10 Steps to 21st Century BI & Performance Management

For optimal decision-making, executives must ensure that business and management processes are supported with useful, actionable information. In providing this decision support, business intelligence (BI) is a key technology that enables organizations to understand and act on the information received from and stored in various sources. Executives and managers from finance, sales and marketing, customer service, human resources and operations are also making performance management a priority. They seek to monitor more effectively the functioning of people and processes, align them with organizational goals and improve their results.

Information and technology are critical components of performance management, and BI can be an important contributor here as well. By combining BI and performance management capabilities such as metrics and dashboards, organizations can provide better information for decision-making and feedback, as well as enable communication and collaboration across functions and organizational levels. Where they do so, improved performance will follow.

Unfortunately, business and IT organizations typically act independently; while IT develops an infrastructure and middleware to enable BI and reporting, the business side focuses on analytics and the performance of its people and processes. Such an approach often is insufficient (and may even work at cross-purposes) to achieve two essential elements of performance management: collaboration and the alignment of all units to the enterprise goals. To manage performance effectively, business and IT must work together to provide users with the information and capabilities they need.

Despite major investments in technology, many business users still rely on spreadsheets, presentations and e-mail as their tools for information and analysis, despite the fact that they are not designed to manage or improve organizational performance and can impede collaboration. A new study by Ventana Research, "Business Intelligence and Performance Management for the 21st Century," consistently shows that these desktop productivity tools obstruct efficiency and effectiveness when used in enterprise processes. The research was underwritten (though not influenced by) Information Builders and Microsoft and was promoted by nine media partners, including Intelligent Enterprise.

As this executive summary of Ventana's benchmark report explains, BI and performance management systems can function separately, but used in concert they can usefully address key needs of both individual departments and the organization as a whole. BI applied to performance management is, however, still an evolving market. To date, the leading software vendors often have specialized and have not addressed the expanding set of requirements to support rigorous performance management. At the conclusion of this article, we offer ten what-to-do-next suggestions for maturing to a 21st Century BI and performance management deployment. The Findings

Ventana Research undertook this benchmark research to assess the current state of maturity, trends and best practices. The goal was to determine how organizations approach BI and performance management and prioritize their key components, and to identify what elements they desire in a comprehensive approach. (In this report we refer to BI or performance management separately when discussing uses and capabilities particular to each; at other times we refer to them together as we discuss them functioning in combination to serve business needs and goals.)

The research found strong interest in and growing demand for BI and performance management, with two-fifths (41%) of 308 qualified survey respondents reporting they view them as a high priority in their organization. As a group, managers (62%) prioritized them highly more often than other categories of employees; departmentally, the most growth in adoption of BI tools to support performance management has been in operations (51%), finance (50%) and customer management (49%).

However, the research paints a picture of a market in an early stage of development. It shows that most organizations face considerable obstacles. They have only basic BI capabilities such as querying sources for specific data (74%), generating reports from data (74%) and accessing data from a spreadsheet for further analysis (70%). Moreover, the capabilities they currently are working to deploy are only somewhat more sophisticated: communicating data in the right format (27%), searching for data (26%), presenting data effectively (25%) and creating measures and metrics (24%). Organizations are aware that more advanced capabilities exist; the ones our participants said most often that they hope to establish are being able to access data via a mobile device (27%), to conduct what-if analysis (25%) and to collaborate on data and metrics (23%).

These and other findings lead us to conclude that in general, organizations are still maturing in their use of BI and performance management. Our research finds that this Information immaturity largely is the result of the ineffectiveness of the tools these organizations currently use. More than half of participants (53%) said they are only somewhat confident or not confident at all that their BI technology meets the needs of the organization. In addition, nearly half said it is significantly difficult (32%) or extremely difficult (14%) to standardize BI into a consistent and reliable technology. Overall, only 9 percent are very satisfied with their organization’s BI efforts.

Both Information and Technology maturity are held back by the persistent use of desktop tools for BI and performance management -- tasks for which they were not designed. All but 13 percent of organizations use spreadsheets universally (40%) or regularly (47%) for BI. Not coincidentally, 39 percent frequently find errors in them, and 47 percent have to correct errors often or very often after a spreadsheet has been shared with others. More sophisticated capabilities of performance management, such as dashboards, analytics and metrics, are simply beyond the reach of desktop spreadsheets. We conclude that organizations will have difficulty maturing until they adopt more capable, flexible tools.

Very large organizations (defined as having 10,000 or more employees or more than US $10 billion in revenue) are the farthest along in applying BI and performance management. Half the participants from very large organizations, as measured by number of employees, prioritize BI and performance management highly, compared to only 32 percent of those from midsize organizations. Very large organizations also have done new software implementations more often than others (38% by employees and 37% by revenue).

We attribute the progressive stance of very large organizations to their need to manage enormous volumes of data and provide it to a great many users and to their more abundant resources than smaller companies have. On the other hand, midsize organizations, having experienced growth (sometimes rapid growth), often lack sufficient resources to advance their capabilities and must make do with tools they have outgrown.

The research found a ray of hope for midsize organizations and others under funding constraints. The research shows that lack of resources (60%) and lack of a budget (43%) are the two most common barriers to improving BI and performance management. A significant percentage of the participants said that in the next year or two they will choose hosted software managed off-site or rented software as a service (SaaS) as the means of deploying such software. These methods can be more economical than the traditional on-premises deployment and require fewer in-house resources such as hardware and IT staff. What To Do Next

This benchmark research found strong demand for BI and performance management, both separately and together. Organizations’ most important goals in deploying BI tools are to provide access to data through a variety of tools (cited by 57% of participants), to make it possible to apply analytics to the data easily (61%), and to communicate and collaborate on the analytics (55%). They also view as important expanding the focus of BI to support performance management and decision-making. Yet the research also found only moderate maturity in the use of BI and performance management. Many lack confidence in the tools they currently use for either BI or performance management but lack resources or budgets for acquiring new ones. Nevertheless, two-thirds (66%) of organizations are planning to evaluate new technologies; your organization may be among them. Based on the research, here are ten recommendations on how to proceed.

1. Assess your organization’s maturity in BI and performance management. Applying the Ventana Research Maturity Index methodology, we found that only 15 percent of organizations reach the "Innovative" level in all four functional categories of maturity (People, Process, Information and Technology). Our analysis also reveals that maturity across these categories is uneven. For example, only 11 percent of organizations are at the Innovative level in the Information category while 22 percent reach it in the People category. Fewer than one-quarter of organizations have deployed BI in key processes that could benefit from it. Information maturity is hampered by inadequate access to data and an inability to interact and collaborate. From a technology perspective, organizations still use spreadsheets and e-mail too often to perform BI tasks. Examine your own capabilities in each of the four maturity categories and research how organizations that rank higher are able to do so.

2. Consider the effectiveness of your current tools and applications. Ventana found that most organizations have at least some doubts about the technology they currently use for BI and performance management. Only 12 percent of participants said they are completely confident in their BI technology, and only 9 percent made that assertion for the technology they use to manage performance. Respondents did not follow a traditional technology-adoption curve: Only about one-third said they are confident in BI (35%) and performance management (36%), far fewer than said they are either only somewhat confident or not confident (51% and 55%, respectively). In both cases, executives expressed strong confidence more often than management and analysts, who are more likely to be experienced users of these tools. Explore users’ feelings about the tools they use and identify to tools that should be replaced.

3. Reduce the number of BI tools and the use of spreadsheets. BI systems have been around for years now, yet all but 10 percent of participants said they have at least some degree of difficulty standardizing BI into a consistent and reliable technology; almost half (44%) indicate that this is significantly or extremely difficult to do. The research shows that a major contributor to the difficulty is the array of tools, systems and applications used for BI and performance management: Ten different types were cited as used every day by at least 20 percent of participants. Among these, spreadsheets led the way, used daily by almost half (42%) of the research participants; close to one-third (32%) use e-mail to distribute information and collaborate.

Spreadsheets are an impediment to collaborative processes in enterprises. They are prone to errors and conflicts in data between files that are thought to be the same. Only 13% of organizations use spreadsheets "occasionally, rarely or never" for BI. It is not surprising that 39% frequently find errors; only 8% rarely or never find errors. Nearly half of participants (47%) said such errors must be corrected often or very often after the spreadsheet has been shared with others, which is time-consuming and costly. We advise taking steps to reduce the number of BI tools in use and standardize them. This research reinforces the many past findings that spreadsheets should not be used for this or any collaborative, enterprise purpose.

4. Compare the BI capabilities you have with those you want. The research shows that most participating organizations have deployed or are deploying basic BI capabilities such as querying sources for specific data (74%), generating reports from data (74%) or accessing data from a spreadsheet for further analysis (70%). However, notably fewer have more advanced capabilities. For example, only 30% can apply analytics to data effectively, 24% can collaborate on data and metrics, and 22% can conduct what-if analysis for planning and forecasting. Nor are these the capabilities most organizations are currently working to deploy; the most popular at that stage are communicating data in the right format (27%), searching for data (26%), presenting data effectively (25%) and creating measures and metrics (24%). Conducting what-if analysis (25%) and collaborating on data and metrics (23%) rank high among the capabilities that participants hope to deploy; the most desired is to access data via a mobile device (27%). Decide what BI capabilities you want and examine products that can supply them.

5. Determine whether products currently in use can handle performance management well. Participants in our research said their most important goals in managing performance are to align actions and decisions to goals and strategy (cited by 77%) and to be able to plan effectively for improvement (75%). Business intelligence can be a key tool for helping organizations understand, align and optimize their performance; however, participants expressed mixed feelings about how well their BI tools help them in these efforts. In several aspects of understanding performance, fewer than 10% said their current products are superior, and the largest percentages called them only adequate or worse. In aspects of aligning performance, products fared worse: Again fewer than 10% rated their products superior in any category, and inadequacy outpolled basic adequacy. For optimizing performance, responses followed the same pattern, with no aspect exceeding 10% in superior rating. These findings suggest that you should take a hard look at the adequacy of the tools and systems you use to manage performance; determine whether other tools would enable more cost-effective performance management. What To Do Next (Continued)

6. Identify the types of data you need to access and analyze. A majority of participants (57%) said that an important goal in providing BI tools is to provide access to data through a variety of methods. Asked to identify the types of data they consider most critical to access, 71 percent of participants cited not a type but a source: databases residing in data warehouses or operational data stores. The next two most-often-cited data types involve business activities important to a range of job functions: finance data (67%) and customer data (61%). More than half of participants said they need to access spreadsheets (55%) or transactional data (54%) from enterprise systems such as customer relationship management (CRM), enterprise resource planning (ERP) or online transaction processing (OLTP). Indicating the increasing diversity of data types, one-third (34%) said they need to access unstructured content such as text, images, voice or Web data. To put BI and performance management to the best use, we advise identifying the types and sources of data your company or unit needs to access most often and then evaluating tools that can help you do so easily.

7. Consider adopting or expanding metrics for performance management. The ability to measure and track performance is an integral component of performance management. Currently 41% of participating organizations evaluate performance data and 29% are assessing metrics or measures to do so; more than one-third of executives (37%) measure performance. To a lesser extent participants now evaluate process data (26%) or are assessing doing so (29%), as well as compliance (21% evaluate and 25% are assessing), risk (19% and 25%), governance (16% and 22%) and sustainability (15% and 26%). Among those not currently doing either, from 16% to 25% in each category said they plan to begin using a measure or metric within one year. We applaud that intent; monitoring any of these processes using metrics can contribute to improving an organization’s overall performance. Find which processes and employees in your organization might perform better if metrics were available for evaluating their performance, then deploy systems that can monitor those metrics.

8. Address organizational barriers to improving BI and performance management. While research participants clearly recognize the worth of improvement, they also acknowledge a number of barriers to implementing projects to do that, mostly involving money or institutional support. The barrier cited most often is lack of resources (60%), followed by lack of a budget (43%). The top two people issues are lack of awareness (cited by 36%) and lack of executive support (26%). In issues related to purchasing of tools, 31% said the total cost of ownership is too high, 23% said the business case is not strong enough, and 15% have not identified suitable software. Along the same lines, 69% of participants said their organization has evaluated alternatives to its current BI and PM software within the last two years, although only 22% have bought any. Determine what barriers exist in your own organization and discuss how to overcome them.

9. Look into alternative means of software deployment. Asked how they deploy this software, half (53%) of participants said they currently install and manage it on their own premises in the established manner; however, that percentage drops dramatically regarding plans for deployment in the next 12months (13%) or 12 to 24 months (11%). Nearly as many said that in the next 12 to 24 months they will choose hosted software managed off-site (13% and 9%, respectively) or renting software as a service (SaaS) on demand (12% and 10%). These options can help address organizational barriers such as lack of resources to provide BI and performance management.

10. Examine software that can be deployed across roles in the enterprise. The research found that two-thirds (66%) of organizations are planning to evaluate new technologies for BI and performance management. In terms of roles, managers (72%) were most assertive about planning to consider new products. In these evaluations, practical considerations will be the most important criteria; 88% of participants said usability -- whether software meets business needs -- is important or very important, and 86% said functionality -- the business capabilities of software -- is important or very important. Consider the breadth of implementation you require from software to support BI and performance management and make that a criterion when evaluating products and vendors. Challenge vendors to demonstrate the appropriateness and usability of the products they’re offering, and ask to speak with customers in situations similar to yours.

Click here for the complete executive summary version of the Ventana Research "Business Intelligence and Performance Management for the 21st Century" report (registration required).