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WHITEPAPER: BUSINESS INTELLIGENCE & MANAGEMENT


WHITEPAPER: BI & Management Content 1.- Business Intelligence, critical for the management ................................................. 3 1.- What is Business Intelligence? ........................................................................... 3 2.- How do CEOs benefit from Intelligence?............................................................. 4 3.- What information does a CEO need? ................................................................. 5 2.- Business Intelligence: The CEO & the Balanced Scorecard ................................... 6 1.- What is the Balanced Scorecard?....................................................................... 6 2.- How to define a metric-based strategy................................................................ 7 3.- Leading Business Intelligence towards success ................................................... 10 1.- How to choose the right platform ...................................................................... 11 2.- Do all companies need BI in all their departments? ........................................... 12

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2

Jan 2012


WHITEPAPER: BI & Management

1.- Business Intelligence, critical for the management First, we will answer some common and basic questions about Business Intelligence, and then, relate them with the management and see how the board can take advantage of all its features.

1.- What is Business Intelligence?

Wikipedia gives us the following definition on this concept:

“Computer-based techniques used in identifying, extracting, and analyzing business data, such as sales revenue by products and/or departments, or by associated costs and incomes”

In other words, software tools that enable that all the information of a company (sales, purchases, financial information, production, marketing, etc.) flows in an organized way through the business, reaching the right person, at the right time. To this, in LITEBI we would also note that achieving Intelligence needs full-featured and integrated tools to manage and optimize the performance of the company as a whole and to align it with the business strategy. A tool with all these characteristics makes things easier for those in charge of the decision making in each department: a CFO, a Sales Manager, a CEO or a Controller. Business Intelligence or BI should be, among all enterprise software tools (including CRM and ERP), the most closely related with the management function, especially CEOs. Since the computing revolution and the explosion of the Internet, information is acquiring more and more importance every day. Everything is digitalized or will be soon, the amount of existing information grows year after year, and most of our company’s processes are supported by complex information systems. Studies tell us that the amount of information managed by companies doubles every two years and that 80% of decisions are made with only a 10% of the available information. And all that information is power! It is essential to compete in today’s market.

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Jan 2012


WHITEPAPER: BI & Management

Accounting Online Engagement

Datasheet

ERP

eCommerce

LITEBI Off

POS

CRM

eMailing

AdWords

DDBB

Social Media

Illustration 1. How BI integrates different tools and software

2.- How do CEOs benefit from Intelligence?

A manager would ask himself what does Business Intelligence do and in what way does it optimize the management of his business. . Business Intelligence allows businesses of any size and industry increase its performance. It helps users from any department make the best decisions, giving them access to easy and powerful analytical tools to extract value from the information they need. From the CEO’s point of view, it is critical to control and understand what is going on in the company. Management implies analyzing and controlling those key factors that affect the operational and economic performance of the company. Therefore, we can say that the CEO can relate to Business Intelligence in two ways:

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As a user, to have available a global, trustful and easy to use vision of the business, that enables to control the performance, detect those situations that may require action or analyze in detail some aspects of the organization when needed.

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Jan 2012


WHITEPAPER: BI & Management

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As a manager, making the business evolve to a metric-driven culture, so that everyone keeps in mind that “something that is not measured doesn’t exist”, leading the organization to use information as a valuable active.

3.- What information does a CEO need?

Over which areas does a CEO make decisions? What areas should he be concerned of? His responsibility is global. He has to make decisions over all areas, and because of it, needs information about all the different departments of the company. Moreover, having quality, updated information, and that avoids wasting time building manual reports, is a need that in a world that is constantly changing, and is more and more competitive every day, can’t be ignored. To be able to control a company, define a strategy and focus on performance, the CEO needs to know what is happening over the business through frequent and direct access to information. If the goal of Business Intelligence is to take, through an automatic process, information from any source inside or outside the company to the decision-maker’s desk, nobody needs more data than the CEO, neither the need of making the correct decisions is so critical for anyone else. From this point of view it is clear that Business Intelligence seems to be , of all the areas of enterprise software, the closest to the CEO, closer to the place where the most critical decisions are made. Answer the CEO’s questions:   

Control the business as a whole , with an integrated vision. Control the evolution of the strategic plans. Analyze integrated information of all the different departments: Sales, Financial, IT, etc..

Benefits of Business Intelligence for the company:   

Making better and more informed decisions. Avoid spending time building reports. Control the Key Performance Indicators.

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5

Jan 2012


WHITEPAPER: BI & Management

2.- Business Intelligence: The CEO & the Balanced Scorecard Let’s focus on one of the key features of Business Intelligence, the Balanced Scorecard or BSC, that being one of the most popular features of BI, is rarely found among the usual terms we usually think of when talking about this area of enterprise software. When talking about Business Intelligence it is normal to think about Data Warehouses, OLAP analysis with multi-dimensional cubes, Dashboards or alerts, but less common to think of the Balanced Scorecard as a critical feature of BI. However, to me, it is an essential feature and the CEO should consider it as a basic tool in order to lead a change in the way the company communicates, organizes and analyzes information, as an instrument to guide the company towards a “metric-driven culture”

1.- What is the Balanced Scorecard?

Its origin is not a technical one, as the rest of BI tools. The BSC is a methodology to manage the business strategy designed by two academics: Robert Kaplan and David Norton, that was first published by the Harvard Business Review in 1992. It is something that could be implemented using a pencil and a piece of paper (with great effort), but I think it should have its own space in the BI toolbox. Why? Because of the BSC’s emphasis on using all the information from all over the company, because it makes a company go beyond the traditional management control, based on financial information and indicators. The Balanced Scorecard encourages the company to define and systematically control the business strategy, organizing it through strategic initiatives, objectives and KPIs. The BSC thinks of the business as a system in which not only the financial information is important, but also defining what objectives I have in regard to the relation with my market/customers, the behavior of my internal operations (production , logistics, operations, R&D) or in the know-how and the human resources needed to achieve those elements. At this point, we come up with the four perspectives through which the BSC methodology recommends us to shape our business:

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Financial

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Learning and Growth

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Internal Processes

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Customers

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Jan 2012


WHITEPAPER: BI & Management

The advantage of the BSC is that it considers the company as whole, an interrelated structure, in which different areas affect each other through cause -effect relations (Ex: I won’t be able to increase the revenue without increasing the number of customers, and I won’t be able to do this if I don’t improve my sales processes and I have the right people to do so).

2.- How to define a metric-based strategy

The importance of defining objectives that lead our strategy and actions in the short term is to be able to measure if they are being achieved and detect the origin of the deviations, in order to make the appropriate decisions and meet our goals. To be able to define a strategy systematically, we must have a clear idea about the following elements:

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Strategic objectives: Based in our mission and vision (Ie: become the market leader in 2 years) I will have to define what milestones I must reach, control if they are being reached, and the relation between one objective and other. Will I have to increase my revenue organically or will I need to acquire other companies? Is my financial objective to get rid of a heavy debt burden? Do I want to decrease the weight of the direct sales and expand the distribution channel? Do I want to outsource my R&D department?

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KPIs: Key Performance Indicators. Numbers that indicate the evolution of the company’s most important areas. Like the revenue of course, but also the quality perceived by my customers, the average response time of my customer support issues, the leads generated by marketing, or the motivation and skills level of my team.

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Initiatives: In order to obtain the KPIs I want (revenue), to be able to reach my objectives (be market leaders of a certain area), we can’t sit and watch the traffic lights of our BSC turn from red into yellow and then into green, we will have to carry out initiatives that we will need to define, communicate and control: hire more sales men, launch new product lines, etc.

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Jan 2012


WHITEPAPER: BI & Management

We define it graphically with a screenshot of the Balanced Scorecard and its interrelated objectives

Screenshot 1. LiteSCORECARD Module - Balanced Scorecard

We will be able to control all these elements through time, monitoring if the real data aligns with the objectives we had, if indicators are behaving as expected and if the initiatives, besides being carried out, are obtaining the results we wanted. To summarize, the BSC is a tool for the management to define the strategy and control its execution. A powerful allied for a CEO, Manager, Board member, etc. whose job is to take the company where the stakeholders want it to be. Seeing the importance that the BSC gives to indicators, to the transmission of information (objectives, initiatives, expected indicators), to the team responsible of its execution, it isn’t hard to see the tight relation with the rest of the BI tools, field of the software that (at least today) I could define as a “tool to make the information useful enough to optimize the company’s management” The Balanced Scorecard methodology has reached its popularity because it is a tool that enables to organize chaos in the fast-changing market we live in. Having clear idea of who we want to be, how we are going to get there, and how we are doing it, will help the CEO make the organization move better in this extremely volatile environment, guiding it towards a “metric-driven culture”, which is the greater promise of Business Intelligence.

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Jan 2012


WHITEPAPER: BI & Management

Lastly, I would like to highlight again that, although most of the BSC deployments are done with a specialized software (as LITEBI’s LiteSCORECARD module), the key is to put people ahead of technology and invest our effort, once we have the adequate tool, not in deployments, hardware or maintenance, but in aligning the business to a methodology that, if well deployed, is capable of transforming organizations.

Screenshot 2. LiteSCORECARD Module - Design and monitoring of the strategy through KPIs

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9

Jan 2012


WHITEPAPER: BI & Management

3.- Leading Business Intelligence towards success Now, we have to take this theory of metrics to the practice, and see how to deploy a Business Intelligence tool and how can a CEO make this deployment successful. The goal is clear, make the company measure its activity, control what happens and make better and informed decisions. In other words, deploy a Business Intelligence software to be more competitive. This isn’t always easy. It takes leadership. We should start by looking at a statistic that still shocks me: over 60%-70% of BI deployments fail. It’s a very high rate of unsuccessful projects from which companies don’t obtain a clear ROI and that in the end don’t live up to the business expectations. To put it in context, the Business Intelligence market represents 10% of the Enterprise software field (following ERPs and CRMs). That is a big and growing market (because of the increasing needs of companies) but that still has to mature, and in which more than half of the BI projects fail. I would however like to say that this isn’t LITEBI’s case (with a 95% of customer loyalty), due mainly to the platform’s SaaS model that requires us to focus on the continuous satisfaction of the customers.

Illustration 2. LITEBI’s Cloud Computing BI platform

There are several reasons that can make a BI software unsatisfactory: too complex technology, companies that are not prepared to be led towards a metric-driven culture, not knowing the right tool to choose or a lack of involvement from management, are some examples. For a BI Project to be successful it takes three things:

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Jan 2012


WHITEPAPER: BI & Management -

Choosing the right solution, which fits my needs.

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Working with a reliable services provider that deploys the BI platform.

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Real commitment of everyone involved both business users and IT guys.

1.- How to choose the right platform When choosing the right tool, it is important to know who I am, what I want, and then choose the tool which gives me what I need. There are plenty of options in the market: traditional suites, tools with a more agile approach, open source alternatives or Cloud Computing solutions like LITEBI. Each model (and specific product) has some features that make it different from the rest, not better or worse, just different. All solutions have its strong and weak points so we must choose the right tool based on a realistic analysis of what I need and what does each product offer me. What has worked in some companies (or has failed in others) won’t necessarily work the same way for me. Too many times we select a tool based on what others refer instead of basing the decision on my business needs. In this process, the CIO’s role is essential, but the CEO will have to ensure that the decision is made based on the businesses real needs rather than in different, more subjective, criteria. Of course, the second point is also a key element when choosing the right tool, but I won’t deepen into it too much because I consider it common -sense. It is essential to have a reliable service provider that understands my needs, professional and trustworthy, preferably certified and that maintains a good relationship with the software vendor. Too many projects fail due to the lack of experience of the consultants or because they don’t have a good relation with the vendor for those cases in which, during the deployment of the project, unforeseen difficulties appear. A piece of advice in this matter would be to be wary about those service providers that start talking about the “Big Project”, which will last several months and will meet the BI needs of the whole company. This is often a wrong approach to deploy BI, in my opinion, based on years of experience, better results are achieved when deploying the platform step by step, and covering one business area at a time, ensuring that the solution is working correctly and that all the different departments and users are making the most of it. However, to drive a BI Project deployment towards success it requires more than just acquiring a good product that meets my needs and/or hiring a good consultancy firm. In my opinion, most projects don’t fail because of the selected tool (although I’ve seen some megalomaniac decisions that have ended up in catastrophic failures), neither because of the people in charge of the deployment (but sometimes we can find teams with lots of shortcomings, although nowadays there are many highly qualified BI professionals in any country, as our LITEBI Certified Partners). The main reason for a BI project to fail is the lack of involvement and changes in the business culture , and the management plays a critical role in this. w w w .litebi.com | marketing@litebi.com

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Jan 2012


WHITEPAPER: BI & Management 2.- Do all companies need BI in all their departments? Business Intelligence tools are highly related to business needs, what do I want to measure, which decisions are important, who must make them, and even if we have chosen the correct tool and hired the best team to deploy it, it is still very hard to make the project a success without sharing correctly the business needs and without the will to lead the company towards a metric-driven culture. The CEO’s leadership, transmitting the importance the project has for all the different departments, and the need to start working systematically on the control and analysis of information (with all the competitive advantages and cost savings it means), is essential.

Let me give an example. We have decided to deploy a Business Intelligence solution in our sales dept. because until now information was dispersed, we had access only to low quality, unreliable information, infrequently and in addition it took lots of time to gather it (quite a typical case). The IT Manager can select the solution that best fits the business needs, and hire the best consultancy in the market, but if the sales manager or its team isn’t aware of the importance of the tool, we will end up in the following situation: -

That the requirements (necessary reports, important things that should be measured, current needs that aren’t covered yet) aren’t well transmitted and aren’t taken into account in the design of the solution.

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That during the platform’s deployment the lack of clear feedback keeps us from correcting the system development to adapt it to the real business needs.

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That once the solution is deployed, it isn’t used. That people continue to work the same way they did (The sales director spending 5 hours each week looking at a spreadsheet or some sales manager using excessive imagination when doing sales predictions or analyzing target achievement).

I think that the example (without any intention to offend the sales departments, that by the way, are often excellent and happy BI users) illustrates quite well what can happen if the CEO (or someone else with authority inside the company) doesn’t transmit the importance of the project the way it should be, doesn’t coordinate IT and the business users making them realize the importance to embrace change.

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Jan 2012


WHITEPAPER: BI & Management

The success of a Business Intelligence deployment therefore has a component of Information Technologies, (choosing the BI tool and the deployment strategy), but also, and more important, a management component, which requires the involvement of the CEO, leading the change towards a metric-driven culture, methodology change that will allow us to be more competitive, efficient and all the benefits for the business that await after the successful deployment of a Business Intelligence solution.

Copyright Š LITEBI

About LITEBI: LITEBI is leading the next generation of Business Intelligence with its Cloud Computing platform. It offers advanced analytics, dashboards, data integration, alarms and balanced scorecards for companies of any size or industry, through a pay -as-you-go model. LITEBI is an easy, powerful and affordable BI solution.

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13

Jan 2012


WHITEPAPER _ Business Intelligence & Management