by Deepa Sankar, Product Marketing, Business Intelligence, SAP

ipad1-150x150Last time, I discussed how companies can mine their data gold by turning it into insight, which leads to positive impacts on your business, such as increased revenues, reduced costs, managed risks, and capital.  These impacts give your business a better competitive advantage. Today, let’s discuss the other details of the other critical factors to make your BI program successful.

Define the Value of BI with KPIs

Defining the value of BI, i.e. assigning a dollar value to BI, is often challenging since this could be mostly qualitative. Therefore, it’s best to define these benefits ahead of time for the stakeholders to review.   You should also identify business key performance indicators (KPIs) and the expected future value of these KPIs.  Here are some examples:

  • Qualitative Benefits
    • The BI program could reduce lost sales from significantly increasing transparency in sales and reducing customer defection.
    • The finance department could reduce the amount of working capital due to improved collections management.

  • Quantitative Benefits
    • Implementing a BI solution will help reduce lost sales by 1.5% or $10 million per year, while increasing margins by 3% or $1 million per year.
    • The marketing department is expecting customer churn to reduce by 5% every year.

  • Future State KPIs:
    • Measuring the new sales KPIs around customer defection will help the company reduce customer churn.
      • Current customer churn as of 01/30/2013 = 5%
      • Future state customer churn as of 8/1/2013 = 3%
    • Measuring receivables more accurately and in more detail will help the company reduce receivables and bad debt, and better predict which customers are likely to become problems.
      • Current receivables level as of 01/30/2013 = 12%
      • Future state receivables level as of 8/1/2013 = 9%

As Mico Yuk rightfully pointed out in her blog earlier this year, user adoption is the number one KPI to measure success of your BI program. It’s extremely important to track the percentage increase in number of customers (or end users) over a period of time (often six months).  It ‘s also important to validate the relevance of the content that’s out there on a regular basis. I’ve heard customers remark that, of the tens of thousands of reports that they’ve created, they aren’t sure which ones are still relevant to the business.  This is a great opportunity to re-validate the capabilities and solutions that have been delivered over time.

Examples of BI best practice KPIs include:

  • Percentage of strategic KPIs tracked using BI
  • Percentage of employees with visibility into strategic KPIs
  • Usage of BI/analytics to manage business processes
  • Percentage of employees receiving analytical information
  • Percentage of external stakeholders receiving analytical information
  • Availability of real-time/predictive insights into business processes

Promote BI Success Stories

Lastly, IT departments often don’t advertise or promote BI success stories to broader groups internally and externally.  This is critical if you want to expand your BI program and generate more funding for it.  Most BI groups have a business-facing team that works closely with business partners on gathering requirements, setting expectations, and translating requirements to engineers.  You can leverage this team to write and promote success stories across the company. The win stories could be published as part of your BI guerilla marketing approach via newsletters, email communications, portals, etc.

A good BI strategy will bring together all the different BI efforts across the organization, including the broad spectrum of decision makers and decision making processes.  It will guide organizations toward an effective, pervasive use of analytics and  lead the path to success.

For more information, here’s an interesting Voice of America roundtable discussion on how smart BI is without a strategy,  “Culture eats strategy for breakfast, so make sure your strategy is delicious – Part 1, Part 2, Part 3”.

 

 

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