SharePoint 2010 PerformancePoint: Integrated Performance
- Business Intelligence as a Discipline
- Performance Management Methodologies
- Business Intelligence as an Enabler
- Integrated Business Planning
- Summary
This chapter is from the book
This chapter is from the book
This chapter is from the book
This chapter introduces business intelligence (BI) as a discipline and discusses how business management and performance management strategies work hand in hand in BI solutions. You learn about the different decision types that occur across all levels of an organization and how BI products have evolved to their present capacity in which they can enable business decisions across all levels of an organization.
Business Intelligence as a Discipline
In any organization, decisions happen daily at every level, from the person working at the front desk to the most senior executive in the corner office. And for every person in an organization, making sound and timely decisions depends on access to good and reliable information. At its best, BI exists where decisions and information converge (see Figure 1.1).
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Figure 1.1 Fundamentally, business intelligence is about decisions and information.
The type of information needed for a decision varies depending on the decision required. The decisions themselves vary depending on who is making the decision, how much time there is to make the decision, and how much of an impact the decision may have on the organization as a whole. There are three different decision types referred to in the BI world:
- Strategic
- Tactical
- Operational
Strategic decisions are typically made by senior management and generally impact the company as a whole. Only a few of these decisions are made during the year, and they often involve long-range planning from 1 to 3 years at the executive level. Strategic decisions might be centered on questions such as the following:
- Should we start a new product line?
- Should we open regional offices in Europe or the Middle East?
- Should we close our plants in the Midwest?
Tactical decisions are usually made more often than strategic decisions and have less of an impact on the company as a whole. They involve planning on a quarterly or semi-annual basis and might be centered on questions such as the following:
- How can we adjust the budget for the Chicago office to meet projections this quarter?
- Do we need to increase our sales staff for the upcoming holiday season this year?
- How can we increase production in the overseas plant to meet demand next quarter?
Operational decisions are made most often, and on a daily basis, by all types of employees, at all the various levels in the organization. These are like the decisions that keep the assembly plant running every shift and might be centered on questions such as the following:
- Do we need to add a team to the night shift to pack the orders that need to go out tomorrow morning?
- Who is available to replace Jane on her shift tonight?
- Do we need to change the supplier for our store?
Consider an example based on the case study of an organization called Apples and Oranges Productions detailed in Chapter 3, "Case Study: Managing What You Measure." The executive team of Apples and Oranges Productions, a fictitious production company with TV and film divisions, decides to grow the organization. Strategic questions might be centered on the following:
- How can we grow our organization?
- Which division is best positioned for growth?
The executive team decides to grow the organization by expanding into new markets and that compared to the Film division, the TV division is best positioned right now for this expansion. The decision to expand the TV division into new markets is an example of a decision taken at the highest level of the organization that will impact the company as a whole and will be evaluated and implemented over the long term. The executive team arrived at this decision by looking at industry performance, overall company revenue, and overall strengths and weaknesses. The decision defines a direction for Apples and Oranges for the next 2 years and will have an impact on the company as a whole as resources, financial and human, are turned toward realizing the goal of expanding the TV division into new markets.
Following up on this strategic direction, the management team of the TV division looks at what they need to do to realize this strategic goal. At this level, the TV division makes tactical decisions centered on these types of questions:
- Which of our shows is best positioned for expansion into new markets?
- How can we increase viewership for our best shows?
Looking at current viewership and advertising revenue, they decide that a show called The Green Orange that is currently in the top 10 television markets is best positioned for expansion. This is an example of a tactical decision. It is a decision taken at a lower level in the organization with the objective of enabling the strategic decisions communicated to the company. Other examples of tactical decisions at this level would be the decision to increase guest appearances on the show or to increase the presence of a particularly popular character based on viewership data.
Operational decisions for The Green Orange occur on the set and are centered on these types of questions:
- How do we increase viewership for The Green Orange?
- What can we do to make the show as appealing as possible to our viewership?
- What can we do to make the characters as appealing as possible to our viewership?
The set designer makes decisions about the appropriate architecture and furnishings for the show. The costume designer makes decisions about how to dress the characters. The writers make decisions about story lines and scripts. The actors decide how to interpret their lines. These are operational decisions made by a wide variety of Apples and Oranges employees, and all are geared toward producing the best possible episodes to realize operational, tactical, and strategic goals.
Information is required for each of these types of decisions. With BI, an organization can provide a continuous flow of information to business decision makers at all levels of the organization to answer questions such as the following:
- What has happened?
- What is happening?
- Why?
- What will happen?
- What do we want to have happen?
(From http://technet.microsoft.com/en-us/library/cc811595(office.12).aspx)
BI is where information and decisions converge to provide answers to these questions.
Organizations have been making business decisions from data ever since the first computer was introduced into the workplace, and in the past five years, BI products and understanding has evolved exponentially. In particular, the capacity to transform data into information has evolved. It is important to note that data and information differ in the following way:
- Data equals raw numbers.
- Information is repurposed data presented in a format that helps human beings make better decisions.
Various products have facilitated the evolution of data into information. Let's consider Microsoft products specifically: People have been making decisions from data since Excel was introduced to the desktop. Microsoft has offered an OLAP solution since SQL Server 7.0 and OLAP Services, which later evolved into Analysis Services with the release of SQL Server 2000. This was further enhanced by a line of BI-specific products. Again at Microsoft in particular, the Business Scorecard Manager, one of the first products in the BI line, embraced the idea of key performance indicators (KPIs) and scorecards as measures of business performance to enable better decisions. The next iteration of the product, PerformancePoint Server, extended the use of dashboards as visual decision-making support systems, and further expanded the analytic capabilities of the BI tools through the integration of ProClarity. With the most recent integration of PerformancePoint Services into SharePoint 2010, the next step in the evolution makes reliable information accessible throughout the organization in a secure, flexible, and readily available format integrated into daily activities and tools.
With this more unified and familiar structure, people in organizations have the support they need to make decisions and track the impact of their decisions quickly and with ease. This does not mean that people will always make predictable decisions dictated by data. It is important to remember that people make business decisions and that this can involve impulsive and intuitive behaviors. Think of how often on a personal level you might have gone against the facts at hand. For example, every month, Sam allocates money from his paycheck to pay the bills. This month he sees that he has additional money in hand. Following the strategic plan he laid out with his accountant, he knows he should invest this money in his retirement account. Instead Sam decides on impulse to buy tickets for a Broadway show and enjoy a night on the town with friends. This is the human factor. As long as BI involves people making decisions, the human factor will remain as an unpredictable (and sometimes surprising and profitable) aspect of the BI discipline.