Business Analysis Guidebook/Business Intelligence and Performance Management
One cry that was prevalent during the 1980s was the worry regarding ‘Information Overload!’. Widespread initiatives and work to develop Business Intelligence (BI) and Business Performance Management (BPM) solutions gathered momentum from the escalating technology advances in the last decades of the 20th century. The primary goal of BI/BPM initiatives in this new environment was to support a modern-day advance not unlike the advent of the Combine in the early-mid 1800s. In the same way that the Combine automated the harvest of wheat (mechanically separating the wheat from the chaff), BI and BPM tools “separate what is useful or valuable from what is worthless”. The capabilities that are available in the marketplace today enable an organization to use their data to generate value-adding information for operational and management decisions.
Information as an Asset
Every organization uses multiple Information System applications to meet business requirements. These applications capture exponentially-growing data stores. The data stores are intangible assets and should be managed appropriately. The ‘Information’ stored in the data provides guidance to those who use it throughout the organization. It represents organizational knowledge that is hidden in the data. BI and BPM metrics tools deliver that knowledge to the appropriate audience.
BI provides quantifiable information as a base for identifying the who, what, and when of historical activities for an organization. This is extended by Business Analytics which uses historical data to determine planning for future activities. With effective BI, the Right information is provided to the Right people within the organization, at the Right time, in the Right place, and in the Right format to facilitate the ability for operational and management organizational staff to make the Right business decisions.
Investments in business information should support all the people within an organization, from the operational efforts of ‘boots on the ground’ staff through the management of strategic initiatives established by executive leadership. The scope of output provided by BI tools leverage this information, providing required knowledge for a single unit within an organization, for operational coordination between business units, or for the enterprise as a whole.
Business Performance Management
Business Intelligence and Business Analytics capabilities can help any organization to determine how well their operations and strategies are supporting the business goals and initiatives. According to a study published in 2010, “Business performance management (BPM) is a systematic management process for planning and budgeting enterprise performance, measuring performance against financial and operational targets, and taking corrective actions.” The ability to retrieve measurement metrics to use in the decision making process is supported by BI capabilities such as executive dashboards and ad hoc operational reporting.
The definition of measures that will be used to verify or validate performance is a strategic decision in itself. ‘Key Performance Indicators’ or ‘KPI’s may be used to define and measure progress towards organizational goals and objectives and are used across the organization – from high-level financial and executive dashboard measures all the way down to project deliverables. Baselines are defined to provide the starting point for measurement and encompass the business rules for calculating actual performance metrics. The most important aspect of establishing KPIs and baselines is to be able to have confidence that the measures selected will accurately reflect what is important to reach a successful goal.
Determine how to leverage BI to measure performance. Use statistical metrics (% of compliance, % of variance from expected result) to quickly communicate information measuring organizational achievements and alignment with goals. Example: outreach – compliance with new requirements – DMV new bicycle registration system
- Determine levels of compliance
- Justify outreach efforts – measure actual performance
- Identify root causes for poor performance to indicate direction for future outreach efforts – predict and plan for the future.
- Identify alignment with KPI goals (e.g., office supply costs)
monitor implementations, gather evidence of beneficial impact, control release of resources, communicate with stakeholders, learn from past activities to lend value to planning
Information Management and Architecture
How to ensure BI/BPM metrics are reliable -> can they be trusted? Operational and Enterprise decisions based on ‘information’ contained within the data.
Highlights needs for integrity, reliability, appropriate delivery.
History replete with examples of regrettable decisions based on bad information.
Standards, Policies, Alignment with strategic goals/mission statements (high-level)
Critical – one version of the truth
Definition, including identification of entity attribute sourcing and stewardship responsibilities at enterprise level to ensure integrity of data – confidence that the best info needed to determine decision is accurate/reliable.
Someone must be assigned these responsibilities, with involvement of upper-level organizational or executive management in determining definitions.
Critical – information architecture to facilitate operational and enterprise needs for purposes of information retrieval.
Use of data architecture to facilitate and advance organizational goals, providing reliable info to those who need it.
Operational (real-time) vs. Management (point-in-time) reporting
- "Separate the Wheat from the Chaff". TheFreeDictionary.com. http://idioms.thefreedictionary.com/separate+the+wheat+from+the+chaff. Retrieved 10/23/2014.
- "business intelligence (BI)". TechTarget.com. November 2006. http://searchdatamanagement.techtarget.com/definition/business-intelligence. Retrieved 10/23/2014.
- Williams, N. and Williams S. (August 16, 2010). "Performance Management and Business Intelligence: A Power Combination". BeyeResearch. http://www.beyeresearch.com/study/14228. Retrieved 10/20/1014.
- "Key Performance Indicators". ApplicationPerformanceManagement.org. 2013. http://www.applicationperformancemanagement.org/performance-testing/key-performance-indicators/. Retrieved 12/16/2014.