By Gary Rinehart
All Over AgainOver the last couple of decades I’ve been presenting various forms of “executive information systems (EIS),” “business intelligence data marts (BI),” “performance management environments (PM),” “management by information (MBI),” Management Information Systems (MIS), Enterprise Resource Planning (ERP), etc., etc., etc. I’ve discussed how companies can buy all the enterprise applications they want, but unless they are performing well to begin with, that software isn’t going to help a whole lot. To most, these investments are a cost without an ROI.
Originally I was discussing MIS environments. It did not stop with MIS. In fact, it hasn’t stopped with ERP applications. Other segments of business technology, ones that depend on these enterprise-software backbones, have similar issues. Let’s look again at one of them, namely the business intelligence (BI) or performance management (PM) market. Unless you approach it the right way, it won’t fill its promise.
Déjà vu all over again
In 1993, on the eve of the ERP spending explosion, we in IT were talking about our needs and the promise of these new “client/server-based” business applications. One quote stands out from those days: “If we go in and ask senior management for millions to bring in this new technology, we have to be able to answer the question, ‘What’s in it for the CEO?’” They were interested in what were then called executive information systems, or tools to get information out of ERP systems to guide executive decision making.
Now, 15 years later, amid information overload, we’re still pursuing this dream. Only now we call it business intelligence, executive dash-boards or performance management, and we long for real-time dashboards that give us the information we need to be better managers. The desire for these systems has resulted in a huge business:
- Since 2001, BI and PM have been major factors in IT spending, according to spending studies. Initially, they were in response to federal Sarbanes-Oxley (SOX) compliance requirements, but they have expanded much further.
- Spending will grow to $32.1B this year, up 7.4% from 2007 and averaging more than $2.44M per organization, according to AMR Research’s newly completed survey of governance, risk management, and compliance (GRC) spending in the United States, Germany, and Japan. Within this spending, risk management is now the new compliance, equaling or exceeding financial governance in influence and spending.
Rules of success
However, sales success and market growth do not necessarily translate to effective implementations. These tools have enormous promise, but most aren’t seeing it. Given the level of investment, it is in all our interest to start generating benefits.
To help make this happen, these four rules to guide your success are offered:
Rule No. 1: Start with decisions executives already make and work backwards
This is called “decision reengineering.” Too many companies start with the plethora of information they have and then try to use technology to organize it and present it in an organized way. However, if it’s not information that executives are relying on, it will still be ignored.
Instead, spend some time to understand what information is being used or desired, and then design systems to present it in a usable way. Having more regular or real-time access to information that is already being used will yield measurable results and gain executive buy-in.
Rule No. 2: Technology won’t change organizational behavior
Behavior must be changed first or the systems will fail. If people don’t communicate or share information, technology is not going to make them do it.
It is amazing how often companies think new technology is going to make people change the way they work. If two people don’t talk to each other, buying each of them a cell phone is not going to change that. Likewise, content management (CM) systems and BI tools are not going to make people who don’t share information become open to doing so. The end result is most likely a useless system and a lot of frustration if the process is not fixed first.
Rule No. 3: Just because you can or others are doing it is not a reason
A few years ago, a Fortune 500 CIO wanted to put together a justification for spending millions on an e-procurement system. When asked why he said that his CEO was on the board of another company and several of the other CEOs were talking about the millions they had spent, and his CEO didn’t want to get left behind. This CIO was left to make it happen.
So many bad decisions start this way. I call it the Lemming Theory. The technology is available and it really works, but only if you are ready for it. Executive dashboards are sexy. They are the “in” thing. We all want executive dashboards because they sound great, and we’ve all read how XYZ Company is using them effectively. Just know going in that you need more than that before you can be sure you’re not wasting time and money.
Rule No. 4: Make sure a line-of-business (LOB) executive is driving the bus
IT has to put these systems in and make them work. If they fail, IT will be blamed. However, failure won’t be because of technology issues, but because the business users don’t support the systems. If a LOB leader is not taking the lead, don’t do it—it’s that simple.
Technology offers us incredible opportunities. What is available to us today in business compared to just 10 years ago is astounding. But none of it matters if you don’t take simple steps to assure success.
Technology is always only part of the equation, and we all know that nature abhors an unbalanced equation.
In Conclusion
BI systems exist for the sole purpose of helping executives to meet their goals and objectives. The concern of a BIS is not with how a function is performed but with what people do. The job of the BIS is to provide management with enough information to know the appropriate action when a problem exists, and to provide feedback on that action when implemented.
The value of BIS is closely tied to its degree of focus upon key business issues. Subsequently, BIS’ greatest impact is as an instrument of change. It acts as a beacon, a catalyst, for changes guiding the rest of the organization towards the evolving corporate goals. The BIS is instrumental in extending the executive's "reach", putting the executive in closer contact with key individuals within the organization.
In 1967 Peter Drucker wrote a definitive text for executive effectiveness appropriately titled The Effective Executive. Drucker wrote:
"To be effective is the job of the executive, to effect, and to execute, are, after all, near synonyms. Whether he works in a business or in a hospital, in a government agency or in a labor union, in a university or in an army, the executive is first of all, expected to get the right things done at the right time. And this is simply that he is expected to be effective...Intelligence, imagination and knowledge are essential resources, but only effectiveness converts them into results. By themselves, they only set limits to what can be attained."
The management of any enterprise is a complex task requiring the mastery of information as a strategic tool by the entire executive team. BIS will aid the executive team to question and analyze, diagnose and explain, test and discover, and manage and monitor events. In short, BIS allows the executive team to truly become effective.
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