I have had the opportunity to provide advisory services for a number of clients in the past few years. I am surprised at the large number of these clients that do not have a BI Strategy and do not feel that a BI Strategy provides value. In talking with our clients I have noticed a pattern. For those organizations that do not feel that they will achieve value in developing a BI Strategy, they generally have “technology perception” of a BI Strategy.
This “technology focus” includes the perception that a BI Strategy’s primary value is establishing a BI reference architecture, consolidating BI tools and data marts, and organizing IT to deliver and support the resulting BI environment. True, these items can be the products of a well-formed strategy; however, the value in establishing a BI Strategy is generally focused driving increased business efficiency and performance.
Research on BI strongly points to that the value from strategically establishing BI strongly supports this point. Consider the following:
- In a Forrester study, high performing companies were 62% more likely than non-high performing companies to identify BI as important in their efforts in their efforts to gain a competitive advantage.
- In a study documented in the book Competing on Analytics, 65% of high-performing companies had “Significant decision support/analytical capabilities”. This is contrasted to 23% for low performing companies.
- SAP surveyed its customers recently on how a BI Strategy created values for SAPs clients. A whopping 69% said having a BI strategy resulted in higher revenue per employee! This is three times higher than the number of companies that were able to realize cost reductions from tool consolidation (20%).
But how does one align BI efforts to gain these benefits? Quite simply it is through strategically approaching BI from a business point of view where the BI Strategy communicates this alignment. A well-formed BI Strategy starts with the desired business outcomes and establishes the BI functionality and information access required.
When I worked at a large retailer, we had a business initiative to optimize our store receiving operations. The annual cost-out benefit was greater than $100million. By tying the required BI infrastructure investment to this initiative, the $500K project became a very easy sell. Furthermore, since the BI project provided the visibility into the benefits of the receiving optimization initiative, we were able to provide tangible benefits analysis to justify future investment.
This outcome was planned – with an upfront BI Strategy that aligned the infrastructure investment to the business value created. We knew over a year ahead that we were going to need to upgrade our BI infrastructure to support the receiving initiative. Thus, we were able to plan for it in our annual budget. The BI Strategy was the key.