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IDC 1248

I D C A N A L Y S T C O N N E C T I O N


Dan Vesset
Program Vice President, Business Analytics

Best Pr act i ces f or a BI and Anal yt i cs St r at egy
February 2012

At a time of great economic volatility, there has been a significant decrease in the ability of decision
makers at all levels to rely effectively on only experience or intuition to make decisions. The demand
to respond faster, with greater insight into ongoing internal and external events based on facts, is
increasing. As a result, a growing number of organizations are moving toward having more pervasive
business intelligence (BI) by turning to evidence-based decision making supported by a range of BI
and analytics technology and processes that enable decision makers to have the best possible
intelligence about customers, finances, operations, suppliers, and the market.
Although IDC is expecting worldwide spending on business analytics software to be $33 billion in
2012, technology is only part of the story. Higher BI and analytics competency and pervasiveness are
achieved when organizational culture, business processes, and technologies are designed and
implemented with the goal of improving or automating all strategic, operational, and tactical decision-
making capabilities of all stakeholders.
That is a lofty goal, but one that leading organizations are striving to achieve. There is growing
evidence that higher BI and analytics competency and pervasiveness have a direct impact on
competitiveness. However, justifying large capital outlays for software will be challenging unless
short-term benefits can be directly correlated to the investment. As more incremental projects are
undertaken, it will be important to execute these projects within the long-term strategic plan of
organizationwide decision management.
The following questions were posed by SAP to Dan Vesset, program vice president of IDC's Business
Analytics research, on behalf of SAP's customers.
Q. What is the value of a BI and analytics strategy to a process composed of many
incremental BI projects?
A. BI and analytics technology (and projects) is never an end in itself. The technology, people, and
processes exist to provide support to decision makers or to automate certain decision-making
processes. These in turn must lead to actions based on insight and augmented with experience.
Therefore, it is imperative to have a strategy that guides the organization toward effective and
pervasive use of BI and analytics resources. Such a strategy needs to take into account the broad
spectrum of decision makers and decision-making processes that exist in any organization.
For example, at one end of the decision-making spectrum is a relatively small number of
strategic decisions with broad scope and a high level of uncertainty made by executives in a
collaborative environment. At the other end of this spectrum are thousands or tens of
thousands of tactical decisions made by front-line employees or, in some cases, systems.
Any one of these decisions has limited scope and impact, and most are made "in the field"
without much collaboration. In the middle are ongoing operational decisions made by
managers, business analysts, and quantitative analysts or data scientists.
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Each of these broadly defined groups has a different set of data and technology
requirements. Yet, a recent IDC study of over 4,000 organizations revealed that only 25%
have a BI and analytics strategy. The lack of a strategy leads to execution challenges.
Q. What are the factors to consider when creating a BI and analytics strategy?
A. IDC encourages organizations to develop an organizationwide BI and analytics strategy that
articulates responses to the following questions:
What are our organization's business objectives, challenges, and goals, and how do we
measure progress toward these goals?
Are our BI objectives aligned with our business objectives? What metrics or key
performance indicators (KPIs) exist to ensure that measurement of progress toward
organizational goals is made possible?
What are the types of strategic, operational, and tactical decisions being made at
different levels in our organization?
Who are the different user groups and user types making these decisions?
What data sources are required to support the decisions being made at our organization?
What BI and analytics technology functionality is required to support the types of
decisions and decision-making processes of various end-user groups, including
executives, managers, business analysts, quantitative analysts, operational staff,
customer-facing staff, and external stakeholders?
What staffing needs and organizational structure are required to ensure that individuals
or teams exist to address tasks such as data integration, data quality, data management,
master data management, report or dashboard development, data analysis, and
information access?
What technology components exist or are needed to ensure that the decision support or
automation needs of all decision makers are addressed?
Responses to these questions will assist you in defining a long-term BI and analytics
strategy. However, it's also important to conduct a periodic assessment of responses to these
questions and a review of the level of BI and analytics competency and pervasiveness in
your organization.
Q. What are the benefits of a BI and analytics solution?
A. Today, not only access to information but also the ability to analyze and act upon that
information creates competitive advantage in commercial transactions, enables sustainable
management of communities, and promotes appropriate distribution of social, healthcare,
and educational services.
The value of better BI and analytics is often expressed in such intangible terms as the ability
to make better decisions, where "better" is usually undefined. In practice, however, there is
growing quantifiable evidence of the value of BI and analytics.
Our studies have shown that indicators that define BI and analytics competency and
pervasiveness have a direct correlation to the competitiveness of organizations within their
respective industries. This positive impact on an organization's competitiveness is achieved
by affecting business process improvements, productivity, and cost containment.
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Other IDC studies have identified the median ROI of BI and analytics projects to be just over
100%, while the benefits accrued by organizations deploying BI and analytics technology and
processes split as follows:
54% from business process improvements
42% from productivity gains
4% from technology cost savings
In other words, 96% of the benefits are in the productivity and business process
enhancement categories. Both types of benefits are important. Yet there is a limit to the
efficiency gains due to productivity in bringing information together. The data-gathering
process can be streamlined only so far before diminishing returns set in.
This is not the case with business process enhancement, including product development and
service delivery innovations. The cycle of feedback and correction can be continually
improved. Models can be made more accurate in predicting the impact of policy changes.
Employees can improve their judgment as they learn to incorporate relevant feedback in
making better decisions.
Q. What are examples of best practices that lead to pervasive and highly impactful BI and
analytics use?
A. Today's BI, analytics, and data management challenges (and opportunities) are likely to
overwhelm organizations that are unprepared for the emerging changes. IDC defines these
organizations as "fumblers." By comparison, "fact finders" have the following characteristics:
A high reliance on BI and analytics and consider it critical to their competitiveness
BI and analytics solutions' output has a high level of influence on all employees' actions
BI and analytics are deployed to support individual, intragroup, and intergroup decision
making
Our research demonstrates that, as a group, fact finders are more competitive than fumblers.
80% of the most competitive organizations are fact finders almost 30% more than among the
least competitive organizations. IDC's worldwide BI and analytics analyst team has spent years
evaluating best practices at thousands of commercial, nonprofit, and public sector
organizations. Common themes and specific practices unite the organizations we define as fact
finders. In addition to having a stated BI and analytics strategy, these organizations focus on:
Training formal, informal, and embedded into technology on the meaning of data,
the use of BI and analytics tools, and the use of analytics to improve decision making.
They highlight how to improve existing process and expose what's possible today to drive
innovation.
BI and analytics system design quality to ensure the ability to rapidly respond to changing
business conditions and end-user requirements. For example, they measure the extent to
which end users' expectations about the speed of adding various BI and analytics
solution components (e.g., new dashboard, new data source, and new KPI) are met by
the IT group.
Data governance by placing a high level of importance (including providing funding) on a
data governance group and associated data governance policies.
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Nonexecutive management involvement in promoting and encouraging the design and
use of the BI and analytics solution. While executives are important to initiating and
funding projects, research shows that the next layer of management is instrumental in
spreading the use of BI and analytics technology and processes throughout the
organization.
Performance management methodology as one of the key means to align the
organization with a set of defined metrics and KPIs that influence user behavior.

A B O U T T H I S A N A L Y S T
Dan Vesset is program vice president of IDC's Business Analytics research. Mr. Vesset's research is currently focused on
the business intelligence and analytic applications markets, which encompass multidimensional analysis, end-user query
and reporting, data mining, and other related business intelligence tools as well as supply chain and operational analytic
applications.


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