Description
The execution of business strategy is often hampered by a lack of reliable information.
PERFORMANCE AND TECHNOLOGY
Does your
business
intelligence
tell you the
whole story?
ADVI SORY
2 |BI
oesyourbusinessintelligencetellyouthewholestory?
Contents
Doesyourbusinesshavetherightinformationtoprepareforthefuture? 3
Businessandfunctionalstrategyalignment 6
Governance 8
Performancemanagementprocessandreporting 10
Integratedinformationmanagement 12
BusinessIntelligenceplatform 14
Infrastructure 16
References 18
©2009KPMGLLP,aUKlimitedliabilitypartnership,isasubsidiaryofKPMGEuropeLLPandamember?rmoftheKPMG
networkofindependentmember?rmsaf?liatedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
BIoesyourbusinessintelligencetellyouthewholestory?|3
Doesyourbusinesshavetherightinformationtoprepare
forthefuture?
Theexecutionof
businessstrategyisoften
hamperedbyalackof
reliableinformation.
Intoday’sturbulentand
unpredictableconditions,
it’smoreimportantthan
evertogaincontinuous
marketinsightandhave
theagilitytoreactquickly.
Withthefuturepromisingfurther
upheaval,businessesrealisethatthey
needtoadapttosucceed:recent
KPMGresearch(Fig.1)indicatesthat
halfoforganisationsworldwideexpect
toadoptnewbusinessmodelssoon.
Businessintelligenceshouldbean
integralpartofthisevolution,placing
informationattheheartofalldecisions.
HugeinvestmentsinITdonot
necessarilyguaranteebetter
information.Whatismoreimportantis
tofundamentallychangethewaydata
isgathered,processedandpresented.
Todiscoverwhetherbusinesses
arereadyforsuchachange,we
commissionedCambridgeUniversity
toconductanextensivereviewof
businessintelligenceresearch.
Our?ndingssuggestthat,despitean
annualglobaloutlayofaroundUS$60
billion
(2)
,manyorganisationsarenot
seeingtheexpectedbene?ts:
• Fewerthan10%oforganisations
havesuccessfullyusedbusiness
intelligencetoenhancetheir
organisationalandtechnological
infrastructures
(3)
• Morethan50%ofbusiness
intelligenceprojectsfailtodeliver
theexpectedbenefit
(4)
• Twothirdsofexecutivesfeelthat
thequalityofandtimelyaccessto
dataispoorandinconsistent
(5)
• Sevenoutoftenexecutivesdonot
gettherightinformationtomake
businessdecisions.
(5)
Inshort,whilehugeamountshave
beenspentthereisrelativelylittleto
showfortheoutlayandarguablymuch
ofthedataproducedisinaccurate,
whichactuallymakesdecisionmaking
more,ratherthanless,risky.
Fig. 1
Half of survey respondents would change their business model when rethinking their
company's long term strategy
0 10 20 30 40 50
Others
Your customers
Your suppliers
Your geographical markets
Your pricing
Your products
Your business model
Source: ‘Never catch a falling knife’ global business survey 2009, KPMG International
©2009KPMGLLP,aUKlimitedliabilitypartnership,isasubsidiaryofKPMGEuropeLLPandamember?rmoftheKPMG
networkofindependentmember?rmsaf?liatedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
4 |BIoesyourbusinessintelligencetellyouthewholestory?
Thegoodnewsisthatthosewith
effectivebusinessintelligence
outperformthemarketbymorethan
5%intermsofreturnonequity
(6)
.
Theresearchisbackedupbyourown
practicalexperience:successcomes
whenbusinessesviewinformation
astheirmostvaluableassetand
createaninformationarchitecture
thatremovesanybarrierstoitsfree
andeffective?ow.
Thosewillingtoembracebusiness
intelligencearebetterabletodeliver
therightinformation,attherighttime,
totherightpeople.Intheprocess,
theywilldiscoverhowinformationcan
givethemrealcompetitiveadvantage
atbothastrategicandatacticallevel
–whilecostinglesstoprovide.
Building Business Intelligence
into your organisation
Thereareanumberofreasonswhy
businessintelligenceprojectsfail.
Themostcommonisownershipof
businessintelligencebeinglimited
tospecialistswithinanorganisation
insteadofbeingembeddedin
processes.Individualdepartments
producereportsfrompoorquality
information(whichincludesduplication)
leadingtoalackoftrustinthedata.
Also,businessintelligenceisnotoften
linkedtotheperformancemanagement
strategy,soKPIsarepoorlyde?nedand
becomeirrelevantovertime.
Tobreakthiscycleoffailure,throwing
outperformancemanagement
processesandITsystemsisnot
necessary.However,amoreholistic
viewisrequired:
Business & Functional
Strategy Alignment
Governance
Performance Management
Process and Reporting
Integrated Information
Management
Business Intelligence
Platform
Infrastructure
• Changethefocusfromtechnical
implementation,concentrating
insteadontheneedsoftheusers
andownersofinformation;
©2009KPMGLLP,aUKlimitedliabilitypartnership,isasubsidiaryofKPMGEuropeLLPandamember?rmoftheKPMG
networkofindependentmember?rmsaf?liatedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
BIoesyourbusinessintelligencetellyouthewholestory?|5
Uptohalfofexecutive
managersplaceno
con?denceinthe
numberspresented
tothem
(7),(8)
Business and functional
strategy alignment
Inmanyorganisationsthereisno
explicitlinkagebetweenthestrategy
andtheinformationusedtomanagethe
business.Consequentlymanyreports
bearlittleornorelationtostrategic
objectives.Itisvitalformanagement
tofocusonprovidinginformationthat
supportsallbusinessdecision-making.
Governance
Fororganisationstobecometrusted
usersofasinglesetofdatarequires:
• Clearownershipofdata
andinformation;
• Clearownershipandmanagement
oftheprocessesandsystemsthat
generateinformation;and
• Clearunderstandingofwho
usestheinformationandfor
whatpurpose.
• Changetheprocessofgathering,
measuringandreportinginformation
bycreatinganinformation
architecturethatdeliversthe
rightmetrics;and
• Changethefunding,prioritising
dataqualityovertechnology.
TheKPMGBusinessIntelligence
frameworkisdesignedtohelp
yougettherightbalanceof
expenditurebetweentechnicaland
organisationalinfrastructure,asyou
seektoimprovethereturnonyour
investmentininformation.Thereare
six“components”totheframework,
which,althoughinterdependent,
canalsobeappliedindividually.
©2009KPMGLLP,aUKlimitedliabilitypartnership,isasubsidiaryofKPMGEuropeLLPandamember?rmoftheKPMG
networkofindependentmember?rmsaf?liatedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
6 |BIoesyourbusinessintelligencetellyouthewholestory?
Business and functional strategy
alignment
Informationisonlyusefulifithelpsyoumakebetterdecisions.Byaligning
informationrequirementswithstrategicneedsyoucreateafoundationfor
betterperformancemeasurement,competitiveintelligenceandeffective
decisionmaking.
“Theinformationage”hasrarelydeliveredonitspromises.Oneofthebiggest
businessmythsisthatmoredatawillautomaticallyimproveperformance.
Consequentlyorganisationsarespendingmillionsonupdatinginformationsystems
thatarefundamentally?awed.Executivesareliterallydrowninginaseaofdata
whenwhattheyreallyneedisgreaterinsight.
Thevastmajorityofreportsendupinablackholeandmakenocontributionto
importantstrategicortacticaldecisions.Subjectiveassumptionsareoftenmade
aboutthelinksbetweendifferentmeasurements,leadingtofalseconclusions.
Duplicationisrife,addingtotheinformationoverloadandpushingupcosts.
Thoseresponsibleformanaginginformation?owshould?rstgainaclear
understandingofwherethebusinesscreatesrealvalue.While?nancialinformation
isgenerallyreportedeffectively,it’softenhardertohighlightissuessuchas
customerchurn,theoverallhealthofaproject,andotherintangibles.Itisthe
managementoftheseintangiblesthatfrequentlycreatesthemostvalue.
Byunderstandingthedecisionmakingprocessthatdrivesthesebene?ts,
businessescanorienttheentireinformation?owtosupportthesekeyactivities.
Andbycuttingdownthevolumeofreports,theorganisationcansigni?cantly
reducethecostofITimplementationandothercosts.
Businessintelligencecanimprovethe
strategiccompetitivenessoforganisationsif
theyfocusonhowstrategiesandoperations
areconnected
(9)
©2009KPMGLLP,aUKlimitedliabilitypartnership,isasubsidiaryofKPMGEuropeLLPandamember?rmoftheKPMG
networkofindependentmember?rmsaf?liatedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
BIoesyourbusinessintelligencetellyouthewholestory?|7
95%
ofacompany’semployeesareunawareof,
ordonotunderstand,itsstrategy
(10)
Business & Functional
Strategy Alignment
Governance
Performance Management
Process and Reporting
Integrated Information
Management
Infrastructure
Business Intelligence
Platform
Case study: Aligning business and KPIs
Isitpossibletobemoreeffectiveandef?cientatthesametime?Aglobal
automotivesupplierhaslearntthatasharpfocusonwhatmatterscanprovide
moreincisiveinformationatasigni?cantlylowercost.
Ratherthantheclassicsystemsapproachofcollectingmassesofcon?icting
businessrequirementsandthentryingtoreconcilethisintoacoherentsetof
requirements,thisglobalsupplierchosetostartwiththecoreinformationrequired
toenablethebusinessmodel. Thisinvolvedadetailedanalysisoftheexisting
businessmodelandthestrategy.Byre-de?ningthemeasuresthatre?ectreal
value,wehelpedthecompanysetnewkeyperformanceindicators(KPIs),covering
performancefroma?nancial,operationalandriskperspective.Reportswere
standardisedandthenumberandsizeofdocumentswerereduced,eliminating
unnecessaryinformation.
Theresultwasasigni?cantreductioninthenumberofreportsandlessduplication
ofredundantinformation. Theclientcannownavigatetheinternalorganisationand
externalmarketmuchmoreeffectively,forecastquicklyandproduceinformationat
alowercost.Theclientisnowawarethat,tosteerthebusinessandtosupportits
strategy,itneedsmorethanjustKPIs:itmustharmoniseitsplanning,forecasting
andreporting,sothatalllinkintothesameinformation.
Business & Functional
Strategy Alignment
Governance
Performance Management
Process and Reporting
Integrated Information
Management
Infrastructure
Business Intelligence
Platform
Case study: Reducing complexity
Whatdoyoudoifyourcompanyhasgrownthroughmultipleacquisitions–and
investorswantyoutodrivesynergybene?ts–butyoucan’tgetglobalorregional
insightintokeyoperationalcomponents?Youneedtofocus.
Aleadingglobalbrewergrewthroughmorethantwentyacquisitions;however
eachacquiredcompanyhaddifferentwaysofde?ningchannels,customersand
products. Thismadeinternalbenchmarkingdif?cult,ifnotimpossible.Havingtried
tostandardisetheinformationseveraltimestheyrealisedthatadifferentapproach
wasrequired.
Wehelpedtheclientbecomeexplicitabouttherequirementsofeachkeystakeholder
toexecutethestrategicplan.Asaresult,theywereabletoreducethevolumeof
informationrequirementssigni?cantly. Thisinturnledtotheadoptionofsimpli?ed
processes,systemsanddatamodeltodelivertheinformationrequiredtomake
strategicdecisionsfortheirglobaloperation.
©2009KPMGLLP,aUKlimitedliabilitypartnership,isasubsidiaryofKPMGEuropeLLPandamember?rmoftheKPMG
networkofindependentmember?rmsaf?liatedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
8 |BIoesyourbusinessintelligencetellyouthewholestory?
Governance
Combined
development
ofmanagement
andinformation
infrastructures
resultsina34%
performance
improvement
(11)
Inordertocreatetrulyvaluablebusinessintelligence,organisationsshould
clearlyde?newhoowns,usesandproducesinformationandhowitis
presented.Suchtightownershipandcontrolshouldgiveconsistent,accurate
reportsandallowfair,“likeforlike”comparisonsofperformance.
Manycompaniesstruggletoproduceconsistentreporting,withamassofdifferent
datainmultipleformats,makingmeaningfulcomparisonsdif?cultorimpossible.
Somethingasapparentlystraightforwardasa“sale”canhavemultiplede?nitions;
e.g.hasthetransactionbeencompletedandtheinvoicepaid?Canthesalebe
attributedtooneparty?Istheunitsizeofaproductinonecountryequaltothat
inanother?
Fartoooftenthereareawiderangeofindividualsorgroupsresponsiblefor
generatingandpresentingdata,andnocommonprinciplesorstandards.
Andit’snotjustperformanceevaluationthatsuffers.Forecastingbecomes
lessreliableasdifferentapproachesareusedforsales,operations,?nance
andproduction.Onceagain,bringingincostlyITtoupdatetheprocessonly
perpetuatesbadhabits.
Effectivegovernancemeansestablishingclearownershipoverinformation.
Forexample,globalmarketingcouldowndataonthetoptenproducts;regional
marketingowntheremainingproducts;whilecountrymarketingteamsown
promotionalpackaging.Anychangestothewayinformationisde?nedandused
wouldneedapprovalbythesebodies.
©2009KPMGLLP,aUKlimitedliabilitypartnership,isasubsidiaryofKPMGEuropeLLPandamember?rmoftheKPMG
networkofindependentmember?rmsaf?liatedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
BIoesyourbusinessintelligencetellyouthewholestory?|9
Fewerthan
10%
oforganisationshavemadeprogress
insimultaneouslyenhancingtheirorganisation
andtechnologicalstructures
(12)
Business & Functional
Strategy Alignment
Governance
Performance Management
Process and Reporting
Integrated Information
Management
Infrastructure
Business Intelligence
Platform
Case study: A single version of the truth
Isitpossibletoachieveacoherentviewofthetruthinacost-effectivemanner
whenyourbusinesshasmorethanahundredbilliondollarsofrevenue,over
50,000employees,globaloperationswithhundredsofproductsandchannels?
Forthisglobaloilcompanytheanswerwasanemphatic‘yes’.
Aftermanyyearsofsigni?cantsystemsinvestments,ourclientstillfoundtheyhad
inconsistentreportingmethods–theywerenoclosertoobtaininga‘singleversion
ofthetruth’. Theproliferationofsystems,datawarehousesandreportsseemedto
begettingworse.Itwasclearthatcontinuingwiththesameapproachwouldnot
solvesomeofthefundamentalissues.Differentthinkingwasrequired.
Bystartingattheinformationrequirementsandgovernancelevels,wehelpedthis
organisationsegregatetheirgovernancemodelintothreelayers. The?rstwasto
identifywhoreallyownedandcontrolledtheinformation,thesecondwastolook
atwhousedtheinformationandthethirdwaswhoproducedit.Byusingadvanced
facilitationmethodsandtools,thisorganisationwasabletode?neclearroles
andresponsibilitiesforownershipandusedasharedservicecapabilitytodeliver
master-datamanagement.
Theoutcomeledtosigni?cantimprovementsindataqualityandconsistency,lower
costandfasterdecisionmaking.
Lessthan
50%
ofUK?rmsbelievethattheirenterprise
performancemanagementsystemsdeliver
usefulinsight
(8)
©2009KPMGLLP,aUKlimitedliabilitypartnership,isasubsidiaryofKPMGEuropeLLPandamember?rmoftheKPMG
networkofindependentmember?rmsaf?liatedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
10 |BIoesyourbusinessintelligencetellyouthewholestory?
Performance management
process and reporting
“60–80%of
?rmsfailto
executetheir
strategies,and
fewerthan5%
ofemployees
areawareof,
orunderstand,
their?rms’
strategies”
(13),(14)
Individualandgroupperformanceshouldbecloselylinkedtothestrategic
prioritiesofthebusiness.Thiscanonlybeachievedbymeasuringand
rewardingthoseactivitiesthatcontributetosuccess.
Thecurrent?nancialcrisishasledtoharshquestionsbeingaskedabouttheway
performanceisevaluatedandrewarded.Suchconcernsarenotlimitedtothe
?nancesector;mostorganisationsmeasureawholehostoffactorsthathavelittle
ornoin?uenceonstrategicgoals.
Theperformancemanagementcycleformostorganisationsconsist,ofthe
strategicplanningprocess,portfolioallocation,capitalplanning,targetsetting,
budgeting,forecastingandmonitoring.Oftentheseprocessesarenotlinkedto
oneanotherwhichmeansoutputislikelytobe?awed.
Bychoosingtherightperformanceindicators,reportingwithplanning,andadopting
greaterautomation,organisationshavethepotentialtomakeconsiderablesavings.
Leadingcompaniesrealisethateffectiveforecastingleadstobetterperformance
management–andhelpsthemadaptmorequicklytomarketchanges. Theyfocus
onissuesthatcreaterealvalueandinvolvefront-linedecision-makers.
Around
75%
oforganisationsseeMSExcelastheprime
wayofsupportingperformancemanagement
(8)
©2009KPMGLLP,aUKlimitedliabilitypartnership,isasubsidiaryofKPMGEuropeLLPandamember?rmoftheKPMG
networkofindependentmember?rmsaf?liatedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
BIoesyourbusinessintelligencetellyouthewholestory?|11
Business & Functional
Strategy Alignment
Governance
Performance Management
Process and Reporting
Integrated Information
Management
Infrastructure
Business Intelligence
Platform
Case study: Improving cash ?ow through better
information management
Whatdoyoudowhenyouneedtoimprovecash?owanddon’tknowhow?
Weestablishedframeworksforcashreportingandforecastingwhichreducedthe
?nancialcloseperiodfrom25-11days.Bydoingsowewereabletoreleaseupto
w20millionincash.
Afterthreeweekswehelpeddiagnosetheissuesandbeganworkingonrede?ning
theKPIsalignedtothestrategicobjectivestodesignamockupboardreporting
pack.Thiscreatedatransparentviewofworkingcapitalandcashmanagement
whichgaveinvestorsclarityonperformance.
Business & Functional
Strategy Alignment
Governance
Performance Management
Process and Reporting
Integrated Information
Management
Infrastructure
Business Intelligence
Platform
Case study: A renewed focus on performance
Howdoyouidentifyperformanceissueswhenyouarefacedwithhundreds
ofKPIs?
Ourclientwasatalosstoexplainsuddenandunexpectedvolatilityinkeycost
linesduringtherecenteconomicturbulence.Managementhadalsooftenfailed
tonoticepoorperformanceofkeyindicatorsintimetomakenecessarydecisions
andchanges.
Weidenti?edwherepoorinformation,governanceandinadequateprocesses
hadsigni?cantlycontributedtopoormanagementdecisionsthat‘cost’the
organisationover£50million.
Weprioritisedfromhundredsofperformancemeasures,toproducea
manageablenumbersuchas:volumeofcustomers;churnrate;revenue;margin.
Thishelpedustocreateasimulationmodelwhichenabledtheclienttoassess
theoutcomeofchangingvariablessuchaspriceandcustomerservice,andlearn
howvariousmeasuresareinterrelated.
Asaresultthebusinessnowhasanunderstandingofhowachangeinpriceand
speedofcustomerserviceresponsesaffecttheirperformance.
©2009KPMGLLP,aUKlimitedliabilitypartnership,isasubsidiaryofKPMGEuropeLLPandamember?rmoftheKPMG
networkofindependentmember?rmsaf?liatedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
12 |BIoesyourbusinessintelligencetellyouthewholestory?
Integrated information
management
Thesheervolumeandtypesofdataanorganisationgenerateshasgrown
enormously.Managingthisdataeffectivelyandbeingabletorelyonits
accuracyisnowevenmorecriticaltobusinesses.
Justasgovernanceofdataenablesanorganisationtomanageitsdataassets
throughrulesandpolicies,anintegratedinformationmanagement(IIM)approach
ful?lsthefundamentalneedforacommonbusinesslanguage,setofde?nitionsand
agreedstandards.
Howthedataisorganisedwithinanorganisationismosteffectivelyperformed
thoughtheuseofcorporatedatamodelswhichrangefromcorporatetoindividual
systemsbuttheyshouldadheretoacommonsetofstandards.
Theimprovementofdataqualityisoftenseenasaquicktacticalproject.Howeverit
shouldformpartofanintegratedapproachthatincludesbothdatagovernanceand
IIM,toprovidecompleteness,accuracy,consistencyandintegrityofdata.
Twothirdsofexecutivesfeelthatthe
qualityofandtimelyaccesstodata
ispoorandinconsistent
(5)
©2009KPMGLLP,aUKlimitedliabilitypartnership,isasubsidiaryofKPMGEuropeLLPandamember?rmoftheKPMG
networkofindependentmember?rmsaf?liatedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
BIoesyourbusinessintelligencetellyouthewholestory?|13
Business & Functional
Strategy Alignment
Governance
Performance Management
Process and Reporting
Integrated Information
Management
Infrastructure
Business Intelligence
Platform
Case study: Providing real insight to the Board
Thisglobalminingcompanyfoundthatasimpli?eddatamodelwastheanswerto
survivinginaturbulentmarket.
Foreventhemostadeptmanager,havingtomanagecommoditypricesthat
?uctuateover200%inoneyearismorethanjustachallenge.Fortunately,this
globalmininghousewasprepared. Throughatimelyexaminationofthedriversof
value,theywereabletoidentifywhichwerethekeytotheirbusinessandwhat
hadtobereportedtotheboardasthemarketschanged.
Byusingtheinsightsgainedfromourvalue-driveranalysis,theclientwasabledistil
thekeyelementsofthedatamodelrequiredforfastdecision-making.Afasterdata
collectionprocesswasestablishedandamodelwasdevelopedinHyperion.
Byusingacommondatamodel,withclearlyagreedcommonde?nitions,the
organisationwasabletomakeimmediatedecisionsaboutstopping,resumingand
startinginvestments. Theycouldclearlyforecasttheimpactoftheturbulentmarket
placeandhadtheabilitytomakecriticaloperationaldecisions.
“Manycompanieshavenocoordinated
datamodelforthebusinessandhenceno
comparabilityacrossproducts,customers
orgeographies”
©2009KPMGLLP,aUKlimitedliabilitypartnership,isasubsidiaryofKPMGEuropeLLPandamember?rmoftheKPMG
networkofindependentmember?rmsaf?liatedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
14 |BIoesyourbusinessintelligencetellyouthewholestory?
Business Intelligence platform
ABusinessIntelligenceplatformisnotastandalonepieceofsoftwarebutforms
partofanintegratedinformationnetwork,oftencomposedofmultiplesoftware
applications,extractingandcleansingdatafromnumerouslegacysystems.
TheBusinessIntelligenceplatformshouldprovideauni?edandtrustedview
ofthebusiness,empoweringallemployeeswithinsightandaligningthe
organisation’sstrategytoexecution.Afterall,technologyismerelyanenabler
andisrarelythecauseoffailedBusinessIntelligenceprojects.
It’seasy–anddangerous–toassumethatanewsetofapplicationswillsolve
allyourdataissues.Alltoooftenyouendupwiththesameinformation,andno
improvementindataquality,butdeliveredfasterandinamoreattractiveformat.
Thereforeitiskeythatonlywhentheorganisationhasagreedexactlywhatit
needstoknow,shoulditconsiderinvestingintechnology.Theselectionofthe
correctsoftwareapplicationsrequiresacontrolledprocess,utilisingsoftware
selectionprocessesandensuringeffectivestakeholdersupportandbuy-in.
Thisisespeciallytruewhenconsideringtheappropriatereportingandanalytical
software.Asorganisationslooktoempoweremployeeswithbetterinsight
andmakeBusinessIntelligenceaseamlesspartoftheworkenvironment,
itisimportanttorolloutalowcost,easytousereportingapplication.
Whenconsideringtheappropriateapplicationtoextract,avoidduplicationand
cleanselegacydata,itmakessensetobothpro?leyourdata,tobetterunderstand
itsquality,andhaveanaccurateideaaboutthevolumesandfrequencyinwhich
thedatawillbeextracted.
ButBusinessIntelligenceimplementationsarenotjustabouttechnology.Itis
alwaysimportanttoconsiderthechangingroleofthestaffwithinanorganisation.
Beitdesigningeffectiveprocessestobettermanageandmaintaindataquality
orsetupnewreportingteams,implementingachangemanagement
programmeforindividualsandteamsisparamounttohelpensurethesuccessful
implementationofanewBusinessIntelligenceplatform.
©2009KPMGLLP,aUKlimitedliabilitypartnership,isasubsidiaryofKPMGEuropeLLPandamember?rmoftheKPMG
networkofindependentmember?rmsaf?liatedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
BIoesyourbusinessintelligencetellyouthewholestory?|15
Business & Functional
Strategy Alignment
Governance
Performance Management
Process and Reporting
Integrated Information
Management
Infrastructure
Business Intelligence
Platform
Case study:Transforming management of information
Ifyouareusingmultipleinformationsystems,howdoyouaccuratelymeasure
?nancialperformanceacrossdifferentareasofyourorganisation?
Wehelpedaglobalautomotivecomponentssubcontractor,tobuildafullyintegrated
managementinformationsystem.
Byexaminingallthevariousinformationneedsacrossthebusinessweconsolidated
anumberofdifferentsystems.Wehelpedinthedesignandtestingofanew
managementinformationprocess,whichincorporatedplanning,reportingand
performanceindicatorsononedataplatform. Thisallowedforfargreaterautomation
byreducingtheneedfortimeconsumingmanualplanningandconsolidationprocess.
Thismeantthattheclientalsohasacommonglobal?nanceplatformdelivering
essential?nancialdatatohelpthemtrackperformancebothatagroupandsub-
grouplevelintheirglobaloperations.Furthermore,theimplementationofthenew
systemresultedina20%reductionincosts.
70%
ofBalancedScorecardinitiativesdonot
delivervaluebecausemanyorganisations
donomorethanrepackagetheirexisting
(15)
measures
©2009KPMGLLP,aUKlimitedliabilitypartnership,isasubsidiaryofKPMGEuropeLLPandamember?rmoftheKPMG
networkofindependentmember?rmsaf?liatedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
16 |BIoesyourbusinessintelligencetellyouthewholestory?
Infrastructure
Aneffectivetechnicalinfrastructureprovidestheframeworktoensureaccurate
informationisdeliveredattherighttime.Itshouldbe?exibleenoughtoadapt
tochangingneedsandshouldbesecure.
Mosttechnicalarchitecturesareunnecessarilycomplex. Thisisprimarilybecause
technologyisbroughtin–atgreatexpense–tocompensateforalackofdirection
intheoverallinformationstrategy.Howevertherearefourkeycharacteristicsthat
allbusinessintelligencearchitectureshouldpossesstodrivevaluefromthe
ITinvestment:
Scalability–theBusinessIntelligenceapplicationarchitectureshouldbe?exible
andbalancedenoughtomeetcurrentbusinessrequirementsandthelongerterm
businessrequirementsinacosteffectivemanner.Inmanysituations,whatiscost
effectiveintheshorttermwillnotbeinthelongtermandviceversa.
Availability–thesystemavailabilityrequirementswillimpacttheapplication
architecture.Forexample,assumingcurrentsystemsarenotrequiredtorun24
hoursaday,ifthebusinessexpandsinternationallytheavailabilityrequirements
maychangetoeitherincreaseproductionorprovideservicestocustomersin
differenttimezones.Similarlyconsiderationneedstobetakenforthetimethe
systemmaybeunavailablee.g.duetoovernightsystembackups.
Security–effectivesecurityensuresdataaccessismonitoredandcontrolled
appropriately,addressingregulatoryrequirementsarounddataprivacyand
retentionwhereappropriate. Theobjectiveistoprovideatailoredsecuritysolution
whichbalancestherequirementtoshareandpublishinformationaswidelyas
possiblewiththeneedtoprotectcommerciallysensitiveinformationassetsand
ensureregulatorycompliance.
Maintainability–themaintainabilityandmoreimportantly,thecostofmaintaining
theenvironmentde?nedbytheapplicationarchitecture,shouldalsobeconsidered.
Itshouldbeeasytodeployandmonitor,troubleshootand?twiththeexisting
backupandarchivingprocesses.
“Mostcompanies’abilitytodeliverrapid
andconsolidatedinformationforusein
strategicperformancemeasurementis
limitedbytheirITsystems”
©2009KPMGLLP,aUKlimitedliabilitypartnership,isasubsidiaryofKPMGEuropeLLPandamember?rmoftheKPMG
networkofindependentmember?rmsaf?liatedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
BIoesyourbusinessintelligencetellyouthewholestory?|17
Business & Functional
Strategy Alignment
Governance
Performance Management
Process and Reporting
Integrated Information
Management
Infrastructure
Business Intelligence
Platform
Case study: Restoring direction to business reporting
Arecentsurvey
(16)
of700automotivedistributorsfoundthatthereareanumber
ofoperationalpracticesthatcorrelatepositivelytohighperformance.Wehelped
anautomotivedistributordrivevaluefromitsbusinessintelligenceinvestments
togainabetterperformance.
Inamajorinitiative,weestablishedacompletenewstructureforcontrolling
the?nancialreportingsystemsofthislargeUSAutomotiveDistributor.
Theclientlackedconsensusonhowtoimproveitsreporting,andwassuffering
fromanexcessofmanualwork,ahighleveloferrorsandavarietyofdifferent
approachesacrossthebusiness.Recenttechnologyinvestmentshadbeen
perceivedasmisspentandcon?icting.
Ourreviewinvolvedinterviewingkeyexecutivesanddevelopingabusiness
caseforanewapproachthatcouldgenerateoverUS$6millioninproductivity
savingsandoverUS$2millionincostsavings.Wedesignedanewgovernance
structurethatclari?edownershipofdataprocessingandreporting,and
broughtimprovementstothetechnologyarchitecture,includingastandardised
approachacrossthebusiness.
“Thereisamultitudeoffragmentedand
geographicallydispersedlegacycomputer
systems,madeworsebygenerationsof
mergersandacquisitions”
©2009KPMGLLP,aUKlimitedliabilitypartnership,isasubsidiaryofKPMGEuropeLLPandamember?rmoftheKPMG
networkofindependentmember?rmsaf?liatedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
18 |BIoesyourbusinessintelligencetellyouthewholestory?
“Organisationshave
tosimultaneously
improvethe
management
andinformation
infrastructuresif
theyaretounlock
thevalueofBusiness
Intelligence”
©2009KPMGLLP,aUKlimitedliabilitypartnership,isasubsidiaryofKPMGEuropeLLPandamember?rmoftheKPMG
networkofindependentmember?rmsaf?liatedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
BIoesyourbusinessintelligencetellyouthewholestory?|19
References
1 ‘Nevercatchafallingknife’globalbusinesssurvey2009,KPMGInternational.
2 MauraMcGreevy,M.(2008)Spending on Business Intelligence and Performance Management toTop $57.1B in 2008,AMRResearch,May13.
3 Rayner,N.(2008)Measuring and Managing Corporate Performance: The State of the Art, Gartner,August.
4 Gartner2003pressrelease.
5 December2007globalstudyconductedforHewlett-Packard.
6 Ittner,C.D.andD.F.Larcker(2003)Coming Up Short on Non ?nancial Performance Measurement,HarvardBusinessReview81(11):88-95.
7 Lingle,J.H.andSchiemann,W.A.(1996)From Balanced Scorecard to Strategic Gauges: Is Measurement Worth It? ManagementReview,85(2),56–61.
8 Neely, A.D.; Yaghi, B. andYouell, N. (2008)Enterprise Performance Management: The Global State of the Art, OracleandCran?eldSchoolofManagement.
9 Chenhall,R.H.(2005)Integrative Strategic Performance Measurement Systems, Strategic Alignment of Manufacturing, Learning and Strategic Out Outcomes: An Exploratory Study, Accounting
Organisations and Society 30(5):395-422.
10 Kaplan,R.S.andNorton,D.P.(2007)Using the Balanced Scorecard as a Strategic Management System, HarvardBusinessReview85(7-8):150-161.
11 Bloom,N.,Sadun,R.andVanReenen,J.(2007)Americans do I.T. Better, CEPDiscussionPaper788,LondonSchoolofEconomics.
12 Rayner,N.(2008)Measuring and Managing Corporate Performance: TheStateoftheArt,Gartner,August.
13 Neilson,G.L.,Martin,K.L.etal.(2008)The Secrets to Successful Strategy Execution,HarvardBusinessReview86(6):60-70.
14 Kaplan,R.S.andNorton,D.P.(2007)Using the Balanced Scorecard as a Strategic Management System,HarvardBusinessReview85(7-8):150-161.
15 Grif?ths,R.andNeely,A.D.(2008)Incentives and Managerial Experience in Multi-TaskTeams: Evidence from within a Firm, SSRNWorkingPapers.
16 CarlosFCaicedo,MarkDMitchkeandJonVanderArk(2007)- How to build top-performing auto dealerships, McKinsey&Company.
©2009KPMGLLP,aUKlimitedliabilitypartnership,isasubsidiaryofKPMGEuropeLLPandamember?rmoftheKPMG
networkofindependentmember?rmsaf?liatedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
kpmg.co.uk
KPMG in the UK
Herman Heyns
[email protected]
+442073114478
Stephen Gallagher
[email protected]
+442073113881
KPMG in Germany
Bernd Trautwein
[email protected]
+498992821825
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guaranteethatsuchinformationisaccurateasofthedateitisreceivedorthatitwillcontinuetobeaccurateinthe
future.Nooneshouldactonsuchinformationwithoutappropriateprofessionaladviceafterathoroughexaminationof
theparticularsituation.
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isasubsidiaryofKPMGEuropeLLPandamember
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DesignedandproducedbyKPMGLLP(UK)’s
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youthewholestory?
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Printedonrecycledmaterial
doc_513973739.pdf
The execution of business strategy is often hampered by a lack of reliable information.
PERFORMANCE AND TECHNOLOGY
Does your
business
intelligence
tell you the
whole story?
ADVI SORY
2 |BI
oesyourbusinessintelligencetellyouthewholestory?Contents
Doesyourbusinesshavetherightinformationtoprepareforthefuture? 3
Businessandfunctionalstrategyalignment 6
Governance 8
Performancemanagementprocessandreporting 10
Integratedinformationmanagement 12
BusinessIntelligenceplatform 14
Infrastructure 16
References 18
©2009KPMGLLP,aUKlimitedliabilitypartnership,isasubsidiaryofKPMGEuropeLLPandamember?rmoftheKPMG
networkofindependentmember?rmsaf?liatedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
BI
oesyourbusinessintelligencetellyouthewholestory?|3 Doesyourbusinesshavetherightinformationtoprepare
forthefuture?
Theexecutionof
businessstrategyisoften
hamperedbyalackof
reliableinformation.
Intoday’sturbulentand
unpredictableconditions,
it’smoreimportantthan
evertogaincontinuous
marketinsightandhave
theagilitytoreactquickly.
Withthefuturepromisingfurther
upheaval,businessesrealisethatthey
needtoadapttosucceed:recent
KPMGresearch(Fig.1)indicatesthat
halfoforganisationsworldwideexpect
toadoptnewbusinessmodelssoon.
Businessintelligenceshouldbean
integralpartofthisevolution,placing
informationattheheartofalldecisions.
HugeinvestmentsinITdonot
necessarilyguaranteebetter
information.Whatismoreimportantis
tofundamentallychangethewaydata
isgathered,processedandpresented.
Todiscoverwhetherbusinesses
arereadyforsuchachange,we
commissionedCambridgeUniversity
toconductanextensivereviewof
businessintelligenceresearch.
Our?ndingssuggestthat,despitean
annualglobaloutlayofaroundUS$60
billion
(2)
,manyorganisationsarenot
seeingtheexpectedbene?ts:
• Fewerthan10%oforganisations
havesuccessfullyusedbusiness
intelligencetoenhancetheir
organisationalandtechnological
infrastructures
(3)
• Morethan50%ofbusiness
intelligenceprojectsfailtodeliver
theexpectedbenefit
(4)
• Twothirdsofexecutivesfeelthat
thequalityofandtimelyaccessto
dataispoorandinconsistent
(5)
• Sevenoutoftenexecutivesdonot
gettherightinformationtomake
businessdecisions.
(5)
Inshort,whilehugeamountshave
beenspentthereisrelativelylittleto
showfortheoutlayandarguablymuch
ofthedataproducedisinaccurate,
whichactuallymakesdecisionmaking
more,ratherthanless,risky.
Fig. 1
Half of survey respondents would change their business model when rethinking their
company's long term strategy
0 10 20 30 40 50
Others
Your customers
Your suppliers
Your geographical markets
Your pricing
Your products
Your business model
Source: ‘Never catch a falling knife’ global business survey 2009, KPMG International
©2009KPMGLLP,aUKlimitedliabilitypartnership,isasubsidiaryofKPMGEuropeLLPandamember?rmoftheKPMG
networkofindependentmember?rmsaf?liatedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
4 |BI
oesyourbusinessintelligencetellyouthewholestory?Thegoodnewsisthatthosewith
effectivebusinessintelligence
outperformthemarketbymorethan
5%intermsofreturnonequity
(6)
.
Theresearchisbackedupbyourown
practicalexperience:successcomes
whenbusinessesviewinformation
astheirmostvaluableassetand
createaninformationarchitecture
thatremovesanybarrierstoitsfree
andeffective?ow.
Thosewillingtoembracebusiness
intelligencearebetterabletodeliver
therightinformation,attherighttime,
totherightpeople.Intheprocess,
theywilldiscoverhowinformationcan
givethemrealcompetitiveadvantage
atbothastrategicandatacticallevel
–whilecostinglesstoprovide.
Building Business Intelligence
into your organisation
Thereareanumberofreasonswhy
businessintelligenceprojectsfail.
Themostcommonisownershipof
businessintelligencebeinglimited
tospecialistswithinanorganisation
insteadofbeingembeddedin
processes.Individualdepartments
producereportsfrompoorquality
information(whichincludesduplication)
leadingtoalackoftrustinthedata.
Also,businessintelligenceisnotoften
linkedtotheperformancemanagement
strategy,soKPIsarepoorlyde?nedand
becomeirrelevantovertime.
Tobreakthiscycleoffailure,throwing
outperformancemanagement
processesandITsystemsisnot
necessary.However,amoreholistic
viewisrequired:
Business & Functional
Strategy Alignment
Governance
Performance Management
Process and Reporting
Integrated Information
Management
Business Intelligence
Platform
Infrastructure
• Changethefocusfromtechnical
implementation,concentrating
insteadontheneedsoftheusers
andownersofinformation;
©2009KPMGLLP,aUKlimitedliabilitypartnership,isasubsidiaryofKPMGEuropeLLPandamember?rmoftheKPMG
networkofindependentmember?rmsaf?liatedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
BI
oesyourbusinessintelligencetellyouthewholestory?|5 Uptohalfofexecutive
managersplaceno
con?denceinthe
numberspresented
tothem
(7),(8)
Business and functional
strategy alignment
Inmanyorganisationsthereisno
explicitlinkagebetweenthestrategy
andtheinformationusedtomanagethe
business.Consequentlymanyreports
bearlittleornorelationtostrategic
objectives.Itisvitalformanagement
tofocusonprovidinginformationthat
supportsallbusinessdecision-making.
Governance
Fororganisationstobecometrusted
usersofasinglesetofdatarequires:
• Clearownershipofdata
andinformation;
• Clearownershipandmanagement
oftheprocessesandsystemsthat
generateinformation;and
• Clearunderstandingofwho
usestheinformationandfor
whatpurpose.
• Changetheprocessofgathering,
measuringandreportinginformation
bycreatinganinformation
architecturethatdeliversthe
rightmetrics;and
• Changethefunding,prioritising
dataqualityovertechnology.
TheKPMGBusinessIntelligence
frameworkisdesignedtohelp
yougettherightbalanceof
expenditurebetweentechnicaland
organisationalinfrastructure,asyou
seektoimprovethereturnonyour
investmentininformation.Thereare
six“components”totheframework,
which,althoughinterdependent,
canalsobeappliedindividually.
©2009KPMGLLP,aUKlimitedliabilitypartnership,isasubsidiaryofKPMGEuropeLLPandamember?rmoftheKPMG
networkofindependentmember?rmsaf?liatedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
6 |BI
oesyourbusinessintelligencetellyouthewholestory?Business and functional strategy
alignment
Informationisonlyusefulifithelpsyoumakebetterdecisions.Byaligning
informationrequirementswithstrategicneedsyoucreateafoundationfor
betterperformancemeasurement,competitiveintelligenceandeffective
decisionmaking.
“Theinformationage”hasrarelydeliveredonitspromises.Oneofthebiggest
businessmythsisthatmoredatawillautomaticallyimproveperformance.
Consequentlyorganisationsarespendingmillionsonupdatinginformationsystems
thatarefundamentally?awed.Executivesareliterallydrowninginaseaofdata
whenwhattheyreallyneedisgreaterinsight.
Thevastmajorityofreportsendupinablackholeandmakenocontributionto
importantstrategicortacticaldecisions.Subjectiveassumptionsareoftenmade
aboutthelinksbetweendifferentmeasurements,leadingtofalseconclusions.
Duplicationisrife,addingtotheinformationoverloadandpushingupcosts.
Thoseresponsibleformanaginginformation?owshould?rstgainaclear
understandingofwherethebusinesscreatesrealvalue.While?nancialinformation
isgenerallyreportedeffectively,it’softenhardertohighlightissuessuchas
customerchurn,theoverallhealthofaproject,andotherintangibles.Itisthe
managementoftheseintangiblesthatfrequentlycreatesthemostvalue.
Byunderstandingthedecisionmakingprocessthatdrivesthesebene?ts,
businessescanorienttheentireinformation?owtosupportthesekeyactivities.
Andbycuttingdownthevolumeofreports,theorganisationcansigni?cantly
reducethecostofITimplementationandothercosts.
Businessintelligencecanimprovethe
strategiccompetitivenessoforganisationsif
theyfocusonhowstrategiesandoperations
areconnected
(9)
©2009KPMGLLP,aUKlimitedliabilitypartnership,isasubsidiaryofKPMGEuropeLLPandamember?rmoftheKPMG
networkofindependentmember?rmsaf?liatedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
BI
oesyourbusinessintelligencetellyouthewholestory?|7 95%
ofacompany’semployeesareunawareof,
ordonotunderstand,itsstrategy
(10)
Business & Functional
Strategy Alignment
Governance
Performance Management
Process and Reporting
Integrated Information
Management
Infrastructure
Business Intelligence
Platform
Case study: Aligning business and KPIs
Isitpossibletobemoreeffectiveandef?cientatthesametime?Aglobal
automotivesupplierhaslearntthatasharpfocusonwhatmatterscanprovide
moreincisiveinformationatasigni?cantlylowercost.
Ratherthantheclassicsystemsapproachofcollectingmassesofcon?icting
businessrequirementsandthentryingtoreconcilethisintoacoherentsetof
requirements,thisglobalsupplierchosetostartwiththecoreinformationrequired
toenablethebusinessmodel. Thisinvolvedadetailedanalysisoftheexisting
businessmodelandthestrategy.Byre-de?ningthemeasuresthatre?ectreal
value,wehelpedthecompanysetnewkeyperformanceindicators(KPIs),covering
performancefroma?nancial,operationalandriskperspective.Reportswere
standardisedandthenumberandsizeofdocumentswerereduced,eliminating
unnecessaryinformation.
Theresultwasasigni?cantreductioninthenumberofreportsandlessduplication
ofredundantinformation. Theclientcannownavigatetheinternalorganisationand
externalmarketmuchmoreeffectively,forecastquicklyandproduceinformationat
alowercost.Theclientisnowawarethat,tosteerthebusinessandtosupportits
strategy,itneedsmorethanjustKPIs:itmustharmoniseitsplanning,forecasting
andreporting,sothatalllinkintothesameinformation.
Business & Functional
Strategy Alignment
Governance
Performance Management
Process and Reporting
Integrated Information
Management
Infrastructure
Business Intelligence
Platform
Case study: Reducing complexity
Whatdoyoudoifyourcompanyhasgrownthroughmultipleacquisitions–and
investorswantyoutodrivesynergybene?ts–butyoucan’tgetglobalorregional
insightintokeyoperationalcomponents?Youneedtofocus.
Aleadingglobalbrewergrewthroughmorethantwentyacquisitions;however
eachacquiredcompanyhaddifferentwaysofde?ningchannels,customersand
products. Thismadeinternalbenchmarkingdif?cult,ifnotimpossible.Havingtried
tostandardisetheinformationseveraltimestheyrealisedthatadifferentapproach
wasrequired.
Wehelpedtheclientbecomeexplicitabouttherequirementsofeachkeystakeholder
toexecutethestrategicplan.Asaresult,theywereabletoreducethevolumeof
informationrequirementssigni?cantly. Thisinturnledtotheadoptionofsimpli?ed
processes,systemsanddatamodeltodelivertheinformationrequiredtomake
strategicdecisionsfortheirglobaloperation.
©2009KPMGLLP,aUKlimitedliabilitypartnership,isasubsidiaryofKPMGEuropeLLPandamember?rmoftheKPMG
networkofindependentmember?rmsaf?liatedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
8 |BI
oesyourbusinessintelligencetellyouthewholestory?Governance
Combined
development
ofmanagement
andinformation
infrastructures
resultsina34%
performance
improvement
(11)
Inordertocreatetrulyvaluablebusinessintelligence,organisationsshould
clearlyde?newhoowns,usesandproducesinformationandhowitis
presented.Suchtightownershipandcontrolshouldgiveconsistent,accurate
reportsandallowfair,“likeforlike”comparisonsofperformance.
Manycompaniesstruggletoproduceconsistentreporting,withamassofdifferent
datainmultipleformats,makingmeaningfulcomparisonsdif?cultorimpossible.
Somethingasapparentlystraightforwardasa“sale”canhavemultiplede?nitions;
e.g.hasthetransactionbeencompletedandtheinvoicepaid?Canthesalebe
attributedtooneparty?Istheunitsizeofaproductinonecountryequaltothat
inanother?
Fartoooftenthereareawiderangeofindividualsorgroupsresponsiblefor
generatingandpresentingdata,andnocommonprinciplesorstandards.
Andit’snotjustperformanceevaluationthatsuffers.Forecastingbecomes
lessreliableasdifferentapproachesareusedforsales,operations,?nance
andproduction.Onceagain,bringingincostlyITtoupdatetheprocessonly
perpetuatesbadhabits.
Effectivegovernancemeansestablishingclearownershipoverinformation.
Forexample,globalmarketingcouldowndataonthetoptenproducts;regional
marketingowntheremainingproducts;whilecountrymarketingteamsown
promotionalpackaging.Anychangestothewayinformationisde?nedandused
wouldneedapprovalbythesebodies.
©2009KPMGLLP,aUKlimitedliabilitypartnership,isasubsidiaryofKPMGEuropeLLPandamember?rmoftheKPMG
networkofindependentmember?rmsaf?liatedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
BI
oesyourbusinessintelligencetellyouthewholestory?|9 Fewerthan
10%
oforganisationshavemadeprogress
insimultaneouslyenhancingtheirorganisation
andtechnologicalstructures
(12)
Business & Functional
Strategy Alignment
Governance
Performance Management
Process and Reporting
Integrated Information
Management
Infrastructure
Business Intelligence
Platform
Case study: A single version of the truth
Isitpossibletoachieveacoherentviewofthetruthinacost-effectivemanner
whenyourbusinesshasmorethanahundredbilliondollarsofrevenue,over
50,000employees,globaloperationswithhundredsofproductsandchannels?
Forthisglobaloilcompanytheanswerwasanemphatic‘yes’.
Aftermanyyearsofsigni?cantsystemsinvestments,ourclientstillfoundtheyhad
inconsistentreportingmethods–theywerenoclosertoobtaininga‘singleversion
ofthetruth’. Theproliferationofsystems,datawarehousesandreportsseemedto
begettingworse.Itwasclearthatcontinuingwiththesameapproachwouldnot
solvesomeofthefundamentalissues.Differentthinkingwasrequired.
Bystartingattheinformationrequirementsandgovernancelevels,wehelpedthis
organisationsegregatetheirgovernancemodelintothreelayers. The?rstwasto
identifywhoreallyownedandcontrolledtheinformation,thesecondwastolook
atwhousedtheinformationandthethirdwaswhoproducedit.Byusingadvanced
facilitationmethodsandtools,thisorganisationwasabletode?neclearroles
andresponsibilitiesforownershipandusedasharedservicecapabilitytodeliver
master-datamanagement.
Theoutcomeledtosigni?cantimprovementsindataqualityandconsistency,lower
costandfasterdecisionmaking.
Lessthan
50%
ofUK?rmsbelievethattheirenterprise
performancemanagementsystemsdeliver
usefulinsight
(8)
©2009KPMGLLP,aUKlimitedliabilitypartnership,isasubsidiaryofKPMGEuropeLLPandamember?rmoftheKPMG
networkofindependentmember?rmsaf?liatedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
10 |BI
oesyourbusinessintelligencetellyouthewholestory?Performance management
process and reporting
“60–80%of
?rmsfailto
executetheir
strategies,and
fewerthan5%
ofemployees
areawareof,
orunderstand,
their?rms’
strategies”
(13),(14)
Individualandgroupperformanceshouldbecloselylinkedtothestrategic
prioritiesofthebusiness.Thiscanonlybeachievedbymeasuringand
rewardingthoseactivitiesthatcontributetosuccess.
Thecurrent?nancialcrisishasledtoharshquestionsbeingaskedabouttheway
performanceisevaluatedandrewarded.Suchconcernsarenotlimitedtothe
?nancesector;mostorganisationsmeasureawholehostoffactorsthathavelittle
ornoin?uenceonstrategicgoals.
Theperformancemanagementcycleformostorganisationsconsist,ofthe
strategicplanningprocess,portfolioallocation,capitalplanning,targetsetting,
budgeting,forecastingandmonitoring.Oftentheseprocessesarenotlinkedto
oneanotherwhichmeansoutputislikelytobe?awed.
Bychoosingtherightperformanceindicators,reportingwithplanning,andadopting
greaterautomation,organisationshavethepotentialtomakeconsiderablesavings.
Leadingcompaniesrealisethateffectiveforecastingleadstobetterperformance
management–andhelpsthemadaptmorequicklytomarketchanges. Theyfocus
onissuesthatcreaterealvalueandinvolvefront-linedecision-makers.
Around
75%
oforganisationsseeMSExcelastheprime
wayofsupportingperformancemanagement
(8)
©2009KPMGLLP,aUKlimitedliabilitypartnership,isasubsidiaryofKPMGEuropeLLPandamember?rmoftheKPMG
networkofindependentmember?rmsaf?liatedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
BI
oesyourbusinessintelligencetellyouthewholestory?|11 Business & Functional
Strategy Alignment
Governance
Performance Management
Process and Reporting
Integrated Information
Management
Infrastructure
Business Intelligence
Platform
Case study: Improving cash ?ow through better
information management
Whatdoyoudowhenyouneedtoimprovecash?owanddon’tknowhow?
Weestablishedframeworksforcashreportingandforecastingwhichreducedthe
?nancialcloseperiodfrom25-11days.Bydoingsowewereabletoreleaseupto
w20millionincash.
Afterthreeweekswehelpeddiagnosetheissuesandbeganworkingonrede?ning
theKPIsalignedtothestrategicobjectivestodesignamockupboardreporting
pack.Thiscreatedatransparentviewofworkingcapitalandcashmanagement
whichgaveinvestorsclarityonperformance.
Business & Functional
Strategy Alignment
Governance
Performance Management
Process and Reporting
Integrated Information
Management
Infrastructure
Business Intelligence
Platform
Case study: A renewed focus on performance
Howdoyouidentifyperformanceissueswhenyouarefacedwithhundreds
ofKPIs?
Ourclientwasatalosstoexplainsuddenandunexpectedvolatilityinkeycost
linesduringtherecenteconomicturbulence.Managementhadalsooftenfailed
tonoticepoorperformanceofkeyindicatorsintimetomakenecessarydecisions
andchanges.
Weidenti?edwherepoorinformation,governanceandinadequateprocesses
hadsigni?cantlycontributedtopoormanagementdecisionsthat‘cost’the
organisationover£50million.
Weprioritisedfromhundredsofperformancemeasures,toproducea
manageablenumbersuchas:volumeofcustomers;churnrate;revenue;margin.
Thishelpedustocreateasimulationmodelwhichenabledtheclienttoassess
theoutcomeofchangingvariablessuchaspriceandcustomerservice,andlearn
howvariousmeasuresareinterrelated.
Asaresultthebusinessnowhasanunderstandingofhowachangeinpriceand
speedofcustomerserviceresponsesaffecttheirperformance.
©2009KPMGLLP,aUKlimitedliabilitypartnership,isasubsidiaryofKPMGEuropeLLPandamember?rmoftheKPMG
networkofindependentmember?rmsaf?liatedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
12 |BI
oesyourbusinessintelligencetellyouthewholestory?Integrated information
management
Thesheervolumeandtypesofdataanorganisationgenerateshasgrown
enormously.Managingthisdataeffectivelyandbeingabletorelyonits
accuracyisnowevenmorecriticaltobusinesses.
Justasgovernanceofdataenablesanorganisationtomanageitsdataassets
throughrulesandpolicies,anintegratedinformationmanagement(IIM)approach
ful?lsthefundamentalneedforacommonbusinesslanguage,setofde?nitionsand
agreedstandards.
Howthedataisorganisedwithinanorganisationismosteffectivelyperformed
thoughtheuseofcorporatedatamodelswhichrangefromcorporatetoindividual
systemsbuttheyshouldadheretoacommonsetofstandards.
Theimprovementofdataqualityisoftenseenasaquicktacticalproject.Howeverit
shouldformpartofanintegratedapproachthatincludesbothdatagovernanceand
IIM,toprovidecompleteness,accuracy,consistencyandintegrityofdata.
Twothirdsofexecutivesfeelthatthe
qualityofandtimelyaccesstodata
ispoorandinconsistent
(5)
©2009KPMGLLP,aUKlimitedliabilitypartnership,isasubsidiaryofKPMGEuropeLLPandamember?rmoftheKPMG
networkofindependentmember?rmsaf?liatedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
BI
oesyourbusinessintelligencetellyouthewholestory?|13 Business & Functional
Strategy Alignment
Governance
Performance Management
Process and Reporting
Integrated Information
Management
Infrastructure
Business Intelligence
Platform
Case study: Providing real insight to the Board
Thisglobalminingcompanyfoundthatasimpli?eddatamodelwastheanswerto
survivinginaturbulentmarket.
Foreventhemostadeptmanager,havingtomanagecommoditypricesthat
?uctuateover200%inoneyearismorethanjustachallenge.Fortunately,this
globalmininghousewasprepared. Throughatimelyexaminationofthedriversof
value,theywereabletoidentifywhichwerethekeytotheirbusinessandwhat
hadtobereportedtotheboardasthemarketschanged.
Byusingtheinsightsgainedfromourvalue-driveranalysis,theclientwasabledistil
thekeyelementsofthedatamodelrequiredforfastdecision-making.Afasterdata
collectionprocesswasestablishedandamodelwasdevelopedinHyperion.
Byusingacommondatamodel,withclearlyagreedcommonde?nitions,the
organisationwasabletomakeimmediatedecisionsaboutstopping,resumingand
startinginvestments. Theycouldclearlyforecasttheimpactoftheturbulentmarket
placeandhadtheabilitytomakecriticaloperationaldecisions.
“Manycompanieshavenocoordinated
datamodelforthebusinessandhenceno
comparabilityacrossproducts,customers
orgeographies”
©2009KPMGLLP,aUKlimitedliabilitypartnership,isasubsidiaryofKPMGEuropeLLPandamember?rmoftheKPMG
networkofindependentmember?rmsaf?liatedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
14 |BI
oesyourbusinessintelligencetellyouthewholestory?Business Intelligence platform
ABusinessIntelligenceplatformisnotastandalonepieceofsoftwarebutforms
partofanintegratedinformationnetwork,oftencomposedofmultiplesoftware
applications,extractingandcleansingdatafromnumerouslegacysystems.
TheBusinessIntelligenceplatformshouldprovideauni?edandtrustedview
ofthebusiness,empoweringallemployeeswithinsightandaligningthe
organisation’sstrategytoexecution.Afterall,technologyismerelyanenabler
andisrarelythecauseoffailedBusinessIntelligenceprojects.
It’seasy–anddangerous–toassumethatanewsetofapplicationswillsolve
allyourdataissues.Alltoooftenyouendupwiththesameinformation,andno
improvementindataquality,butdeliveredfasterandinamoreattractiveformat.
Thereforeitiskeythatonlywhentheorganisationhasagreedexactlywhatit
needstoknow,shoulditconsiderinvestingintechnology.Theselectionofthe
correctsoftwareapplicationsrequiresacontrolledprocess,utilisingsoftware
selectionprocessesandensuringeffectivestakeholdersupportandbuy-in.
Thisisespeciallytruewhenconsideringtheappropriatereportingandanalytical
software.Asorganisationslooktoempoweremployeeswithbetterinsight
andmakeBusinessIntelligenceaseamlesspartoftheworkenvironment,
itisimportanttorolloutalowcost,easytousereportingapplication.
Whenconsideringtheappropriateapplicationtoextract,avoidduplicationand
cleanselegacydata,itmakessensetobothpro?leyourdata,tobetterunderstand
itsquality,andhaveanaccurateideaaboutthevolumesandfrequencyinwhich
thedatawillbeextracted.
ButBusinessIntelligenceimplementationsarenotjustabouttechnology.Itis
alwaysimportanttoconsiderthechangingroleofthestaffwithinanorganisation.
Beitdesigningeffectiveprocessestobettermanageandmaintaindataquality
orsetupnewreportingteams,implementingachangemanagement
programmeforindividualsandteamsisparamounttohelpensurethesuccessful
implementationofanewBusinessIntelligenceplatform.
©2009KPMGLLP,aUKlimitedliabilitypartnership,isasubsidiaryofKPMGEuropeLLPandamember?rmoftheKPMG
networkofindependentmember?rmsaf?liatedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
BI
oesyourbusinessintelligencetellyouthewholestory?|15 Business & Functional
Strategy Alignment
Governance
Performance Management
Process and Reporting
Integrated Information
Management
Infrastructure
Business Intelligence
Platform
Case study:Transforming management of information
Ifyouareusingmultipleinformationsystems,howdoyouaccuratelymeasure
?nancialperformanceacrossdifferentareasofyourorganisation?
Wehelpedaglobalautomotivecomponentssubcontractor,tobuildafullyintegrated
managementinformationsystem.
Byexaminingallthevariousinformationneedsacrossthebusinessweconsolidated
anumberofdifferentsystems.Wehelpedinthedesignandtestingofanew
managementinformationprocess,whichincorporatedplanning,reportingand
performanceindicatorsononedataplatform. Thisallowedforfargreaterautomation
byreducingtheneedfortimeconsumingmanualplanningandconsolidationprocess.
Thismeantthattheclientalsohasacommonglobal?nanceplatformdelivering
essential?nancialdatatohelpthemtrackperformancebothatagroupandsub-
grouplevelintheirglobaloperations.Furthermore,theimplementationofthenew
systemresultedina20%reductionincosts.
70%
ofBalancedScorecardinitiativesdonot
delivervaluebecausemanyorganisations
donomorethanrepackagetheirexisting
(15)
measures
©2009KPMGLLP,aUKlimitedliabilitypartnership,isasubsidiaryofKPMGEuropeLLPandamember?rmoftheKPMG
networkofindependentmember?rmsaf?liatedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
16 |BI
oesyourbusinessintelligencetellyouthewholestory?Infrastructure
Aneffectivetechnicalinfrastructureprovidestheframeworktoensureaccurate
informationisdeliveredattherighttime.Itshouldbe?exibleenoughtoadapt
tochangingneedsandshouldbesecure.
Mosttechnicalarchitecturesareunnecessarilycomplex. Thisisprimarilybecause
technologyisbroughtin–atgreatexpense–tocompensateforalackofdirection
intheoverallinformationstrategy.Howevertherearefourkeycharacteristicsthat
allbusinessintelligencearchitectureshouldpossesstodrivevaluefromthe
ITinvestment:
Scalability–theBusinessIntelligenceapplicationarchitectureshouldbe?exible
andbalancedenoughtomeetcurrentbusinessrequirementsandthelongerterm
businessrequirementsinacosteffectivemanner.Inmanysituations,whatiscost
effectiveintheshorttermwillnotbeinthelongtermandviceversa.
Availability–thesystemavailabilityrequirementswillimpacttheapplication
architecture.Forexample,assumingcurrentsystemsarenotrequiredtorun24
hoursaday,ifthebusinessexpandsinternationallytheavailabilityrequirements
maychangetoeitherincreaseproductionorprovideservicestocustomersin
differenttimezones.Similarlyconsiderationneedstobetakenforthetimethe
systemmaybeunavailablee.g.duetoovernightsystembackups.
Security–effectivesecurityensuresdataaccessismonitoredandcontrolled
appropriately,addressingregulatoryrequirementsarounddataprivacyand
retentionwhereappropriate. Theobjectiveistoprovideatailoredsecuritysolution
whichbalancestherequirementtoshareandpublishinformationaswidelyas
possiblewiththeneedtoprotectcommerciallysensitiveinformationassetsand
ensureregulatorycompliance.
Maintainability–themaintainabilityandmoreimportantly,thecostofmaintaining
theenvironmentde?nedbytheapplicationarchitecture,shouldalsobeconsidered.
Itshouldbeeasytodeployandmonitor,troubleshootand?twiththeexisting
backupandarchivingprocesses.
“Mostcompanies’abilitytodeliverrapid
andconsolidatedinformationforusein
strategicperformancemeasurementis
limitedbytheirITsystems”
©2009KPMGLLP,aUKlimitedliabilitypartnership,isasubsidiaryofKPMGEuropeLLPandamember?rmoftheKPMG
networkofindependentmember?rmsaf?liatedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
BI
oesyourbusinessintelligencetellyouthewholestory?|17 Business & Functional
Strategy Alignment
Governance
Performance Management
Process and Reporting
Integrated Information
Management
Infrastructure
Business Intelligence
Platform
Case study: Restoring direction to business reporting
Arecentsurvey
(16)
of700automotivedistributorsfoundthatthereareanumber
ofoperationalpracticesthatcorrelatepositivelytohighperformance.Wehelped
anautomotivedistributordrivevaluefromitsbusinessintelligenceinvestments
togainabetterperformance.
Inamajorinitiative,weestablishedacompletenewstructureforcontrolling
the?nancialreportingsystemsofthislargeUSAutomotiveDistributor.
Theclientlackedconsensusonhowtoimproveitsreporting,andwassuffering
fromanexcessofmanualwork,ahighleveloferrorsandavarietyofdifferent
approachesacrossthebusiness.Recenttechnologyinvestmentshadbeen
perceivedasmisspentandcon?icting.
Ourreviewinvolvedinterviewingkeyexecutivesanddevelopingabusiness
caseforanewapproachthatcouldgenerateoverUS$6millioninproductivity
savingsandoverUS$2millionincostsavings.Wedesignedanewgovernance
structurethatclari?edownershipofdataprocessingandreporting,and
broughtimprovementstothetechnologyarchitecture,includingastandardised
approachacrossthebusiness.
“Thereisamultitudeoffragmentedand
geographicallydispersedlegacycomputer
systems,madeworsebygenerationsof
mergersandacquisitions”
©2009KPMGLLP,aUKlimitedliabilitypartnership,isasubsidiaryofKPMGEuropeLLPandamember?rmoftheKPMG
networkofindependentmember?rmsaf?liatedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
18 |BI
oesyourbusinessintelligencetellyouthewholestory?“Organisationshave
tosimultaneously
improvethe
management
andinformation
infrastructuresif
theyaretounlock
thevalueofBusiness
Intelligence”
©2009KPMGLLP,aUKlimitedliabilitypartnership,isasubsidiaryofKPMGEuropeLLPandamember?rmoftheKPMG
networkofindependentmember?rmsaf?liatedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
BI
oesyourbusinessintelligencetellyouthewholestory?|19 References
1 ‘Nevercatchafallingknife’globalbusinesssurvey2009,KPMGInternational.
2 MauraMcGreevy,M.(2008)Spending on Business Intelligence and Performance Management toTop $57.1B in 2008,AMRResearch,May13.
3 Rayner,N.(2008)Measuring and Managing Corporate Performance: The State of the Art, Gartner,August.
4 Gartner2003pressrelease.
5 December2007globalstudyconductedforHewlett-Packard.
6 Ittner,C.D.andD.F.Larcker(2003)Coming Up Short on Non ?nancial Performance Measurement,HarvardBusinessReview81(11):88-95.
7 Lingle,J.H.andSchiemann,W.A.(1996)From Balanced Scorecard to Strategic Gauges: Is Measurement Worth It? ManagementReview,85(2),56–61.
8 Neely, A.D.; Yaghi, B. andYouell, N. (2008)Enterprise Performance Management: The Global State of the Art, OracleandCran?eldSchoolofManagement.
9 Chenhall,R.H.(2005)Integrative Strategic Performance Measurement Systems, Strategic Alignment of Manufacturing, Learning and Strategic Out Outcomes: An Exploratory Study, Accounting
Organisations and Society 30(5):395-422.
10 Kaplan,R.S.andNorton,D.P.(2007)Using the Balanced Scorecard as a Strategic Management System, HarvardBusinessReview85(7-8):150-161.
11 Bloom,N.,Sadun,R.andVanReenen,J.(2007)Americans do I.T. Better, CEPDiscussionPaper788,LondonSchoolofEconomics.
12 Rayner,N.(2008)Measuring and Managing Corporate Performance: TheStateoftheArt,Gartner,August.
13 Neilson,G.L.,Martin,K.L.etal.(2008)The Secrets to Successful Strategy Execution,HarvardBusinessReview86(6):60-70.
14 Kaplan,R.S.andNorton,D.P.(2007)Using the Balanced Scorecard as a Strategic Management System,HarvardBusinessReview85(7-8):150-161.
15 Grif?ths,R.andNeely,A.D.(2008)Incentives and Managerial Experience in Multi-TaskTeams: Evidence from within a Firm, SSRNWorkingPapers.
16 CarlosFCaicedo,MarkDMitchkeandJonVanderArk(2007)- How to build top-performing auto dealerships, McKinsey&Company.
©2009KPMGLLP,aUKlimitedliabilitypartnership,isasubsidiaryofKPMGEuropeLLPandamember?rmoftheKPMG
networkofindependentmember?rmsaf?liatedwithKPMGInternational,aSwisscooperative.Allrightsreserved.
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