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Best Practices in BI: 8 Questions CEOs Should Ask Before Investing in BI

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No single organizational initiative which warrants preparation, planning and strategy more than its decision to invest in a Business Intelligence (BI) Program.  Here are 8 questions CEOs should ask before investing in BI.

1.  What are typical budgets for a BI Program?

Organizational BI funding is allocated to Capital and Maintenance Budgets.  According to a 2013 TDWI Benchmark Report,median capital budget in 2013 is $335,000, with 62% of organizations having capital budget funding of $500,000 or less.  81% reported capital BI budget compared to < 20% of the overall IT capital budget. Median maintenance budget in 2013 is $400,000, with 63% having a budget of $500,000 or less.  83% reported maintenance BI budget <20% of the overall IT maintenance budget. Figure 1.

2.  How will our organization be able to justify our investment in BI?

Surprisingly, many organizations that have invested in BI have no formalized process in place to monitor quantitative ROI or cost savings as a consequence of adopting a BI strategy.  Here is the summary of steps needed to justify a BI investment.

  1. Use facilitated sessions to gather information requirements;
  2. Understand information flow to determine cause-and-effect analytics;
  3. Identify and quantify the benefits as tangible, strategic or intangible;
  4. Establish a measurement baseline;
  5. Calculate Total Cost of Ownership (TCO), Return on Investment (ROI), Payback Period;
  6. Measure the investment, planned benefits and actual benefits;
  7. Determine how to retain benefits as the organization objectives change.

3.  Is My Organization Ready for BI?

Organizations that have demonstrated “success” in their own BI programs exhibit certain characteristics or “behaviors” over other organizations which are recognized as “struggling” with their own BI programs.  Through the use of survey or facilitated session, information can be gathered to determine an organizational readiness profile, and compare to those characteristics identified by the industry as more conducive to success.

Figure 2 - Organizational Profile to Model after Successful Organizations

4.  Who should I select in my organization to drive our strategic
commitment to the BI Program?

The organizational role served plays an important part toward the success of any BI Program initiative.  Traditionally, many BI experts warn against letting members of IT sponsor and drive a BI project.

In Figure 3, a TDWI Study revealed successful sponsor roles were CxO level or Business Unit leaders 70% of the time when compared to sponsorship lead by an IT Executive role only 16% of the time.

5.  Will we need to consider formalized data architecture?

In all likelihood, yes.  Organizations generally evolve their information platform based on business need (BI maturity). 

When comparing application databases to information databases, both have completely different design philosophies.  Application databases have a data in philosophy – lots of small read, write, and delete operations.   Application databases are considered very volatile due to the operational nature of each business process on a daily basis.  Information databases have a data out design philosophy optimized for reads, large and complex queries and overall the subject-oriented nature of each reporting and analytics request.

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