Top 4 Metrics for Measuring the Success of Business Intelligence

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One of the main goals of BI is to organize and distribute metrics on the performance of the business. The conundrum is measuring the performance of the BI platform itself. If a division of the company is enjoying a surge in profitability, can this be attributed to the new BI system and the insight it provided to decision makers – or not? Some statistics about BI performance are relatively easy to obtain and quantify, such as usage data drawn from the logs of specific tools or portals. But the remainder often relies on systematically gathering user opinions and tracking the change in those opinions over time. One trend continues to jump out from our survey results: Top Performers seem to be more focused on metrics tied to business outcomes, even though the impact of BI can be hard to measure. In short, Top Performers do their best to tie metrics to consequences and act upon these insights; Everyone Else is treating the BI output itself as “mission accomplished.” (2014 Business Intelligence Gleansight Benchmark Report)
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One thing that is very difficult to quantify in BI initiatives is the effectiveness of the information produced. Frankly, your key concern should be ascertaining a qualitative understanding of decisions made with BI. To be sure, there’s a dramatic difference between justifying meetings with BI insights and actually taking action as a result of this information. If you crack the nut on measuring that, let us know. In the meantime it’s food for thought.

Financials (revenue, operating margins, shareholder value, etc.).

All other things being equal, an organization with superior analytics ought to exhibit superior financial performance at the level of revenue and profits. Over the long term, the effect of running a more efficient, intelligent, and data-driven business should show up in the bottom line. Has overall corporate performance improved in step with business intelligence initiatives? How well can we judge the contribution of BI to better decisions and strategies? Look for evidence that the BI strategy is making the company more valuable. If the evidence is not there, reconsider both the data and the models used by the BI platform. Remember, Top Performers track whether decision makers are, in fact, using the BI. A system that is not being used will never achieve its intended results.

Employee performance/productivity.

Employees ought to be more productive when they do not have to waste time compiling reports or searching for information that is now readily available through the BI platform. The effect should be measurable, at least for knowledge workers and targeted categories of customer service and operations employees. Certainly, you can measure productivity on specific tasks. Pick a few benchmarks, such as compiling a report that is due at the end of every month, and put a stopwatch on them. Be sure to measure the results before and after BI initiatives. Time spent can be quantified by salary and multiplied by resources involved. This figure is often quite compelling when aggregated globally over a number of years.

Operating margins.

Top Performers are 8 times more likely than Everyone Else to rank operating margins as a top three metric for measuring the success of BI. That’s a staggering difference, and one that required further exploration than the survey revealed on the surface. Discussions with Top Performers revealed BI tools were frequently the only means of aggregating the disparate sources of information necessary for operating margin analysis. Operating margin is a measure of revenue minus variable costs. It demonstrates what is left over for the company to pay fixed costs. The mere fact that BI tools were being used to calculate this metric suggests that Top Performers are capable of correlating operational excellence to the insights derived from BI.

Number of active users.

How many users have accounts on the BI platform, compared with the penetration you would ideally like to see across the organization? How many of them are actually regular users, indicating that they find value in the information provided? How frequently do they access the system?

Republished with author's permission from original post.

Ian Michiels
Ian Michiels is a Principal & CEO at Gleanster Research, a globally known IT Market Research firm covering marketing, sales, voice of the customer, and BI. Michiels is a seasoned analyst, consultant, and speaker responsible for over 350 published analyst reports. He maintains ongoing relationships with hundreds of software executives each year and surveys tens of thousands of industry professionals to keep a finger on the pulse of the market. Michiels has also worked with some of the world's biggest brands including Nike, Sears Holdings, Wells Fargo, Franklin Templeton, and Ceasars.

2 COMMENTS

  1. Agree with all of these, especially building in employee performance/productivity (although would extend this to level of advocacy behavior, because it is proven more monetizing over time), with one caveat. Would incorporate a more action-centric approach to resultant customer behavior: http://customerthink.com/is-there-a-single-most-actionable-contemporary-and-real-world-metric-for-managing-optimizing-and-leveraging-customer-experience-and-behavior/

  2. “. Pick a few benchmarks, such as compiling a report that is due at the end of every month, and put a stopwatch on them.”

    I actually think that is a fantastic idea! Don’t ask them for the hardest report ever, but something they should need to run on a semi-regular basis anyway and see how long it takes them to do what you want. If they can’t do it in a reasonable amount of time figure out what went wrong. Was is the employee or the system?

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