Do you effectively leverage all the information your organisation creates and collects? How much of a grip do you have on your organisation’s information and is your IT helping?
Leveraging organisational data is becoming one of the CIO’s most important responsibilities as access to information becomes key to competitive advantage. As a result, business intelligence (BI), the practice of optimising processes and systems to leverage organisational data, continues to grow in popularity. BI helps deliver the right information, to the right people at the right time.
When designed and deployed effectively BI systems can deliver real business benefits and create value through three core pathways. First, BI systems reduce the cost and complexity of processing information. Second, with appropriate infrastructure, BI provides performance insights that can enhance an organisation’s efficiency and effectiveness, allowing for better and faster decisions. Third, BI has the potential to engage people across the organisation in the successful execution of strategy.
New technologies and ways of working are changing the rules of the game and the way that firms compete. The ever-growing needs for reliable information, continuous market insight and the agility to react quickly are increasingly important for businesses world-wide. Recent KPMG research found that half of organisations are expecting to adopt new business models within the next three years. BI solutions are key to ensuring the success of these transformations. However, despite a combined annual global investment of around USD $60 billion in enabling BI solutions, many organisations are not seeing the expected benefits.
Estimates suggest that 50 per cent of BI projects fail, and recent research by Cambridge University - commissioned by KPMG - provides insights as to why. To unlock the potential of BI, organisations have to simultaneously enhance their organisational and technological infrastructures. However, the research suggests that fewer than 10 per cent of organisations have successfully used business intelligence to achieve this aim. The reasons for this lack of success are clear:
- First, too frequently simplistic assumptions are made about the nature of BI; it’s not just a technology but a new way of thinking about the way information is collected and utilised across a business.
- Second, too frequently BI projects are seen as technology projects, with ownership being limited to specialists within an organisation instead of being embedded in processes. It isn’t the CIO’s job alone to implement BI and it cannot work without cross-organisation collaboration and strong business sponsorship.
- Third, many organisations are limited by legacy systems and under-developed IT. Companies struggle to make sense of the information drawn from multiple databases and models that are complex to integrate and difficult to align. The problem is exacerbated by mergers and acquisitions where IT is all too often seen as a solution rather than an enabler.
- Fourth, established models of management are report-driven and reactionary. Driving real success through BI comes through understanding how to turn this data into information and strategic insight.
- Fifth, more often that not, BI projects are implemented too quickly without much thought given to the design and role of data. The CIO must fight his corner here and ensure the BI strategy will work both operationally and technically.
The challenge is how to design BI systems that aid and enable, not simply command and control management structures. Executives are no longer looking for ways of creating top-down control, but rather for tools that enable their people to perform.
Globally, organisations have recognised this transition creating great interest in BI. The rewards are high for getting it right; BI can deliver significant returns to those that really capitalise on its potential.
There are six key building blocks that will allow organisations to tap the real potential of BI, around which business leaders must ask themselves the following critical questions:
Business strategy alignment:
• What information is key to delivering strategy?
• How can it be deployed in a manner that maximises business performance in a cost-effective manner?
• What are the principle processes and the organisational structure required to ensure integrity and the continuous alignment of information to business needs?
Performance management process and reporting:
• What are the KPIs and reporting requirements of the business that align to your business strategy?
• How can financial planning and business performance management be improved?
Integrated information management:
• What information should be stored where, in what structure (data model), in which format (structured or unstructured) to enable information agility and insight?
• How should existing systems be changed and combined with new solutions to deliver effective BI capabilities for the business?
• Where are the value creation opportunities in effective data management? (Master Data Management, standardised KPIs, consolidated reporting, single version of the truth?)
• What are the right applications and tools to support information delivery, financial consolidation, planning, ad-hoc reporting, data analysis and performance management?
• How do you ensure that your application portfolio will continue to meet your strategic goals, as vendors change their BI solutions?
• How do you measure delivery success and ensure that BI solutions really deliver value to the business?
• What will all of this mean from a technical infrastructure point of view?
• How do you ensure solutions are scalable and future-proof, whilst remaining cost effective?
• How can security, access and performance of the solution be ensured?
These six building blocks, although interdependent, can also be applied individually. However, to unlock the true value of BI, organisations must address all six components together.
BI is not only about getting the right information to the right people at the right time so they can make the best decisions; successfully deploying BI solutions involves a much broader agenda to maximise RoI through the simultaneous enhancement of organisational and technological infrastructures.
This approach provides the basis for building the management and information infrastructures necessary for the 21st century whilst at the same time maximising the likelihood of success.
About the authors:
Herman Heyns, Partner and Rick Hawkins, Principal Advisor at KPMG Performance & Technology. KPMG Performance & Technology is the consulting arm of the big four professional services firms. For more information, please call 0207 311 4478, email [email protected] or visit www.kpmg.co.uk