Ever driven a car with your eyes fixed on the rear-view mirror? You won’t get far, and neither will companies that base their strategies solely on past performance. That is why many turn to business insights -- a holistic approach to capturing and analyzing data that helps them predict the impact of their decisions on future success.
Today's organizations must constantly reinvent themselves to adapt to changing conditions. But one element remains constant: success stems from solid decision-making based on solid data. In the last few years, companies have invested heavily in technologies such as SAS software, Business Objects and Hyperion, all of which are designed to help capture higher quality data.
But look beyond the tools for a moment. How smart is your organization's approach to business intelligence? If you rely too heavily on dashboards, your view of the company may be too high level, missing key details on specific performance issues. The data you capture may only offer a snapshot view of your business, making your intelligence unfortunately short-sighted. In the end, an approach that focuses primarily on tools while overlooking data and strategy will not add significant value.
Today, business intelligence must rise to the level of business insights -- a more sophisticated approach that gives your executives the information they need to drill into each area covered by a dashboard and play "what if" scenarios, based not just on a historic perspective, but also a prospective one. When your approach includes both reflective and predictive perspectives, you can get much more out of the tools you're using to balance risks and rewards and set strategy more effectively.
A prospective view
As you shift your focus to business insights, keep in mind that it's not just about the tools -- it's about building a robust enterprise capability that enables you to take operational characteristics and turn them from analytical data into useful, predictive data to manage your business either on a current, real-time basis or on a future predictability basis.
In the past, business insights have been used primarily for sales forecasting and reviewing knowledge around areas like supply chain or customer and product profitability -- all of which line operations people need to make strategic decisions. This use of business insights is a vertical application that looks at departmental functions. An expanded approach is a horizontal application - extracting data that crosses the organization, connecting all relative pieces together to give you a common look and feel for predicting the future.
This application helps you see the consequences of moving the levers of your business. For example, let's say you wish to change your inventory management processes. Business insights allows you to look ahead to see its potential effects on areas like cash flow, staffing, delivery times or liquidity. This type of insight helps you predict how your decisions will impact your business, customers and profitability.
Building a robust insight capability
A solid data structure. The first element you will need is a strong data structure, which comes out of all the applications you rely on to operate your business. Those include your ERP systems, financial accounting, HR, supply chain systems, manufacturing, logistics, customer files and other areas to give you a departmental or vertical view of the company. When you look at all of these pieces, an overall story emerges about what is going on inside your company at any given point in time. At that point, it's time to start connecting the dots by creating a common, horizontal set of data elements. When you do, you produce the kind of insights your leaders need to move the levers that fine tune and optimize your business. This is where ETL or data extraction tools come into play, placing the right information into a common platform: your data warehouse.
Looking outward. The next step is to sub-divide your data warehouse into individual data marts, which are a horizontal or vertical perspective of the company. As you conduct business insights activity, be sure you look outward, or prospectively first, not necessarily inward. Think of it as looking out the windshield as you drive, rather than focusing on the rear-view mirror, which can only cause you to miss vital turns or make serious mistakes.
Painting your picture. The final element is the right set of reporting tools, including Hyperion, Business Objects, Cognos, and SAS software, or Crystal Reports. By plugging your data into these tools, you can now begin painting the overriding picture of your business insights. From there you can generate dashboards or predictable modeling scenarios that allow you to change one dial or lever at a time and measure the impact on your business.
As you tweak the dials and levers of your business, it is absolutely critical to have the information you need to keep from flying blind in today's tough economic climate. By raising your business intelligence to the level of business insights, you can obtain new barometers of knowledge about your business and how it's performing. But creating value requires more than an investment in technology – it requires a comprehensive data model and strategy. When you understand the true worth of business insights, you support smarter, more agile decision-making within your organization and build strategic advantage.
Mike Gorsage is a Partner and Leader of the Business Operations and Technology Practice for Tatum LLC. Tatum is the nation's largest executive services firm, providing financial and technology leadership nationwide.