Imagine a company where the CEO walks into his office at 8am and spends just 30 minutes on his strategic dashboard. Imagine that in these mere 30 minutes he is able to know exactly what sales are in the pipeline; what problems there are in the factory; where HR is in terms of recruitment; what the latest capital expenditure is; the progress of strategic projects and; the latest competitor news that has been gathered from social media. This no longer needs to be imagined by executive teams because with Business Intelligence it is a reality that is at our fingertips, explains Jeremy Hurter, chief financial officer at BIPB.
There is a common misconception in the business world, particularly in South Africa, about what business itelligence (BI) is and the extent to which it can impact on business if implemented and used properly. In terms of BI strategy, there are four types that have been observed in then, outdated, accidental and purposeful.
In the case of “none”, many companies are recording transactions and going about their business but are not analysing their data in any detail. With regards to the “outdated” category, these enterprises use spreadsheets and very expensive, rigid reporting technologies to try and develop some BI capabilities.
These companies often have large IT departments and BI teams but are not able to deliver what the business needs. The “accidental” group are businesses which have had some great data fall into their laps and have capitalised on it or, have some smart business employee who develops their BI in an extremely tactical way but with very few rules around data governance.
Finally, the very rare and elite “purposeful” group, includes businesses that have developed their BI to support and guide their strategy.
Business Intelligence can be both a strategy and a tool to support the strategy execution process. The key is to identify pieces of information that are needed in order to ensure that the company is on track every day to achieve the strategy.
If you really simplify it, a CEO will present a strategy and budget to the company stakeholders before the year starts. He then has to walk into the boardroom after the year ends and tell the board whether the company has achieved the goals set out in that strategy. That is really the CEO’s whole job: if he gets that right and the company meets or exceeds its goals everyone wins.
If we were able to predict this, can you imagine how revolutionary it would be? This would mean no managers running around all day crunching spreadsheets and compiling PowerPoint slide presentations, as they too would be able to access their BI and know how their teams are performing.
People would finally be focused on doing their jobs, rather than being stuck in meetings all day. In my past life, as a CFO working for other corporates, I was astounded at how much time was spent in meetings and preparing reports where executives fed back information from their various units. All this time combined kept them away from doing the jobs they were called to do, often resulting in their actual work being done after hours.
Effective BI promises to change all this.
I am talking about all of the information a CEO needs to know about how the company is doing in terms of the strategy that he has set. All of this critical strategic information gathered, without human intervention, after it has been captured in the source systems. It stands to reason that if your CEO can know every day how he is doing in terms of meeting his company’s strategy, he will be able to either know that he is on track or, if he is not, he can start to make decisions supported by the information to adjust the business Ilevers to get back on track.
Good data is critical for making great decisions. I think of the data held in an organization as the organisational memory. Every time a transaction is recorded or, some piece of master data is recorded, it adds to this memory. So, in effect, this data probably knows more about a business than anyone else.
If you then leverage this data with great BI, you can create another member of your executive committee/board who tells you things and share insights with you in order make decisions that are based on facts. Add to this the new world of big data, social media analytics, machine learning and predictive analytics and you really have a cool robot to help drive you to success.
However, the reality is that if you don’t get BI right, it can be a colossal waste of time and resources and, quite frankly, you shouldn’t even bother. Peter Drucker said that “Culture eats strategy for lunch”, and it’s quite true. If your strategy does not fit with the company culture, it will fail. As such, a good strategy is to try and get the culture to fit the strategy. It is really difficult for a company that is conservative and old fashioned to suddenly become the next unicorn start up in Silicon Valley.
There are a number of other reasons why BI initiatives don’t work. One of the major causes is when the initiative is led by IT and not business. This leads to a number of disconnects. However, this is not always the fault of IT.
Many execs and CEOs automatically hand off the BI projects to IT and expect them to deliver a good result with minimal input. IT may have the technical skills to effectively deliver on them but, for obvious reasons, this is a major problem because BI is a business requirement and must be led by your business leaders.
So, how do we get this right? Well, firstly you need to make sure you identify what is needed to measure in order to check that you’re on track. This involves setting Key performance Indicators – KPIs.
The general guideline for this is to use SMART principals to do this. In order to be successful, KPI’s must be specific, measurable, achievable, realistic and time-based. The place this starts is right at the lowest level of the organization when data is captured. It really frustrates me when I go into a retailer and they have a system meant to capture data about the customer but the person doing it tries their best to avoid this process.
As a result, things like addresses or contact numbers are not captured or are captured erroneously.
The overall business trend that’s been identified this year is that data is becoming appreciated as something businesses of all sizes can now use to give them a competitive advantage. The challenge is how they harness the power of this asset. Furthermore, the volume of data being generated is ever increasing.
Companies are faced with the dilemma of how to make sense of the massive amounts of data that’s being constantly generated and how to differentiate between what is valuable data versus what isn’t. That is where a company who specialises in BI solutions comes in.
BIPB, for instance, prides itself on being business-led with our BI solutions and specialise in assisting companies in making informed decisions based on massive amounts of data that they own, to help improve operational efficiencies and their bottom lines.
In short, BI is the way of the future and executive committees that have the vision to use this powerful tool will undoubtedly be among the top performing businesses in their sectors.