Don’t Shift Business Intelligence into Your IT Organization!

Last month, SAP agreed to acquire Business Objects. This week, IBM scooped up Cognos. Both companies’ shareholders received nice valuations. Business intelligence used to be an optional “nice to have” competitive differentiator. Now it has become a “must have” capability to run your business. Organizations that made good use of business intelligence differentiated themselves in the marketplace because they were able to spot trends, identify needs, and correlate seemingly unrelated factors (purchases of diapers and beer; purchases of chainsaws and mattresses).

Today business intelligence applications are no longer confined to the marketing department’s research analysts. BI applications are highly distributed and deeply integrated into many companies’ day-to-day operations. They track inventory, they monitor patient outcomes, they monitor financial risk, they predict customer defections, they correlate operational execution (inventory on shelf, flight delay, equipment downtime) with revenue forecasts and customers’ future buying behaviors. Today’s business intelligence applications are also among the most interesting applications because they’re typically written in-house by subject matter/domain experts; not by professional programmers.

As SAP and IBM’s acquisitions attest, business intelligence has moved from “nice to have” to “must have” investments for most organizations. BI needs to be tightly integrated, albeit loosely coupled, into the applications that run your operations. The danger in turning business intelligence into a core component of your IT operational infrastructure is that the care and feeding of business intelligence may wind up in the IT organization, rather than in the lines of business. The development of business intelligence applications might wind up in the hands of IT analysts as opposed to business analysts. This would NOT be a good thing!

Critical Success Factors for Your Business Intelligence Strategy

Business intelligence practitioners can take heart that the application development tools they’ve relied on for years have now been sanctioned as part of the core IT systems of record. But be wary of ceding ownership of BI applications to your already overburdened IT staff.

1. Development of Business Intelligence Applications Belongs in the Business Units. These application development tools are designed to be used by business analysts. You need to deeply understand your business, create a logical model of your business, and map that model to the ever-changing transactional activities. Modeling a business is an expertise that resides with the people who run your business.

2. Treat Business Intelligence as a Core Competency. Best practice calls for your organization to have a Center of Expertise for business intelligence that can support all of your distributed business intelligence professionals across the organization. This support includes maintaining models, testing new software releases, ensuring smooth migration of BI applications from version to version of the software, and well-defined interfaces with ERP, CRM and other IT applications.

3. Drive Business Intelligence from Customers’ Metrics. Use customers’ outcomes and metrics to monitor and improve the things that matter most to customers. Koko Fitness monitors how well customers are doing in reaching their strength training goals after each exercise session. This enables Koko to modify the customer’s training regime. Harrah’s monitors whether slot machine gamblers are blasting through their gambling budget too quickly. This enables Harrah’s to print a coupon at the slot machine for a free meal or theater ticket, to break the customer’s losing streak and make them feel lucky.

4. Use Business Intelligence to Link Customers’ Goals with Business Results. As you refine your business intelligence strategy for the coming year, focus on monitoring what matters to customers and correlating improvements on those operational metrics with improvements in revenues and profits.