The last person who should be in charge of a business intelligence (BI) project is the CIO. In fact, shame on you if you believe BI is a technology project at all – at least that was the message given to delegates at the Gartner BI Summit in January. The reality is, of course, that most BI projects do fall at the CIO’s feet.
Gartner estimates that 42 per cent of CIOs fill the vital role of BI tzar in their companies, more than double the number of CFOs, the next biggest group. “Getting sponsorship is sine qua non,” says Allister Piggott, design head of business intelligence at BA. “It’s got to be someone whose job begins in a C and ends in an O.”
CIOs usually wear the BI hat, however, simply because, as Betsy Burton vice-president and analyst at Gartner points out: “The CIO feels the pain and agony of implementing tactical BI more than anyone else.”
Burton maintains that the best person to lead the BI charge is the chief operating officer (currently BI tsar in just four per cent of companies) or a line of business chief, because these people have the breadth of business experience and will not be sidetracked too much by either the technology or financial implications.
It is the people, culture and change elements that will determine whether an enterprise-wide BI programme blossoms or rots – not technology, particularly as it will trample and reshape geographical and power boundaries.
"Michael Langendorf, manager of business support, Electrolux"
In Electrolux, every IT project needs to be sponsored by the business and it’s very hard to sell standardisation to the business
The task is so big that Burton estimates: “By 2010, 70 to 75 per cent of the time, energy and money companies will focus on, in terms of BI, will be the people, process and governance issues.” To ensure that these change issues are addressed, Gartner suggests organisations set up a Business Intelligence Competency Centre (BICC) to act as a steering group for BI. It is the BICC’s job to secure the funding, build the frameworks, choose the methodologies and create the skills needed for BI to flourish.
The idea is catching on fast. “Around 20 per cent of organisations today have a BICC working and we’re seeing that number rise dramatically. This year it will double,” Burton points out. The most successful BICCs are made up equally of business, IT and analytic representatives. If the pendulum swings too far to the IT camp, then it can be perceived as an IT project rather than a business initiative.
This perception problem is one Electrolux recognises well. “When we put in the BICC, some said it should be with IT and some said with business,” remembers Michael Langendorf, manager of business support at the Centre of Excellence. The original BI push started in the IT camp, with the aim to reorganise IT and standardise BI. The stigma of BI being perceived as part of IT still stands.
“Today, we see it is difficult to get business people into Electrolux IT because they want to be near the business,” says Langendorf.
"It should be something that comes out of the business. 99 per cent of BI projects that didn’t work out came from the IT perspective"
Ton van den Dungen, business intelligence manager, Eneco
In common with many large companies that have grown through acquisition, Electrolux has a complex IT and business environment.
The business imperative for BI was clear – creating one standard platform would make things far easier to manage. It would also break down the information silos. “We have a history within Electrolux of regional or country managers who are responsible for everything from IT to sales, so we had lots of BI solutions in Europe,” says Langendorf. Setting up a BICC was seen as a way of helping “bridge the gap between IT and the business”, he adds.
This structure presented a clear political problem; each unit was used to making its own decisions and protected their own solutions and information. Standardising its BI structure is a way not only of reducing duplication but also sharing best practise between the units.
The biggest problem was raising the money to achieve these aims. “When you want to standardise and build a BICC you need funding. In Electrolux, every IT project needs to be sponsored by the business and it’s very hard to sell standardisation to the business,” says Langendorf. In the end, the group achieved a mix of central funding and money from the business units.
Key to raising funding and awareness is to make the business understand the importance of BI. At French/Italian semiconductor ST Microelectronics, when the business makes demands for BI, the BICC takes time to show them the value and costs involved in meeting their requests, so they can make an informed decision. In other words, the BICC acts as a communication conduit between IT and the business.
The danger with the BICC being part of IT and funded by IT is that users will have very different expectations. “Users will ask and demand a lot more than the team can provide and then they will complain,” says Maria Santangelo, BI competence centre manager at ST Microelectronics.
The brain behind the big, bad burger
It is the Monster Thickburger, the latest pièce de résistance from US burger joint Hardee’s. It consists of:
- Two chargrilled 100 per cent Angus beefburgers, each weighing a third of a pound
- Three slices of cheese
- Four crispy strips of bacon
- It is topped with a dollop of mayonnaise that oozes from a toasted buttery sesame seed bun
The Monster Thickburger tips the scales at a whopping 1,420 calories and an artery-clogging 107g of fat. It quite possibly is the most fattening mass-produced burger on the planet and it is selling like hot cakes, according to Jeff Chasney, CIO and executive vice-president of strategic planning at CKE Restaurants, the company that owns and operates Hardee’s.
With more than 1,400 calories, Hardee’s hefty Monster Thickburger was introduced after the company’s BI system indicated that the burger would sell well, despite Americans’ preoccupation with weight. You would think that CKE would have thought twice about rolling out such an over-the-top concoction in the midst of an international obsession with the growing epidemic of obesity. But CKE was able to introduce the Monster Thickburger with confidence – if not impudence – that the public would receive it with open mouths because of the insights the company obtained from its business BI system.
CKE used its BI system, known ironically inside the company as CPR – standing for CKE Performance Reporting – to monitor the performance of its big, bad burger in test markets. Specifically, CKE used BI to see if the hamburger was actually contributing to increases in sales at restaurants or if it was just cannibalising sales of other, lesser burgers. The company wanted to know whether the increased sales from the burger were worth the cost to produce it.
CKE used its BI software to study a variety of factors – such as menu mixes, the cost to produce a Monster Thickburger, average unit volumes for the Thickburger compared with other burgers, gross profits, total sales for each of the test stores and the contribution that each menu item, including the Monster Thickburger, made to total sales. Because the Monster Thickburger exceeded expectations in test markets, the company decided to roll it out across the US and devote around $7 million in advertising to promoting it. CPR gave CKE the confidence it needed to introduce such a burger and to know that the advertising dollars behind it wouldn’t be a waste.
It has been a resounding success; sales of the burger bomb continued to exceed expectations. Sales at Hardee’s stores that have been open at least a year were up 5.8 per cent for December. “The Monster Thickburger was directly responsible for a good deal of that increase,” says Brad Haley, Hardee’s executive vice-president of marketing.
At the outset – particularly if users already have bad experience of BI – it is vital for the BICC to create a few project victories and begin to change perceptions. The best thing to do is show how with the same budget – or less – they can provide the business with better service.
The BICC team can either be a fixed unit, a virtual team or a mixture of both – and this should change as the business imperatives change. Similarly, the people need to change too.
Dutch energy company Eneco Energie has a virtual BICC staffed by 30 people, helping to rollout Cognos across the business and ensure the company gains the best deals on licensing and achieves maximum total cost of ownership.
Just as importantly, it acts as a knowledge-sharing centre and because it is a virtual team funding comes directly from the business unit.
The impetus for Eneco to go down the balanced scorecard and BI route in the first place was the fact that in 2004 the industry was being deregulated; new rivals meant that having better customer data could make Eneco more competitive. To sell the idea to the company, Eneco began with a couple of pilot projects in the contact centre and the accounts receivable departments. Today, about 250 employees are using BI in the company and eventually it will be rolled out to 800 to 1,000 users.
The idea behind the rollout is to take it slowly, and to “think big, act small”, says Ton van den Dungen, business intelligence manager at Eneco. The beauty of starting small is that it makes selling the idea to other business units much easier – not only “pushing” the idea on them but them requesting or “pulling” BI. “Now people see it’s successful they want it too,” says van den Dungen.
This softly-softly approach to BI is key, according to Burton. You need people in the BICC who can empathise and communicate with users rather than tell them what to do. “People in the BICC can’t go stomping around the organisation saying thou shalt use these skills,” she says.
Eneco keeps a close eye on BI usage. So, if someone is only using BI once a month, when other people at their level are using it once a week, a BICC member will try and find out if they need training or help.
Van den Dungen totally agrees with the Gartner perspective that BI should be a business initiative. “It should be something that comes out of the business. 99 per cent of BI projects that didn’t work out came from the IT perspective,” he says. According to van den Dungen, the technology part of the project is relatively straightforward.
“Change management is at some stages a bigger issue than the technical environment,” he advises. It is difficult to make people change the way they have been working for years. “You have a change management responsibility to get people using BI tools and if you don’t get that it will go down the drain.”
Best of all is to prove the concept with results. Using Cognos has enabled marketers within Eneco to target customers more efficiently with campaigns, improving conversion rates from five to eight per cent to 70 to 75 per cent. The accounts receivable project helped identify when to send reminders out to bill payers, saving the company almost 8 million euros.
It is the results that count. If that means keeping BI away from IT – even if the CIO is in charge of the initiative – then that has to be a good thing. Otherwise, as Burton warns: “Organisations that don’t put business users as an engaged and integral part of BICC will double their long-term costs.” And no one wants to be responsible for that.
Business intelligence systems can sometimes turn out to be dreary failures.
But in the restaurant industry, there have been significant payoffs.
It has been called “the fast food equivalent of a snuff film” by one health and nutrition advocacy group. Jay Leno made cracks about it on The Tonight Show. Even The New York Times devoted an editorial to its excesses.