SQL SERVER – Business Intelligence – Aligning Business Metrics

Today, executive management and managers need the latest information to drive intelligent decisions for business success. More informed decisions mean more revenue, less risk, decreased cost, and improved operational control for business agility and competitiveness. Besides, in today’s fast paced, technology-driven business world, organizations are continually struggling to deal with growing data volumes and complexity to use their own data efficiently. Constrained with competitive environments and data complexity are COO, IT Managers and Business Consultants who are asking for less information more easily for smarter, faster decision-making. They want information that is highly visual, up-to-date, personalized and secure. Also, they want information delivered in line with where and how they work.

By leveraging on the power of Business Intelligence (BI) organizations can understand and analyze large volumes of rapidly changing data for effective decision-making. BI helps decision makers to harness the advantage of change to create competitive advantages, achieve corporate objectives, and make better decisions, faster.

Business Intelligence to put it simply, is all about improving decision making within an organization. By presenting the latest information to the right people at the right time the quality of decisions as well as their timeliness can be improved. These days, organizations are embedding BI into business process to create a better workflow, apart from gaining other benefits of BI. In fact, BI can make all areas of business strategic and make them value-rich.

Business Intelligence

Proper BI deployment – Aligning all business metrics

Business Intelligence adds value to all departments or business units within an organization. In general, revenue-generating areas of business such as sales and product manufacturing are often considered critical to a company’s success. While other areas like HR and operations are a requisite to do business but are not considered crucial for revenue generation and for improving business performance. So naturally, when it comes to adding BI value to a business, only revenue-generating departments and areas strike the mind first. However, this is not the case and with appropriate metrics and data this thought process needs to be changed.

Traditionally, Business Intelligence focused primarily on siloed information. Functional areas like Finance, Sales, Marketing and HR created metrics. To provide value to an organization from top to bottom, metrics must align from top to bottom across business units and do away with silos. Undoubtedly, there is still value in maintaining HR, Finance and Sales-specific metrics; however, if the metrics of all areas of an organization are aligned to corporate metrics and objectives, it can prove to be a potent tool to facilitate both the top and bottom lines of an organization. From line leaders to middle managers to executives, they all must have metrics and dashboards that are congruent and support one another.

Nowadays, businesses are putting in a lot of effort to come up with smart, intelligent decisions that will help them run a strategic operation and gain competitive advantage. One of the key aspects of proper Business Intelligence deployment is the alignment of metrics from top to bottom across functional areas, which can go a long way in ensuring business success.

Scenario: Business Intelligence in real world

Let us take a real world scenario and try to understand how proper alignment of business metrics makes all areas of a business more strategic and value-rich.

In our example, let’s take a car manufacturing company Speed Motor Manufacturing. The top priority corporate objective of the company is to increase its profit margin by 5%. To attain this target, it is important to consider each area of business to help impact the bottom line, including the HR department. In general, HR department is considered important by all organizations; however, it is not considered strategic or a contributor to the bottom line.

Now, let’s assume that the operation’s business unit of Speed Motor Manufacturing has ascertained that the best way they can contribute to the overall margin objective is to make 20% more use of a new type of machine which can speed up assembling car components, which will in turn improve the speed of manufacturing process and more cars will be produced per day. However, this complex machine cannot be operated by all individuals. It requires specialized training and more experienced users. Now, in order to meet the objective, the new car manufacturing machine requires an increased usage by 20% for the year.

Here, HR department can play a major role. The HR department ties its goals and metrics to help operations meet their goals, thus directly contributing to the corporate objective of increasing the profit margin by 5%. To meet the objective, HR department must retain the skills required for operating these complex machines, train individuals to operate the new machines and even hire new skills that can operate the new machines. HR’s metrics map specifically to the operations team’s metrics, which map directly to the overall corporate metrics.

In our example, we saw how metrics are aligned top to bottom and across the organization.

Having said that, in order to successfully measure these metrics and create dashboards to check advancement and achievement, the data and the data structure must be available and appropriate. If the data structure is present and the objectives are properly aligned, all aspects of an organization can be strategic and contribute to enhance the business performance for assured success. The HR business unit measures the training it conducted, which increased the number of qualified operators of the new machineries. The operations leader measures the number of hours the new machine was operated compared to the previous year. The finance team measures the profitability of the operations in the current year compared to last year and quantifies operations increase in margin. Thus, we see how all the departments work together towards a common objective, set up metrics to monitor and measure their success and link them accordingly.

In a nutshell, proper deployment of Business Intelligence makes way for perfect objective alignment and improved vision throughout the organization for business success and competitive advantage.

Reference : Pinal Dave (http://blog.SQLAuthority.com), DNS

About these ads

6 thoughts on “SQL SERVER – Business Intelligence – Aligning Business Metrics

  1. Hi Mr.Pinal,
    Fundoo article and fundoo explanation of BI…gr8….

    One word i didn’t get is – SILOS,SILOED…

    What is the meaning??

    Thanks,
    Nitin Sharma

    Like

    • Hi Nitin,
      Let us say a dept/group is working in a silo, it means that they are in their own world without any interactions with other groups, also means lack of integration. In BI perspective we hear this a lot, for example: finance is in its own silo or IT is in its own silo. For BI to be effective all the units should work together.

      Like

  2. Hi Pinal,
    I like the venn diagram you put up with the different units and how BI is the intersection of them. This is what we constantly stirve to achieve in the BI world.

    Thank you

    Like

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s