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Pervasive Business Intelligence: Enhancing Key Performance Indicators
Business intelligence (BI) is on the move. Industry analyst IDC projects that the market for BI tools will grow from approximately $3.7 billion in 2002 to $4.5 billion by 2007.
BI is not only on the move, it also is evolving from traditional BI to pervasive BI (PBI), which empowers everyone in the organization, at all levels, with analytics, alerts and feedback mechanisms. It's a new paradigm with potentially enormous benefits - and far-reaching cultural implications.
On the benefits side, PBI promises to:
PBI represents a powerful tool for measuring progress against strategic corporate goals and KPIs that have been set by management and communicated throughout the organization. Individual contributors can have a greater impact on organizational objectives because when they are armed with real-time PBI, they are empowered to "do the obvious" - on their own initiative. People have greater freedom to realize their entrepreneurial selves in support of the organization. This model does pose cultural challenges. For example, in setting and communicating the organization strategy, managers may need to anticipate and address such issues as resistance due to fear of loss of control and uncertainty about how to use enhanced access to information from those who are not accustomed to acting on their own initiative.
Corporate Change from the Bottom Up
Another cultural impact is that PBI can create new levers for change. If management creates a clear strategy, defines it, implements a PBI solution to track progress against goals, and follows up and rewards people who meet their commitments, these activities will effect corporate and structural change from the bottom up. Instead of being frustrated by the organization's seeming inability to translate executive initiatives into day-to-day work (and what executive has not suffered this frustration?) initiatives can be implemented into workflow metrics and introduced into the workplace directly at every level. This approach also requires executives to frame actionable initiatives rather than vague "leadership messages" that few people can translate into day-to-day work. Through PBI, the company's executive leadership team can be very successful in allowing people at every level to understand exactly what expectations are placed on them and whether they are meeting those expectations.
The key for organizations is to embed PBI in their business processes. This requires top-down support for any PBI solution, which is a major change program. Overcoming the cultural resistance to PBI, particularly among first line managers, takes a lot of vision and drive from senior executives. It also requires a PBI solution specialist who can understand the organization's business, create a custom PBI solution to address gaps and pain points, and is willing to continually articulate and refine the proposed PBI solution extensively. For large, global implementations, it is especially important to start small and have an early success.
The Right Data at the Right Level
Getting and keeping everyone on the same page depends on how PBI is used to measure results against targets set for business activities, strategies and KPIs. Done successfully, everyone can have an intelligent conversation about the "elephant," even if the only part they actually touch is a tusk or a tail.
When PBI was implemented recently at a major international financial services institution, a PBI repository was created to help monitor specific KPIs focused on trade processing operations worldwide. Through dashboard interfaces with specific color-coded dials, employees can access KPIs for their particular tasks. For example, each person in the trade processing operations group can see how many letters of credit they are handling, the average processing time and which letters of credit fall outside the average service level agreements or need special attention. Individuals can also see how their colleagues in the same department are doing and how their department stacks up against counterparts.
Workloads can also be more effectively balanced. If Asia has a spike in volume, for example, then colleagues in Europe can pitch in. This not only benefits the financial services company by providing faster throughput, but also allows individuals to gauge their performance relative to their department objectives and to the larger corporate goals. All of this has led to many peer-to-peer and employee-to-manager conversations about sharing best practices and sharing workload to meet customer satisfaction goals and service level agreements.
At the next level, department managers can track the relative performance of individuals on a daily basis and react quickly to any changes, positive or negative, with appropriate management action. The PBI solution also gives them the opportunity to track trends in banking centers worldwide, understand different situations and explore how more successful workflows might be leveraged in their own departments.
At the executive level, company leaders can see individual and departmental performance summarized to corporate performance goals and have the ability to drill down as necessary on the contributing elements. Because the data is gathered and analyzed in real time to the lowest level of the organization, executives have gained an unprecedented ability to more quickly effect change on an enterprise-wide basis. Instead of implementing a policy and waiting for communications and feedback to be coordinated throughout the organization, they can track the immediate effects of a decision and make changes proactively.
To bring all this full circle - which is what PBI does - individual contributors at this financial institution now have many of the same capabilities as managers and senior executives, except that these capabilities are bounded by their job responsibilities. Like executives, they can track the immediate effects of their decisions and make changes proactively. And like mid-level managers, they can see changes in their performance and make self-management decisions on how to improve. They can manage themselves, instead of waiting to be managed from above.
Timing Is Everything
In a workflow context, PBI measures how long a particular transaction is taking and alerts the individual contributor, manager or executive according to approved business rules. Colors indicate transaction status to provide "at a glance" prioritization of efforts. Employees don't have to wait to be told a red flag needs immediate attention.
To get to this point, however, a PBI system has to reflect what "real time" means to a particular business. Actually, it's more about "right time" than "real time." A stock trader might define real time in hundredths of a second, whereas a loan officer would find updates every second meaningless and distracting. A daily update on loan status is probably more than sufficient.
This need to "right time" in PBI changes what information is being collected and how it is updated. In general, as PBI becomes more operational, it requires more timely information updates based on business requirements because it is usually not practical to update everything at the same rate. Clearly, all data is not equal. If data from two or three sources is appropriate to be updated every hour and a PBI solution is created to update that data every minute or every 24 hours instead, the solution is not well designed and could cause undue overhead or data latency. Users will view the data as not credible for good decision-making. In framing a PBI solution, therefore, it's critical to properly define "right timing" to make sure that key performance indicators for specific business activities are updated appropriately.
Keys to Effective Measurement
"You can't manage what you can't measure." PBI puts a new twist on this idea. With PBI, metrics are subject to continuous evaluation, and when old metrics are seen to have flaws, new ones take their place. Here's how it happens.
Initially, the company will define what metrics are to be used for performance. One company, for example, might choose to measure the time it takes for someone to accomplish a task. However, coming up with an accurate duration metric could be more challenging than it might appear. One employee responsible for three major tasks (A, B and C) might take a much longer time to process task A compared with another employee who spends 100 percent of his time on task A. Without a proper context that takes into account the added complexity of the first employee's job, that employee could be seen as not performing efficiently. The elements skewing the metric should be identified and, if possible, corrected. For example, the duration metric might be weighted to take job complexity into account.
Additionally, the organization would need to be aware of how metrics such as duration and complexity might differ from one department to another or from one geographic region to another. The key point is that the metrics don't need to be perfect; they just need to exist. Organizations can do their best with current metrics and continually strive to improve. With PBI, the data is taken in context. As the context changes, so do the metrics.
The beauty of PBI is that it enables companies to conduct thorough investigations down to a very low level in order to evolve metrics, refine systems and change business processes.
What happens when someone focuses on information that was never available before - or not paid attention to in the past - can be very exciting. There's no telling where things will go. For example, one PBI customer zeroed-in on a new metric showing how long the volume of incomplete trade finance transactions went unprocessed. Because the metric reflected poorly on them, employees started challenging the data - and discovered the wrong information was being collected. This prompted an analysis of the problem, which then resulted in decisions by company management to provide additional training for employees processing the trade finance transactions as well as to modify the trade finance processing software application.
With PBI, the right metrics not only drive the right behavior, but the right behavioral changes.
Summing Up the PBI Difference
Pervasive business intelligence is BI for the rest of organization. It's the ability to take relevant information that is usually reported up to management and push it down to users. At the various organizational levels, the data is presented so that people see only what is most relevant to their day-to-day tasks, broken out into vertical silos, with expectations and performance clearly identified.
Culturally, the success of PBI depends upon the belief that the ability of employees to meet the goals and KPIs set by management is good for the entire enterprise, and that individuals can contribute more than they do today with less hands-on management oversight. PBI makes use of the fact that people at the individual level know their jobs best, they can deal with circumstances themselves and they can come up with improvements at their own level.
Another critical success factor is "right timing" the PBI data so that it is in sync with business processes. People will not pay attention to data that seems out of sync with what they are trying to do.
As with traditional BI, it is important to develop metrics properly linked to business processes. Also, PBI becomes increasingly more accurate and powerful as the metrics evolve. However, individuals must analyze the metrics, discover their shortcomings and improve them accordingly.
Further, PBI affords an unprecedented mechanism to effect change in the organization. By embedding metrics for behavior throughout the organization's work processes and rewarding people for the right behavior, the organization's senior leadership team has a powerful instrument for change at their fingertips. Instead of just the steering wheel, they can control the whole change engine.
From the CEO to the newest individual contributor, everyone can work smarter when business intelligence is pervasive. Whether you believe PBI is a true leap beyond BI or merely a natural evolution of existing BI systems, its time is fast arriving as companies rush to adopt traditional BI solutions. PBI has the potential to take these companies to the next level. Early adopters are already on board and achieving real results with PBI, which means many more companies are sure to follow.
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Dave Mittereder is president and CEO of Citigate Hudson, a provider of pervasive business intelligence solutions for making better decisions faster. He has more than 15 years of extensive experience in the technology industry, including strategic consulting, business analysis, project management and application development. Prior to founding Citigate Hudson, Mittereder was an independent consultant for 10 years serving the financial, insurance and art auction industries. He can be reached at email@example.com.