CIO drilldown: Business Intelligence

CIO drilldown: Business Intelligence

Definition, objectives and getting BI deployments right.

Business intelligence, or BI, is an umbrella term that refers to a variety of software applications used to analyse an organisation’s raw data. BI as a discipline is made up of several related activities, including data mining, online analytical processing, querying and reporting. Companies use BI to improve decision making, cut costs and identify new business opportunities. BI is more than just corporate reporting and more than a set of tools to coax data out of enterprise systems. CIOs use BI to identify inefficient business processes that are ripe for re-engineering.

With today’s BI tools, business folks can jump in and start analysing data themselves, rather than wait for IT to run complex reports. This democratisation of information access helps users back up—with hard numbers—business decisions that would otherwise be based only on gut feelings and anecdotes.

Although BI holds great promise, implementations can be dogged by technical and cultural challenges. Executives have to ensure that the data feeding BI applications is clean and consistent so that users trust it.

Who should lead the way?

Sharing is vital to the success of BI projects, because everyone involved in the process must have full access to information to be able to change the ways that they work. BI projects should start with top executives, but the next group of users should be salespeople. Because their job is to increase sales and because they’re often compensated on their ability to do so, they’ll be more likely to embrace any tool that will help them do just that—provided, of course, the tool is easy to use and they trust the information.

With the help of BI systems, employees modify their individual and team work practices, which leads to improved performance among the sales teams. When sales executives see a big difference in performance from one team to another, they work to bring the laggard teams up to the level of the leaders.

Once you get salespeople on board, you can use them to help get the rest of your organisation on the BI bandwagon. They’ll serve as evangelists, gushing about the power of the tools and how BI is improving their lives.

How should I implement a BI system?

When charting a course for BI, companies should first analyse the way they make decisions and consider the information that executives need to facilitate more confident and more rapid decision-making, as well as how they'd like that information presented to them (for example, as a report, a chart, online, hard copy). Discussions of decision making will drive what information companies need to collect, analyse and publish in their BI systems.

Good BI systems need to give context. It's not enough that they report sales were X yesterday and Y a year ago that same day. They need to explain what factors influencing the business caused sales to be X one day and Y on the same date the previous year.

Like so many technology projects, BI won’t yield returns if users feel threatened by, or are skeptical of, the technology and refuse to use it as a result. And when it comes to something like BI, which, when implemented strategically, ought to fundamentally change how companies operate and how people make decisions, CIOs need to be extra attentive to users' feelings.

Seven steps to rolling out BI systems:

1. Make sure your data is clean.

2. Train users effectively.

3. Deploy quickly, then adjust as you go. Don't spend a huge amount of time up front developing the "perfect" reports because needs will evolve as the business evolves. Deliver reports that provide the most value quickly, and then tweak them.

4. Take an integrated approach to building your data warehouse from the beginning. Make sure you're not locking yourself into an unworkable data strategy further down the road.

5. Define ROI clearly before you start. Outline the specific benefits you expect to achieve, then do a reality check every quarter or six months.

6. Focus on business objectives.

7. Don't buy business intelligence software because you think you need it. Deploy BI with the idea that there are numbers out there that you need to find, and know roughly where they might be.

What are some potential problems?

User resistance is one big barrier to BI success; others include having to winnow through voluminous amounts of irrelevant data and poor data quality.

The key to getting accurate insights from BI systems is standard data. Data is the most fundamental component of any BI endeavor. It's the building blocks for insight. Companies have to get their data stores and data warehouses in good working order before they can begin extracting and acting on insights. If not, they'll be operating based on flawed information.

Another potential pitfall is BI tools themselves. Though the tools are more scalable and user friendly than they used to be, the core of BI is still reporting rather than process management, although that's slowly beginning to change. Be careful not to confuse business intelligence with business analytics.

A third impediment to using BI to transform business processes is that most companies don't understand their business processes well enough to determine how to improve them. And companies need to be careful about the processes they choose. If the process does not have a direct impact on revenue or the business isn't behind standardizing the process across the company, the entire BI effort could disintegrate. Companies need to understand all the activities that make up a particular business process, how information and data flow across various processes, how data is passed between business users, and how people use it to execute their particular part of the process. And they need to understand all this before they start a BI project, if they hope to improve how people do their jobs.

What are some benefits of business intelligence efforts?

A broad range of applications for BI has helped companies rack up impressive ROI figures. Business intelligence has been used to identify cost-cutting ideas, uncover business opportunities, roll ERP data into accessible reports, react quickly to retail demand and optmise prices.

Besides making data accessible, BI software can give companies more leverage during negotiations by making it easier to quantify the value of relationships with suppliers and customers.

Within the walls of the enterprise, there are plenty of opportunities to save money by optmising business processes and focusing decisions. BI yields significant ROI when it sheds light on business bloopers. For example, employees of the city of Albuquerque used BI software to identify opportunities to cut cell phone usage, overtime and other operating expenses, saving the city $2 million during three years.

Likewise, with the help of BI tools, Toyota realised it had been double-paying its shippers to the tune of $812,000 in 2000. Companies that use BI to uncover flawed business processes are in a much better position to successfully compete than companies that use BI merely to monitor what's happening.

More tips for getting BI right

• Analyse how executives make decisions.

• Consider

• Consider what information executives need in order to facilitate quick, accurate decisions.

• Pay attention to data quality.

• Devise performance metrics that are most relevant to the business.

• Provide the context that influences performance metrics.

And remember, BI is about more than decision support. Due to improvements in the technology and the way CIOs are implementing it, BI now has the potential to transform organisations. CIOs who successfully use BI to improve business processes contribute to their organisations in more far-reaching ways than by implementing basic reporting tools. Compiled by Ryan Mulcahy

Sidebar: Social CRM - how analytics can spur greater success

Done right, Social CRM can help your company talk to your customers, but even more importantly, it can help you listen to your customers in ways you've never imagined. And that can help your business grow.

By Todd R. Weiss

Companies of every kind are beginning to focus more on consumers and engaging with them on Facebook, Twitter and other social media platforms. But the successful businesses, the ones that want to really make their social media efforts sing, are going beyond just gaining that simple visibility.

What those smart companies are doing, says Denis Pombriant, a Social CRM analyst with Beagle Research Group LLC, is turning their social media efforts into two-way, real-time communications with their customers.

"We usually think of social media as an outbound-only tool," where companies only send their messages to consumers, he says. But that's a huge mistake to make today.

"Instead, what you need to do is listen" to customers via social media and hear their messages loudly and clearly, he says. "What's hard about direct mail and other older technologies out there is that were no good, inexpensive ways to capture the voice of the customer in the past. But with social media tools, if you listen, you can learn a lot about customer demand, biases and more."

To do that, enterprises that are building and growing their social media efforts need to also bring in great analytics tools to collect customer social media data, parse it and use it to grow their businesses even more, Pombriant says.

"Analytics, in my opinion, is the killer app for social media," he says. A Harvard Business School study last year found that by a two to one ratio, more organisations were using social media tools without incorporating analytics tools that could teach them what it all meant, he says.

"What it points to is that there are a lot of people out there who are telling things to their customers rather than listening to their customers," Pombriant says. "I think that the important thing to do is to make this a closed loop and listen as well as tell, to collaborate."

The bottom line is that simply embarking on a Social CRM strategy is not a panacea, according to Pombriant. You have to really do the work to make it a valuable addition for your company.

One thing to look at is "sentiment analysis," which allows companies to find out what customers think about them in the marketplace. "According to the Harvard study, most companies don't know what their customers are saying about them and where they are saying it," Pombriant says.

Why is this important?

"Because when you start doing that, you begin to get a much clearer picture of your customers and you become more intimate," Pombriant says. "And when you become more intimate, you're more likely to make that second or third sale over time."

Try a little experiment, Pombriant says. Do a Google search of any company name, followed by the word "sucks." Now hit the Enter key and check out the fascinating results.

No matter what company name you type in, just look at all that attention those businesses are getting! Of course, this is not the kind of attention you might want your business to be receiving, but there it is, in living color on the Internet for the viewing pleasure of potential customers around the world.

So what can you do?

"You can't simply ignore it," he says. "The approach in the past has been to ignore it because it's just too expensive to fight all those brush fires. But if you don't find out, those brush fires are going to turn into forest fires."

At the very least, your company can set up simple "Google Alerts" for instances of your company name when it comes up in Google searches. Customers, both happy and unhappy, are most likely posting things online on blogs, Facebook, Twitter, Web sites and other destinations about companies and products that they use and buy. "You can find out what your customers think about you, you can discover what is on their minds and about their unmet needs and their biases," Pombriant says.

"It's an outgrowth of being social," he says. "Being social doesn't mean being nice all the time. Being social means telling it like you see it."

There's even a name for all of this new online marketing potential, he says. Forget about "e-commerce." That's so Year 2000. Instead, try F-Commerce, as in Facebook Commerce.

But before you schedule a staff meeting tomorrow to get your whole company on board the Facebook Express, take a breath, Pombriant advises.

It's not just being on Facebook and Twitter and then communicating with your customers, he says. It's also knowing the markets and audiences on those platforms and knowing what you need to do to communicate with your targeted audience. Again, that's where those pesky analytics come in.

"It's always been true that you need to understand your target market and it's just as true with Facebook," he says. "Some people see half a billion users on Facebook and they say that means it's a great market. But there's more to it than that. Yes, it's a big market but it's skewed towards women, with about 62 percent of the users being female."

That makes a difference in how you approach it, he says.

Last year, Pombriant wrote a book on Social CRM called, Hello Ladies! Dispatches from the SocialCRM Frontier. In the book, he described an article he read about a fellow who brought his custom dress shirt business onto Facebook, where the fellow thought he'd make a killing selling gorgeous dress shirts. In fact, the only way you could buy the guy's shirts was through his Facebook page. You could pick your fabrics, collars, cuffs and the rest.

But the fellow forgot one step.

"He never really paid any attention to the demographics on Facebook," Pombriant says. "He figured that there were so many people there that he'd find some to sell to. He didn't really know that the audience was mostly women. And they didn't buy his shirts. In the article, he was complaining that Facebook was a poor medium for sales."

The lesson in this tale, says Pombriant, is that listening to your customers is key, not just talking at them. "When you think outbound messaging only, you are thinking like the shirt maker."

To get a better handle on what your company can be doing to improve your Social CRM strategy, there are lots of IT tools and vendors in the marketplace who can help your company listen better.

Sentiment analysis vendors include SAS and Radian6, which was recently acquired by, according to Pombriant. Analytics vendors include Marketo, Cloud9 Analytics and major vendors such as Oracle, SAP and Microsoft.

A good place to start is with the basics, he says.

"If you're an executive, you can investigate various vendors or do some of these experiments," Pombriant says. "Take your company name and Google it [as noted above] and ask yourself, 'what's it costing me to do nothing about it?'"

You can even take a look at your product sales figures and correlate them to the customer sentiments you find online. "I suspect you will find out that there's a direct connection between your products and the sentiments people are leaving," he says. "Happy customers buy more products."

And don't forget to also take a look at competitors, too, and benchmark yourself against them to find out how your company is doing in comparison in the world of online comments from customers.

"That can help you discover some metrics," Pombriant says. "If the CEO discovers that his competitor's customers are happier than his, he can declare war" and drive new improved metrics based on social media research. "It can be the root for a new charm offensive."

And there's still more to come in this evolution, he says. "What we're looking at is a transition state, not a final solution," Pombriant says. "We are in a customer intimacy age. If we want to sell more we need to be listening."

Soon, the new information companies that are gaining through social media will be brought into product development to give instant feedback from customers on what they want to buy, he says. That will lead to new products that arrive faster than ever. "In the product development world historically, companies have prototyped and thrown spaghetti against the wall to see if it stuck. In this age, though, in order to be successful you can't still throw spaghetti against the wall because it's too expensive to do." With social media development, you'll know more about customer desires before you spend product production money.

So will this all be worth the time and expense for your enterprise? What a question, Pombriant says. "At the end of the day it's sort of like the old days when companies would ask, 'what's the ROI for putting a telephone on everybody's desk, or putting a computer on everybody's desk? Those questions were asked in a previous decade and we know how those things went. The people who said that they wanted to wait missed the boat." CIO US

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