Study Highlights How Leaders Improve Performance with Operational BI
Aberdeen Group study highlights best practices of Best-in-Class users of real-time business intelligence.
In spite of declining budgets, enterprises are under increasing pressure to deliver results by responding faster and making more accurate decisions. In a new report, Operational Business Intelligence, Five Things You Need to Know About Improving Your Customer-Facing Performance, Aberdeen Group vice president and principal analyst David Hatch, points out that 82 percent of survey respondents say they are cutting budgets because of the recession. That's putting pressure on enterprises to cut customer churn and defections by focusing on customer relationships more than ever.
Timely data has always been important, of course, but now enterprises must move beyond looking at historical trends. "Top performing companies are more likely to focus BI investments on operational requirements that are focused on real-time and near-real-time data sources in order to address day-to-day business activity."
Aberdeen's study of more than 260 companies revealed subtle shifts in the drivers for operational BI since December 2007 (when the research organization released a similar report, Operational BI: Getting Real-Time about Performance). In late 2007, a desire to increase operational efficiency was the top motivator. Today, the need to improve speed and accuracy of business decisions (the second most popular driver in the 2007 report) is now the top factor. Furthermore, respondents complain that "traditional BI requires us to manipulate the data warehouse which is too time consuming and costly."
Aberdeen defines "traditional" BI as "the combination of practices, capabilities, and technologies that companies use to gather and integrate data, apply business rules, and deliver visibility to information in order to better understand the business and ultimately, to improve performance." Operational BI applies BI capabilities within operational areas where information changes frequently, often several times a day. To separate Best-in-Class companies from those it ranked "Industry Average" and "Laggard," Aberdeen Group used several key performance criteria involving customer service, sales operations, and service operations.
Aberdeen's research found that although Industry Average and Laggard companies were doing a better job of delivering information more quickly (reducing the "time-to-information" gap), Best-in-Class companies do a far superior job in getting decision makers the information they need as soon as it's available. Getting more information to users isn't as important as the data's timeliness; Best-in-Class companies managed on average 167 GB of data compared to 309 GB for Laggards.
Technology is one key differentiator; Best-in-Class companies are investing in automation at significantly higher rates than their competitors. For example, automated alerts based on data changes are used by one-third of Best-in-Class companies; the figure is just 15 percent for all other firms. Such alerts are also at the top of technology plans for all Best-in-Class firms; one-third are planning to use automated alerts this year, Aberdeen says. (Information portals and dashboards/scorecards follow closely in the list.)
The source of data is varied; 54 percent of respondents cite their ERP system as the most prevalent source of operational data; less than half (46 percent) get operational data from their CRM systems. The key is how the information comes together: "75 percent of Best-in-Class companies integrate data together from both ERP and CRM systems, compared with 36 percent of all others," according to the study. Again, technology offers one advantage: one-third of Best-in-Class companies automate the integration of their operational data; only 18 percent of all other firms do so.
Another key differentiator is a company's attention to identifying and prioritizing the operational processes it should analyze. "Best-in-Class companies are more than twice as likely [as] Industry Average companies and 10 times as likely as Laggards to take this step." However, even leaders have room for improvement: only 32 percent have an established method for identifying such processes.
Of course, information is of little value if it isn't properly distributed so employees can adjust their actions to enhance the company's performance. Even the best companies have room to improve. "Less than half of all companies surveyed are proactively communicating to their employees about the initiatives around operational performance and analysis. This is something that interviewees unanimously agreed is an area that needs work within their organizations." Best-in-Class companies are more likely to seek guidance from industry associations and consortiums about how their peers are communicating information.
Operational BI is no panacea. As Hatch explains, enterprises must consider "the difference between 'time-to-information' and 'time-to-decision/action.' Simply delivering operational data to business decision-makers is not enough. Does the information allow for timelier and more accurate decisions and does faster delivery of information drive decisions and actions within a timeframe that affects performance?
The full report, which includes suggested actions for Laggard, Industry-Average, and Best-in-Class companies can be downloaded from http://www.aberdeen.com/link/sponsor.asp?spid=30410737&cid=5392
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