About Success and Failure

 October 27, 2009 by Ralph Baker
 Source :http://www.ironsidegroup.com/
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Two very different articles came across my desk this afternoon.  One described an IBM Cognos implementation with 3,623% return on investment just in 11 days. The other described how some UK firms are spending millions on Business Intelligence (BI) and seeing little in return.  Clearly organizations are investing in the technology, but there are just as many unproductive BI projects as successful implementations. Why is there such a disparity in the outcomes of BI initiatives?
While there are a number of reasons why BI initiatives fail, all really successful projects have two key elements – elements which are fairly evident from early on in the project.  And while technology is an important enabling factor, and some technology enables better than others,  it’s almost never the factor that makes or breaks an implementation.
The Numbers That Matter
The key to any successful project is to have the right metrics. This may sound simplistic and self-evident, yet it’s surprising how many organizations fall short in this area. Why? There’s a strong temptation to measure things which are easy to measure, and not the things which are critical to the business, have a high leverage factor within the business, and can lead to better corporate decisions and actions (changes!).
Focus
At the beginning, you should have a laser-like focus on why you’re executing the BI project in the first place. Where is the business value? Will you act on the results if they are not what you expect? Remember, it’s the analytics that tell you the bad news which gives you the opportunity to improve results. A pat on the back feels good, but doesn’t yield ROI.
The “So What” Factor
My wife has a marketing business for non-profit organizations. When trying to hone a high impact marketing message, she’ll ask clients a simple question: “So What?” This works well for focusing BI projects as well.
Try applying that question to your current or future BI project and see if that tightens up the metrics you’re reporting.  Also, see who on your project team can answer that question!
Here are some statements which include an answer to the “So What?” question:

• We have a chart showing sales trends over the last 6 months – So that we can verify the new sales initiative, tried in one product line, is working and duplicate it in the others, and grow our sales a proportional amount.
• Users can drill into any transaction over the last 5 years – So that we can identify high-profit customers, evaluate their buying habits and head off defections to competitors before they happen.

Organizational Readiness
One of the least discussed but most harmful impacts to a BI initiative is organizational resistance to change.  For example, there could be a culture of operating on “gut feel” or “the way we’ve always done it”. The seminal book Competing on Analytics: The New Science of Winning by Thomas H. Davenport and Jeanne G. Harris, describes five stages of analytic competition:

1. Analytically Impaired
2. Localized Analytics
3. Analytical Aspirations
4. Analytical Companies
5. Analytical Competitor

The book contains a useful description of the readiness of organizations to adopt and derive value from BI projects, and the spread of them within the organization.  You can’t move your organization from level 1 to level 5 overnight, but it is possible to advance from where you are to the next level. I recommend the book as a great read for everyone involved in BI projects.
Next month, the other key factor determining BI success…
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Almost every day I hear of cases where Business Intelligence (BI) initiatives in companies are achieving tremendous results (3,623% ROI in 1 case) or are dismal failures and are wasting money.  In my experience, there are two very key elements which are present in every successful BI project, and without them the initiatives are almost guaranteed to underwhelm.

In last month’s newsletter I described the first of two major factors which have a major impact on the success or failure of Business Intelligence initiatives – having the correct metrics. And to paraphrase Mark Twain – The difference between almost the right metric and the right metric is the difference between the lightning bug and lightning. This month’s article focuses on the second of the two success factors – Executive Sponsorship.

First let me draw a distinction between BI and reporting systems. Reporting systems are narrower in scope, usually based around a single subject area (such as a general ledger) and present data in useful but not necessarily insightful ways. It’s not to say they aren’t useful, but useful in the way a phone book is useful.

Business Intelligence is a system, not simply a technology. BI initiatives deliver information critical for informed decision-making. The information is targeted, clearly understood, actionable, and specific. The underlying data may originate in multiple systems and departments, and is timely, clean and conformed.

For a BI initiative to succeed, there are a number of activities and people across typically unrelated areas that have to work in concert. These steps often involve not only IT, but finance, operations and various management business areas.  This naturally requires a great deal of coordination, cooperation and rapid communication with a focus on the following factors:

• IT needs to have a keen understanding of the business.
• Data needs to be available, accurate and timely.
• The processes must be in place to capture and accurately record critical information.
• Confidence in the speed, accuracy and reliability of the system must be widely accepted by the user community.
• Strong and agile project management builds credibility with frequent deliverables, keeping the business engaged.
• The business is able to act on the metrics.
• ROI is delivered, measured and promoted.
• Sufficient funding is secured.

With the breadth of areas covered by these points, the only way they work together is with strong executive leadership, sponsorship, vision and belief in the BI initiative.
Executive leadership is the second of my critical success factors. The success of any BI project depends on too many areas and crosses too many divisional and functional boundaries to succeed without it. No single manager in one of these areas can make the project work by him/herself. When there is a lack of leadership, coordination failures usually occur in many of the areas at the same time. The effect is quite dramatic and unmistakable.
Does this mean that your BI initiative is doomed to failure without effective executive sponsorship? Not necessarily. However, if you have the vision and direction for your BI initiative and your sponsoring executive does not, you have your work cut out for you. You will have to champion the vision for the areas where you can – perhaps a departmental area. By building on successes and developing expertise and knowledge in that area, your vision will eventually spread. The good news is that it’s possible, and there’s never been a better time to be excited about the possibilities fueled by BI. Did I mention the 3,623% ROI?