Operational Business Intelligence - Is it still a pipe dream?

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.

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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.