The landscape of business intelligence (BI) is shifting. More companies are looking for a rapid implementation of a BI solution. While the request to see a return on investment in a solution as quickly as possible is not unfounded, organisations are starting to forget what goes into the foundation of a robust BI solution.
The typical BI solution consolidates multiple data sources, cleans the data to ensure accuracy and quality and then disseminates the information into a time-variant data store. This traditional approach has several pros and cons.
When implemented correctly and time variance works well, it can compensate for integration shortfalls within source systems, allowing an organisation to gather huge insights into its customer base by storing history and noting trends. A good example of this was when the retail group Target sent a teenage customer a pregnancy-coupon kit, before she had even let her father know she was pregnant.
The converse side is that all too often, BI solutions become a “white elephant” in organisations. This is largely due to the fact that there is a longer time to market and companies cannot keep up with the ever-changing businesses. When not implemented correctly, BI solutions can become a hindrance to use and difficult to extract information from.
It is becoming more challenging to keep track of all the BI tools that connect and report directly off an organisation’s source systems. These tools are attractive and usually quick to implement. Within a matter of weeks, a chief financial officer can have a dashboard that tells him everything about the organisation’s finances, an operations manager can quickly see the performance of the department, a call centre manager can see which agents are performing well and a sales department will have a good representation of how good sales actually are.
There are several fundamentals that need to be in place for these tools to provide an effective solution: accurate and integrated data in the source systems needs to be perfect. If this cannot be guaranteed, a separate level of abstraction is required, and this is achieved through a traditional BI solution.
It is important to understand the motivation for organisations wanting to implement a BI system. One of the challenges faced by many organisations is calculating the true profitability of a customer, that is how much money the customer spends with the organisation, and how much the cost of sales actually cost the organisation.
Costs associated with a customer include the cost of the product or service being sold, the commissions paid to the sales people, the organisation’s fixed costs that need to be distributed across all customers and then the additional variable costs.
In addition to trying to find out a customer’s true profitability, analysing information to understand inefficiencies in a business is a big motivator. Which of the products are not moving fast enough and, therefore, costing too much to store? When will the company run out of stock and what are the cross-sell opportunities? Which debtor’s agents are performing? These are all questions that a good BI solution should be able to provide answers to.
To successfully implement a BI solution, management needs to understand the disparate systems in their organisation. Instead of trying to go for the quick win, they need to keep their long-term strategy in mind. Before teams try to get dashboards out, they need to understand the underlying systems in the organisation and the data supply chain. Data must be 100 percent accurate and integrated, with sufficient history maintained to enable the discovery of important trends.
The purpose of a BI solution is far more than a presentation layer on top of your data. While your organisation is busy trying to impress each other with pie charts, another organisation is focusing on transforming data into information and letting that information drive innovation.
Implementing an effective BI solution should not be difficult if you keep the fundamentals in mind and make sure it is not an afterthought. An efficient BI solution will also enable you to create additional service offerings, find new opportunities in the market and validate strategic business decisions.
Ryan Naudé is the manager of data solutions at Entelect Software.