Business intelligence as a source of competitive advantage
According to a recent study by IBM, more than 80 percent of CIOs and CFOs rate business intelligence and analytics as their top priority in enhancing business performance.
So what are the issues?
Faced with ever-mounting levels of data from an increasing number of sources, many businesses struggle to keep up with the daunting task of interpreting its meaning. As a result, there are some inherent challenges associated with managing information as a strategic manufactured asset:
- Information has an increasingly limited shelf life: In a fast moving environment, timely access to well organised data has become even more important.
- Data and information are managed in silos: Data is characterised differently by different parts of the organisation. Complications with interpretation arise when no common definitions are agreed.
- Digital data is doubling at an unprecedented rate: The escalated demand for information and the exponential growth in data volumes are challenged by the increase in types and complexity of disparate data that need to be managed.
- Your people need insights more than ever before: The increase in the number of knowledge workers throughout organisations means that more people are seeking access to more data than ever before. The need to present that data in intelligible forms to workers lacking specialised data extraction skills has never been greater.
A significant proportion of this data has financial repercussions and will inevitably end up in the hands of Finance. The problem is that in many cases the need for business insight has risen much faster than Finance’s ability to process it, and that’s assuming they even know where to begin.
Finance now has a valuable opportunity to take a more proactive role in the performance of the organisation. More data is available than ever before, allowing greater breadth, depth and speed of insight. Despite this, many finance departments still fall short in providing genuinely strategic insight for the business. Although many do a good job when providing conventional metrics, they lack the ability to drill deeper to deliver the substantive business analytics required to compete at a world level.
Our perspective – BI as a Core Competency to any organisation
Although they are faced with demands for greater competitiveness, there are glaring gaps in the insight capabilities of many organisations. If they are to make the best use of the wealth of business intelligence that is available to them, they need more advanced data analyses, scenario planning and predictive capabilities. There needs to be a fundamental recognition of enterprise information as a strategic manufactured asset, and needs to be managed accordingly.
Once the right sponsorship is acquired, Finance and the broader management needs to address three considerations when building a Business Intelligence capability:
- Define the information assets to be ‘manufactured’: Of course, the regulatory obligations will make it easy to define some of these. But just as importantly, an understanding of where the value is created by each part of the organisation will allow it to derive the necessary information.
- Define the production environment: Ensuring an efficient and effective process in order to ‘manufacture’ information. Often companies think that just ‘buying the system’ is good enough, but, unsurprisingly, a system on its own can often produce more ‘noise’ than anything else. Hence the need to consider softer aspects such as processes to create information, architecture/definitions and, of course, the technology itself.
- Define how you will organise your ‘tacit knowledge’: It is naive to think that all information can be accessed and stored. The value is in the use of information in combination with the application of your organisation’s tacit knowledge, mainly based on the people and the way you organise them.
Below, we illustrate in more detail the above considerations and, from an information consumer’s perspective, where your people will actually be based and for what purpose:
Both Finance and IT organisations have the credibility to drive the mandate of building BI as a core competency.
However, Finance needs to better understand the interaction of cross-functional operational metrics from supply chain, sales and marketing, and other areas, and incorporate sales and operational plans into their financial forecasts.
Results
Finance’s persuasiveness as a strategic advisor depends on having superior business insight capabilities. With the right tools and resources in place, Finance is able to act as an early warning system that allows all levels of the business to anticipate problems and react before they run out of control. The result is that the business is better placed to contend with rising complexity, volatility and uncertain growth.
GEOJAN – performance management and business intelligence
Aligning people with performance
Tel: 020 3287 7620