- 29 May, 2014
- Article - New Technology
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. The ‘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 gathering 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 own 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 and 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 CFO can have a dashboard that tells him or her everything there is to know about the organisation’s finances, an operations manager can quickly see the performance of the department, a call-centre manager can understand which agents are performing well and a sales department will have a good representation of how good its sales actually are.
Whilst these tools work, and they usually work well, 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 actually spends with the organisation, and how much does the cost of sales actually cost the organisation. Costs associated with a customer include the cost of the actual 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 there are additional variable costs.
Only once we have done Activity Based Costing and incorporated all fixed and variable costs, can we truly get an accurate reflection of a customer’s profitability. 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 and which aren’t? These are all questions that organisations are trying to answer. These are all questions that good a 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. No one in an organisation should have ‘consolidating data not available in the BI solution’ as part of his or her job description. Before teams try to get dashboards out, they need to understand the underlying systems in the organisation and the Data Supply Chain. Data needs to be 100 per cent accurate and integrated, with sufficient history maintained to enable the discovery of important trends.
An effective BI solution should be able to drive innovation in your organisation and simplify people’s lives. 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, someone else, a more innovative and forward-thinking 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.