As experienced business intelligence consultants specializing in BI strategy, we’ve seen large successful companies in many industries struggle with envisioning BI uses. In our forthcoming book, provisionally titled Business Intelligence Strategy: Lessons from Industry Leaders, we will provide industry-specific and function-specific examples of business intelligence opportunities and BI uses. In this blog post, we provide a brief description of a simple method companies can use to envision BI uses that will create business value and achieve organizational objectives.
Business Intelligence and Business Performance Improvement
Business intelligence (BI) is like a Swiss Army knife – it can be used for many different business purposes. BI as a tool encompasses the ability to enable reports, advanced analytics, scorecards, dashboards, alerts, predictive analytics, big data analytics, and multi-dimensional analysis (OLAP). The key to value creation lies in using BI to improve management processes, revenue generating processes, customer service processes, and operational processes. By increasing revenue, reducing costs, or both, business intelligence creates business value.
BI Strategy Formulation Process
Essentially, the BI strategy formulation process amounts to aligning BI uses with the overall business strategy and the core business processes through which the business strategy is executed. Using Business Intelligence Opportunity Analysis (see The Profit Impact of Business Intelligence, Chapter 2) or similar methods, companies can systematically identify and envision BI uses. To help with this process, here is a sample of questions companies can ask during the BI strategy formulation process:
- Do we have timely and effective performance dashboards and scorecards that let us know how we’re doing financially, operationally, and with key customers or customer segments?
- Do our performance dashboards and scorecards link to analytical scorecards and dashboards?
- Do we have integrated data about our operations and our finances that enable advanced analytics and predictive analytics for cost analysis, budgeting, performance management, and financial modeling?
- Do we have integrated data – including big data – about all aspects of our business relationship with our customers that enables multi-dimensional analysis (OLAP) for sales and marketing uses such as segmentation, targeting, sales forecasting, product/service performance analysis, customer service analysis, sales and marketing performance analysis, channel analysis, and so forth?
- Do we have integrated data – including big data – about all aspects of operations that enables advanced analytics, predictive analytics, performance and analytical dashboards and scorecards, alerts, and multi-dimensional analysis (OLAP) for operations management uses such as demand forecasting, sales and operations planning, inventory management, supply chain management, cost analysis, productivity improvement, and so forth?
To a significant degree, business intelligence strategy formulation is about envisioning how BI can be used across the enterprise to improve the business activities that drive business performance. By systematically doing a top-down BI Opportunity Analysis, companies can easily identify how business intelligence can be used to improve financial and operational performance, both of which are keys to strong strategic performance. In the coming months, we’ll talk about other key components of BI strategy and about BI strategy for various industries and business functions.