Nine Ways To Create Real Business Value with BI
Implementing a BI solution can seem expensive. For most companies it will be a long-running program costing well up into six- or seven-figures over a period of years. But done correctly, it should be viewed as a bargain. The key is in identifying the expected business value in advance, and then ensuring you achieve it.
So how do you know in advance that it will be a wise
investment that will drive your business forward? I like to target specific business processes where I know the right information can really make a difference, and where there are business stakeholders who are committed to acting on that information once they have it. I don’t recommend a strategy of “let’s put everything in the BI system, just in case.”. That’s very expensive, untargeted, will take a very long time, and will certainly be under-utilized.
Here are nine ways we have seen our clients find real, quantifiable dollars from their BI apps that have moved their businesses forward.
- Increase sales
- Identify points in the sales pipeline where prospects get stuck, giving sales professionals the ability to focus on moving the right deals along.
- See which customers have not yet purchased specific items, recovering sales that would have otherwise been lost.
- Provide better insight to support Marketing
efforts, improve media buys, and measure results.
- Reduce costs
- Provide visibility into the components of cost
of your products.
- Use BI in healthcare to reduce patient cost of
care. How do your population-level metrics compare to others’ and to national
averages? Are your chronic-care patients getting correct follow-up based on a
care pathway? What percent of your diabetic patients have A1C below a defined
- Provide always-up-to-date visibility to budgets and spending to all managers with budget authority.
- Support an analysis of purchasing / current expenditures
- Free up cash
- Which customers drag out their payments to you?
Supporting improved collection cycle times brings cash in the door.
- Inventory analysis and rationalization can assist in reducing the amount of cash tied up in inventory, while at the same time improving customer service levels.
- Another potentially interesting inventory trick can be to chart inventory balances by item by facility with a longer period moving average (120 days?) and a shorter period moving average (30 days?). Where the shorter moving average crosses the longer one, it is a “point of interest”, where inventory is building up or depleting faster than it has been in the recent past. This can serve as a bit of an early warning, prompting someone to dig deeper, and potentially take corrective action. You may have to play with the number of days for the moving averages to get something that works for your items.
- Reduce risk
- Understand where losses come from, and which ones might be preventable, or reduced.
- What are the characteristics of, and circumstances surrounding patients in a healthcare setting who may be likely to sue? How can these circumstances be mitigated?
- Increase compliance and quality
- One way to think about quality is the degree to
which you comply with a specific process, and the consistency of the outcome of
that process. BI can measure both of these, and also track the improvements.
- Measuring compliance to processes also helps
- Improve a work process or work flow
- What are the important things to measure in a given work process?
- Are we doing the right steps, in the right way, in the right sequence, every time?
- What is the cost of fixing mistakes?
- What is the value of reducing or eliminating mistakes?
- If you have multiple facilities performing the same tasks, how do they compare on KPIs? What can facilities learn from each another? What is the value of bringing all facilities up to the performance level of the best one, on each KPI?
- Improve alignment with organizational strategy
- Most organizations today have a publishedstrategy, and some high-level KPIs to measure progress against it.
- Fewer organizations have second or third tier of well thought-out supporting KPIs that ensure that all levels of the organization are pulling in the same direction.
- BI can illustrate how the actions of even a small department can move their KPIs in the right direction, and how that supports higher-level success.
- Clone the “Rock Star”
- You know who they are…the “rock stars”. Those people on your team who just perform head-and-shoulders above everyone else. It may be that Category Analyst who manages her category efficiently, and effectively. It may be a marketer who consistently has a better response rate.
- These people often know how to make Excel or Access sing and dance. They live in the numbers. They know how to glean insight from the data. But most mere mortals don’t really want to, or know how to do the same.
- By interviewing them, and reviewing the steps these rock stars take to achieve their top-tier performance, we can often build their needed information, business rules, thought process, and decision points into a BI app. Then other team members can leverage that same thinking, and start to perform more like the rock stars.
- It is a truism that the rock stars often are not around in a role forever. They are smart, get promotions, or take jobs at other organizations. By capturing their thought process in a BI app, you have the side benefit (and reduced risk) of not losing all of that expertise when they leave.
- Demonstrate your value to your customers
- We know a SaaS provider of a solution around patient care. The direct users are people like nurses and nursing managers who love the solution. But the administrators who pay for the subscription cost every year don’t use it, and don’t personally see all of the value it provides. This SaaS company is now building in BI targeted to those administrators, so they can begin to see how using this solution is improving patient care, reducing risks, and improving compliance.
- Another company produces electronic signs and menus like you might see in fast food restaurants. They are using BI to capture usage data and present it back to executives at those chain’s headquarters, giving them visibility to the level of engagement each individual retail outlet manager has with the system. BI provide usage data, frequency of changing the menu items, prices, use of special graphic icons, use of videos, etc., all of which can be changed at will by the managers. This allows chain executives to see that the system is viewed as valuable by retail managers, and being actively used. It also provides a bit of “wisdom of crowds” data on what the most effective retailers are doing. Those most effective actions can then become best practice recommendations to other retail locations. All of this builds the case for the chains to renew the subscription to the electronic sign software.
It doesn’t take much back-of-the-napkin math to put some numbers to these scenarios and uncover real business benefit. You don’t have to be perfect. It’s still very useful if you can make fair assumptions and just be in the right ball park. Our goal is usually to arrive at some numbers that everyone around the table can look at, and say “that seems reasonable”.
We ask a lot of questions like:
- How often does that happen?
- Who else is impacted by that?
- What is the lifetime value of a customer?
- How much waste do YOU think is in that process?
- What are your inventory turns? What would you like them to be?
- Who performs that task the best? What do they do
that is different?
In the end, it’s always been worth the effort to really dig
in to find the business value. It can provide direction on where to make targeted
and effective BI investments and prevent the BI team from floundering by trying
to tackle everything all at once. It can provide momentum for the BI program, and
can make BI seem like a real bargain!