Do your business analytics efforts “float aimlessly”? Do you spend millions on hardware, and wonder where the ROI is? Are you struggling to find the right analytic talent? Authors Gert Laursen and Jesper Thorlund tackle these topics in their new book, Business Analytics for Managers: Taking Business Intelligence Beyond Reporting. SAS’ Anne Milley recently asked the authors about their views on creating ongoing value from analytics for her blog contribution posted on SAS Voices.
Anne: What one or two things inspired you to write this book?
Gert and Jesper: One, we think that business analytics is more than a technical solution. In our work as consultants, we have often experienced business analytics (BA) as purely an IT discipline, driven primarily by the organization’s technical environment. This results in business analytics initiatives that float aimlessly. In our opinion, successful BA initiatives are always closely interlinked with the organization’s strategy (mission, vision and goals) and are put in place to strengthen the ability of business processes to move in the right direction toward business objectives. Unfortunately, these points are often overlooked, and this is one of the reasons for this book.
Also, we were inspired by the simple fact that we have seen companies spend millions on hardware, but still would not employ analysts. This – combined with our experience that shows that company turnarounds can be made via analytics – continuously reminded us that information management is a valid strategic path to choose.
And reason number two: to see business analytics as a cross-functional process. We also wanted to position the analyst/controller as a key person in business analytics activities since he or she is a cross-functional person who holds all the strings together. This is because of the analyst/controller’s presence in both the business-driven environment and the technically oriented environment. And, the analyst usually has the needed insight into processes and strategies in the business-driven environment, as well as the necessary technical insight, to be able to enter into a constructive dialogue with the data warehouse and IT department. It seems to us that companies need to focus more on the human element of an information system, like analytical methodologies and competencies.
Anne: For any given industry, do you think most organizations now view reporting as necessary but not sufficient, and are looking to have more of an information strategy? Or do you think the majority of organizations still struggle with the basics?
Gert and Jesper: As consultants, we have learned that many companies are still struggling with the basics like establishing a data warehouse, improving their data quality and identifying one version of the truth, and so on. It requires a high level of maturity for your information systems and your corporate culture to be an analytical competitor, and many are not there yet. We think that many companies look forward to applying more advanced information to create competitive advantages in business and probably feel inadequate.
It seems to us that they do not know what to focus on. Since it all starts with some technical elements that must be in place, it does unfortunately also often end as a technical discipline only. On the other hand, we know from companies like Facebook and Google what can be accomplished. This, we believe, creates a sense of being insufficient and realizing the need for more knowledge. This is really the need we want to address with our book.
Anne: Given the number of effective visuals you include in your book, can you comment on the importance of visually displaying information to help decision makers understand key concepts?
Gert and Jesper: Since the book presents new concepts, we believe that the book’s visual elements are very important. When we developed the concepts, we were concerned they would be too complex if we could not present them in a simple manner. Of course, the concepts would also be complex to the readers since a good visual tells more than a thousand words. For example, we included the Stairways Chart in our book, and we are pleased to hear from readers that it has helped them understand the important difference between analytics and traditional business intelligence.
Also, we believe that people are able to remember visual presentation much better and for a longer time. In order to create a good product – the book is about creating sustainable knowledge – you need to give considerable thought about how you convey the information.
Anne: What are some of the best ways you think organizations can measure the effectiveness of their efforts so it’s easier to show the value they are creating and get buy-in to do more?
Gert and Jesper: First of all we believe that it is, and will always be, hard to measure the effectiveness of innovation and that is what business analytics primarily generates. Business analytics typically is an enabler of the improvement of other processes. When the project is finalized and the new process is up and running, it is often very difficult to assign the success to individual contributors. In general, it is our experience that the analyst will get the most exposure (and thereby analytics can be conveyed as a valuable business means) if analytical competencies are used on a project level with fixed deliveries, a deadline, and an understanding of analytical potential. The alternative – which is to place the analyst between a series of technicians – is that the analyst will never gain an understanding of business that he or she needs in order to go out and make a big difference.
If no projects exist, the analyst should “invent” his or her own, go out and gain stakeholder support, and grow with the successes. Also the analyst should know how to sell what he or she does – create a vision and deliver on it.
Therefore, we believe that the ultimate success criterion for business analytics is to identify how many business processes are based upon or enabled by it. It is not until somebody does something differently and smarter than what they otherwise would have done that decision support generates some value to the company. After all, if the company – despite all decision support – proceeds how it otherwise would have anyway, information management is something between a nice-to-have and a waste of resources.
Just like in sports, success is when people clap their hands; basically, we believe business analytics departments should be measured the same way. No matter how you twist things around, deliverables from a business analytics department are ultimately judged by feedback from business people using the information. And those users will clap if they like it. If the BI department creates information that increases business people’s process performance and takes them closer to their own targets/bonuses, they will let analysts know and “shout” for more throughout the organization. In that case, analytics is creating value and it’s easy to get buy-in to do more.
Visit SAS Publishing to sample a chapter of “Business Analytics for Managers: Taking Business Intelligence Beyond Reporting“.