Business Intelligence: avoiding intelligence failure

The search for insight from information comes down to a simple equation. Accurate business intelligence (BI) plus access to timely information supports better decision-making, the key driver of corporate performance.

Giving valuable data to the relevant people at the right time doesn’t just enable them to make the right choices. When used correctly, BI systems also deliver real business benefits and create value.

They provide new performance insights that enhance an organisation’s efficiency and effectiveness – allowing for faster, better decisions. BI also reduces costs and simplifies complex information processing. An additional benefit is that employee engagement and usage of information can increase across the business if the strategy is successfully executed.

All kinds of organisations have latched on to this winning combination. As new technologies and ways of working have changed the rules of the game and the way firms compete, the ever-growing need for reliable information, continuous market insight and the agility to react quickly is increasingly important for businesses globally.

As a result, they’re investing strongly in BI capability, with AMR Research estimating that US$57.1 billion was be spent on BI in 2008. In Gartner surveys, CFOs and CIOs regularly rate BI as their number one issue.

Get it right, and business intelligence makes real business sense. When all the building blocks are aligned, BI shapes up to making a positive impact on the bottom line. Evidence of this is in premium stock prices following announcements about BI initiatives. Economic studies reveal positive reactions from the financial markets to companies’ investment in BI both in short and long-term share price growth.

The problem is that many organisations are getting BI wrong. Despite a combined annual worldwide investment of US$60 billion in BI solutions, half of all BI projects fail according to KPMG-commissioned research from the U niversity of Cambridge.

So what’s the problem?

Reasons for failure

The Cambridge research provides valuable insights into why BI projects fail. It suggests that fewer than 10% of organisations have used BI to re-engineer their organisational and technological infrastructures simultaneously – which is a key driver of success.

Similarly, BI projects are often mistakenly seen as purely technology based, with ownership limited to IT specialists within the business instead of being embedded throughout the organisation.

Firms’ IT systems can also be under-developed, with legacy systems not being up to scratch. Companies then struggle to make sense of multiple databases, in different locations, made more complex by mergers and acquisitions.

Failing to address underlying data issues can easily lead to problems in delivering BI, as well as an unwillingness to challenge the existing status quo of measures and reports.

In some cases, companies are still trying to use models of management that were developed in the 1970s, forgetting that the management models of yesterday will not work tomorrow.

And finally, BI projects are often implemented too quickly, with little thought given to the design and role of data. Getting the basics right first time, under-estimating the complexity involved as well as understanding the impact on many processes and systems, is essential.

The challenge is how to design BI systems that facilitate and enable, not simply command and control management structures. Executives are no longer simply looking for ways of controlling vast empires, but rather for mechanisms that enable their people to perform. BI can deliver significant returns to those who really capitalise on its potential.

How to succeed

KPMG Performance and Technology has identified six key building blocks, including several business-critical questions for business leaders to answer, which will allow organisations to reap BI’s rewards:

Business strategy alignment

• What information is key to delivering strategy?

• How can it be deployed in a way that maximises business performance cost-effectively?

Governance

• What are the principle processes and the organisational structure required to ensure integrity and the continuous alignment of information to business needs?

Performance management process and reporting

• How can financial planning and business performance management be improved?

• What are the key performance indicators (KPIs) and reporting requirements of the business?

• How can the financial consolidation be best executed?

Integrated information management

• What is the information content and data model required to support reporting requirements?

• Where are the value creation opportunities in standardising KPI and master data?

BI platform

• What is the right application to support information delivery, financial consolidation, planning, and performance management?

• How can the application’s implementation be delivered successfully and make the overall solution really deliver value to the business?

Infrastructure

• What does all this mean from a technical infrastructure viewpoint?

• How can security, access and performance of the solution be ensured?

These six steps can be applied individually but they need to be aligned simultaneously if they’re to unlock the true value of business intelligence.

Successfully deploying a BI solution involves a much broader agenda than getting the right information to the right people at the right time so that correct decisions are made. To maximise the return on investment, companies must enhance organisational and technological infrastructures at the same time – creating the balance to maximise success.

Only by doing both will businesses be able to build the management and information structures necessary to survive in the increasingly competitive world of the 21st century.

In the wake of the global financial crisis, successfully implementing BI is once more in the spotlight. It can help companies to examine what really matters and reduce information processing costs, while helping management to focus on core priorities for the business.

A well-designed and deployed business intelligence system not only improves efficiencies and save costs, it also mitigates risk – a benefit that’s increasingly valued in a post-crisis world – and its agility makes businesses more competitive.

History is full of business intelligence failures. With the right approach your BI project won’t be one of them.

Herman Heyns is Partner at KPMG Performance & Technology.