Operational
Business Intelligence
Bringing the power of insight to everyday business
This is a briefing paper I wrote about 7 years back for a job interview on a hot topic at that time Operational Business Intelligence - most of the messages still seem relevant hence posting it. The reason I posted it is I still see a number of organisation where this is still an analytic stream rather than an everyday operational one.
Introduction
Traditionally, business
intelligence (BI) tools have been used by a select few senior management
personnel for tactical and strategic decision making only. The power of data
turning into insight available from the business intelligence tools was not
accessible to the rest of the organization and was also not being used in the day-to-day
functioning of a company. The latest trend in the BI arena – Operational BI
(OBI) is about extending the reach of information across the organization and
thus improving the situation.
OBI – A Summary
OBI applications help
transform BI from a backward looking, strategic/analytical tool to a critical factor
in effectively managing the day-to-day business operations. OBI systems are often
deployed as applications which work in concert with the transactional systems to
solve specific problems. Consider the example of a finance personnel being able
to do a better job of credit approvals by understanding the customer’s credit
history, market factors and internal cash situation. In this case, the OBI
application could be working alongside or as part of the accounting or
financial package.
OBI
systems can be deployed as a stand alone applications or one which is coupled
with other applications like ERP (Enterprise Resource Planning), SCM (Supply
Chain Management) and CRM (Customer Relationship Management) etc. They could be
in the form of reports, dashboards, scorecards or could be just alerts aiding
in the age old principle of “Management By Exception”.
Most
OBI deployments are in the Finance function or in customer facing operations
like Sales, Marketing, Customer support and Consulting. The profile of
employees who use and derive benefits from OBI include executives, mid-level
business managers, business analysts and front-line (customer facing)
employees. A good example could be a customer call centre executive being able
to better handle support calls by being in the know about customer preferences,
purchase patterns and credit situation etc. According to Ventana Research, OBI
systems are often used on an hourly, daily or weekly basis.
.
OBI – A Performance
Imperative
From the business benefits perspective,
OBI systems are able to realize improved customer services, profitability,
competitiveness and revenue generation while reducing business/IT costs and risks.
It is also seen that operational BI helps in tying the corporate objectives to
the activities of the front line workers thereby ensuring alignment of the
broad corporate strategy with day to day transactions.
An
example from a common business situation would clarify. In most companies, the
sales person’s focus is on selling as much of his product or service as
possible. While this may look good on the face of it, it is better if it is put
in the context of the company’s objectives. The customer targeted may have a
bad credit history or the raw materials may be unavailable or the company’s
strategic focus may have moved to targeting only high margin customers. A
better informed sales person utilizing the power of OBI can avoid these
situations and can help the company align his personal performance with that of
the broader corporate performance. Also, the sales people would be better able
to analyze situation facing them everyday and keep track of their performance
and improve it. Hence the case for OBI’s utility as a process and performance
management tool.
Other Benefits -
OBI
applications satisfy the need for access to previously inaccessible information
across the organization. Some of the generic benefits are enlisted below:
- Provides information/awareness to line
of business workers or front line managers thereby improving performance
of frequent tasks
- Facilitates awareness, prioritization
and timely decision making for all users
- Improves communication among multiple
teams or groups thus ensuring greater collaboration
- Presents a consistent view of the
organization across employees, creating a common comparison base
OBI Success – A Few Pointers
The ROI justification for an
operational BI can be done in a superior manner by targeting the low-hanging
fruits initially i.e. by identifying and acting on specific needs and
opportunities. The OBI applications can then be extended to include other
processes and can slowly be made into an enterprise-wide initiative. The BI
initiative should focus on delivering near-term ROI as the big-bang approach
always leads to huge cost overhead which may be difficult to justify. A few
other points to note are:
- Operation business intelligence
applications are always based on the desired outcome.
- Operational BI applications should be
designed such that it fits with the business processes used/to-be used by
the company.
Challenges/Risks
The importance of the
corporate strategy being aligned with the OBI initiative can never be stressed
enough. The key challenges/risks which are typically encountered in an
operational BI deployment are listed below:
- Delayed initial development can
adversely affect the future plans and total costs
- Integration with other applications
& providing real time data access
- Ensuring Support for industry
processes/metrics/methodologies
- Guaranteeing reliability and security of
systems and quality of data
Conclusion
Operational Business
Intelligence is a concept which is increasingly being used by mature
organizations to accelerate deployment of information to front line operations.
The access to information and thereby insight which it provides to a much
larger part of the organization makes it an effective tool for process and
performance improvement for businesses. Nevertheless, it is very important to
be able to tie it to the business processes and to use a near-term ROI approach
in implementation to make it a success.
