2. Leading and Managing Business Intelligence 21 st Meeting Course Name: Business Intelligence Year: 2009

3. Bina Nusantara University 3 (1). Williams, Steve & Williams, Nancy (2007). The Profit Impact of Business Intelligence. Chapter 5 Source of this Material

4. A Leadership Perspective on Business Intelligence- Driven Profit Improvement From a leadership perspective, BI-driven profit improvement is largely about vision and cultural change, whether at the enterprise level, the business unit level or the functional level. Changing The Culture of Information Usage The culture changes that leaders must drive to realize the value of investments in BI include the following:  Redefining the role that information plays in the organization  Changing the way that information requirements are defined  Changing behaviors in using information Companies that meet the leadership challenges presented by BI-driven profit improvement initiatives will reap the business and economic benefits that BI can provide. The process of BI-driven cultural changes can be viewed as a journey along a predictable development path that we think of as a BI maturity model with three stages, as shown in Figure 21-1. Bina Nusantara University 4

5. 5 A Leadership Perspective on Business Intelligence- Driven Profit Improvement (cont…) Figure 21-1

6. A Leadership Perspective on Business Intelligence- Driven Profit Improvement (cont…) The Three Stages of Business Intelligence-Driven Cultural Change As Figure 21-1 suggests, the process of changing an organization’s culture to benefit from BI usually follows three distinct stages, To manage the change process effectively, you need to understand each stage of the process, as well as what you can and can’t accomplish during the stages.  Stage 1 Information focus: “What” do the users want (lists of data elements) ROI potential: Limited This early stage of BI maturity looks a lot like information usage before BI. There has been no redefinition of the role of information. Information requirements are gathered much like report requirements and typically consist of lists of data elements provided by business users to the BI team.  Stage 2 Information focus: “Who” (some), “what”, “when” (some), “where” (some), “why” ROI potential: High Bina Nusantara University 6

7. A Leadership Perspective on Business Intelligence- Driven Profit Improvement (cont…) The middle stage of BI maturity is a great improvement over the early stage. During this stage, the company recognizes that to reap the benefits of its investment, managers must rethink the role of information in the organization and go beyond the status quo.  Stage 3 Information focus: “Who”, “what”, “when”, “where”, “why”, “how” ROI potential: Optimal The final stage of BI maturity improves further upon stage 2 by looking at overall organizational processes that are in place for using information. It does not stop at delivering the right information to the right people at the right place and time. Steps for Advancing Business Intelligence Maturity To accomplish the required changes depicted in Figure 21-1, leaders can apply a change model such as the one advocated by John Kotter, a highly regarded expert in the field of change management (Kotter, 1995). Adapted for BI, the cultural change approach consists of eight steps: Bina Nusantara University 7

8. A Leadership Perspective on Business Intelligence- Driven Profit Improvement (cont…)  Step 1: Establish a Sense of Urgency to Change the Company Culture to Leverage Business Intelligence  Step 2: Create a Coalition to Drive Business Intelligence Use into the Company Culture  Step 3: Develop a Clear Vision of How Business Intelligence Will Be Used for Profit Improvement  Step 4: Share the Vision of How Business Intelligence Will be Used for Profit Improvement  Step 5: Empower People to Clear Obstacles to Business Intelligence Use  Step 6: Secure Short-Term Business Intelligence Wins  Step 7: Consolidate Business Intelligence Wins and Keep Moving  Step 8: Institutionalize the Change in How Business Intelligence is Used Bina Nusantara University 8

9. A General Management Perspective on Business Intelligence Driven Profit Improvement The general management focus for BI-driven profit improvement must balance considerations of business strategy, BI strategy, business infrastructure and processes, and BI infrastructure and processes. This concept is shown in Figure 21-2, which is adapted from “strategic alignment: A model for organizational transformation via information technology” (Henderson and Venkatraman, 2005). The model, adapted for BI, shows that fully leveraging BI requires integration and/or alignment at four key points, which are numbered accordingly in Figure 21-2. These integration and/or alignment points are between. Business strategy/BI strategy Business strategy/business infrastructure and processes Business infrastructure and processes/BI infrastructure and processes BI strategy/BI infrastructure and processes Bina Nusantara University 9

10. 10 A General Management Perspective on Business Intelligence Driven Profit Improvement (cont…) Figure 21-2

11. A General Management Perspective on Business Intelligence Driven Profit Improvement (cont…) The Program Plan for BI-Driven Profit Improvement At the applied level, the BI program plan must guide and coordinate systemic development of BI competencies that advance your company along the BI maturity path. Accordingly, the company has embarked on a BI program aimed at providing all levels of operations management with more timely and relevant business information, as well as with appropriate analytical tools so that managers can consistently improve productivity and service. This particular program plan has seven elements. This particular program plan has seven elements.  Element One: Business Strategy for Leveraging BI Deploy business information and business analysis tools that provide frontline managers with more detailed, timely, and specific information about productivity.  Element Two: Program for Developing BI Core Competencies To achieve the business strategy for leveraging BI, the company is evolving toward a COE approach, which is a systematic way of developing and exploiting BI core competencies to improve profits and business performance. These core competencies are shown in Figure 21-3. Bina Nusantara University 11

12. Bina Nusantara University 12 A General Management Perspective on Business Intelligence Driven Profit Improvement (cont…) Figure 21-3

13. A General Management Perspective on Business Intelligence Driven Profit Improvement (cont…)  Element Three: Risk Management BI readiness assessment is an excellent tool for indentifying risks in advance. The specific risks to be managed differ from company to company. The BI program plan is the place to identify and describe the risk management techniques that will use to mitigate them.  Element Four: Business Process Re-engineering To capture the business value of its investment in BI, company must leverage BI-driven reengineering skills, that is, the ability to use introduce and standardize the use of BI within business processes that affect profits and performance.  Element Five: Program and Project Management To succeed, a BI-driven profit improvement program must have effective program management and project management.  Element Six: Information Technology Infrastructure A BI-driven profit improvement program may require changes to the existing IT infrastructure, depending on the company and its starting position with respect to BI and DW. Bina Nusantara University 13

14. A General Management Perspective on Business Intelligence Driven Profit Improvement (cont…)  Element Seven: Information Technology Operations It is critical that IT operations support both the production operations of the data warehouse and the BI applications it supports. BI-Driven Profit Improvement is a General Management Responsibility If consider the business and technical challenges outlined above in our discussion of BI-driven profit improvement programs, it’s clear that, many of the challenges are cross-functional between the business and IT. IT does not have the power to force the business to engage or to change business processes to leverage BI. Bina Nusantara University 14

15. BI-Driven Profit Improvement Is Crossing The Chasm The order of adoption follows a predictable pattern: technology enthusiasts are first, followed by visionaries, pragmatists, conservatives, and skeptics. If the y succeed, the highest incremental profit goes to the early adopters-enthusiasts and visionaries. The majority of the market consists of pragmatists and conservatives, who take less risk but consequently reap lower rewards. Bina Nusantara University 15

16. End of Slide “Strategic Planning, Benchmarking, Pay-for-Performance, Outsourcing, Customer Segmentation, Reengineering, Balanced Scorecard, and Total Quality Management are among the many management tools that companies have experimented with in recent years. Do companies using these tools do better than the ones who don’t? The is no equivalent of the Consumer Reports for management to use in evaluating the tools available to them.” -Daryl Rigby, “Management Tools and Techniques: A Survey.” California Management Review, Winter 2001. Bina Nusantara University 16