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Operational Business Intelligence Applications: Business Case Assessment

It is very important to conduct a thorough business case assessment before beginning an operational business intelligence initiative.

This article originally appeared on the BeyeNETWORK.

Many organizations are already well equipped to implement successful operational business intelligence (BI) applications. However, for operational BI projects, it is helpful for project managers, project teams and business representatives to review what works and what doesn’t work when implementing operational business intelligence. This article provides many helpful suggestions for ensuring the success of operational BI applications.  


Before embarking on an operational business intelligence project, it is critical to carefully consider the questions that follow: 

Access to Information
Where do we get the information for decision-making today?
What information do we already have and what additional information do we need?

Business Drivers and Sponsorship
What are the business drivers for the operational BI  application? 
What are the specific business drivers for this operational BI application?
Do we already have a business sponsor for this operational BI application? Do we have a backup business sponsor?

Readiness Assessment
Are we ready for an operational BI environment? 
Have we performed a readiness assessment?
What do we need to do to get ready? Buy hardware? Tools? Software? Establish standards? Hire more staff?

What are the risks of building an operational BI application?
What are the risks of not building the operational BI environment?

Cost Justification 
Do we know what all of the BI project costs will be?
Will we have to buy new hardware? Upgrade our network? Buy new tools? Buy more software? Hire employees/consultants?

Return on Investment
How will we measure return on investment (ROI)? For example:

Will the operational BI application have an effect on our customer service? 
Will it help us increase customer satisfaction? 
Will it help us increase our revenue?
Will it help us make strategic decisions that will lead to increased profits?
Will it help us reduce our costs?
Can we expect to gain a bigger market share as a result of it?

(Source: Business Intelligence Roadmap – The Complete Project Lifecycle for Decision-Support Applications.) 

After the thorough preliminary assessment has been completed, it is time to begin. Following are seven suggested steps for an operational business intelligence initiative: 

  1. Identify your organization’s strategic business goals: Understand the impact of the external drivers. A common cause of failure for operational BI application initiatives is that the objectives did not align with the strategic business goals of the organization. It is important to recognize that operational BI projects are cross-organizational business initiatives and that cross-organizational initiatives are different from stand-alone solutions. 

    Operational BI applications are expensive to develop, run and maintain. These applications have to be in synch with the overall strategic business goals. It is helpful to make a list of the organization’s strategic business goals as well as a list of the operational BI application’s business goals. Compare the two lists and justify any differences. 

  2. Business value of the operational BI application:  Let the business representative work with a number of business managers and business executives to define the business value of the operational BI application. Help them identify the needs of different business people involved. The level of detail, timeliness, accuracy, security and external data needs will differ for senior management, knowledge workers, business analysts, sales and marketing personnel, and external clients. 

    One of the major ingredients of any successful operational BI application is the ongoing participation of business representatives. When they are more involved, there is a much higher  probability that they will accept and use the application.  Additionally, because the business representatives have been involved on an ongoing basis, it is likely that the IT staff will not have to fight the “not invented here” battle. 

  3. Marketing arm of the firm: Concentrate your efforts in defining the business case with business representatives from the marketing arm of the firm. In many industries, marketing is often at the forefront of operational BI applications. Use their business savvy to help identify business benefits, and call upon their influence to sell the value of the operational BI initiative throughout the organization. 

    In many organizations, it is the marketing department that takes the lead in efforts related to obtaining information about the customers, customer buying habits, what is being sold and what is “sitting on shelf” in order to develop successful marketing strategies.  

  4. Business driver: Have a clear business driver. You can’t justify BI costs (many range in millions of dollars) unless you have very specific business reasons for your operational BI application.

    No operational BI application should be launched because you think it would be nice to have. Provide written details that crisply prove the business benefits of the operational BI project. Be critical about your own thoughts. Present the proposal to the “doubters” in your organization. In every organization, there are a few people who are delighted to find “holes” in other peoples’ proposals. Let them try to shoot it down. If your proposal survives this onslaught of criticism, you most probably will have a “winning” operational BI application. 

  5. Keep it simple: Start with one business need (business problem or business opportunity) that you would like the operational BI application to satisfy. With a flexible design, you can add more functionality later, once the initiative has proven itself profitable and has been generally accepted by the user community. 

    Trying to accomplish too many things at the same time never has been a successful strategy for any business. Identify three projects that could benefit from an operational BI application. Come up with strategies, benefits and challenges for all the three opportunities, and then select one (together with the friendly sponsor) for implementation. 

  6. Carefully research the available software tools/product, making sure that business processes that need to be implemented match the tool/product and service categories with functionality. The phases for operational BI applications are: 

    • Justification: creating BI vision and strategies, and analyzing ROI
    • Planning, designing and building the BI infrastructure
    • Designing, building and managing historical and operational information stores
    • Information retrieval and reporting by leveraging off-the-shelf enterprise software
    • Data visualization, prediction and presentation by leveraging customized solutions
    • Managing and enhancing BI applications and infrastructure

    (To receive a complimentary copy of the colorful BI Navigator poster that explains these phases and the corresponding tools/products in detail, please click here.) 

  7. Financial consequences: Clearly state the financial consequences of the current business problems and how these problems could be resolved with an operational BI solution. Include this in the cost-benefit analysis.

    Cost-benefit analysis should not be based on “guesstimates.” It is often very challenging to come up with benefits in quantitative terms, but it has to be done. One major factor that needs consideration is the cost of “not doing” it. Opportunity gain is an important factor for the future of the organization. 

While it is important to know what steps to take when planning an operational BI initiative, it is equally important to know what not to do: 

Don’t depend on any single business unit to completely fund the BI initiative. Depending on a single business unit could be disastrous. The true business potential for BI usually lies in delivering information that is used across the lines of business. Concentrating on only one business unit is not very smart. That business unit may lose the champion sponsor, have its budget slashed or be presented with a problem that needs immediate attention. There are many unforeseen circumstances that could result in loss of sponsorship. Consequently, it is good business practice to have one or more alternative business unit sponsors lined up – just in case.   

Don’t offer a specific ROI. Don’t get maneuvered into promising a specific dollar value return on investment (ROI) for the operational BI initiative. For example, if a business benefit is the potential for cross-selling, the amount that could be generated from cross-selling is pure guesswork. One selling experience could provide a minimal return, while another could generate enough revenue to cover the entire cost of the first operational BI application. 

Don’t work alone. Partner with business units – never work alone. Realize that business managers would like to profit from any competitive advantage they can get in this increasingly competitive marketplace. Business managers are usually quite willing to work with IT on business justification for a business intelligence initiative. 

Don’t hastily offer specific functionality. Promising functionality without thinking about the intricacies and the interdependencies is definitely not recommended. Unfulfilled promises invariably lead to dissatisfaction on the part of business users. 

Helpful Hints
Remember, if the operational business intelligence initiative is driven by a business problem, it has a very good chance of being successful. However, if the BI decision support initiative is driven only by the latest trend in technology, there is a very good chance it will fail. Following are helpful tips to keep in mind when planning your operational BI project:

Minimize Complexity and Integration: Keep complexity and integration to a minimum on every operational BI project to avoid a higher risk of failure. 

Assess risks involved: As early as possible, assess the risks in order to gain a better understanding of the BI initiative. Risks are factors or conditions that may jeopardize a project and thereby imperil it financially. Risks should be assessed for these six major variables:

Technology – used for implementing the project
Complexity – of capabilities and processes to be implemented
Integration – of various components and data
Organization – with its financial and moral support
Project Team – with the staff’s skills, attitude and commitment
Financial Investment – in terms of ROI 

Figure 1 depicts a basic risk-assessment matrix for these six variables, using the colors of a traffic light to indicate the severity of the risk:

Green = low risk – go ahead with the project
Yellow = medium risk – caution, proceed slowly
Red = high risk – stop, reevaluate before proceeding

Figure 1: Basic risk-assessment matrix 

(Source: Business Intelligence Roadmap – The Complete Project Lifecycle for Decision-Support Applications.) 

Data: Not all data is of equal importance, and the data needs of various business groups vary widely. In the majority of organizations, business representatives – not necessarily the IT staff – are the ones who understand what the data means.   

Usage: Remember that 20% of the business people will be using the BI decision support environment 80% of the time. Therefore, be sure to first address the needs of that 20%. 

If a comprehensive business case assessment has been completed and consideration is given to the suggestions in this article, it is likely that a successful operational BI application will be the result.

Copyright Shaku Atre 2006. All rights reserved.

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