Profit Impact of Business Intelligence (eBook)

Front Cover 1
The Profit Impact of Business Intelligence 4
Copyright Page 5
Table of Contents 6
Preface 14
Acknowledgments 18
Chapter 1 The Business Value of Business Intelligence 20
1.1 What Is Business Intelligence? 21
1.2 Business Intelligence in Action 22
1.3 The Origins of Business Intelligence 24
1.4 Business Intelligence Today 30
1.5 Using Business Intelligence to Capture Business Value 31
1.6 How Do We Achieve Strategic Alignment? 35
1.7 The Need for Process Engineering 36
1.8 Process Engineering in Practice 38
1.9 The Need for Change Management 39
1.10 Business Value Analysis of Business Intelligence Initiatives 40
1.11 Managing for Business Value Delivery 41
1.12 Key Points to Remember 42
1.13 Think Tank 42
1.13.1 Seven Questions to Ask About Your Organization’s BI Needs 42
1.13.2 Quiz: What Might BI Mean for Your Company? 43
Chapter 2 Identifying and Prioritizing Business Intelligence-Driven Opportunities for Your Organization 44
2.1 Business Intelligence Opportunity Analysis Overview 45
2.2 Case Study: McCormick Opportunity Analysis 46
2.2.1 Evolution of McCormick’s Relevant Industries 47
2.2.2 Summary of Food Industry Drivers and Trends 48
2.2.3 Application of the Business Intelligence Opportunity Analysis Framework at McCormick 48
2.2.4 Business Intelligence Opportunity Analysis Summary 55
2.3 Business Intelligence Opportunity Analysis: Practical Considerations 55
2.3.1 Art Versus Science in Business Intelligence Opportunity Analysis 55
2.3.2 Quality of Business Intelligence Opportunity Analysis 57
2.3.3 Risk-Reward Tradeoffs and the Business Intelligence Opportunity Map 60
2.3.4 Business Intelligence Opportunity Analysis: Summary 61
2.4 Key Points to Remember 62
2.5 Think Tank 62
2.5.1 Seven Questions to Ask About Your Company’s Business Intelligence Opportunities 62
2.5.2 Quiz: How Prepared Are We to Leverage Business Intelligence? 62
Chapter 3 Business Intelligence Readiness: Prerequisites for Leveraging Business Intelligence to Improve Profits 63
3.1 Business Intelligence Readiness Overview 64
3.2 Business Intelligence Readiness, Business Risk, and Traditional Development Methods 66
3.2.1 Manufacturing Company Example 66
3.2.2 Disability Insurance Company Example 68
3.3 Business Intelligence Readiness Factors 69
3.3.1 Strategic Alignment 69
3.3.2 Continuous Process Improvement Culture 70
3.3.3 Culture Around the Use of Information and Analytical Applications 71
3.3.4 Business Intelligence Portfolio Management 72
3.3.5 Decision Process Engineering Culture 74
3.3.6 Business Intelligence and Data Warehousing Technical Readiness 75
3.3.7 Effective Business/Information Technology Partnership for Business Intelligence 77
3.3.8 Summary: Business Intelligence Readiness Factors 77
3.4 Case Study: BYTECO Business Intelligence Readiness Assessment 78
3.4.1 The Business Intelligence Readiness Assessment 79
3.5 Business Intelligence Readiness: Summary 81
3.6 Key Points to Remember 82
3.7 Think Tank 82
3.7.1 Seven Questions to Ask About Your Company’s Business Intelligence Readiness 82
3.7.2 Quiz: How Prepared Is the Business to Leverage Business Intelligence? 82
Chapter 4 Business-Centric Business Intelligence Development with the BI Pathway Method 84
4.1 The BI Pathway Overview 86
4.1.1 Unique Characteristics of the BI Pathway Method 87
4.1.2 Organizational Tailoring of the BI Pathway Method 88
4.2 Part 1: The Architectures Phase of the BI Pathway Method 91
4.2.1 The Case for Investing in an Architectures Phase 91
4.2.2 BI Pathway Architectures Phase Overview: Aligning the Business Intelligence Program To Deliver Return on Investment 92
4.2.3 Setting the Architectural Foundation for Business Intelligence Project Success 96
4.2.4 BI Pathway Architectures Summary 102
4.3 Part 2: The Implementation Phase of the BI Pathway Method 102
4.3.1 Logical Data Mart Modeling 105
4.3.2 Technical Development Work 109
4.4 The Operations and Continuous Improvement Phase of the BI Pathway Method 111
4.5 Chapter Summary 112
4.6 Key Points to Remember 113
4.7 Think Tank 113
4.7.1 Seven Questions to Ask About Your Company and Business Intelligence 113
4.7.2 Quiz: How Prepared Is Your Company to Leverage Business Intelligence? 113
Chapter 5 Leading and Managing a Business Intelligence-Driven Profit Improvement Program 115
5.1 A Leadership Perspective on Business Intelligence-Driven Profit Improvement 116
5.1.1 Changing the Culture of Information Usage 116
5.1.2 The Three Stages of Business Intelligence-Driven Cultural Change 117
5.1.3 Steps for Advancing Business Intelligence Maturity 119
5.1.4 Summary: A Leadership Perspective on Business Intelligence-Driven Profit Improvement 124
5.2 A General Management Perspective on Business Intelligence-Driven Profit Improvement 124
5.2.1 The Program Plan for Business Intelligence-Driven Profit Improvement 126
5.2.2 Summary: The Program Plan for Business Intelligence-Driven Profit Improvement 132
5.2.3 Business Intelligence-Driven Profit Improvement Is a General Management Responsibility 133
5.3 Business Intelligence-Driven Profit Improvement Is Crossing the Chasm 134
5.4 Key Points to Remember 134
5.5 Think Tank 135
5.5.1 Seven Questions to Ask About Your Company and Business Intelligence-Driven Profit Improvement 135
5.5.2 Quiz: Where Does Your Company Stand In Relation to BI/DW Core Competencies? 135
Chapter 6 Business Intelligence in the Broader Information Technology Context 136
6.1 Where Business Intelligence Fits in the Information Technology Portfolio 136
6.2 Information Technology Assets Required for Business Intelligence 141
6.2.1 The Basic Scope and Configuration of Information Technology Assets for Business Intelligence 142
6.2.2 Key Information Technology Products for Business Intelligence 146
6.2.3 Summary: Information Technology Assets Required for Business Intelligence 149
6.3 Business Intelligence Environment in the Information Technology Environment 150
6.3.1 Business Intelligence Development Process 152
6.3.2 Business Intelligence Production and Support Processes 154
6.3.3 Business Intelligence Human Resources 155
6.3.4 Summary: Business Intelligence Operations in the Information Technology Operational Environment 156
6.4 Summary: Business Intelligence in the Broader Information Technology Context 156
6.5 Key Points to Remember 157
6.6 Think Tank 157
6.6.1 Seven Questions to Ask About How Business Intelligence Fits in Your Company’s Information Technology Portfolio 157
6.6.2 Quiz: Where Does Business Intelligence Stand in Your Company’s Information Technology Environment? 157
Chapter 7 Important Ways Business Intelligence Can Drive Profit Improvement 159
7.1 The Impact of Industry, Competitors, and Company Business Design on Business Intelligence Opportunities 160
7.2 A General Overview of Business Intelligence Opportunities 164
7.3 Business Intelligence for Management Processes 167
7.3.1 Common Ways Business Intelligence Is Used to Improve Management Processes 169
7.3.2 Business Intelligence and Balanced Scorecards: Enabling Strategic Management 171
7.3.3 Business Intelligence and Management Accounting: Improving Operational and Financial Performance 173
7.3.4 Summary: Business Intelligence for Management Processes 177
7.4 Business Intelligence for Revenue-Generating Processes 178
7.4.1 Summary: Business Intelligence for Revenue-Generating Processes 182
7.5 Business Intelligence for Operating Processes 182
7.5.1 Common Ways Business Intelligence Is Used to Improve Operating Processes 183
7.5.2 Summary: Business Intelligence for Operating Processes 186
7.6 Summary: Important Ways Business Intelligence Can Drive Profit Improvement 186
7.7 Key Points to Remember 187
7.8 Think Tank 187
7.8.1 Seven Questions to Ask About How Business Intelligence Can Improve Profit in Your Company 187
7.8.2 Quiz: How Does Business Intelligence Improve Profits? 187
Chapter 8 Common Mistakes Companies Make on Business Intelligence Initiatives 189
8.1 Critical Success Factor: Establishing the Value Proposition 190
8.1.1 Mistake #1: No Explicit Alignment Between Business Intelligence Strategy and Business Strategy 191
8.1.2 Mistake #2: Not Knowing How to Define Information Requirements 191
8.1.3 Mistake #3: Not Marketing the Vision to Obtain Organizational Support 192
8.2 Critical Success Factor: Establishing and Managing a Business Intelligence Program 193
8.2.1 Mistake #4: Using Ad Hoc Practices to Select and Fund Business Intelligence Projects 194
8.2.2 Mistake #5: Providing Inadequate Governance for the Business Intelligence Program Management 194
8.2.3 Mistake #6: Establishing De Facto Program Governance Based on the Initial Business Intelligence Project 195
8.2.4 Mistake #7: Not Strategically Positioning the Business Intelligence in the Business Organization 195
8.2.5 Mistake #8: Not Providing Adequate Resources and Funding for Supporting Efforts Needed for a Successful Business Intelligence Initiative 195
8.3 Critical Success Factor: Optimizing Information Technology Infrastructure for Business Intelligence 196
8.3.1 Mistake #9: Using a Technical Infrastructure That Does Not Adequately Support Business Intelligence 196
8.3.2 Mistake #10: Using Operational System Information Technology Design and Development Approaches 197
8.3.3 Mistake #11: Using Information Technology Standards and Policies Designed for Operational Systems 197
8.4 Critical Success Factor: Managing Organizational Change Needed to Capture Value 198
8.4.1 Mistake #12: Not Utilizing Business Process Reengineering Approaches to Optimize the Use of New Business Intelligence Capabilities 198
8.4.2 Mistake #13: Unwillingness to Make the Organizational Changes Needed to Obtain Data Needed to Deliver Business Intelligence 199
8.4.3 Mistake #14: Not Creating Organizational Incentives 199
8.4.4 Mistake #15: Not Exploiting the Full Potential of Information 200
8.5 Key Points to Remember 200
8.6 Think Tank 200
8.6.1 Seven Questions to Ask About Business Intelligence Mistakes 200
8.6.2 Quiz: Do You Know How to Avoid the Worst Business Intelligence Mistakes? 201
Chapter 9 A View over the Horizon 202
9.1 Business Intelligence Moves into the Mainstream 204
9.2 Decision Process Engineering: Equipping Knowledge Workers with Information and Instituting Standards and Accountability 204
9.3 Re-engineering Knowledge Work: Releasing the Power of Business Intelligence 210
9.3.1 Creating a Vision of How Knowledge Work That Impacts Profits Should Be Performed 210
9.3.2 Making Specific Decisions About Management and Analytical Frameworks for Core Business Processes That Impact Profits 211
9.3.3 Determining What Business Information Is Needed to Apply the Selected Frameworks 211
9.3.4 Determining How Key Decisions Should Be Made and by Whom 212
9.3.5 Infusing Accountability and Process Metrics into Business Processes and Decision Processes 212
9.3.6 Investing in Business Intelligence and Business Process Management Competencies, Methods, and Tools 212
9.3.7 Managing the Changes Required to Redirect Knowledge Work from an Artisan Model to a Systems Model 213
9.4 Closing The Loop: Optimizing and Integrating Strategic, Tactical, and Operational Business Performance 214
9.5 Barriers to Realizing the Benefits of Business Intelligence 214
9.5.1 Noise and Confusion in the Business Tools Environment 215
9.5.2 Skepticism About Information Technology Value Propositions 215
9.5.3 Executive and Management Challenges Relative to Information Technology 215
9.5.4 Competition for Business and Information Technology Resources 216
9.5.5 Risk Aversion 216
9.6 Summary 217
9.7 Key Points to Remember 217
9.8 Think Tank 218
9.8.1 Seven Questions to Ask About Your Own View Ahead 218
9.8.2 Quiz: How Will You Make the Most of Business Intelligence in the Future? 218
Appendix A A Business Intelligence Glossary 219
Appendix B A Business Intelligence Readiness Assessment 221
B.1 Strategic Alignment 221
B.2 Continuous Improvement Culture 222
B.3 Information Usage Culture 222
B.4 Business Intelligence Portfolio Management 223
B.5 Decision Process Engineering 223
B.6 Business Intelligence and Data Warehousing Technical Readiness 224
B.7 Business/Information Technology Partnership 224
Bibliography 225
Index 228
About The Authors 236