This article originally appeared on the BeyeNETWORK
Many organizations experience what can be called a “BI leadership gap” in embracing the promise of business intelligence (BI) and in moving their organizations forward to realize the full potential of BI investments. TDWI Best Practices winners clearly demonstrate that business intelligence return on investment (ROI) is optimal when business intelligence is positioned as a business initiative aimed at improving business performance. This is no small task, involving technical, organizational, and business process change that must be supported by strong business and technical leadership. Unfortunately, experience shows that there is a noted lack of education and alignment of expectations about the need for strong BI leadership in many organizations. Common symptoms of a BI leadership gap include:
- Business users are unsatisfied with the BI applications that have been deployed and are frustrated with the slow pace of BI delivery.
- Business leaders won’t fund business intelligence adequately until the value is proven, and yet the value can’t be proven if only small, low impact projects are undertaken.
- The business community hasn’t articulated a BI strategy, and thus IT is stuck in a reactive, report-centric mode – even though there are quick-hitting, effective ways to create or revise a BI strategy.
- IT methods and operating policies that work well for transactional systems and web applications are impeding the ability to do business intelligence in rapid increments with high business impact.
- BI best practices and sound data architecture principles are not being followed, resulting in greater risk and an impaired ability to deliver high impact business intelligence.
Having seen these problems repeated in many organizations that are struggling to establish a successful BI program, I will offer my perspective on their causes and potential remedies.
BI Core Challenges and BI Leadership
Whether a company is just getting started in business intelligence or is reinventing its BI program to get a better return on its investment, there are a number of business and IT core challenges that must be met in order to be successful. While the particulars might vary, all companies face the need to:
- Create a concrete BI vision of how they will use BI to improve profitability and business performance. The vision must be based on identification and prioritization of specific business improvement opportunities, i.e., specific uses of business intelligence within core business processes that make a difference in business performance.
- Systematically identify organizational, process, technical, and capability gaps that present barriers to success, and then work purposefully to plan and execute the changes needed to break down and overcome those barriers.
- Manage business intelligence as a program of prioritized and orchestrated projects and operational activities, all aimed at rapidly and effectively developing and deploying new BI capabilities, managing risk and quality, managing business process change, and ensuring cost-effective technical operations and user support.
In our consulting practice, we think of these prerequisites for BI success as BI strategy, BI assessment, and BI program planning/management, and the fundamentals apply whether yours is a new BI program or an ongoing program in need of reinvention. The BI leadership gap occurs when business leaders and IT leaders provide an insufficient amount of direction, funding, oversight, and follow-through to ensure that a suitable BI vision is created, that the gaps and risks are understood and overcome, and that the BI program is managed so that BI-enabled business improvement opportunities are realized. The cost of the BI leadership gap is business under-performance and lost business opportunities.
To illustrate the BI leadership gap, I’ll draw on an engagement where we worked with a nationally known company to develop a BI strategy and road map. As part of the engagement, we posed a number of questions to the business and IT executives we interviewed. Two key questions and the associated representative responses were:
- What would be the consequences to your company of not leveraging business intelligence?
– We would not meet channel and market expectations.
– It would increase the risk of customer defections.
– We would lose market share.
– We would lose opportunities to the competition.
– We would lose our edge in the marketplace.
– Our marketing campaigns would cost more and yield less.
- What are the barriers to success?
– Insufficient access to subject-matter experts.
– Inability to measure process performance.
– Lack of data integration.
– Insufficient funding.
– Lack of internal cohesion/coordination.
– Lack of data governance.
– Lack of BI expertise.
– Lack of goal congruence between functions.
When we look at these sets of questions and responses, we see that leveraging business intelligence is felt to be a strategic imperative, with adverse business consequences for failing to do so. At the same time, there are a number of barriers to success, and most of them could be overcome with sufficient BI leadership. If business intelligence is as imperative as it appears to be for this company, then the BI leadership challenge is to address all of the identified barriers. In this organization, the business and IT leaders stepped up to the plate, but, unfortunately, this is not always the case.
Why the BI Leadership Gap?
BI leadership needs to come from both the business and IT organizations. During my career, I have had the opportunity to experience both perspectives. As an MBA, my background and training is in general business management. I have also spent a considerable part of my career in IT. As a business intelligence/data warehousing consultant and educator, I have had the opportunity to observe many organizations attempting to build a BI capability. From these perspectives, I have come to see that the following factors contribute to the BI leadership gap:
- Insufficient executive involvement in IT in general and business intelligence in particular, resulting in an insufficient understanding of what business intelligence can deliver and what it takes to do so.
- Insufficient executive understanding of the linkage between the use of BI and the ability to meet sales, customer retention, quality, cost, profit, and other key business performance goals.
- Insufficient appreciation within IT of the differences in development methods and operational imperatives between transactional systems and business intelligence, and thus the prerequisites for fast, effective delivery of BI to exploit business improvement opportunities.
- Cost reduction orientations that establish IT cost minimization as a higher IT priority than BI-enabled profit improvement initiatives, thus starving business intelligence of the assets and resources needed to drive BI use into the core business processes that drive profits.
- IT capital budgeting approaches whereby investments in infrastructure and in transactional systems are prioritized and business intelligence gets what’s left over, as opposed to ensuring that business intelligence has the resources needed to deliver the substantial profit improvement it enables.
- Organizational strategies whereby IT is a technically driven enterprise, as opposed to being a business-driven line management responsibility, and yet there are very few areas of business where real business improvement does not require investment in IT.
More broadly, and being of the same general vintage, I believe that the current generation of business leaders often has a limited understanding and appetite for IT, regarding it as a cost center. At the same time, many of the current generation of CIOs have risen through the classic IT disciplines, and thus they may not fully appreciate the business improvement opportunities that business intelligence enables. As a result, both sides of the “business-IT divide” tend to give BI short shrift – despite years of case examples across the spectrum of industries that show that business intelligence delivers competitive advantage and profit improvement. Thus, the BI leadership gap.
Building BI Leadership Capabilities
Experience suggests that there are 4 key activities that are fundamental to building BI leadership capabilities:
- BI executive education
- BI benchmarking
- BI prototyping and promotion
- Change management
These activities combine to create the desire to lead in the BI arena and the skills required to do so. Specifically:
- BI executive education is used to help business and IT executives understand the profit impact of business intelligence – thus helping them understand the importance of business intelligence and creating the desire to realize BI-enabled business improvement opportunities.
- BI benchmarking is used to help business and IT executives understand what is possible with business intelligence and what it takes to be successful. Done right, these executives can talk about BI with business and IT peers and thereby obtain an independent perspective on the return on investment from business intelligence. This reinforces the desire to realize BI-enabled business improvement opportunities.
- BI prototyping and promotion is used to make business intelligence more real, using real data for company-specific BI prototypes. Our clients have had great success in the BI arena by using prototypes to promote the ability of BI to help realize business improvement opportunities. In one case, prototyping and promotion resulted in approval of a $30 million, multi-year BI program.
- Change management is used to overcome organizational resistance to change, which occurs in both the business side and the IT side when it comes to business intelligence. BI requires business process change in order to realize a return on investment, and it often requires changes to IT methods, capital budgeting, and mind-sets.
Taken as a whole, these four activities build BI leadership capabilities by creating the desire and know-how required to drive creation of a suitable BI vision, ensure that the gaps and risks are understood and overcome, and ensure the BI program is managed so that BI-enabled business improvement opportunities are realized. What’s more, this is a very practical approach that does not require huge amounts of executives’ time. In short, this is an approach that helps business and IT executives “get” BI and want to do what it takes to use it as a key weapon in their profit improvement arsenals.