How to Make the Business Case for BI

When Neil McMurchy, Sydney-based research director for Gartner Inc., talks about the rationale for business intelligence (BI) projects, he likes to recall the words of the CEO of an enterprise he describes as "very spreadsheet-oriented." In this company, "people were doing lots of things in spreadsheets, and the core reporting systems were pretty ordinary. The CEO said, 'Look, for any executive meeting I insist that the information you talk about comes out of our core financial systems. I regard information out of spreadsheets as opinion -- and unfortunately the only opinion that matters is mine.' "

Opinionated CEOs and the desire to move toward a single version of the truth are not the only forces driving companies to undertake BI projects. Relentlessly increasing compliance mandates and external reporting demands are two more. And throw in the need for more timely data to support better decision-making.

Even in the present tough economic climate, McMurchy sees no sign that companies are backing away from BI initiatives. "I think it's actually the opposite," he says. BI remains attractive because companies can use it to leverage the enormous investments they've made in data-generating applications such as ERP and customer relationship management (CRM) systems, he notes.

Cindi Howson agrees. She's the founder of BIScorecard.com and author of Successful Business Intelligence: Secrets to Making BI a Killer App (McGraw-Hill Osborne Media, 2007). "BI is what can help companies operate more efficiently or outperform the competition, so it's a little more insulated from the economic downturn," she says. Companies want what BI has to offer, "whether it's improving operational efficiency; reducing costs; growing revenues; or providing competitive advantage, better products, and better customer service."

Still, purchases of any kind are under pressure these days, and a proposal for a BI implementation needs to be airtight. McMurchy offers these tips:

• Establish a clear link between your organization's business imperatives and the proposed initiative. Promoters of a BI project should demonstrate a clear connection between their proposal and the strategic goals that matter most to senior leadership. The principle is simple enough: If the company is emphasizing innovation, for example, make sure you show how the project supports innovation. Yet BI business cases often fail to do this, according to McMurchy, and too often the result is a proliferation of projects that fail to realize significant benefits and ultimately drive up IT costs.

• The more qualitative the expected benefits are, the more executive sponsorship and business commitment you need. Some software initiatives give you immediate measurable benefits -- an ERP implementation in a manufacturing company, for example, may generate savings by improving inventory management. With BI, though, even the best implementation won't deliver results unless the business actually does something with the data it produces.

"The absolutely critical factor here is that the business has to truly own the business case because they are almost exclusively responsible for deriving benefits from it," says McMurchy. "It sounds self-evident, but we often see CIOs -- out of frustration, in some cases -- trying to push BI up through the organization."

• Avoid an ad hoc, tactical approach to BI projects. Too often, businesses implement BI piecemeal and without an overarching plan. Result: they end up with an aggregation of loosely connected projects reflecting departmental silos.

Gartner recommends that companies establish a BI competency center, a virtual team that focuses on promoting and developing the use of BI within the enterprise. "Organizations will often implement very good BI applications, but unless there's a funded focus on seeking out new opportunities for using that information more effectively, usage declines over time," says McMurchy. "So you need this almost evangelist group that's constantly seeking new ways of using information." The group should include people from management as well as IT, and the business case needs to cover the investment.

• Measure and secure business agreement on current, "as-is" baseline metrics that are critical to the business case. A surprisingly large number of organizations that decide to launch a BI project fail to determine the current state of the processes they want to improve. "We see people coming out of the back end of a BI initiative trying to understand the benefits they've realized, and the problem is that they haven't actually taken a starting point in terms of the metrics they want to measure," McMurchy reports. "What that means is that the justification for then going to the next initiative becomes harder to prove."

• Plan for short-term benefit realization, but in the context of an overall BI strategy. Keep the big picture in mind, but plan to deliver projects in small chunks centering around short-term wins such as improving customer segmentation.