Organization of Business Intelligence

Transcription

1 Organization of Business Intelligence The advantage gained by companies using competency centers to coordinate their business intelligence initiatives BARC Institute, Wurzburg, August 2008 Business Business Application Application Research Research Center Center

2 2 Organization of Business Intelligence Authors Steffen Vierkorn Head of Consulting and Product Research Business Application Research Center BARC GmbH Steinbachtal 2b Würzburg +49 (0) Dirk Friedrich Head of Market Research Business Application Research Center BARC GmbH Steinbachtal 2b Würzburg +49 (0) This independent study was written by BARC, an unbiased market analyst. This study can be distributed free of charge thanks to a sponsorship from IBM Cognos and Cubeware GmbH.

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4 4 Organization of Business Intelligence Background Business Intelligence (BI) supports companies by delivering important information for decision-making and management processes. To ensure a successful implementation, companies need to address a range of technical and business concerns as well as create a supporting organization. A good indication of a productive BI initiative is when users request regular changes and additions to these systems. BI initiatives often take on the character of a project. Companies, however, cannot achieve comprehensive unified reporting through multiple isolated projects. In addition, many companies fail to successfully continue the outlined measures after the implementation because they were not embedded into their business structures. By incorporating business intelligence into their organizational structures, companies can ensure the long-term success of these initiatives. Today, the most common approach is to establish a Business Intelligence Competency Center (BICC). Here, the core objectives include creating a suitable BI organizational form within the existing corporate structure as well as integrating appropriate roles and responsibilities into the competency center. Since the BICC is responsible for all business intelligence initiatives throughout the enterprise, there are often discrepancies between choosing single best solution and adhering to corporate standards. In order to implement the developed standards and guidelines in companies, a BICC requires a suitable sponsor who can secure the necessary funding and authority within the company. Without this influence, chances are that a BICC will only be able to observe the isolated BI activities without taking action and control of the situation. This empirical study shows how BICCs work as well as what makes them successful. In addition to evaluating the structure, this study uses qualitative analyses to examine the satisfaction levels and the effects of the respective organizational forms.

5 Organization of Business Intelligence 5 Executive summary Overall, Companies with BICCs outperformed those without competency centers in every single category. Competitive Advantage: Productivity: Pervasive Usage: Alignment: Organization: Companies with a BICC have a competitive advantage over those without this organizational structure. BICCs are more capable of completing their tasks and they are able to implement changing requirements much more quickly. BICCs influence the deployment of BI software throughout the enterprise. When companies have a BICC in place, their departments use BI software more actively than those organizations that do not. The cooperation between business and IT is much closer in companies that have a BICC. In larger organizations, BICCs are predominantly separate departments. In smaller companies, however, they are typically virtual teams that are not officially embedded into the organizational structure. BICCs are primarily staffed by projects teams that have already worked together in the past. Roles and Responsibilities: The prime responsibilities of a BICC are planning and coordinating BI initiatives. However, companies with a BICC are more likely to have structured Data Management (DM) than companies without a competency center. Companies with a competency center have a better overview of the different BI activities that are currently in place. Quality and Satisfaction: Companies that have a BICC report a better quality of business intelligence initiatives as well as a higher level of user satisfaction.

6 6 Organization of Business Intelligence Organizational questions are becoming more and more important with regards to business intelligence initiatives. BI competency centers are a widespread term used to describe organizations that were created to focus on these activities. Of the 74 percent of respondents who had established a competency center (see figure 11), 67 percent of the companies established a BICC from existing teams on account of their handson skills and knowledge in managing central responsibilities. A third of the companies, however, staffed their BI competency centers with a new team representing various departments within the company. In most cases, a BICC is either established as an independent department within the organizational structure (39 percent) or a virtual team representing many different departments (36 percent). Further studies show that large companies tend to have separate departments, while smaller ones usually form virtual teams. BICCs, however, are rarely organized as a staff function (11 percent). Figure 1: BICCs are an emerging concept with no established standards to date Were you familiar with the term BI competency center prior to this study? Percent, n = 271 Is your BICC a new organizational unit? Percent, n = 190 No 42 Yes 33 It is new 58 It was formed from an existing team 67 How is the BICC embedded in your company s hierarchical structure? Percent, n = 187 Percent, n = Staff function Established 56 Depends on 11 department the project Virtual crossdepartment group < k - 10k > 10k Established department Virtual crossdepartment group Employees

7 Organization of Business Intelligence 7 BI competency centers promote the usage and proliferation of business intelligence software in companies. This team takes on the primary responsibility in consulting various user groups and building acceptance for BI applications in a wide range of departments. Using clearly coordinated concepts, these competency centers can increase awareness on the scope and potential of using business intelligence solutions as well as reduce negative reactions in the process. Addressing enterprise-wide issues such as data governance, selecting targeted tools as well as building knowledge through trainings for business users are just some ways that companies can use BI successfully. Figure 2: BI software usage is slightly more common in companies with a BICC How many employees in your company use BI software (in percent)? Percent, n = 271 More than 50% With BICC Without BICC Up to 50% 3 6 Up to 25% Up to 10% Up to 5% 33 41

8 8 Organization of Business Intelligence BI competency centers influence how business intelligence software is used throughout the company. Projects that are not managed centrally tend to concentrate on the needs of a single department. In companies without a BICC, departments are much less likely to use business intelligence software. Companies with five or more departments are more likely to organize their BI initiatives through a BICC than as a regular project. Competency centers cover and coordinate the special requirements of various interest groups more effectively. Generally speaking, more departments use BI software when the company has established a BICC. It is important to mention that this influence is noticeable in each area of the company. Every department, for example, has a higher usage of BI software when a BICC is part of the organization. This effect is independent of the size of the company or the number of employees. Figure 3: A BICC results in a higher level of BI usage across all departments Which departments in your company use BI software? Percent, n = 271 Number of departments 25% With BICC Without BICC 20% 15% 10% 5% 0% Department types Financial Controlling Financial Accounting Sales Management IT Marketing Human Relations Purchasing Logistics Production R&D Post Sales Other With BICC Without BICC 10

9 Organization of Business Intelligence 9 Companies that have a BI competency center are more likely to have structured data management (DM) than those that do not. 66 percent of companies with a BICC follow a central approach with one or more data warehouses (without a BICC only 52 percent) and only 12 percent do not have a coordinated DM strategy. In companies that do not have a BI competency center, 23 percent of the respondents stated that they do not follow a consistent data management strategy. The clear results in all size clusters prove that BI competency centers have a significant impact on a company s data management strategy. Figure 4: BICCs promote structured forms of data management Where do you store decision-support data in your company? Percent, n = 271 A single, central database containing all relevant data for decision-making (i.e. enterprise data warehouse) or more central databases providing information for more than one department (i.e. data warehouses) or more local databases (i.e. applied data marts) There is no consistent data storage concept for decision-making data With BICC Without BICC

10 10 Organization of Business Intelligence As expected, the financing of BI initiatives is generally a C-level task. This applies for all companies regardless if they have a dedicated competency center or not. There is, however, a decisive difference in how these initiatives are coordinated. This directly ties to the work methods within a BICC. The cooperation between IT and business users is much stronger in companies with an established BI competency center (48 percent with a BICC versus 31 percent without one). A good cooperation between these two groups, however, is crucial for successful BI initiatives. Figure 5: BICCs impact the coordination but not the financing of BI initiatives With BICC Without BICC Who finances /approves the BI initiatives in your company? Percent, n=268 Management (CEO) IT (CIO) Finance (CFO) Business users and IT Business users External consultant(s) Others Who coordinates BI initiatives in your company? Percent, n=268 IT (CIO) Business users and IT Management (CEO) Finance (CFO) External consultant(s) 5 4 Others 7 4

11 Organization of Business Intelligence 11 The responsibilities of a BI competency center vary from company to company. In general, its prime focus is planning and coordinating business intelligence initiatives. Less common tasks include the implementation and technical development. Commonly viewed as an instrument for strategic alignment, a BICC contributes its expertise during the conceptual design, software selection and strategic decision-making processes. These responsibilities also include various rights with regards to the implementation. BICCs primarily have the authority to make strategic decisions. These decisions primarily deal with topics such as software selection or data governance, which is a typical task requiring centralized coordination. Figure 6: Planning and coordinating BI activities are the prime responsibilities of a BICC Which responsibilities does the BICC have? Percent, n=200 Managing BI projects Developing BI standards and guidelines Managing a BI system architecture Developing and implementing applications Consulting business users on BI Supporting users Overall responsibility for all BI projects Creating and maintaining the technical infrastructure Setting priorities for user requirements Marketing BI inside the company Administering data access rights Developing training programs Standardizing tools Other Which rights does the BICC have to enforce its decisions? Percent, n=185 Selection of software Selection of software vendor Data governance Veto right for BI projects Budget control over software purchase Other

12 12 Organization of Business Intelligence Through its central management, a BI competency center influences which tools will be used within the company. Since companies with a BICC view business intelligence tasks from a more integrated standpoint, they integrate more data sources into the central reporting system. 65 percent of the companies with a BICC have integrated more than four data sources into their data warehouse in contrast to only 47 percent of companies without this organizational structure. Companies with BI competency centers are most likely to standardize on two standardized tools as a single tool cannot adequately cover all BI tasks within a company. Overall, 72 percent of organizations with a BICC have implemented one or two standards, versus 59 precent of companies without a BICC who overall had a higher proportion of multiple tools. Figure 7: A BICC supports a technical mindset throughout the entire company How many data sources are incorporated in your central reporting system? Percent, n = 259 > With BICC Without BICC How many standardized BI front-end tools does your company use? Percent, n = 114 > With BICC Without BICC

13 Organization of Business Intelligence 13 The survey participants were also asked to assess the maturity levels for various criteria. The following nine questions were designed to monitor the quality of business intelligence initiatives and their results are indeed surprising. Companies with BICCs outperformed those without competency centers in every single category. The establishment of a BICC increases the quality of the BI activities as well as user satisfaction. The central approach ensures that the requirements of all stakeholders have been addressed and provides an ideal approach to tackle topics which affect the entire enterprise (e.g. data management). Information quality, a point which often faces sharp criticism, is generally better in companies with a BICC than those without this centralized approach. The coordination of BI initiatives is also better among companies with competency centers. Particularly striking are the large differences in the extreme values. Companies that have a BICC (21 percent), for example, are much more likely to praise their internal coordination than those organizations that don t (5 percent). Figure 8: BICCs improve the quality of BI initiatives Rank these aspects of BI projects in your company. Satisfaction with internal BI initiatives Percent, n= With BICC Without BICC 13 6 Quality of information Percent, n= Coordination of BI initiatives Percent, n= Not developed Not well developed Well developed Very well developed

14 14 Organization of Business Intelligence BICCs are more capable of completing their tasks. This, in turn, affects a company s ability to abide to internal guidelines and implement requirements quickly. Due to the close cooperation with the departments, BI competency centers are able to implement changing requirements much more quickly. Compared to companies without BICCs, for examples, they can deliver reports much more quickly. As a result, BICCs are able to neutralize one of the main points of criticism with regards to BI systems (see Using standardized key performance indicators across the enterprise is often challenging in realworld scenarios. Although this criterion was the least commonly used among companies, is does show the advantages of competency centers. Through the central coordination and the involvement of different groups of people, BICCs can create and establish universal standards in companies much more easily. Figure 9: BICCs allow companies to complete tasks in a faster, more balanced manner Rank these aspects of BI projects in your company. With BICC Report speed Percent, n= Without BICC Implementation speed Percent, n= Standardized KPIs across the enterprise Percent, n= Not developed Not well developed Well developed Very well developed

15 Organization of Business Intelligence 15 An important characteristic of a BICC is that it includes representatives from many different interest groups. On account of the collective exchange of ideas, these competency centers can create balanced strategies that account for the different needs of all involved parties. Due to the active exchange between IT and business users, BI competency centers can address and support these requirements more effectively. The results of this study show that better communication leads to a closer cooperation from a qua- litative point of view as well (see Figure 5). Competency centers are more likely to address the concerns of users and offer suggestions to improve the situation. In general, the decision-makers within a BICC have strong ties to the actual business users. This helps level out the difference between what the users want and what they actually get. Figure 10: BICCs improve cooperation and support Rank these aspects of BI projects in your company. With BICC Cooperation between business users and IT Percent, n= Without BICC Advice provided to business users Percent, n= Support on issues concerning existing BI applications Percent, n= Not developed Not well developed Well developed Very well developed

16 16 Organization of Business Intelligence Conclusion The results of this study clearly justify the significance of competency centers for business intelligence. In almost every comparative analysis, companies with a BICC had a competitive advantage over those without this organizational structure. The results show that when the deployment rate of BI software increases across an enterprise, the data management is coordinated more effectively and the quality of the BI initiatives is higher across all examined categories. BICCs are not just a trend. They shape long-term BI initiatives. BI competency centers are not simply hype. Many companies have already recognized the advantages of coordinating BI tasks through a competency center. Over time, this knowledge will multiply and companies will address technical, business as well as organizational aspects as the standard procedure for BI initiatives.

17 Organization of Business Intelligence 17 Figure 11: Respondent profiles Location Company size (number of employees) Latin America Asia Pacific >10k <100 Rest of world Central Europe 21 Other Europe k - 10k 100-1k North America Industry BI competency center in use Other IT No 26 Yes Healthcare Manufacturing Finance 74 Commerce / Service Percent, n = 271

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