Chapter 3 Business Intelligence Readiness Prerequisites for Leveraging Business Intelligence to Improve Profits
“… successful organizations can be distinguished by their ability to leverage IT capabilities to transform their businesses (structures, processes, and roles) to obtain powerful sources of competitive advantage in the marketplace.”
—John Henderson and N. Venkatraman, Center for Information Systems Research, Sloan School of Management, Massachusetts Institute of Technology, November 1990
Historically, many data warehousing (DW) and business intelligence (BI) initiatives have been driven by information technology (IT). The BI industry has focused mainly on the technical aspects of delivering information to the BI user community. Now, however, we have arrived at a point where many of the technical challenges and tradeoffs are well understood. As a result, attention has shifted away from the technology per se and toward expanding the ways BI can be used to deliver business value, as well as toward enhancing BI development methods to ensure that BI investments pay off.
In Chapter 2, we briefly introduced the concept of business-centric BI methods, which design return on investment (ROI) into planned BI applications at the outset and then re-engineer relevant business processes to ensure that the organization actually captures its planned ROI. We also discussed BI opportunity analysis and the BI opportunity map in detail, and we introduced the BI readiness assessment. All of these are key components of business-centric BI methods—a comprehensive view of which is the focus of Chapter 4.
Our focus here in Chapter 3 is on BI readiness as a prerequisite for BI success and as a key BI risk analysis tool. As part of the more rigorous business-centric BI methods, BI readiness assessments are used at the front end of BI projects to determine the degree to which a given company is prepared to make the changes that are necessary to capture the full business value of BI.
A well-conceived BI readiness assessment builds on traditional DW readiness assessments by examining a range of organizational attributes that are correlated with the readiness to exploit BI for improved profits. Examining these key readiness factors “up front” focuses the attention of business sponsors and business users on business value capture mechanisms—that is, on the manner in which relevant organizational behaviors and business processes must change in order to exploit newly available business information and business analysis tools. BI readiness assessments also identify specific areas of implementation risk so these risks can be managed and mitigated, thus improving the probability of BI success. Used effectively, the information gained from a BI readiness assessment helps the BI team design ROI into BI applications and reduce the business risk that BI applications will turn out to be shelf-ware.
3.1 Business Intelligence Readiness Overview
As we discussed in Chapters 1 and 2, the business value of BI lies in its ability to improve the effectiveness of the core business processes that drive profits. Simply put, an investment in BI must return increased revenues and/or reduced costs that exceed the amount invested or business value will actually be lost. The increased attention being paid to the ROI of BI reflects industry experience over the past decade wherein many DW initiatives, and the BI applications they supported, were not successful when measured against the business value yardstick.
To overcome this problem, we need to better understand where the business value of BI is and then identify and manage the preconditions for capturing the business value.
As seen in Chapter 2, using BI opportunity analysis and the BI opportunity map delivers a richer and more rigorous understanding of the business value capture mechanism(s) for a given BI project or for all of the opportunities within the BI portfolio. These techniques are used to achieve strategic alignment among (1) business strategies, goals, and objectives; (2) the key business processes employed to meet the goals and objectives; and (3) the BI initiatives that are designed to improve the effectiveness of the key business processes. These efforts lay the groundwork for a successful BI investment by establishing a business-driven roadmap for profitable BI investments. By way of reminder, Figure 3-1 shows the BI opportunity analysis flow.
Using BI opportunity analysis and the BI opportunity map fundamentally changes the front-end analysis for BI and DW by adding rigor to the determination of how the BI investment or investments are going to increase your company’s profits. These methods also change the back-end delivery process by using business process reengineering techniques to ensure that the deployed BI applications are embedded in relevant business and/or management processes that deliver business value.
FIGURE 3-1 Business-centric analysis of using business intelligence to create business value.
To reach the final destination–that is, deployed BI applications that deliver ROI–we also need to manage those business and IT factors that will either support or impede project success: that’s where the BI readiness assessment comes into play. Based on our consulting experience with Fortune 1,000 companies and government agencies, and on our experience as judges for the BI/DW Best Practices competitions, we have identified factors correlated with an organization’s ability to leverage BI to improve business performance and deliver business value. Figure 3-2 shows those factors.
Tip
Readiness assessment is crucial because it serves two important goals. First, it identifies “gaps,” areas where you are not ready to proceed with your BI efforts. By identifying your BI readiness gaps, you can avoid wasting time and resources in areas where lack of preparation would make success difficult and failure probable. Second, readiness assessment shows you what you need to close the gaps and implement BI with a high probability of success.
After an organization determines where it stands in relation to these BI readiness factors, the organization can leverage strengths, manage risks, launch initiatives to improve readiness, develop competencies in embedding BI into core processes, and manage the process of capturing business value on specific BI projects. A BI readiness assessment can thus be seen as a BI risk analysis tool and as an implementation tool that, with a modest investment of effort, can greatly enhance the probability of a strong payoff for a BI investment.
FIGURE 3-2 Impact of business intelligence readiness factors on its return on investment.
3.2 Business Intelligence Readiness, Business Risk, and Traditional Development Methods
A BI readiness assessment is a tool designed to help overcome the limitations of traditional development methods. Because it is business-centric, we are less concerned with the technical issues of DW and BI deployment—even though technical architecture, data architecture, technology choices, and appropriate methods will always be critical to project success. Instead, the business risk associated with BI investments is important: that’s the risk that the business will not successfully identify key BI opportunities and/or capitalize on a given deployed BI application, and thus the investment will not pay off.
This is different from traditional development approaches, which make the leap of faith that the combination of sponsor support (funding, commitment, participation, political support, and testimonials), subject matter expert (SME) involvement, and sound technical and management methods will result in a successful BI project. We believe that industry experience shows a clear need to move beyond this traditional perspective in order for organizations to realize the business value of BI. Two recent cases, disguised to protect the proprietary interests of the organizations involved, will illustrate this point.
3.2.1 Manufacturing Company Example
Company A is a $4.5 billion manufacturer of consumer and industrial products. At the time of the project (2000/2001), its consumer products group had deployed a data mart with an online analytical processing (OLAP) application used for managing revenue and profit to meet Wall Street’s expectations. Company A’s industrial products group determined that a similar BI application would allow it to do a better job of managing revenues and profits. Funding was obtained. The group used a traditional development method to design, develop, and deploy the BI application. It held facilitated sessions with SMEs to determine the business questions the BI application would need to answer. Several business users were involved throughout the project, and the group provided training after the data mart was completed. Although the BI application was ultimately successful, there were several bumps in the road that the company could have avoided via a comprehensive BI readiness assessment. Specifically,
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“Data mart,” “OLAP,” and other BI technical terms are explained in Appendix A at the end of this book.
Had the company started by conducting a BI readiness assessment, it could have anticipated and better managed many of the obstacles that got in the way of realizing the full value of the BI investment. The design and deployment of the BI application and the tool used to deliver it would certainly have been different. Further, a richer understanding of the culture around information use, decision making, and the use of analytical applications would have allowed Company A to identify and manage the organizational change needed to fully leverage the new BI application. In addition to training, a more proactive business process re-engineering effort in conjunction with behavioral incentives to make use of the sales analysis information would have improved the outcome.
Pitfall
Some people take culture and cooperation less seriously because these items are not about technology and cannot easily be quantified. However, such “soft” factors are just as crucial to your BI success as metrics and technologies. You ignore them at your peril.
3.2.2 Disability Insurance Company Example
Company B is an $8 billion company that faces substantial business challenges over the next decade. Those challenges come largely from increases in claims by the aging baby-boom generation, whose members are entering their disability-prone years. Other challenges come from heightened customer service expectations associated with the ever-growing number of business transactions that can be accomplished via the Internet. Accordingly, Company B needs to optimize claims processing productivity and improve service delivery. These challenges are operationally complex owing to the variable nature of disability claims and the need to apply both medical and vocational expertise to make accurate claims decisions. Accordingly, the company has embarked on a BI program aimed at providing all levels of operations management with more timely and relevant business information, as well as with appropriate analytical tools so that managers can consistently improve productivity and service. Toward these ends, the company is specifically managing the BI readiness factors described in Figure 3-2. It has funded a major project to ensure that it captures the business value of its investments in BI. In terms of BI readiness,
Tip
The essence of Company B’s advantage in BI is managerial, not technological. By aligning its BI program with strategic objectives and processes, by planning for cultural change, by assessing its BI readiness, and by using effective IT governance mechanisms, Company B ensures that it will get the most from its BI investment almost regardless of the specific BI technologies it chooses to implement.
The situation at Company B is different from that at Company A because Company B has embraced business-centric BI methods that explicitly consider and manage the business risk associated with BI investments. By assessing BI readiness at the front end, Company B has positioned itself to manage process changes and implementation risks so as to ensure that the BI applications deliver business value. In other words, Company B has increased the odds that its BI applications will pay off. BI readiness assessments go beyond traditional development methods by explicitly assessing the risk that the business will not successfully capitalize on a given deployed BI application.
3.3 Business Intelligence Readiness Factors
To ensure a return on an investment in BI, those factors that make a difference in whether or not the investment pays off have to be identified and managed. From a technical perspective, an established body of knowledge around DW can be employed to ensure that fundamentals of acquiring, staging, and delivery of information and BI applications are done correctly. From a business perspective, a number of factors ultimately determine whether or not a BI application delivers an ROI. These readiness factors are types of business risk and can be managed accordingly. It is common for organizations to obtain a range of scores, from strong to weak, on individual BI readiness factors. Strong scores indicate a strength that can be leveraged for success. Weak scores indicate risks that need to be actively managed to mitigate risk.
3.3.1 Strategic Alignment
Much has been written about strategic alignment between business and IT. The discussion is generally about consistency among business strategy, business organization and processes, IT strategy, IT infrastructure, and IT organization and processes (Cooper et al., 2000). In the BI context, strategic alignment occurs when
Absent any of these elements, there is the risk that a BI initiative will not deliver business value.
Tip
If strategic alignment is an organizational strength, then using a BI opportunity analysis framework (see Chapter 2) to develop a BI opportunity map will seem intuitive. If it is not a strength, then using a BI opportunity framework to develop a BI opportunity map may be initially uncomfortable. The result, however, will be the ability to make a “business case” for potential BI projects that are based on bottom-line considerations. This strategic alignment of BI opportunities will greatly improve the odds of BI success.
From an ROI perspective, BI initiatives should focus on business processes that make a difference, which was the focus of much of Chapter 2. We cannot expect much of an ROI on BI initiatives aimed at nonstrategic parts of the business. To have a profit impact, BI investments must be directed at management processes and/or business processes that have the greatest impact on profits. Accordingly, building ROI into BI initiatives requires that we ensure–up front–that a proposed BI portfolio or project is strategically aligned. The BI opportunity analysis framework and the BI opportunity map help ensure strategic alignment, as do having an appropriate BI infrastructure and a BI organization with the necessary BI/DW core competencies (see Section 3.3.6).
3.3.2 Continuous Process Improvement Culture
Using BI to improve management and/or business processes that make a difference in profits, productivity, and service requires some degree of process change. Experience at leading companies suggests that change management is often the most difficult aspect of successfully deploying a new BI application.
If process changes are needed to leverage BI and business users don’t make them, then the company’s investment in BI will be wasted. The money spent will have no impact on the economic well-being of the organization. However, organizations that have created successful process improvement cultures are adept at changing business processes, which prepares them to leverage BI effectively within processes that have an economic impact. Accordingly, you should assess whether an organization is ready to manage the process changes required to capture the business value of a BI initiative. If the organization is not ready, you need to know that up front so that you can formulate and execute appropriate plans for overcoming that liability (managing that risk). The differences in corporate cultures with respect to change and continuous improvement are evident in conversations we’ve had with several of the large companies with which we work. In one case in which we were developing a BI strategy for an industrial manufacturer, we asked about that company’s orientation to change. Their response was, “All we do is change.” In contrast, another company with which we’ve worked is very slow to change. A business adage popular at that company is that “there are 1,000 people who can say ‘no’ to a proposed change and only two who can say ‘yes,’ and nobody knows who those two people are.” This is a major company whose consumer product brands are among the most well known in the world, so it is very successful. It’s just that the company is very deliberate about change. From the perspective of capturing the business value of BI, these two companies present very different management and implementation challenges. An effective BI readiness assessment can help ferret out the specific change management and continuous improvement challenges that must be managed.
Tip
If continuous improvement is an organizational strength, then process changes that are needed to fully leverage BI capabilities can be incorporated into the existing organizational structures that are in place for this purpose. If it is not a strength, then you may consider identifying key business players that have resisted change, as well as those who may be open to change. “Sell” the need to change to key business players who can “market” to resisters in order to influence organizational change. Work with these change agents to develop a compelling business case for change. Use the BI opportunity analysis to discuss the “to be” organization and how using BI within changed business processes will support bottom-line performance improvement.
3.3.3 Culture Around the Use of Information and Analytical Applications
Organizations that embrace the use of information and analytical applications to improve profits are better able to leverage investments in BI than are organizations that do not embrace and reward such approaches to creating business value. We recently conducted a short survey of BI readiness via our Web site, and we found that major organizations differ markedly on this aspect of readiness. On a scale of 1 (low readiness) to 5 (high readiness), the survey respondents scored as high as 4.5 and as low as 2.5 on this factor. Although the number of respondents to the survey was small, the respondents are major organizations (most with revenues greater than $1 billion), which makes the survey responses valuable at least as anecdotal evidence.
Organizations vary in their readiness to use information and analytical applications to improve business performance. That fact is an element of corporate culture and is influenced by the environment in which the organization operates. For example, businesses that operate in high fixed-cost industries (such as airlines, hotels, trucking, and some manufacturing businesses) have long employed highly sophisticated revenue optimization models that they use every day in their business. These models dynamically manage pricing to optimize the tradeoff between price and capacity utilization. The goal of these models is to deliver the most profit possible under given constraints of supply and demand.
Such organizations are not daunted by the prospects of deploying new BI applications because their operating environment demands the use of BI applications and their culture supports it. In contrast, we have worked with leading companies where the predominant mode of operation was characterized by lack of information and analytics, decisions driven by force of personality, and the dominance of intuition at the expense of fact-based analysis. These different types of firms have different prospects when it comes to leveraging BI to capture business value. An effective BI readiness assessment will identify the relevant cultural obstacles to a successful BI application that delivers ROI.
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If use of information and analytical applications is an organizational strength, then new BI applications that further enrich analysis will be welcomed by the business. If it is not a strength, then this capability will need to be developed in the organization. Finding business “power users” who can embrace new BI applications and demonstrate/model how these applications can be used to measure and manage business performance may be a good way to grow this organizational capability.
3.3.4 Business Intelligence Portfolio Management
A wide range of BI applications can improve the performance of the units within a given company, including some applications that help drive revenue growth and others that help reduce costs and optimize profits. Companies that have undertaken a comprehensive review of the major BI opportunities for sales, marketing, manufacturing, distribution, customer service, quality, and so forth are in a position to manage BI as a portfolio of investments, ranked by business impact and risk. This is important in an environment where capital budgets for IT are constrained, as they are almost always are.
The idea of managing BI initiatives as a portfolio is gaining increased attention in the context of discussions about the business value of BI. In many companies, a certain percentage of sales revenue is budgeted for IT, and then IT investments are managed as a portfolio (Broadbent and Weil, 1998). Within this IT capital budgeting context, BI fits as shown in Figure 3-3.
In any given company setting, a variety of IT capital expenditures for different purposes exists. Infrastructure expenditures—the foundation for the pyramid—can be thought of as basic plumbing in that they move data around, store it, and secure it. Infrastructure also provides the means for collaboration by providing such utilities as e-mail, workflow control, and intranets. The portfolio also includes transactional applications–the systems that the company uses to conduct transactions with or for the benefit of customers. Enterprise resources planning (ERP) systems are the most prominent example of a transactional application. Lastly, the portfolio includes informational applications and strategic applications, which is what BI has come to encompass. Informational applications provide key performance management information, and strategic applications are innovative IT applications that provide strategic advantages to the first mover.
FIGURE 3-3 Business intelligence in the information technology portfolio.
Tip
If IT portfolio management is an organizational strength, then obtaining support for using a BI opportunity map approach to identify and evaluate potential BI projects for funding will likely be supported. If IT portfolio management is not an organizational strength, then the business may have to be sold on the concept. In organizations in which “pet projects” are funded based on influential business players rather than on the merits of the investment, this may be difficult. By selling key business players on the concept and enlisting their help to begin developing a BI opportunity map, you will be able to demonstrate to the business how this type of analysis can be beneficial to ensure that their BI/DW investments pay off.
Given its position in the IT portfolio, BI must compete for scarce capital funds, and the formal capital budgeting process frequently addresses the subject of ROI. If a given company has not examined the full spectrum of BI opportunities, it cannot know if the proposed BI projects are those that offer the highest risk-adjusted ROI to the company. Ideally, this analysis is conducted at an enterprise level, but this analysis can also be applied at a line of business, or functional level, based on the scope of the BI program. This may not make a difference if there is sufficient capital fund all BI projects that offer a positive ROI to fund all BI projects that offer a positive ROI. In a capital-constrained environment, however, not managing BI initiatives as a portfolio poses the risk of funding one BI project at the expense of another that may offer a higher ROI. In our view, companies who take a portfolio view of BI initiatives show a more strategic commitment to BI, and thus they are more ready to capture the maximum business value from BI investments. In our recent readiness survey, respondent scores ranged from 2.7 to 4.3 on this readiness factor, indicating that some organizations take a more strategic approach to managing BI for ROI.
3.3.5 Decision Process Engineering Culture
Decision process engineering is a term we have coined to convey the concept of using structured decision processes to increase the effectiveness of certain decisions that organizations face on a recurring or semi-recurring basis. These structured decision processes can incorporate the use of information, analytical applications, and/or quantitative methods as appropriate for the type of decision to be made. The decisions in which we are most interested are those that occur within the context of the core business processes that have an impact on profits.
For many companies in many industries, numerous routine and/or recurring management and operational decisions get made in the context of management and business processes. Such decision processes can be improved by using BI in ways that capitalize on the availability of information, analytical applications, and workflow technology to build structured, repeatable decision processes (Williams and Williams, 2003). Companies that understand this are well positioned to capitalize on BI applications to improve profits. In our recent “survey” of BI readiness, we found that survey respondents’ scores ranged from 1.5 to 4.0 on this dimension of BI readiness.
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If your organization has a decision process engineering culture, then it will welcome better and richer information to use for organizational decision support. If your organization does not have a decision process engineering culture, then you can use new BI capabilities as an impetus to build one. This may be difficult and take time because in these cultures, individuals frequently have power based on their individual influence on decisions that are many times made in an ad hoc way. Again, the best way to address this is to demonstrate to the organization how moving from an ad hoc approach to a more structured approach regarding decision making will help bottom-line performance. IT is not the appropriate organization to make this case; the business organization is. Key business individuals should be enlisted to develop the business case and advance the argument. Finding very specific organizational “case studies” that everyone can relate to based on perceived business problems is a good place to start.
Organizations that scored high on this readiness factor agreed with such statements as, “There is a standard decision-making routine for any well-structured problem situation we face.” Having experience in engineering key decision processes means that an organization is accustomed to answering the kinds of questions associated with the example BI application, simple variance analysis, shown in Figure 3-4. Such experience translates into BI readiness because it prepares organizations to embed the use of BI applications into the core business processes that determine overall performance.
FIGURE 3-4 Key questions for decision process engineering.
3.3.6 Business Intelligence and Data Warehousing Technical Readiness
A critical requirement for capturing the business value of BI is the technical ability to deliver the information and analytical applications that support BI. Fortunately, there is an extensive body of knowledge about how to do this. That said, some organizations are much more capable than are others at designing, developing, deploying, operating, and maintaining the appropriate technical environment to support DW and BI. Because you are interested in increasing the likelihood that BI investments will pay off, you must be concerned about reducing technical risk, which means that you need to assess technical readiness. By identifying technical risks up front, you can devise and execute appropriate plans to mitigate them. Accordingly, an effective BI readiness assessment should assess BI and DW technical readiness.
One proven tool that can be used to extend the technical readiness portion of the BI readiness assessment is the DW readiness assessment, a comprehensive instrument available from The Data Warehousing Institute (TDWI, at http://www.tdwi.org/Education/main.aspx?pageName=focus). Although the TDWI DW readiness assessment also includes organizational and business process readiness, it is strong on assessing technical and technical program management factors that affect a company’s ability to do the technical work required to design, develop, and deploy a DW environment that will support the BI applications that will make a difference in profits. The TDWI instrument is designed to assess 12 specific capabilities, including the following:
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If your organization has strong BI/DW technical capabilities, then it can support the technical skills needed to support BI/DW program. If your organization does not have these skills, they can be obtained, either through hiring new employees or by using consultants. Determining critical technical skill gaps is essential to ensure successful technical architecture and implementation.
The TDWI DW readiness assessment is a very useful diagnostic tool for identifying technical execution risks, which is a key prerequisite for mitigating and managing them.
3.3.7 Effective Business/Information Technology Partnership for Business Intelligence
When we talk about an effective partnership between business and IT, we’re not just talking about “playing well” with each other. The issue is business results that create business value, which concerns the business practices used to manage development and use of both IT generally and BI specifically. Organizations that have been effective in using IT to improve business results are more able to leverage BI to create value than are those whose practices do not create effective business/IT partnerships. Figure 3-5 shows key elements of effective partnerships.
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If your organization has a strong business/IT partnership, then you are fortunate. Many BI/DW failures result from inadequate support from senior-level business management. That support, however, without a solid framework to guide your BI efforts is not enough. Executives will soon lose interest if you do not demonstrate how their investments in BI will deliver business value. If your organization does not have a strong business/IT partnership, it will need to develop one in order to succeed. Many organizations have used IT-driven prototypes to demonstrate BI opportunities. Although this “bottom-up”/IT driven approach is not optimal, it is often needed to get the business on board. The business/IT partnership will naturally be strengthened and continued funding will be provided when the business benefits that can result from this partnership are demonstrated.
The concepts in Figure 3-5 are not new: they are proven principles for effective use of IT to deliver business value (Dvorak et al., 1997). When these ideas are applied to management of a BI portfolio, the probability that individual BI initiatives will deliver business value is greatly increased. Accordingly, an effective BI readiness assessment will test for the presence of practices that implement these principles.
3.3.8 Summary: Business Intelligence Readiness Factors
The seven BI readiness factors we have described can be either stepping stones or barriers to deploying BI applications that create business value. Accordingly, you must know where the organization stands in relation to these factors, and you must take a holistic and realistic view of its starting position. No organization will achieve perfect scores across the board, and BI readiness is more easily improved in some areas than in others.
FIGURE 3-5 Elements of effective business/information technology partnerships for business intelligence.
For example, changing the culture around use of information and analytical applications will take longer than improving technical readiness, which in some instances can be addressed by strategic hiring, training, and/or use of consultants. The organization can use information from the BI readiness assessment as a guide to develop specific, customized BI strategies and implementation plans that effectively account for an organization’s starting position. The result is that BI initiatives deliver as much value as possible as quickly as possible.
Performing an effective BI readiness assessment is a critical element of business-centric BI development methods because it helps the organization to assess how well it performs on factors that can be considered the preconditions for BI program success. A BI readiness assessment is a key tool for identifying the impediments to BI success and then systematically managing BI initiatives to overcome those impediments. Done correctly, it need not be an expensive or lengthy process, and the insight gained into the principal business risks associated with BI initiatives will pay dividends in the form of deployed BI applications that deliver real business value.
3.4 Case Study: BYTECO Business Intelligence Readiness Assessment
BYTECO is a multi-billion-dollar global manufacturer and marketer of semiconductor devices. Its products are key components used in a broad array of electronic applications, including personal computers, workstations, network servers, mobile phones, flash memory cards, USB storage devices, digital still cameras, MP3 players, and other consumer electronics products. Its customers are original equipment manufacturers located around the world.
BYTECO offers its products in a wide variety of package and configuration options, architectures, and performance characteristics tailored to meet application and customer needs. Individual devices take advantage of its advanced silicon processing technology and manufacturing expertise. BYTECO continually introduces new generations of products that offer lower costs per unit and improved performance characteristics.
BYTECO’s manufacturing facilities are located around the world and generally operate 24 hours per day, seven days per week. Its process for manufacturing semiconductor products is complex, involving a number of precise steps, including wafer fabrication, assembly, burn-in, and final test. Efficient production of semiconductor products requires use of advanced semiconductor manufacturing techniques and effective deployment of these techniques across multiple facilities.
BYTECO sells its products into computing, consumer, networking, telecommunications, and imaging markets. Approximately 45% of its net sales for 2005 were to the computing market, including desktop personal computers, notebooks, servers, and workstations. The company markets its products primarily through its own direct sales force, and it maintains inventory at locations in close proximity to certain key customers to facilitate rapid delivery of product shipments.
3.4.1 The Business Intelligence Readiness Assessment
At the time of the case, BYTECO was in the early stages of BI maturity—a measure of organizational culture about which we will have more to say in Chapter 5. Given the nature of its business (and similar to many high technology companies), BYTECO exhibited a strong appetite for better information to use in such key business areas as
However, the company recognized that it needed to assess its ability to deliver the kinds of BI it could use to improve profits. It used the BI readiness assessment for that purpose. “BI readiness” is a state wherein an organization
A BI readiness assessment can be a good way to educate senior-level business management about the critical success factors needed for BI success and to obtain their support for the changes that are needed to improve the odds of success. In practice, BI readiness is the organization’s starting point for a long-term evolution in how it uses information to improve profits and productivity. The BI readiness assessment survey that we use contains 100 questions grouped and scored across the seven BI readiness factors we described earlier in this chapter. Assessment participants are asked to respond to various statements on a scale from 1 to 5, where 5 means “strongly agree,” 3 means “neutral,” and 1 means “strongly disagree.” The high-level results of the assessment at BYTECO are shown in Figure 3-6.
FIGURE 3-6 Assessment results for BYTECO (case study).
There are several key premises that underlie our use of the BI readiness assessment results to diagnose readiness and identify risk:
The results at BYTECO indicated that there were BI readiness challenges across the board. With a few slight exceptions, all groups were neutral to slightly negative in their assessments of BYTECO’s BI readiness on the seven BI readiness factors. Although there did not appear to be any glaring weaknesses, all fronts indicated room for improvement. In general, respondents felt that BYTECO was the least ready in the areas of partnership between business and IT, BI and DW technical readiness, and managing BI as a portfolio. These indications were further explored and substantiated by using the TDWI DW readiness assessment instrument.
Based on the results of the BI readiness assessment and other supporting analyses, BYTECO developed a comprehensive program plan to move its BI initiatives forward and manage its risks. Specifically, BYTECO addressed strategic alignment by elevating the importance of BI within BYTECO and by changing from small, report-focused projects to looking at BI as a multi-year program, or BI portfolio. BYTECO addressed BI and DW technical readiness by investing in training and by adopting BI/DW design and development methods. The company now has a clear idea of how it intends to leverage BI to improve profits, and it is more technically capable of delivering BI applications. Under the leadership of a well-regarded vice president, and in conjunction with its enhanced BI management capabilities, BYTECO is successfully deploying BI as a key profit improvement tool.
3.5 Business Intelligence Readiness: Summary
BI readiness is ultimately about three things: the ability of the company to align and govern a BI program, the ability of IT to perform technically, and the ability of the company to change in order to leverage BI within core processes that have a profit impact. Absent these abilities, a company’s investment in BI in a substantially higher risk proposition—and certainly more of a gamble than it needs to be. Any capital investment is made under conditions of risk, and thus the goal of management must be to identify and reduce those risks. The BI readiness assessment serves just that purpose, and when used proactively, it can identify specific risks to achieving BI-driven profit improvement. Armed with a clear idea of the risks, management can then mitigate those risks and increase the likelihood that its investment in BI will pay off.