A structured approach to improving

business intelligence
Teo Griffioen and Fred van der Waa

The implementation of a business strategy is often impeded by a lack of reliable information. In the past few
years, circumstances have been so turbulent and unpredictable that companies have had to constantly seek
insight into market trends more intensively than ever before. In addition, companies must prove flexible
enough to be able to react quickly. An increasing number of organizations are investing in business intelli-
gence solutions, but many are not achieving the possible – and anticipated – benefits.

Introduction to be successful. A recent worldwide survey by KMPG

indicated that half of all participating organizations have
Organizations throughout the world are spending enor- plans to implement a new business model in the near
T.D. Griffioen mous sums of money on business intelligence. However, future. This implementation of new business models will
is a director at KPMG
Advisory N.V., Business many people are wondering if these investments in busi- be supported by large-scale investments in IT solutions.
Intelligence Advisory. ness intelligence solutions do genuinely lead to more
[email protected]
manageable organizations. In everyday practice we see However, enormous investments in IT do not necessar-
that organizations that attempt to solve their “informa- ily guarantee better information. It is more important to
tion problem” by means of large investment in IT tools effect a fundamental change in the way in which data is
are booking only limited results. Organizations that pick gathered, processed and presented.
up the problem in a more comprehensive way, looking at
F. van der Waa strategic starting points as well as elements of data gov- Commissioned by KPMG, Cambridge University per-
is a partner at KPMG
Advisory N.V., Financial ernance and infrastructure, are obtaining much better formed comprehensive research on business intelligence,
Management Advisory. results. This article provides an integral approach to your in order to determine the extent to which enterprises are
[email protected]
“information problem.” ready for this fundamental change. The outcomes of this
research seem to show that many of the companies exam-
In the current economic climate, enterprises are begin- ined were not able to realize the anticipated advantages
ning to realize that they will have to change if they wish of business intelligence, such as improved insight into

16
 Enterprises with effective business
intelligence realize five per cent more
yield on their own capital
customer behavior and operational results, despite a total specialists; it is better that the business intelligence solu-
annual investment of around 60 billion dollars. tion be embedded in the line and among the owners of
the organization’s business processes. Another important
The following reasons were determined in the research. factor is the managers’ acceptation of the fact that they
must cease to formulate their “own” reports, because these
•• Less than ten per cent of the organizations were success- are often based upon sub-information that is qualitatively
ful in improving the organizational structure and techni- inadequate. A third important precondition for success
cal infrastructure with the help of business intelligence. is the connection of the business intelligence solution to
•• In more than fifty per cent of the organizations, busi- the performance management strategy, so that KPIs (key
ness intelligence projects did not produce the expected performance indicators) gain in terms of importance and
benefits. relevance.
•• Two-thirds of the executives find the quality and consis-
tency of the data insufficient. In addition, it is not always To realize this, it is necessary to adopt a more holistic
accessible on time. perspective:
•• Seven out of ten executives do not receive the informa-
tion necessary to make operational decisions. •• Start from the needs of the users and owners of the
•• Almost half of all managers have no faith in the man- information, do not start with the possibilities offered by
agement information they receive from their own com- technology.
pany. •• Change the process of collecting, measuring and report-
ing information by creating an information architecture
In short, despite substantial investment, the resulting that ensures the appropriate performance indicators.
effects are rather meager. It can also be stated that much •• In the apportioning of resources, give priority to the
of the collected data is inaccurate – an adverse effect that improvement of quality of the data, rather than to technol-
makes the decision-making process even more risky. ogy.

The good news is that those enterprises that have effective KPMG’s Business Intelligence Framework provides a solid
business intelligence do realize five per cent more yield framework for finding the right balance between invest-
on their own capital than the rest of the market does. On ing in your technical and your organizational infrastruc-
the basis of our practical experience, we too come to the ture, in order to gain optimum yield from investment in
same conclusion: enterprises that regard information as your information facilities. This framework consists of six
their most important asset, and which set up an infor- “components” that are related to one another but can be
mation architecture in which information flows are not applied separately.
obstructed and are used effectively, manage to achieve
more success in terms of profitability and capacity to Business Strategy Alignment: link between
respond to new developments in the market. business strategy and business goals
It is essential that the information used for business
Enterprises that embrace business intelligence are more operations be explicitly linked to the business goals. This
capable of providing the right information to the right ensures that the management function is directly related
people at the right moment. In addition, by doing so, they to the strategic objectives. Accordingly, it is crucial that the
gradually become aware that this form of information pro- management attempt to realize a situation in which the
vision really does give a competitive advantage at strategic information facilities support all operational decisions.
and tactical levels, and at a lower cost price. The business intelligence strategy should therefore fit
seamlessly to the business strategy.

Embedding business intelligence in your BI governance

organization The aim should be to realize an organization within which
people can confidently make use of one and the same col-
The success of a business intelligence project depends on lection of data. This requires:
a number of factors. One of the most important of these
is ownership. This should not be the domain of the IT •• clear ownership of data and information;

Compact_ 2013 1 International Edition 17

 Business Intelligence Framework
Important components

Business
Business Strategy • Business strategy and alignment to strategic goals
Alignment • Organization-wide vision of business intelligence
• Support for BI in the higher ranks

• Organizational structure, tasks and responsibilities

BI Governance • BI Competence Center:
– policy and procedures (e.g., MDM)
– risks, controls, compliance /rules and regulations
– Change management and QA

Performance
• Definition of KPIs and measuring points
Management • Defining standard reports and analysis models
Process & Reporting
• Development of score cards and dashboard
• Alignment of BI to business operations/performance management

• MDM process/Data management

Integral Information • Standardization and harmonization of data
Management • Conceptual information structure
• Monitoring the integrity of information/integrity of data

BI Platform • BI applications and selection of tools

• Reporting, OLAP, data-mining tools
• Tools for development and management
• Authorization and distribution of information
• Selection of technical tools
Infrastructure • Management of data warehouse and source-access process
Technical

• ETL (transformation) data cleansing

• Security and access to data

Figure 1. KPMG’s Business Intelligence Framework.

•• clear ownership and management of processes and applications and makes it possible to extract and cleanse
systems that generate information; data from diverse (custom-made) systems. This produces a
•• clear insight into who makes use of the information uniform and reliable picture, enabling personnel to obtain
and why. better insight that supplements business strategy.

This approach can contribute to more consistency in the Business intelligence infrastructure
method of reporting and measuring within the organiza- Unnecessary expense ought to be avoided when setting up
tion, which will lead, in turn, to more transparency, rel- the IT architecture for business intelligence applications.
evance and focus, by means of which achievements within One should take care to preclude excessive information
the organizations can be compared in a significant way. demands, vague organization structures and an abun-
dance of applications. Through smarter configuration of
Performance Management Process & Reporting business intelligence, the costs of IT architecture can be
Research has shown that only 23 per cent of the enter- substantially reduced, even by as much as forty per cent,
prises actually measure the “properly relevant” aspects. according to some estimates.
As a consequence, staff are often assessed and rewarded on
the basis of activities that do not contribute to the realiza- Connection between business strategy and business
tion of business objectives. For this reason, it is essential intelligence strategy
to develop scorecards that support proper behavior in the
organization. Your organization can only benefit from information that enables
you to take the right decisions. By linking your need for informa-
Integrated Information Management tion to your strategic requirements, the basis is created for the
For the successful establishment of a BI platform, it is nec- good measurement of achievements, business intelligence that is
essary to embed a number of elements from the Enterprise competitive, and effective decision-making.
1. We refer the Data Management “stack” (EDM)1 in the organization. We
reader to the article summarize these elements under the term “Integrated Until now, the promises of the “information era” have
“Enterprise Data
Management: value
Information Management.” We shall deal with the topic in scarcely materialized. One of the greatest myths is that
and necessity.” more detail shortly. more data leads to better achievements. On this basis,
organizations spend millions on the modernization of
Business intelligence platform information systems that have intrinsic flaws. This results
A business intelligence platform is not a stand-alone soft- in a situation in which management is inundated by an
ware package, but rather a part of an integrated network. ocean of data, while the intention was actually to gain bet-
A good business intelligence solution consists of various ter insight into the available data. Therefore it is essential

18 A structured approach to improving business intelligence

 One of the greatest myths is
that more data automatically
leads to better governance
that management information make a contribution to the Effective governance means a definition of the owners of
most important strategic and tactical decisions. Double information. For example, Global Marketing in head office
work should be avoided in the formulation of management may be the owner of the data on the top-ten products,
information, so that an information overload is avoided whereas the data on the other products may belong to the
and the costs of supplying information remain within regional marketing sections. And the marketing teams at
reasonable boundaries. An effective approach requires national level may be the owners of the promotional pack-
that the managers who are responsible for the information ages. If one wishes to change the definition and usage of
flow first ensure that they have good insight into the way information, such a step will have to be authorized by one
in which the enterprise creates value. Financial infor- of these parties.
mation is generally effectively reported, but other, less
tangible aspects such as “churn” (customer loss to others) Performance Management Process & Reporting
and the health of a project as a whole are more difficult to
chart. Nevertheless, effective management of these intan- The achievements of concerns and of the group as a whole must be
gibles is often the factor that creates most added value. clearly connected to the strategic priorities of the enterprise. This
can only be achieved by measuring and rewarding activities that
Enterprises that have insight into the decision-making contribute to the success of the enterprise.
process that steers this value creation can arrange that
their entire information flow supports these crucial activi- The financial crisis of the past few years has raised seri-
ties. This also makes it possible to reduce the number of ous questions about the way in which performance has
reports produced, which considerably lowers the costs of been measured and rewarded. Apprehension about this is
IT implementation and other costs. not confined to the financial sector alone. In most sectors,

BI governance
Case study: Aligning business and KPIs
Truly valuable business intelligence is generated when organi-
zations clearly define the owners, users and formulators of the Is it possible to be more effective and efficient at the same time? A global automo-
information, and the way in which the information is presented. tive supplier has learned that a sharp focus on what matters can provide more
Strict definitions of ownership and management help ensure incisive information at a significantly lower cost.
consistently accurate reports and make it possible to compare
achievements in a frank and fair way (“like for like”). Rather than the classic systems approach of collecting masses of conflicting
business requirements and then trying to reconcile this into a coherent set of
Many enterprises are faced with an abundance of miscel- requirements, this global supplier chose to start with the core information
laneous data in various formats, which makes it difficult required to enable the business model. This involved a detailed analysis of the
if not impossible to compare them properly. Even a con- existing business model and the strategy. By re-defining the measures that
cept such as gross turnover, which would appear to be a reflect real value, KPMG’s Business Intelligence practice helped the company set
lucid concept at first sight, can have several definitions. new key performance indicators (KPIs), covering performance from a financial,
All too often, the responsibility for the generation and operational, and risk perspective. Reports were standardized and the number
presentation of data rests with numerous individuals and/ and size of documents were reduced, eliminating unnecessary information.
or groups, and there are no company-wide principles or
norms. This not only to the detriment of the evaluation The result was a significant reduction in the number of reports and less duplica-
of achievements, but prognoses also become less reliable tion of redundant information. The client can now navigate the internal organi-
because divergent approaches are used for sales, company zation and external market much more effectively, forecast quickly and produce
activities, financing and production. Here, too, it is the information at a lower cost. The client is now aware that, to steer the business
case that large IT investment alone is not the solution: it and to support its strategy, it needs more than just KPIs: it must harmonize its
only ensures that bad habits are prolonged. planning, forecasting, and reporting so that all link into the same information.

Compact_ 2013 1 International Edition 19

 enterprises measure a multitude of factors that have little ent their efforts toward aspects that do genuinely create
or no influence on the realization of the strategic goals. added value and, in doing so, involve the management
staff who are directly responsibility
Within most organizations, the cycle of performance
assessment consists of numerous processes: strategic plan- Integrated Information Management (IIM)
ning, the allocation of portfolios, the planning of capital
administration, the formulation of targets, budgets and There has been an enormous increase in the amount and diver-
prognoses, and the execution of monitoring. To ensure sity of the data that organizations generate. To enterprises, it is
good management, it is essential that these processes link now more essential than ever to manage their data as effectively
up well with one another. The reliability of the informa- as possible and to be able to rely upon the accuracy of this data.
tion is thus enhanced and sizeable cost-savings can be
realized by selecting the proper KPIs, by planning reports In order to design and set up an effective BI platform, it
in detail, and by further automating the processes. is necessary to have a number of elements from EDM
embedded in the organization. First of all, there must be
Leading enterprises are aware that more effective progno- an anchoring of a number of data management activities.
ses enable better performance management, so that they Well-functioning data governance is perhaps the most
can capitalize more quickly on market changes. They ori- important precondition. Data governance creates a man-

Case study: Value-driver-based reporting

Aligning business, finance and KPIs: Is it possible to be more This new way of steering the business resulted in improved perfor-
effective and efficient at the same time? mance dialogues in the underlying Business Units, better under-
A large energy company has learned that a sharp focus on what really standing of the root cause behind the financial performance, and
matters can provide more incisive information and better under- improved maturity of the business-controlling function on its road to
standing of the true drivers of business performance. Rather than becoming a real business partner.
taking the classic approach of reporting financials and operational
management information in separate processes, this energy company The implementation of this improved and driver-based reporting was
chose to improve its business performance reporting by supporting supported by flexible BI tools that combined the financials from the
management with “Value Driver Trees” where the financials are con- local general ledgers with a direct drill-down function to the underly-
nected to the underlying business drivers. ing operational drivers extracted from the core operational business
systems.
Automated value-driver
trees and management
dashboards containing
the key value drivers sup-
ported the introduction
of driver-based steering
and reporting.

20 A structured approach to improving business intelligence

 Analytical Operational

BI Framework

Business Business Strategy

Strategy Alignment

BI Governance Business Model

Performance
Management Process Model Information Management, which can be
Process & Reporting
regarded as a subset of EDM.

EDM Framework IIM/Analytical Operational “Analytical MDM” versus

MDM MDM “Operational MDM”

Successful BI implementations have

Application Model incorporated master data management
BI Platform
ERP, or
Best of Breed (MDM) as an integral component in the
realization phase. In this framework,
MDM forms an important pivot in the
BI Infrastructure IT Infrastructure ability to integrate information origi-
nating from several source systems.

The incorporation of MDM in BI projects

is crucial to the attainment of consis-
Figure 2. KPMG’s Business Intelligence Framework and relationship to the tent, complete and reliable manage-
EDM Framework. ment information. However, with the
integration of information originating
agement structure by embedding the management-related from several source systems, the orga-
tasks and responsibilities in the organization. In addi- nization-wide master data issue is not yet solved. MDM as
tion, it brings a data management vision and strategy and an element in the BI environment is primarily directed
provides policy and rules. Such elements form an impor- toward the analytical part (analytical MDM). This being
tant foundation for the development of a BI strategy that the case, the scope is largely restricted by the management
is supported organization-wide and is in line with other information requirements imposed.
data initiatives within the organization. Furthermore, it is
necessary to have a shared “data language” in which con- Analytical MDM is primarily oriented toward the har-
cepts, terms and definitions have been elaborated and are monization of data from various source systems, and the
used consistently throughout the organization. It is also establishment of a central referential covering several data
crucial that data from the different operating systems used sources. This is needed, for example, to be able to present
by the BI platforms becomes available in a standardized (or an unambiguous customer profile across several systems
harmonized) form. that contain customer data, combining data gleaned from
sales, production and financial systems, for instance. In
Master data management ensures that processes, organi- addition to ensuring a central referential covering dif-
zational structures and technology are available to realize ferent source systems, analytical MDM is also directed
IIM. The data architecture should be able to deliver data toward the determination of dimensional data, such as
models to support the design process of the BI solution. the recording of customer hierarchies that issue from the
This can all be summarized under the term Integrated directional needs of a marketing section, for example.

It is necessary to have a shared “data language”

in which concepts, terms and definitions have been
elaborated
Compact_ 2013 1 International Edition 21
 Investing in business intelligence by
introducing new technical architecture is no
guarantee of added value
In a BI environment, MDM fulfills two important func- extraction. In the rollout of business intelligence, it is not
tions: the harmonization of customer data to generate a only the technique that is important. It is also essential to
clear customer picture and the recording of specific roll- pay attention to the new role that staff are allocated within
up or pyramid structures (customer hierarchies) in order the organization. This can be done by designing effec-
to execute the proper analyses / market segmentations. tive processes for the better management and guarantee
of data quality, or by the establishment of new reporting
Operational systems that serve as a source for BI have teams. Whatever the situation, it is of crucial importance
their own operational MDM process. In this context, we to implement a change project for both individuals and
can mention the maintenance of account structures in groups, in order to ensure that the rollout of the new busi-
a financial system or the specific composition of an end ness intelligence platform will be successful.
product in an ERP system. We refer to this as “Opera-
tional MDM.” The operational part of MDM is beyond the Business intelligence infrastructure
scope of BI. In conjunction with analytical MDM, it forms
an integral part of EDM. An effective technical infrastructure forms the framework
that ensures that accurate information is available at the right
Business intelligence platform moment. The infrastructure must be secure and also flexible
enough to adapt to new criteria.
A business intelligence-platform is not a stand-alone software
package but a part of an integrated network. This type of Organizations must prevent being confronted by an
platform often consists of diverse applications and enables the unnecessarily complex technical infrastructure. The start-
extraction and cleansing of data from all kinds of old systems. ing point is a clear line in the information strategy. This
This produces a uniform and reliable picture, so that staff can prevents people having to compensate flaws in the archi-
obtain better insight into company activities. In this way, a link tecture, often at great cost. However, investing in business
is established between the business strategy and its implementa- intelligence by introducing new technical architecture is
tion. Technology is merely a means; it is seldom the cause of the no guarantee of added value. Only architecture that meets
failure of business intelligence projects. the following four characteristics leads to value creation:

It is all too easy to assume that the introduction of new •• Scalable. The architecture of the business intelligence
BI applications will solve all your data problems. Before application must be sufficiently flexible and balanced to
your organization actually makes an investment in IT, meet the information needs in a cost-effective way, in both
it is crucial that it should first determine which infor- the short and long term. Please note: what is most cost-
mation it wishes to have available. The selection of the effective in the short term is not always most cost-effective
appropriate solution requires a controlled process, in in the long term, and vice versa.
which your organization deploys processes for the selec- •• Available. The architecture must take account of the
tion of software and ensures that it has effective support requirements relating to the availability of the system. For
and commitment from stakeholders. This is all the more example, the current systems may not need to run for 24
important in the choice of the correct reporting and hours a day. But if the enterprise wishes to expand interna-
analytical software. Organizations that wish to give their tionally, this may lead to different demands on availabil-
staff more insight into operations and wish to incorpo- ity, because production must be increased or services must
rate business intelligence seamlessly into their work be provided to customers in other time zones for example.
environment must take care to choose applications that Periods of unavailability due to nocturnal system back-ups
are user-friendly and are indeed used for the purpose for must also be taken into account.
which they were developed. In addition, you will have to •• Secure. Effective security means that access to the data
formulate a profile of your data. In this way, you can gain is monitored and controlled in an appropriate way, observ-
more insight into the quality of the data, and you will ing the application regulations with regard to privacy
know exactly the volumes and the frequency of this data and the storage of data. The security solution is a tailor-

22 A structured approach to improving business intelligence

made configuration. In this, a good balance must be found About the authors
between the need to share as much information as possible T.D. Griffioen  is a director at KPMG Advisory N.V., Business
with as many parties as possible, and the necessary security Intelligence Advisory and is responsible for the BI practice at
KPMG. He covers complex management and BI issues in the
of commercially sensitive information and an adherence to
profit and non-profit sector.
rules and regulations.
•• Maintenance-friendly. The cost and ease of maintenance F. van der Waa  is a partner at KPMG Advisory N.V., Financial
Management Advisory and is currently engaged in improving
of the environment must also be taken into account, as the financial governance of organizations in the profit and non-
defined by the application architecture. The rollout, moni- profit sector.
toring and troubleshooting aspects must be straightforward
and the environment must harmonize with the existing
back-up and archiving processes.

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