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ABC: An Introduction to Business Intelligence

How to turn data into information.

By Compiled by Ryan Mulcahy

PAGE 3

• What is business intelligence?
• What kind of companies use BI systems?
• Who should lead the way?
• How should I implement a BI system?
• What are some potential problems?
• What are some benefits of business intelligence efforts?
• More tips for getting BI right

What are some potential problems?

User resistance is one big barrier to BI success; others include having to winnow through voluminous amounts of irrelevant data and poor data quality.

The key to getting accurate insights from BI systems is standard data. Data is the most fundamental component of any BI endeavor. It's the building blocks for insight. Companies have to get their data stores and data warehouses in good working order before they can begin extracting and acting on insights. If not, they'll be operating based on flawed information.

Another potential pitfall is BI tools themselves. Though the tools are more scalable and user friendly than they used to be, the core of BI is still reporting rather than process management, although that's slowly beginning to change. Be careful not to confuse business intelligence with business analytics.

A third impediment to using BI to transform business processes is that most companies don't understand their business processes well enough to determine how to improve them. And companies need to be careful about the processes they choose. If the process does not have a direct impact on revenue or the business isn't behind standardizing the process across the company, the entire BI effort could disintegrate. Companies need to understand all the activities that make up a particular business process, how information and data flow across various processes, how data is passed between business users, and how people use it to execute their particular part of the process. And they need to understand all this before they start a BI project, if they hope to improve how people do their jobs.

What are some benefits of business intelligence efforts?

A broad range of applications for BI has helped companies rack up impressive ROI figures. Business intelligence has been used to identify cost-cutting ideas, uncover business opportunities, roll ERP data into accessible reports, react quickly to retail demand and optimize prices.

Besides making data accessible, BI software can give companies more leverage during negotiations by making it easier to quantify the value of relationships with suppliers and customers.

Within the walls of the enterprise, there are plenty of opportunities to save money by optimizing business processes and focusing decisions. BI yields significant ROI when it sheds light on business bloopers. For example, employees of the city of Albuquerque used BI software to identify opportunities to cut cell phone usage, overtime and other operating expenses, saving the city $2 million during three years. Likewise, with the help of BI tools, Toyota realized it had been double-paying its shippers to the tune of $812,000 in 2000. Companies that use BI to uncover flawed business processes are in a much better position to successfully compete than companies that use BI merely to monitor what's happening.

 

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