Access to financial and managerial information to gain understanding, metrics and pinpoint weaknesses or opportunities to improve operations has gained tremendous attention as solution providers food the market with “user friendly” business intelligence tools. Solution providers position these tools to help “enlighten” businesses enough to purchase their products. However, a software solution is only as good as the implementation process conducted to leverage the full functionality of the BI tool. An underutilised BI tool will frustrate users and will not generate the expected insight demanded by managers at all levels of an organisation.

Relying on providers to conduct their interpretation of due diligence and discovery could add a level of uncertainty and disconnect that may result in a reporting tool that does not meet expectations. I suggest that businesses review the following framework in identifying their own BI opportunities, including the approach and potential benefits from a BI tool as well as defining the key performance indicators (KPIs) and functional group collaboration in developing a library of analytics.

The road map for a BI solution, much like any other IT solution, is to start with who has issues that a new solution can address. The 'who' needs to be specifically identified. BI tools are successful in providing insight to operations hence, functional areas or business units. If the BI rollout is the first of its kind for a company, it’s best to focus on functional areas rather than business units as they tend to perform specific operations and are easier to define, conceptualise and measure. Whereas, business units contain multiple functions and usually involve collaboration with other units and data stores from multiple systems that will increase the complexity of the design and integration requirements. Based on the experience and lessons learned from the initial BI rollout, plan for business-unit, cross-function projects as this level is more about decision making and strategy than process improvement.

After the functional area(s) have been identified, the next level is to determine who will use or has use for a BI tool. Generally, the lower the job position the greater the need for operational transactional data. As the job position moves up organisationally, the greater the need for summarised information. Companies need to determine which level of the organisation will benefit from a BI tool. Basic inquiries should be examined at each level to discover BI opportunities such as what processes are working and which ones are not, where are the bottlenecks in the process, where are most of the costs accumulating and trace back known bad decisions to their sources of data that supported the bad decisions.

Determining what information offers the most value is fundamental to the process. This step is crucial to finding value in a BI tool. It needs to be patiently performed diving into the details, asking lots of questions and is best conducted by people with deep understanding of the business — those who understand the processes and how those processes interrelate. BI reporting is broken down into three distinct segments of measures, dimensions and level of detail. Measures are the quantifiable values of a business such as total sales and volume of product sold for a given period.

Determine what metrics are important to the functional areas that reflect the base processes of those functions. Measures can be broken down into two categories of base measures and calculated measures. Base measures capture transactional data such as unit sales or customers who bought “x” item(s). Calculated measures are those such as average gross sales over a period of time or a moving average over a multi year range.

Defining measures need to be relevant to the functional areas. If the functional area is production, measures capturing unit costs, scrap and units produced would be most relevant. Dimensions describe measures. Reporting on sales measures are meaningless unless they are related to categories. For example, saying sales were up without providing a point of reference is not informative and will leave the audience wondering where and when. A common way to describe dimensions is to think of measures by something such as sales by product line, sales by region, sales by quarter and so on. Consider which dimensions are critical and then associate measures with them. Each functional area has its unique dimensions.

Take the time to identify all potential dimensions. In setting up group sessions to brainstorm ideas – an effective ideation exercise –pick groups of people who fully understand the business and functional area operations, and who rely on comprehensive information for decision making.

There is a tendency to think of a BI implementation as a technical experiment because of the level of technology used. This approach is fatally flawed as the point of any reporting tool is to provide people with relevant and reliable information in making informed decisions. Identifying measures and dimensions is a business exercise to gain insight into the business to look for opportunities, to improve, to pinpoint inefficiencies and to spot trends both positive and negative. Therefore, business questions need to be asked such as what are the margins for a particular product line? What is the ratio of won deals to lost deals for a particular sale rep? Once the list of business questions has been documented, translating them into measures and dimensions is relatively easy. Depending on the completeness of the business questions, a library of measures and dimensions will develop. It might be surprising how creative business questions will bring to surface more measures and dimensions then thought possible. Don’t dismiss any metric as irrelevant as they might lead to new measures and dimensions that might not have been thought of without making that left turn. The preliminary list of measures and dimensions should be documented in a spreadsheet so to allow the ability to rank and sort each combination as each metric is reviewed and prioritised.

Once the combinations of measures and dimensions have been identified, the next step is to screen them and grade their plausibility.  At this point, its time to bring in the technical team to transition theoretical wants to practical terms as some metrics may not be programmatically possible. For example, Can data from different sources be joined where a single data source does not contain the necessary fields? Grading the library of metrics for a given functional area should be based on the degree to which the library is actionable, materially impacting and whether the metric is tactical or strategic. Based on being actionable, will the BI tool generate a material impact if actions are preformed from the information provided by the BI tool and finally will the BI tool impact short term operational results or generate competitive advantage for strategic planning. As the library of measures and dimensions were listed in a spreadsheet, the three criteria as well should be entered into a spreadsheet to facilitate grading. List the criteria across the columns with the functional areas on the rows and apply a 'high,' 'low,' 'strategic' and 'tactical' value to each applicable column. Depending on the outcome of this grading, the proposed BI tool may or may not generate the expected value. If not, additional brainstorming sessions can be held with a new set of participants with a fresh point of view or the initiative can be canceled if the stakeholders warrant it.

— Alec Smith is VP- Projects at SWK Technologies, Inc. US