new personnel with the ability to communicate effectively between the business world and the IT world may need to be hired before any other progress can be made.
! Implement A BI Center Of Excellence (COE)
The COE is a group within your organization that ensures the long terms success of the standardization effort, and the more strategic use of BI. The goals of the COE are to:
• Help executives understand the critical role of BI in managing the business better
• Build cross-business unit communication to prevent the creation of new BI application silos
• Help users understand the benefits of a robust BI architecture as the foundation for successful delivery of a BI strategy
• Help the IS organization realize that users may need several BI technologies to meet their varied analytical needs, while getting users to support the IS
organization’s need to provide a platform that will support changing user requirements
! Creation Via A Program Management Office (PMO)
An intermediate body called a program management office (PMO) can be used to ensure a smooth transition to a fully-fledged COE.
The PMO is directed by an executive steering committee (ESC) composed of executives from your organization and key BI-related product and service suppliers. The ESC meets on a regular basis, to:
• Formalize and re-enforce importance and commitment to the undertaking
• Identify and prioritize initiatives to be undertaken by the PMO, and set delivery expectations
• Act as a forum for escalated issues or concerns before they get to a critical status
• Provide direction and measurement requirements to the PMO
Project Project USERS Executive Steering Committee Executive Steering Committee Program Management Office Program Management Office Project Project Project Project USERS Prioritized Initiatives Strategic Planning Technology Strategy Center Of Excellence Center Of Excellence Evolution Project Project USERS Executive Steering Committee Executive Steering Committee Program Management Office Program Management Office Project Project Project Project USERS Prioritized Initiatives Strategic Planning Technology Strategy Center Of Excellence Center Of Excellence Evolution
The PMO is composed of your BI and architecture project managers and the project managers from your key BI product and service suppliers. This team will have direct project management responsibilities for the first projects.
The objectives of the PMO are to:
• Executes strategies and initiatives defined by ESC
! ! !
! Figure 5:
The evolution from a Program
Management Office to a BI Center of Excellence
• Oversee development of the COE as the focal point for transfer of knowledge and expertise
• Assist with the development and management of individual project plans, and promote the use of skill-set requirements, metrics, and milestones to measure their success
• Provide tiered oversight and responsibility for BI activities, including the formalization of the BI vision and roadmap, based on return on investment
• Prove knowledge of product capabilities and direction for business users
• Interact with vendors: gathering responses to problems, change and enhancement requests and product direction that impact the project
Provide technical support, in the form of technical guidance to project teams and a help desk for end-users’ technical questions
The PMO should be provided with enough resources to be able to undertake multiple concurrent projects. The number, complexity and project phase of initial projects will be determining factors in establishing week-to-week requirements, and not all the roles necessarily require full time participation. For the first projects, the key BI product and service suppliers typically provide technical services and guidance, with expertise transferred to the members of the team over time.
! Evolving To A BI Center Of Excellence
A primary objective of the PMO team is to transfer knowledge and BI specific considerations for project staffing and execution to the COE team. As the COE is prepared, the PMO can be dissolved or downscaled as an independent entity with responsibilities absorbed into the COE.
As the first projects go into production, the COE will have responsibility for establishing and maintaining the resources and infrastructure required to support the appropriate levels of technical support for the existing projects.
In addition to the project-oriented tasks of the initial PMO, the COE should be developed to carry out the following tasks:
• Help users access information in a self-service way, through product and data training
• Create complex analysis where the end users are not able to do so themselves, using the center’s advanced analytic skills. Over time, the end users should take over more and more complex analytics themselves as their skills improve
• Ensure consistency across the organization. Where different business units have similar needs or problems, the center should be propose consistent solutions
• Defining a consistent “data vocabulary” across the organization, through reuse of business metadata in the enterprise
• Creating a BI framework that is used to maintain standards for the BI tools that are used and supported throughout the enterprise
! Ensure The BI Center Of Excellence Has The Right Skills
The COE requires more advanced skills than the PMO. The PMO can be established with project and technical skills, but to ensure that information is being used
strategically, the COE has to have skills in how information is used, how analysis is performed, and how that analysis is used to facilitate decisions and actions.
The center should contain dedicated analytic, business and IT experts. Business managers themselves are not typically part of the COE, since their responsibilities go beyond BI, but the center must be staffed with individuals that understand the needs of the business users and have their trust. While organizations often staff the COE with business-minded IT people, a better fit usually comes from technically-minded business users that already look after their own BI projects.
Staffing the center with the right employees may not be easy. According to Gartner, there will be a worldwide shortage of BI staff by 20041
, and that “by 2003, enterprises that do not recognize and leverage their analytic skills and staff, and do not invest in them by forming a competency center, will be unable to meet strategic objectives.” Analytic skills needed in the center include the ability to:
• Research business problems, and create models that help analyze these problems
• Explore the data to discover patterns, meaningful relationships, anomalies and trends
• Work with the IT department to identify data for a specific analysis or application
1
• Use a range of techniques, ranging from simple data aggregation to statistical analysis and complex data mining
• Develop and maintain fluency in the use of analytics tools
• Summarize relevant information and produce recommendations based on the correct set of metrics
• Train users in how to use the data
Business Skills Analytic Skills IT Skills Alter processes Clean and store data Analyze and summarize Develop decision alternatives Monitor results Extract data Identify data Map to corporate strategy Interpret results Establish requirements
Business skills required in the center include:
• An understanding of the needs of the various business units, for example sales and marketing, human resources, and supply chain management
• An understanding of cross-business unit issues such as customer and channel profitability
• The ability to communicate at an executive level and link BI with the strategic goals of the enterprise
• The ability to help business managers to set priorities by analyzing the
consequences of choices and creating business cases and return on investment models
! ! !
! Figure 6:
The employees of the BI Center of
Excellence need three types of overlapping skills
IT skills required in the center include a deep understanding of:
• The BI infrastructure implications of business and analytical requirements
• How to access and manage the data required to support business and analysis requirements
• BI tools and technologies, the data warehouse, and data administration While this may seem to be a formidably difficult list of skills to assemble in a single organization, most of us know of the marketing person that knows the systems well and generates reports for the rest of the team. These “power users” are often the best area to start looking for COE members.
! Implement The Center Within The Organization
The position of the COE within the organization is a key success factor. Placed too high, it runs the risk of being an “ivory tower,” disconnected from the business. If too low, the center will not be in a position to have an overview of BI implementations spread
throughout the organization.
There is no one “best location” for the center in general, because this will vary
considerably according to the type of organization and the scope of the BI strategy (in a large multinational, like General Electric, for example, a single business unit may be comprised of several hundred different businesses, each with multiple departments, each level of which could benefit from a BI strategy).
When BI strategies fail, it is not usually because of technology, but for business and management reasons. To ensure that the COE is closely tied to the strategy of the company, it is recommended that whenever possible the COE report to the largest business unit, or to the discipline that has the greatest role in driving the company business (for example, marketing in a consumer goods company or operations in a manufacturing company). Note that since BI is by its very nature a cross-functional discipline, this will only work successfully if there is an appropriate level of cooperation between departments.
If the COE cannot report to the business, it should report to the IT department, but at a level that is considered strategic within the enterprise — for example, reporting directly to the CIO. If the IT department is not considered strategic, the finance department may also be an option, if they have more than a simple financial control function.
In some organizations, there may already be related cross-functional teams — a data warehouse (DW) project team or a Six Sigma competency center. In this case, the organization of the COE needs to be carefully considered in the context of the existing teams. For example, a COE is usually only created after a DW project has been started. In this case, a transition from the DW project(s) to the COE could be managed through the PMO process described earlier in this document, where the CMO acts as a central learning body throughout multiple distinct DW phases or projects.
The effectiveness of the COE will also be influenced by budget and funding concerns. If the costs of the center are seen as pure overhead, then the users of BI can take full
advantage of the service, but it will be difficult to show the economic value of the center, and it is likely to be under-funded and under-appreciated — and at worst become little more than a second-tier help desk for technical questions.
To get the center launched, an internal billing system can be used, where users are charged for help given on projects or analyses. This helps impose value-added behavior, through the virtual profit-and-loss sheet, but can also limit the growth and use of the center by end users: while “early adopters” who leverage the investment in the center pay more, the “late adopters,” who may need more time and persuasion to make best use of BI can use the charges as an excuse not to get involved.
Over time, a subscription-based model is preferred, where costs are assigned across all potential users, and partly based on usage levels. This maintains the virtual profit-and-loss sheet while providing an incentive for all potential users to work with the center.
! Aligning BI Initiatives: The BI Framework
One of the primary jobs of the COE is to create a BI framework that is used to align the various BI initiatives of the organization at various levels.
One approach to the BI framework is to apply a traditional view of the IT “stack” consisting of several layers of technical infrastructure (networks, followed by
applications, followed by data warehouses, etc.) BI standardization efforts then take their place alongside other technical standardization efforts within the organization. The benefit of this approach is familiarity and the ability to reuse existing corporate
structures.
In this document however, we propose a different framework, tailored to the particular nature of BI standardization. In many cases, a layer-cake type approach
more important business and cultural aspects of cross-functional information sharing. The model below seeks to bring balance—and ultimately, help the success of the standardization efforts—by showing how organizational readiness is an essential foundation layer of BI standardization, not a step to be thought about after the “technical” aspects have been resolved.
Information Knowledge
Profit
Organizational Readiness Technical Readiness
Data-Driven Decision Making Measurable Results Vision & Strategy Org & Culture BI
Skills Infrastructure Data Quality Query & Reporting Analytics
Behavioral Change Management
Business Process
Change Management ROI Analysis
The foundation of the BI framework is the information layer, with requirements in terms of technical and organizational readiness.
Technical readiness This outlines the technical criteria for BI to be successful. It includes:
• The underlying operational systems. While this is not strictly part of the BI framework itself, BI analysis is often constrained by the quantity and— especially—the quality of the data stored in these systems.
• The infrastructure to transform data from the operational systems into data that is suitable for BI. This is done with a combination of hand-coded scripts or, increasingly, specialized extraction, transformation, and loading (ETL) software tools.
• The storage infrastructure. There are many different possible architecture choices according to the needs of the organization. Common components are operational data stores (ODS), that store a relatively detailed level of data from multiple systems, and data warehouses / data marts that store historical data in a format optimized for querying.
! ! ! ! Figure 7: A BI framework enables enterprises to align their various BI initiatives
The goal of the technical readiness framework is to balance efficiency and flexibility. For example, the need for a simple project structure and direct ROI may result in the
creation of multiple data marts, one for each project. This compounds the problem of implementing a coherent BI framework, so the framework should impose criteria on the data mart creation to ensure that the data definitions are consistent, and that data can be easily across the different projects.
Organizational readiness. Using information effectively requires more than just a
technical architecture. Many organizations do not have a framework for this phase — once the technical and architectural needs of getting the information have been fulfilled, there is often little thought given to the organizational considerations of ensuring that end users make the best use of the information available. This part of the framework outlines how best to deploy BI in a way tailored to the particular needs of your enterprise. The following things should be taken into account:
• The company’s strategic goals. Are your corporate goals aligned with BI? Have
you implemented business improvement methodologies such as a balanced scorecard or Six Sigma?
• Decision making styles. How are decisions really made in the organization?
Does BI support and facilitate collaboration around data?
• Availability of analytical skills. Does the organization have the analytical skills to take advantage of BI? If not, who should be trained or hired, and in what areas?
• The goals of BI. What are the goals for using information, and how are they
prioritized? For example, is it there a higher priority to cut costs, or to improve customer satisfaction?
• The prevailing information culture. Is there a culture that allows information to
be used as a strategic asset, to be shared not only with employees, but also business partners and customers? Are dashboards and metrics shared, but with the interpretation of that information left up to each individual?
• The user types. What are the different types of BI users in the organization, from
the executive office to the factory floor? How do the BI characteristics of these users change from group to group?
• The competitive environment. How do your competitors use BI? Do they have a
better understanding of customer behavior than you? Are they encouraging customer partnerships by sharing high-level BI information with them? Do you have an opportunity to spot new business opportunities before they do?
• The economic environment. In today’s global economy, priorities for the
business can change rapidly. How does this affect the ability of your organization to use BI? Could it be used to give you get a fast, accurate
assessment of financial shocks in different regions or markets? Can it give you advance warning of the effects of unexpected changes in demand? Can it help strategic planning in the event of unforeseen mergers or partnerships in the industry, or amongst customers?
• The extent of globalization. With the trend towards globalization, is your
organization ready to carry out BI with an infrastructure that will be adapted to supporting users and customers around the world, in many different languages, and potentially with many non-standard environments?
• Trends in regulatory oversight and transparency. Is there increasing pressure to
help ensure that you have the necessary internal oversight to reassure independent board members, investors and regulatory authorities?
• The extended organization. Does your organization work closely with partners
to provide goods and services to customers? How do you share information with them? Do you provide information to customers today? Is there information that you could share that would help them with their business processes?
Once the necessary elements are in place, the knowledge layer concerns the effective deployment of BI systems. This will rely heavily on the portfolio of BI applications that were chosen as part of the earlier phase of standardization, as discussed earlier in this paper. In order to get the full benefit of the framework, organizations should focus on implementing best-practice BI projects in response to solid business cases.
Finally, the profit layer concerns the use of information to effect change. Despite the challenges organizations face when trying to collect and channel information effectively, in many ways this is the “easy part.” Truly using information means making changes to the way you do business, which in turn requires change management around new process, with formal return on investment analysis used to ensure that the expected values are achieved.
The return on investment of a BI infrastructure can be enormous. BI can help companies make the right decisions when faced with unexpected situations. In some cases, as in the recent turbulence in the high-tech sector, inaccurate, slow or insufficiently sophisticated systems may make the difference between survival and going out of business. A full BI framework, taking into account both technical and organization requirements is key to achieving competitive differentiation with BI — by organizing and deploying BI in a manner appropriate to your organization's own characteristics, you can unleash the full value of the data stored throughout the enterprise.
! Implement BI Methodology & Life Cycles
A successful competency center must have the appropriate tools to deliver BI consistently and reliably, including a best practice BI methodology.
This will vary from organization to organization, but should cover all of the significant steps described in the section below. This model, based on the work of analysts such as the Gartner Group and by organizations that have successfully implemented BI,
identifies five significant steps in the life of a BI deployment.
The methodology embraces the ideas and concepts associated with concurrent engineering and iterative or rapid development methodologies. It uses a fluid cycle, where all involved parties are simultaneously involved in the various steps.
1. Scope 2. Design 3. Build 4. Deploy 5. Evolve BI Methodology BI Business Cycle 5a. Discovery 5b. Analysis 5c. Decide 5d. Share 5e. Change
Resources from the BI competency center, the IS organization and the user community are needed at different points in the methodology, with varying degrees of involvement — at each point of the cycle, there should be clear leadership and secondary roles outlined.
The construction phase of any BI deployment takes up the most time, resources and money. It is the single most-important phase in the BI deployment life cycle. Success here determines success in all the other phases.
! ! ! ! Figure 8: A BI best practice methodology is important for the success of your BI projects
Step 1. Scope. Scope is an important, often neglected aspect of the BI projects. Armed
with the BI framework, any proposed project should be compared against the technical and organizational requirements and goals of the enterprise, in order to determine if the project is scoped appropriately, and fits the current, prioritized goals of the
organization.
Step 2. Design. The design phase involves carrying out a needs assessment, including a
predefined set of the key performance indicators (KPIs) that are required by the end users. The plan should include an ROI case that establishes the value that the new information will bring, and helps prioritize the business needs compared to other projects. The KPIs should be formulated without regard to currently available
information — the aim is to capture the business needs, even if support for those needs may currently be impractical. The plan should include a high-level design of the various components of the solution, including the relevant information sources. The plan and success criteria should then formally agreed to by the members of the project team, including key business and IT managers.
The design phase includes the selection of appropriate BI technologies, based on the users' needs and the complexity of the deployment. The choice of tools is a joint task between the COE and IS (accordance with architectural and BI standards), with active participation by end users (fit with needs).
The plan also needs to determine which information sources are required to support the requested KPIs, including their quality and any transformations that are needed to make them suitable for analysis.
Step 3. Build. A prototype or testing environment is built and checked against the goals
of the plan. The full process of how the information flows around the organization should be modeled, not just the first-level access for information specialists.
The data infrastructure could count for as much as 70 percent of the effort and cost of this phase. This and Step 1 typically consume a majority of the time and resources during the construction cycle.
The amount of work involved in building the solution once the data is in place will depend on the complexity of the project. It could require simple configuration or fully-blown customization — for example for a digital dashboard application.
Step 4. Deploy. The solution is deployed to the end users. Whatever the underlying
user training and support, especially in the early phases of the deployment. This phase therefore requires an iterative approach, with extensive user training and adjustment of the solution to meet the users needs. This phase will include the development of
predefined reports and analyses for the business users, and preparing the ground for more advanced analytics in the future.
This effort may be led by the IS organization, with significant guidance and direction from the center. The end users serve in an advisory capacity to both. This is also the step in which the center and the IS organization train the technical-support department for ongoing user support.
Step 5. Evolve. This step is the “consumption” phase of the BI methodology. The end
users make use of the information that is made available to them to make decisions and change business processes. General goals in this step include the measurement of project success, the extension of usage within the enterprise, and increased cross-functional sharing of information internally and externally.
The business-oriented aspects of this step are often neglected — once the BI solution is available from a technical point of view, users are left “to get on with it” — and many projects stall at this point, since the responsibility for forward momentum has not been formally passed to a business manager. For this reason, it is worth subdividing this step to more clearly show what is required for the methodology to be successful.
Step 5a. Discovery: Often the organization will not truly understand how the center will
be used until it has been put in place. Working iteratively together, the end users and the COE build on the initial environment to create a solution that can only be formed when a base system has been established.
Step 5b. Access: Having identified indicators and information of value during the
"design" and "discovery" steps, end users begin to access, analyze and interpret
information, leading them to deeper insight and perspective, in support of the business mission. The users may call on tech support for assistance or (on occasion) re-engage with the center for additional guidance.
Step 5c. Decide: End users make decisions based on the new information. The COE may
be involved to ensure that optimal value is being obtained.
Step 5d.Share: The decisions, and the analysis behind them, are shared with others in
the organization. The resulting action will involve some change in organizational behavior.
Step 5e. Change: Mopermanent changes may suggest mofundamental process
re-engineering. At this point, technical resources and the center may have to review the problem to help address and assess the changes.
After the cycle has been completed, it should begin again at Step 1, but with the methodology operating at a new level of focus:
• Analysis
• Re-evaluation
• Modification
• Optimization
• Tuning
This allows for the benefits of experience to be put back into the process to keep the deployment fluid and relevant to the business.
The use of a BI methodology gives the center a useful tool for understanding and promoting the sequence of steps for successfully developing and implementing BI. The methodology can also serve as a guide in the application and alignment of resources and funding.
! Clear Responsibilities
For each of the steps in the BI methodology, you should assign “responsibility”, “approval”, “support”, and “inform” roles to the different groups involved. This will vary from company to company, and potentially from project to project, depending on the nature of vendor services used (for example, you may use outside vendors for their tactical implementation skills or for strategic business advice).
! Consider User’s Needs Carefully
The key to any BI project is carefully considering the needs of the users of the particular project. Each user segment should be analyzed along a number of different criteria, including:
• Functional complexity. The need for advanced BI functionality, such as
• Data depth. The need to have access to detailed information. The definition of
“detailed” will vary greatly from organization to organization — it could be down to the lines of command on an order in a smaller organization, or down to the sales of a single store in a large multinational company.
• Data breadth. The need to be able to access and compare information from
several different systems, for example to find the effect of human resources information such as tenure and salary on customer satisfaction.
• User control. Some users need to be able to access information directly and
autonomously, while others will need lots of support and handholding.
• Ease of use. The need for ease of use. As with most IT products, there is often a
trade off between ease of use and functional complexity.
• Customization. The need for an interface that is highly customized. This may be
the case for executive dashboards, for example.
Organizations often find that the users within their BI users segment along the following lines:
• Analysts: These are the people that BI has traditionally focused on — individuals
whose role is primarily to access and analyze information in order to pass it on to others in the organization. These users typically use the products and features available to their fullest extent, need to be highly autonomous, and have a need for both data breadth and depth.
• General knowledge workers: These are people whose role is primarily to make
decisions and run the business, and they make up the bulk of BI users. They require information to make those decisions, but compared to analysts, they tend to need an interface that is easier to use, less powerful and more narrowly
focused on a particular data area.
• Executives and managers. These users have a unique set of needs, with a wide
span of control and ever-changing information requirements. They need breadth of data combined with ease of use and customization. They typically want to see information based on key performance indicators, exceptions, and trends rather than detailed analysis. This is a relatively small segment of BI users today, but is set to increase rapidly in the next two years with the growth of dashboards.
• Customers and partners. Increasingly, organizations need to treat customers,
partners and suppliers as users of their BI systems, and the delivery of
information beyond the firewall has been the most rapidly growing segment of BI1
. These users typically need access to status and service-level agreement information that allows them to work more closely in partnership with your organization. Deployment is typically in a web-based environment, and the interface is usually customized to show a limited set of information in an easy, practical way.
! Create An Acquisition And Follow-Up Process
In order to ensure that the best-practice BI methodologies are followed, a BI acquisition process can be an efficient control mechanism within your organization.
This will involve the procurement department, but should also extend to ensuring that businesses make an ROI case for the BI project, with measures that are tracked to ensure that the ROI is actually achieved.
To ensure the long-term success of your BI strategy, there should be a financial incentive for the business units to continue working with the COE. This could take the form of licenses purchases that are negotiated centrally and then made available to the different business unit.
Note that in the case of a successful BI strategy, there will always be other vendors that try to approach the business units directly to persuade them to use their technology. If you are a large, visible company that would be a good sales reference for a technology vendor, the offers may be financially very attractive. To ensure that all projects continue to fit the BI framework, and avoid BI fragmentation, the COE must be able to have the last word in deployment choices.
! Outside Vendors And The Center Of Excellence
Wherever possible, you should work with outside vendors that meet your BI framework criteria, and who are willing to work cooperatively with you on the long-term success of your BI projects.
There are two main types of vendor services that may interact with the COE. The first, and by far the most common, is technical services for implementing and maintaining the
1
BI infrastructure. In most cases, outside services will be essential while the COE is first being implemented, and then used as required for particular projects.
There are several reasons why organizations turn to outside vendors for technical assistance on their projects:
• Technical expertise. The vendors naturally tend to know the most about the
technical capabilities and implementation of their products.
• Experience. The vendors’ consultants have knowledge of a wide variety of BI
deployments and best practice, and can use that experience to help you deploy effectively.
• Focus. The vendors’ consultants are usually heavily specialized. Even when the
COE is fully operational, you are unlikely to be able to be able to cover all the specialized technical skills needed for your BI strategy.
• Availability. You can use vendor resources more flexibility than internal
resources, to cover a period that requires an exceptionally heavy workload, for example.
• Training. The vendors usually offer training courses on their products, which
may be more flexible and cost-effective than using internal resources, and may include computer-based training offers. Note that the vendors training can only cover the technical skills, however, which must be supplemented by data-related training that can only be done by your organization.
BI has been a maturing market, and relatively few vendors yet understand the importance of, or are able to support, a partnership-based approach. Ideally, your vendor relationships should be based on the following:
• A single point of contact worldwide. If you are an international company, you
should look for vendor partners that not only are able to support your needs in different geographic regions, but have an organization that allows you to deal with a single person or team for your worldwide needs. This will greatly simplify work around contracts, pricing, and support.
• Dedicated resources. If your projects are large in scale, you should look to
vendors that are able to provide dedicated resources to your organization. This person or team should be able to anticipate future needs and act as part of the organization, but with all the accountability benefits of an outside supplier.
