Business Intelligence Competency Centre (BICC) June 2013 Strategic Placement within an Organisation
Document Number: version 1.0 Date: April, 2013 Status: ISSUED Information contained in this proposal and associated documents is confidential, proprietary to, and constitutes the trade secrets of, Hitachi Consulting. Without prior written permission from Hitachi Consulting, it may not be disclosed to any other parties or to employees or representatives other than those with a need to know for the purpose of evaluation of this proposal. Copyright Hitachi Consulting, 2013.
Contents 1 Glossary of Terms... 4 2 Introduction... 5 3 BICC Placement Key Indicators... 6 4 BICC Models... 8 5 BICC Key Function Areas...11 6 References...16
1 Glossary of Terms BICC BA LOB COO CIO ROI PMO IS DMT Business Intelligence Competency Centre Business Analyst Line of Business Chief Operation Officer Chief Information Officer Return on Investment Project Management Office Information Systems Data Management Team Strategic placement of BICC in an organisation 4
2 Introduction The objective of this paper is to describe the common models adopted by organisations for the strategic placement of a Business Intelligence Competency Centre (BICC). The paper will focus on: The BICC placement key indicators, The common organisation models, The BICC key function areas The intent of this paper is to serve as a complementary reading material in addition to the Hitachi Consulting white paper Establishing a BICC. Strategic placement of BICC in an organisation 5
3 BICC Placement Key Indicators Every organisation s BI needs are unique. There is a common set of indicators that can provide guidance on where the BICC should be placed to maximise the organisation s BI investments and achieving the corporate BI vision. Where is the executive sponsorship (i.e. CxO) located within the organisation? It is no secret that an executive sponsorship is absolutely critical to the development of a successful BICC. Direct placement under the leadership of someone who is not only an advocate, but also recognises the benefits of the BI investment, has the authority to make decisions, and drives influence on the corporate vision and strategy is essential. All these factors combined increase the success rate of the BICC establishment. With that said, many successful organisations have a virtual BICC model that does not belong to any of the core business functions. In these cases, it is paramount that regular communication becomes mandatory to ensure high visibility on progress, success, and challenges of the BICC are recognised. Does your corporate BI vision gravitate toward operational focus, strategic focus, or a balance of both? It is often advantageous to place BICC under the area of focus where an organisation needs the most attention. This ensures the relevancy of the BICC and that its output will have a direct impact in response to organisational needs. When a company s primary objective is to deliver focus and optimise a company s performance at an operational level, many organisations have opted to place BICC under the COO or operation function since the company s objective ties closely to the COO s responsibilities. Other companies will have a different focus with the aim to achieve a closer relationship between the company s strategy and the way in which information is used. Once an organisation decides on the area of focus for its corporate BI vision, whether it is operational or strategic or a balance of both, the common goal here is to transform the use of data information from a reactive state to a proactive one so that the organisation can make informed decisions in a timely manner (Figure 1). An example of a reactive operational a business user approaching the BI team and requesting the information or knowledge that he/she needs. In turn, the BI team response and takes 3 business days to complete the request. If the timing to receiving this information is critical, then suddenly we have a situation where the BI function will either becomes a bottleneck or where the business will avoid using it again in the future. This behaviour from the business can hinder the ROI from the BI investment. Figure 1 Corporate BI vision will drive the placement of the BICC It is worth noting that the placement of BICC can change over time to reflect the change of focus from the latest corporate BI vision. Strategic placement of BICC in an organisation 6
How does the size of the organisation impact the BICC placement? The size of the organisation can often dictate the structure of BICC and its natural placement within an organisation. In many global organisations, a BICC distributed model is widely used due to its geographic disparity. An overall BI vision is initially set at a corporate level then it is distributed to different regions with adjustments based on the regional needs. Smaller organisations allow the BICC to be treated as a physical organisation entity along with a solid reporting structure. As mentioned previously, each organisation is unique and the best way to gauge the optimal structure and size of BICC should be dependent on the needs and the level of investment from the organisation. Strategic placement of BICC in an organisation 7
4 BICC Models The following table describes the most widely used BICC models in today s organisations. There is no empirical evidence thus far to suggest one particular model is more suitable for a type of organisation or sector. Only careful evaluation and honest assessment of your organisation s vision, needs, level of investment commitment, and the key indicators mentioned in the previous section can determine what is best for your organisation. According to a Gartner BI multi-client survey: 42.3% of BICC placement is under CIO or as an IT department, 19.7% of BICC placement is under CFO or as a Finance department, 15.54% of BICC placement is under Line of Business (LOB) Head (for example SVP of sales or marketing), 4% of BICC placement is under COO or as part of the operation, and 6.6% indicated that their reporting structure was TBD Placement option Pros Cons As Part of Finance Works well when BI and performance management is heavily driven by Finance objectives and by corporatelevel goals and metrics BICC can be set up as the authoritative owner of insight and support to strategic and operational decision making BICC is well placed to reflect the business objectives that drive your BI and performance management strategies If the organisation primarily focuses on measuring and monitoring financial performance, the BICC may be well positioned to report to the The Finance well positioned to promote successes and continue to receive funding for initiatives If the organisation is more focused on operational efficiencies, it may be better served reporting to the COO, or sit elsewhere in the organisation If its members are limited to Finance it is likely to have less impact on your organisation; members should be drawn from across finance, IT and the business During early phases the BICC may focus more on processes, architectures, determining services and technology vendors, and on technology development and integration, than on the people and business strategy issues Strategic placement of BICC in an organisation 8
Placement option Pros Cons As IT department Virtual BICC* *Consists of staff from departments of several business units and/or companies Heavily integrated and high visibility on the overall IT strategic road map Direct senior executive sponsorship support (i.e. CIO) Natural partnership with IT infrastructure strategies, IT BI applications, Data stewardship, IT architecture, and IT investment and prioritisation Centralised approach to ensure consistency and standardisation (e.g. KPIs, languages, vision) Studies recognise most profitable companies tend to centralise their IT strategy Minimal or no new staff members are required No significant, larger budget required Greater flexibility Technology customised to local business needs Ensure the needs of the business that drive all technical initiatives Perception of IT push rather than business pull Risk of insufficient business unit engagement and support Vision and technology may not meet local needs In most studies, overhead cost is absorbed by IT department Common perception of a history of failed BI initiatives Lack of real communication between members of the centre Conflicting priorities, goals, and objectives of each virtual member s direct management team against objectives of the BICC Departmental silo mentality Easy to duplicate work effort and reinvent-thewheel Potential difficulty in finding executive level sponsorship Difficult to maintain corporate wide standards and consistency Extra diligence required to prevent loss of control Significant effort required on cross functional agreement and alignment Strategic placement of BICC in an organisation 9
Placement option Pros Cons As part of Operations Emphasis on achieving operational level excellence (i.e. performance) Ensure the operational needs of the business drive all technical initiatives Direct Senior Executive sponsorship (i.e. COO) Centralised approach to ensure consistency and standardisation across all divisions (e.g. KPIs, languages, vision) Disengagement from other parts of the business units, including IT BICC s priorities, goals, and objectives will gravitate toward operational improvement initiatives hence it hinders the holistic BI corporate strategy Not visible or lack of access to overall IT strategy Potential conflicting initiatives or redundant efforts made by IT Distributed BICC Ideal for large, global scale organisations Centralised approach to ensure consistency and standardisation (e.g. KPIs, languages, vision) Strong linkage between overall corporate strategic goals and objectives Easy access to find executive level sponsorship Potential lack of engagement and feedback from the division level BI maturity and readiness level vary between divisions which can lead to inconsistency at how well they respond to corporate BI strategy Possibility of local divisions acting differently to corporate strategies and initiatives Corporate objectives can be perceived as high-level with an overly strategic focus while neglecting the importance of the daily operations Strategic placement of BICC in an organisation 10
5 BICC Key Function Areas It is vital to have a corporate-level (or equivalent) sponsor for your BICC who is actively involved in the process by providing guidance, direction, requirements and management. As the authoritative owners of insight and operational decision making across the business, the BICC should ensure that Business Intelligence programmes are correctly aligned to functional areas to achieve maximum success. The following describes the key functional areas that need to be considered for any Business Intelligence programme; Figure 2 BICC Key Functional Areas Functional Area Business Intelligence Programme Description The Business Intelligence Programme the foundation of the BICC. Its primary function involves in defining the Business Intelligence (BI) objectives and strategy, and tracking its success over time. The programme ensures that the appropriate BI strategy is executed, satisfies the business needs, and it supports the organisation's overall vision. Data Stewardship Support In some instances, business users can get guidance on how to use BI analyses and understand findings. The BI Programme function can also be acted as the project management office (PMO) that oversees all BI-related projects and initiatives. Another key responsibility of the programme is to keep up-to-date with the latest BI trends and technologies so the organisation can apply the relevant elements and benefit from them. The main function here is the maintenance and administration of technical metadata. It ensures the data is in alignment with business metadata. It is also for data standards, data quality, and data governance. It is recommended that the first-level support would be handled by the general service desk within the organisation. The support we mention here is the second-level support for BI problems. The primary function here is to clarify the BI problem messages from end user, analyses the problem in detail, and return to the user with the solution. It is likely that the problem will be passed to 3rd party vendors if it cannot be resolved within the organisation. BI Delivery Data Acquisition Advanced analytics The main function here it to provide the necessary end-to-end support (i.e. design, development, testing, deployment, maintenance) for BI applications that are for the delivery and distribution of information that are resided in the data warehouses. It is for data integration and data store development, testing, and maintenance. It also handles the design of the data warehouse and potential integration with new and on-going projects within an organisation. The area of focus here goes beyond the basic day-to-day analysis. The intricate analytical requests can lead to statistical analysis, modelling, optimisation, trending, and data mining. Strategic placement of BICC in an organisation 11
Functional Area Training Vendor contracts management Description The primary to educate end users the relevant BI concepts and BI applications that are beneficial to their roles. It also provides answers to user s BI questions and addresses any particular product-specific training and certifications that they desire to acquire. It addresses all related issues on licenses and contracts, including user licenses, software distribution, and service-level agreements with external BI vendors. Stakeholders who involve in this function have significant input during the vendor selection and procurement process. In addition, they work closely with the organisation's purchasing and legal departments. 5.1 SELF ASSESSMENT - WHERE SHOULD YOUR BICC BE PLACED? The decision as to whether all the functional areas should be placed under the BICC will depend on the organisation. As a general recommendation, it is integral that all of these functional areas should be addressed within your organisation holistically regardless whether it is governed by the BICC or not. Hence, the important question for an organisation is how to effectively identify the ownership of each functional area so there is minimal overlap between the responsibilities of BICC and other business units. The table below can be used as part of a discovery exercise to understand which BICC placement model best fits to your organisation. BICC Functional Area Your CIO or IS Your COO Your CFO Your CxO No one is Business Intelligence Programme Defining the BI and AI (analytical intelligence) strategy and its link to the corporate strategy Managing standards and templates for BI/analytical intelligence Establishing and monitoring key performance indicators (KPIs) (e.g., return on investment [ROI]) for the success of the BI strategy and the BICC Business-related consulting BI project office management Function specialisation [1] Service management Strategic placement of BICC in an organisation 12
BICC Functional Area Your CIO or IS Your COO Your CFO Your CxO No one is Internal marketing of the BICC [2] Knowledge management Metadata management BI-related security (common to all functional areas) Information quality Service-level agreements (between the BICC and the business units) Cooperation with corporate IT with regard to hardware architecture, capacity planning, etc. Data Stewardship Metadata management ownership (technical metadata only) Data standards Definitions Data governance Data quality Support Second-level support [3] User management BI Delivery Front-end BI distribution (portal, channel delivery, etc.) Strategic placement of BICC in an organisation 13
BICC Functional Area Your CIO or IS Your COO Your CFO Your CxO No one is Front-end BI application development, warehousebased applications (reporting, OLAP [Online Analytical Processing], etc.) Testing Maintenance Technical consulting Data Acquisition Data integration/development/ testing/maintenance Data store development/ optimization/testing/ maintenance Scheduling Technical consulting Integration processes Advanced Analytics Statistical analyses, modelling, forecasting, optimization, etc. Data mining Research and experimenting Data preparation for analytical purposes Training development Training (business use) Training (product-specific) Strategic placement of BICC in an organisation 14
BICC Functional Area Your CIO or IS Your COO Your CFO Your CxO No one is Vendor contracts management User licenses Service-level agreements with vendors (BI related) Vendor management Product evaluation Interface to purchasing/legal departments Financials BICC headcount budget BI development / delivery budget BI infrastructure budget BI service management / support budget [1] If the focus of the BICC is on a particular area (e.g. customer relationship management), a business expert or specialist in this area should be working directly with the BICC. This individual would serve as the advisory voice for this area of focus to the BICC. [2] This includes keeping the organisation informed about the BICC's service offering to the business. It also includes communication on the status of BI projects, its success, and plans for the future. It is to brand BICC as the centre of excellence for all BI-related questions. [3] We recommend that first-level technical support be handled by the general service desk in your organisation. Strategic placement of BICC in an organisation 15
6 References BIERE, Mike. (2011) The New Era of Enterprise Business Intelligence: Using Analytics to Achieve a Global Competitive Advantage. IBM Press. BURTON. Betsy et al. (2006) Organizational Structure: Business Intelligence and Information Management. Gartner. LAURSEN, Gert H.N. and THORLUND, Jesper. (2010) Business Analytics for Managers: Taking Business Intelligence Beyond Reporting. John Wiley & Sons (US). MILLER, Gloria J., BRAUTIGAM Dagmar and GERLACH, Stefanie V. (2006) Business Intelligence Competency Centers: A Team Approach to Maximizing Competitive Advantage. John Wiley & Sons (US). PEARLSON, Keri E. And SAUNDERS, Carol S. (2010) Governance of the Information Systems Organization - Managing and Using Information Systems: A Strategic Approach. 4th Edition. John Wiley & Sons. SALLAM, Rita. (2012) Defining a BI competency Center to Fit Your Organization. Gartner. Unknown author (2012) BICC Structure and 11 Best Practice. Gartner. Strategic placement of BICC in an organisation 16
For further information please contact: Hitachi Consulting 2 More London Riverside London SE1 2AP Hitachi Consulting Barnett House 53 Fountain Street Manchester M2 2AN Hitachi Consulting 3rd Floor Wing 2, Cluster C MIDC Knowledge Park Kharadi, Pune-411 014 India Change History Date Name Version Change reference March 22, 2013 Michael Leung 0.1 Initial draft April 3, 2013 Michael Leung 0.2 Content updates April 15, 2013 Richard Osbourn 0.3 Content updates Distribution Copy Name Organisation FINAL Simon Greener HCUK FINAL Richard Osbourn HCUK Strategic placement of BICC in an organisation 17
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