Herman Heyns, Accountancy Age, Monday 18 October 2010 at 14:37:00

Business intelligence has the potential to provide enormous improvements inyour company performance and the bottom line, yet many implementations failspectacularly. Herman Heyns explains how to avoid the pitfalls


The search for insight from information comes down to a simple equation.Accurate business intelligence (BI) plus access to timely information supportsbetter decision-making, the key driver of corporate performance.

Giving valuable data to the relevant people at the right time doesn?t justenable them to make the right choices. When used correctly, BI systems alsodeliver real business benefits and create value.

They provide new performance insights that enhance an organisation?sefficiency and effectiveness ? allowing for faster, better decisions. BI alsoreduces costs and simplifies complex information processing. An additionalbenefit is that employee engagement and usage of information can increase acrossthe business if the strategy is successfully executed.

All kinds of organisations have latched on to this winning combination. Asnew technologies and ways of working have changed the rules of the game and theway firms compete, the ever-growing need for reliable information, continuousmarket insight and the agility to react quickly is increasingly important forbusinesses globally.

As a result, they?re investing strongly in BI capability, with AMR Researchestimating that US$57.1 billion was be spent on BI in 2008. In Gartner surveys,CFOs and CIOs regularly rate BI as their number one issue.

Get it right, and business intelligence makes real business sense. When allthe building blocks are aligned, BI shapes up to making a positive impact on thebottom line. Evidence of this is in premium stock prices following announcementsabout BI initiatives. Economic studies reveal positive reactions from thefinancial markets to companies? investment in BI both in short and long-termshare price growth.

The problem is that many organisations are getting BI wrong. Despite acombined annual worldwide investment of US$60 billion in BI solutions, half ofall BI projects fail according to KPMG-commissioned research from the University of Cambridge.

So what?s the problem?

Reasons for failure

The Cambridge research provides valuable insights into why BI projects fail.It suggests that fewer than 10% of organisations have used BI to re-engineertheir organisational and technological infrastructures simultaneously - which isa key driver of success.

Similarly, BI projects are often mistakenly seen as purely technology based,with ownership limited to IT specialists within the business instead of beingembedded throughout the organisation.

Firms? IT systems can also be under-developed, with legacy systems not beingup to scratch. Companies then struggle to make sense of multiple databases, indifferent locations, made more complex by mergers and acquisitions.

Failing to address underlying data issues can easily lead to problems indelivering BI, as well as an unwillingness to challenge the existing status quoof measures and reports.

In some cases, companies are still trying to use models of management thatwere developed in the 1970s, forgetting that the management models of yesterdaywill not work tomorrow.

And finally, BI projects are often implemented too quickly, with littlethought given to the design and role of data. Getting the basics right firsttime, under-estimating the complexity involved as well as understanding theimpact on many processes and systems, is essential.

The challenge is how to design BI systems that facilitate and enable, notsimply command and control management structures. Executives are no longersimply looking for ways of controlling vast empires, but rather for mechanismsthat enable their people to perform. BI can deliver significant returns to thosewho really capitalise on its potential.

How to succeed

KPMG Performance and Technology has identified six key building blocks,including several business-critical questions for business leaders to answer,which will allow organisations to reap BI?s rewards:

Business strategy alignment

? What information is key to delivering strategy?

? How can it be deployed in a way that maximises business performancecost-effectively?

Governance

? What are the principle processes and the organisational structure requiredto ensure integrity and the continuous alignment of information to businessneeds?

Performance management process and reporting

? How can financial planning and business performance management be improved?

? What are the key performance indicators (KPIs) and reporting requirementsof the business?

? How can the financial consolidation be best executed?

Integrated information management

? What is the information content and data model required to supportreporting requirements?

? Where are the value creation opportunities in standardising KPI and masterdata?

BI platform

? What is the right application to support information delivery, financialconsolidation, planning, and performance management?

? How can the application?s implementation be delivered successfully and makethe overall solution really deliver value to the business?

Infrastructure

? What does all this mean from a technical infrastructure viewpoint?

? How can security, access and performance of the solution be ensured?

These six steps can be applied individually but they need to be alignedsimultaneously if they?re to unlock the true value of business intelligence.

Successfully deploying a BI solution involves a much broader agenda thangetting the right information to the right people at the right time so thatcorrect decisions are made. To maximise the return on investment, companies mustenhance organisational and technological infrastructures at the same time ?creating the balance to maximise success.

Only by doing both will businesses be able to build the management andinformation structures necessary to survive in the increasingly competitiveworld of the 21st century.

In the wake of the global financial crisis, successfully implementing BI isonce more in the spotlight. It can help companies to examine what really mattersand reduce information processing costs, while helping management to focus oncore priorities for the business.

A well-designed and deployed business intelligence system not only improvesefficiencies and save costs, it also mitigates risk ? a benefit that?sincreasingly valued in a post-crisis world ? and its agility makes businessesmore competitive.

History is full of business intelligence failures. With the right approachyour BI project won?t be one of them.

Herman Heyns is Partner at KPMG Performance & Technology.