Business intelligence – beyond the realms of technology

As organisations seek to emerge from the global financial turmoil which has hit various economies, companies are looking to grow their business by relying more on business intelligence solutions to conduct their business activities more efficiently and effectively.

Recent research suggests that business intelligence seldom delivers the intended benefits

On the local scene, the organisational and management changes resulting from the extensive restructuring taking place in various local entities have highlighted the importance of providing consistent and accurate business intelligence for reporting across multiple functions. The specific challenges include:

The management of information for reporting at senior executive and board level, while retaining ownership and accountability of the data at operational level;

The ability to provide consistent and accurate business information for executive functions;

Increasing the adoption of shared services for support functions, the improved co-ordination of cross function, and indeed cross company master data.

Large technology investments in business intelligence solutions do not necessarily mean or guarantee better information. Rather, companies should focus first on getting their data right through appropriate methods of gathering, managing, processing and ultimately presenting data.

I am often faced with the question, ‘But what is business intelligence?’ Simply put, business intelligence solutions help organisations acquire, collate and analyse operational and managerial information. With the relevant information at hand, an entity is much more likely to make a timely and informed decision.

Typically a business intelligence solution will allow a company to identify its most profitable products, its least profitable products, areas/locality where it sells most units, inefficient production factories/production lines and so on. Advanced business intelligence solutions also offer predictive analytics. Such solutions help analyse previous trends and identify peak months to sell in, where to sell, and so on.

Recent research suggests that business intelligence seldom delivers the intended benefits. A recent study commissioned by Cambridge University and conducted by KPMG International suggests that approximately 50 per cent of managers interviewed said they have no confidence in the numbers presented to them.

Even more compelling is the evidence suggesting that an increasing number of executives rely on spreadsheets to gain some visibility and understanding of the business – this grossly contracts with the industry’s assumption that BI weans the business off the use and dependability of spreadsheets in the decision making process.

In order to deliver consistent and accurate business information it is important that we have a full understanding of our raw data, where and how it is stored, that it is easy to access and that it requires limited manual intervention. The key objective is to deliver the business intelligence value proposition. A myth that is being actively challenged is that having more data will improve business performance. Actually what is really relevant today is more useful information and an improved insight. However, it is easy, even dangerous to assume that a new technology-driven business intelligence solution will solve an organisation’s data issues.

I have come across a number of companies that have invested heavily in updating their information systems only to find that the data is being delivered faster and in a more attractive format, however there is no improvement in data quality or usefulness. The main driver to achieving a better result is by moving away from a technology focused, tactical solution approach to a longer term strategic approach that places more emphasis on the relevance of information itself. This is achieved by:

1. Initial identification and definition of the business requirement through the development of a business requirement document.

2. Optimisation of the solution to meet the business need by articulating the requirements to produce a detailed business blueprint.

3. Finalisation of the chosen solution by agreeing the design for processes, technical, organisation and operational aspects as documented in the business blueprint.

The first step in this journey is to look at the business drivers of the organisation and how the flow of information influences the management of the business. It is important to link the information used to manage the business to key business strategies, as this will determine the information needed to support these key activities.

The key business drivers are those activities usually unique to the organisation’s structure, industry or customers. This enables the organisation to operate on only ‘one version of the truth’. The key objective derived from this approach will guarantee the delivery of the value proposition.

To achieve the full potential of any business intelligence deployment, one must also consider the wider implication of business transformation.

Business transformation should aim to unlock the full operational potential of an organisation through the strong alignment of processes, data standardisation, management and organisational change. A key element of business transformation involves treating information as a strategic company asset instead of a by-product of a business activity or process.

Those overseeing business intelligence initiatives should be experienced in conducting business analysis and design. Companies should only consider investing in business intelligence technology once the business requirements have been articulated and agreed by all stakeholders involved. It is also extremely important that all the stakeholders involved agree on exactly what information is of most value to the organisation.

Paradoxically, the most important work in a business intelligence deployment actually takes place at the initiation of the project, before a technology or even a business intelligence tool is selected. Without the complete confidence in the data that the business intelligence tool will be reporting on, there can be little confidence in the resulting business intelligence reports.

josephbaldacchino@kpmg.com.mt

Joseph Baldacchino is an associate director with KPMG Malta.