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The Profit Impact of Business Intelligence - Book Review

1 May 2010
Dr. Moria Levy
book cover

This book, "The Profit Impact of Business Intelligence," authored by Steve and Nancy Williams in 2007, arises from their hands-on experience in the field. It furnishes valuable tools for advancing business intelligence within organizations, whether as a new initiative or by tapping into and leveraging existing data warehouses.

Interestingly, many of the insights presented in the book are equally applicable to knowledge management. The book is enjoyable, thoroughly revisiting and elucidating each topic from multiple perspectives while incorporating illustrative examples.

The book delves into the following key areas:

  • Identifying the proper business opportunities

  • Prerequisites in the organization to ensure success

  • Suggested activity methods

  • Common errors encountered along the way

The authors envision a future where business understanding transforms, placing business intelligence at the heart of activities and supporting the organization's strategic goals. They prompt the reader to consider, "Is it? Howdy."

This book is highly recommended for those involved in business intelligence seeking to enhance their skills. Happy reading!

Identifying the proper business opportunities

  1. Outline Principles:

    a. To optimize investments in business intelligence and ensure their alignment with well-defined goals, analyses, decisions, and business actions.

    b. To maximize return on investment, integrate the BI plan's ROI into the work's initial stages with focus and direction.

  2. Identification of Opportunities Requires Preliminary Business Analysis:

    a. Understanding the Business Context:

    i. Business objectives.

    ii. Business strategy.

    b. Understanding how the organization competes and operates:

    i. Top values (price/quality/differentiation, etc.).

    ii. Core business and management processes.

    c. Understanding where business value can be created through business intelligence activities:

    i. Management processes: planning, budgeting, performance, follow-up/evaluation, process improvement, analysis, cost optimization, and more.

    ii. Revenue-generating processes: customer segmentation, campaign management, channel management, sales management, and more.

    iii. Resource-consuming processes: product and service development, order management, production/operations, supply chain, procurement, and more.

    d. Analyzing the relevant processes in the previous section and how they contribute to the objectives and strategy, utilizing both top-down (from goals and plan to processes) and bottom-up (locating processes and examining their contribution) approaches.

    e. Preparing a map that prioritizes BI Portfolio opportunities based on the following:

    i. High Impact + Low Risk (Very worthwhile): Project X.

    ii. High Impact + High Risk (High risk and reward): Project A.

    iii. Low Impact + Low Risk (Quick wins): Project M.

    iv. Low Impact + High Risk (Do not perform): Project S.

Notable Considerations:

  1. Examine strategies to reduce risks in areas of high risk and high impact.

  2. Avoid focusing solely on low-impact projects.

  3. Steer clear of low-impact and high-risk projects.

  4. Prefer a diverse portfolio for optimal results.

Prerequisites in the organization to ensure success

Here are the prerequisites crucial for fostering success, with a particular emphasis on non-computational factors. While technological prerequisites carry significance, they are no longer exclusive conditions, and relying solely on their existence is insufficient for initiating a business intelligence process.

A readiness analysis evaluates three critical aspects of any organization:

  1. The organization's capacity to align with a business intelligence plan and oversee its implementation.

  2. The company's adaptability to change, leveraging performance through business intelligence operations.

  3. The computational ability to practically implement the plan.

The following components warrant examination for the organization's ability to align with a business intelligence plan and supervise its implementation:

  1. Strategic coordination between business and computing functions.

  2. Strong working relationships between business units and the IT department.

  3. Diversification of the business intelligence portfolio.

For maintaining orderly decision-making processes:

4. Cultivating an organizational culture that values information and knowledge.

5 Embracing continuous process improvement as a foundational organizational concept, facilitating the integration of business intelligence into workflows, and even altering processes for improved functionality.

6. Upholding systematic decision-making processes.

Concerning the computational ability to implement the plan in practice:

7. Sustaining a technological infrastructure supporting all business levels, including managerial ones.

8. Maintaining a data warehouse with both technical and operational readiness.

9. Ensuring organizational computing infrastructure readiness, including appropriate staff with a clear understanding of business and computing contributions.

An examination of the organizational state can uncover readiness issues in cases such as:

  1. Significant disparities in results across different groups in the organization.

  2. Shallow scores in the above factors suggest the need for risk-managed activities.

  3. Low to medium scores, with gaps between groups, indicate the necessity to deepen the assessment and refine the results.

Suggested activity methods

The proposed activity method encompasses approaches for the business level, technological realization level, and cultural change management for information use:

Business Method:

  1. Strategic Business Context:

    a. Goals: Understand the external factors impacting the company and the chosen organizational strategy.

    b. Methods: Internal/external research, analysis, and executive interviews.

    c. Contribution: Ensures business intelligence aligns with strategy, enhancing profitability.

  2. Business Architecture:

    a. Objectives: Understand the structure, processes, systems, people, and technology serving customers.

    b. Methods: Intra-organizational research, analysis, and executive interviews.

    c. Contribution: Ensures business intelligence supports strategy and improves profits.

  3. Demarcation of Business Intelligence:

    a. Goals: Understand the organizational focus of business intelligence.

    b. Methods: Interviews with initiating managers.

    c. Contribution: Defines boundaries for planning, development, and implementation.

  4. Types of Business Intelligence:

    a. Goals: Understand information types, analytics, and decisions BI needs to support.

    b. Methods: Interviews, surveys.

    c. Contribution: Provides clarity for planning, development, and implementation.

  5. Relationship Architecture Business Intelligence:

    a. Goals: Understand the technological information environment.

    b. Methods: Interviews, surveys.

    c. Contribution: Evaluate and plan factors influencing the initiative.

  6. Business Intelligence Architecture:

    a. Objectives: Understand connections between BI and supported business processes.

    b. Methods: Analyzing BI opportunities.

    c. Contribution: Identifies processes requiring change for performance improvement.

  7. Business Intelligence Readiness:

    a. Goals: Understand and manage risks.

    b. Methods: BI readiness assessment, data warehouse readiness assessment.

    c. Contribution: Lowers barriers hindering profitability and reduces project costs.

  8. Identifying Business Intelligence Opportunities:

    a. Goals: Understand how BI supports profitability.

    b. Methods: Analyzing BI opportunities.

    c. Contribution: Ensures BI activities support strategy and profitability.

  9. Core Business Processes:

    a. Objectives: Understand processes supporting organizational strategy and generating profitability.

    b. Methods: Analysis of BI opportunities, process analysis.

    c. Contribution: Ensures BI activities align with strategy, identifying targeted initiatives.

  10. Define Business Intelligence Requirements:

    a. Objectives: Understand targeted business information, analytics, and decisions.

    b. Methods: Analyzing BI requirements.

    c. Contribution: Integrates BI activities with business processes.

Method of Realization:

  1. Set up the Logical Data Model.

  2. Set up the logical data warehouse model.

  3. Set up the physical data warehouse model.

  4. Data acquisition planning.

  5. In parallel with steps 2-4: Data Mart prototype.

  6. Establishment of the technological environment.

  7. Guidance.

  8. Realizing business processes using business intelligence tools.

Method for Managing Cultural Change:

  • Three Levels in the Culture of Information Use:

    - Realizing BI without changing information paradigms.

    - Organizational functions rely on BI with specific processes.

    - Organizations are constantly evolving information paradigms for success through BI.

  • Change Management is based on John Kotter's eight-step philosophy, ensuring BI capabilities at the educational, tools, business adaptability, change management, versioning, risk management, and infrastructure levels for success.

Common errors encountered along the way

Several mistakes are often underestimated, yet proper implementation is crucial for success:

  1. Believing Business Intelligence Can Thrive Without Organizational Leadership: Critical for sustained success.

  2. Lack of Explicit Connection Between Business Strategy and BI Strategy: Ensures alignment for strategic success.

  3. Inadequate Understanding of How to Define Business Knowledge Needs: Focused on identifying what the business truly needs.

  4. Failure to Market the Vision of BI's Contribution to the Organization: Communicating the concrete value of BI.

  5. Choosing Random Projects Instead of Targeted Opportunities: Maximizing impact through strategic choices.

  6. Inadequate Management and Governance of the Implementation Plan: Proper oversight and control throughout.

  7. Lack of Management Plan and Supervision at the Prototype Stage: Critical for successful initial development.

  8. Failure to Position Business Intelligence at an Organizational Strategic Level: Ensures BI's integration into the organizational strategy.

  9. Insufficient Resources for Realizing BI Project Requirements: Adequate resources for successful project completion.

  10. Failure to Understand the Distinction Between Operational and BI Systems: Avoids misconceptions about BI's integration into processes.

  11. Use of Technological Environment Unsuitable for the Need: Ensures the right tools for effective BI.

  12. Analyst, Design, and Development Focused on Operational Information Systems: Adopts the correct approach for BI systems.

  13. Belief in Sustaining BI Without Managing Gradual Cultural Change: Cultivates an environment supporting BI over time.

  14. Neglecting Business Process Changes with BI Tools Introduction: Ensures alignment between BI tools and processes.

  15. Lack of Additional Organizational Changes for BI Implementation: Recognizes the need for broader organizational adjustments.

  16. Failure to Create Organizational Incentives for BI Adoption: Encourages active engagement and participation.

  17. Failure to Extract Possible and Correct Insights from Information: Maximizes the value derived from available data.

It is a comprehensive list, and adherence to each step is strongly recommended to ensure successful BI implementation.

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