2. A View over the Horizon 24 th Meeting Course Name: Business Intelligence Year: 2009

3. Bina Nusantara University 3 Source of this Material (1). Williams, Steve & Williams, Nancy (2007). The Profit Impact of Business Intelligence. Chapter 9

4. BI Moves into The Mainstream There are more and more documented cases of BI bottom-line successes and these successes are increasingly being published in business publications. In addition, there is more of a focus on business performance measurement, including the popularization of Balanced Scorecards, dashboards, and the use of key process indicators (KPIs) in the marketplace. Bina Nusantara University 4

5. In many cases, the information needed to support strategic and tactical decision making by knowledge workers has been of low quality or unavailable. Because strategic and tactical decision making requires historical views and analyzing trends, as well as seeing views of the business that crossed functional areas of lines of business, before data warehousing this information was often unavailable. In many organizations, even when the information is available to improve upon knowledge worker performance and to hold knowledge workers accountable for their decisions, ad hoc approaches still prevail. Effectively, by blending BI with “decision process engineering”, we can reengineer aspects of knowledge work that can have a substantial profit impact. We can think endeavor as expanding the number of business situations within which structured, fact-based decision making can be brought to bear. Technically, decision process engineering employs BI, business process modeling, business rules, and workflow software. Bina Nusantara University 5 Decision Process Engineering: Equipping Knowledge Workers with Information and Instituting Standards and Accountability

6. By use of the same concepts and technologies, companies can re-engineer decision processes that occur within the context of management processes, revenue-generating processes, and operating processes. Table 24-1 is designed to illustrate the concept of decision process engineering. Bina Nusantara University 6 Decision Process Engineering: Equipping Knowledge Workers with Information and Instituting Standards and Accountability (cont…)

7. Bina Nusantara University 7 Decision Process Engineering: Equipping Knowledge Workers with Information and Instituting Standards and Accountability (cont…) Table 24-1

8. Bina Nusantara University 8 Decision Process Engineering: Equipping Knowledge Workers with Information and Instituting Standards and Accountability (cont…)

9. Bina Nusantara University 9 Decision Process Engineering: Equipping Knowledge Workers with Information and Instituting Standards and Accountability (cont…)

10. BI marries business information, business analysis, and fact-based structured decision making, all of which have the potential to dramatically improve knowledge worker productivity. To understand the magnitude of the challenge, let us examine some of the tasks that are involved. Creating a Vision of How Knowledge Work that Impacts Profits Should Be Performed To re-engineer knowledge work and knowledge worker productivity, companies will need to develop a vision of how knowledge work should be done, which presupposes a good understanding of the current state and an informed sense of the possible and desirable future state. Making Specific Decisions About Management and Analytical Frameworks for Core Business Processes That Impact Profits To re-engineer knowledge work and knowledge worker productivity, companies must understand what the actual state of the art is for a given core business process. Company management must sift through the information and make choices about Bina Nusantara University 10 Re-engineering Knowledge Work: Releasing The Power of BI

11. how they want their knowledge workers to think about and analyze business information. Determining What Business Information is Needed to Apply the Selected Frameworks The task of re-engineering knowledge work by unleashing the power of BI may require changes to existing management and analytical frameworks. In either case, the business information required for re-engineering knowledge work is a function of the management and analytical frameworks used or to be used by a given company. Determining How Key Decisions Should Be Made and By Whom From a BI perspective, the key is to design BI that meets the needs of different decision styles. Once that has been done, the decision process can be engineered such that it enhances knowledge worker productivity and contributes to more effective decisions, that is, decisions that have a positive profit impact. Infusing Accountability and Process Metrics into Business Processes and Decision Processes Bina Nusantara University 11 Re-engineering Knowledge Work: Releasing The Power of BI (cont…)

12. Leverage BPM technologies, coupled with BI, to create systematic approaches to core management, revenue generation, and operating processes. This in turn will allow greater transparency into key elements of business process and decision process performance. Investing in BI and Business Process Management Competencies, Methods, and Tools To gain the full benefits of increased knowledge worker productivity, companies will need to invest in BI and BPM competencies, methods, and tools. Managing The Changes Required to Redirect Knowledge Work from an Artisan Model to a Systems Model The combination of BI and business performance management can afford knowledge workers relief from the drudgework of basic data accumulation and manipulation and instead offer opportunities to have a far greater impact of company profitability. To reach this point, companies will have to manage the change from the artisan model to a systems model. Bina Nusantara University 12 Re-engineering Knowledge Work: Releasing The Power of BI (cont…)

13. Closing The Loop: Optimizing and Integrating Strategic, Tactical, and Operational Business Performance Once optimal decisions and actions are taken by the knowledge worker to optimize business performance, those decisions must be followed through operationally to close the loop and achieve the potential that exist for performance improvement. By optimizing strategic and tactical decisions and actions and ensuring that these decisions are operationalized, business can then measure the effect of the decisions and actions that were enabled by BI. They can also hold all employees, including knowledge workers, accountable for the decisions and actions that result in business performance. In addition to aligning, optimizing, and measuring business performance at the strategic, tactical, and operational levels, we believe that there will be a technical alignment and optimization of the system that are used to support this new business environment. Bina Nusantara University 13

14. Barriers to Realizing the Benefits of BI The technologies, business process engineering competencies, and change management techniques are in place, and we see no technical reason why BI cannot be raised to the level where it is integral to how companies do business. That being said, we believe there are identifiable barriers to getting there, no least of which is lack of recognition of the profit and performance impacts of BI. Noise and Confusion in the Business Tools Environment There is noise and confusion in the business tools environment, and that works against more aggressive adoption of BI and against taking it to the higher level presented by decision process engineering and re-engineering knowledge work. Skepticism about Information Technology Value Propositions Because major consulting companies in effect act as salespersons for enterprise software vendors, executives and managers find it hard to turn to these same consultants for independent, objective advice when it comes to IT, which exacerbates their skepticism about IT value propositions. In this environment, BI is tarred with the same brush. Bina Nusantara University 14

15. Barriers to Realizing the Benefits of BI Executive and Management Challenges Relative to IT With pervasive cost competition in the global economy and the attendant downsizing, surviving executives, and managers are left with significant bandwidth challenges across the board, which often translates into not having time to really understand IT, its value propositions, and its organizational implications. Competition for Business and Information Technology Resources Companies are so busy taking care of today’s customers that they have limited time to help evolve the company toward a better way of doing business. This bandwidth issue constrains organizational capacity for improvement. Risk Aversion It has been proven in a range of industries that IT innovation can lead to competitive advantage and superior profits. With innovation, however, comes risk, and thus executives and managers play it conservatively when it comes to IT. Realizing the full profit and performance potential of BI entails risk-taking, and many executives and managers are not prepared to place bets in an area within which they are uncomfortable. Bina Nusantara University 15

16. End of Slide “The most important… contribution of management in the 20 th century was the fifty-fold increase in the productivity of the manual worker in manufacturing. The most important contribution management needs to make in the 21 st century is similarly to increase the productivity of knowledge work and the knowledge worker. The most valuable assets of the 20 th century company were its production equipment. The most valuable asset of a 21 st century institution… will be its knowledge workers and their productivity. “Knowledge worker productivity is the biggest of the 21 st century management challenges. In the developed countries, it is their first survival requirement. In no other way can the developed countries hope to maintain themselves, let alone to maintain their leadership and their standards of living.” -Peter Drucker, Management Challenges for the 21 st Century Bina Nusantara University 16