This is our blog about designing and implementing Intelligent organizations. Within this area of expertise we write often about the following subjects BI, analytics, the tools, decision management, data visualization, BI success, Business Intelligence concepts, data management, continuous improvement, and the organization of BI & Analytics.
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This article describes a practical method for BI professionals, business and information analysts, and controllers, to systematically develop proper KPIs. Our method of defining KPIs, the SMART KPI Toolbox, is well-documented and also makes them technically implementable.
One of the advantages of good business intelligence is that every user can effortlessly see the information relevant to them on the screen. Besides descriptive reports and analysis possibilities, that means relevant Key Performance Indicators (KPIs) that provide quick insight into the performance of the team, department, or segment of the business. KPIs are a part of performance management.
The recent wave of acquisitions and the shrinking BI market, as described in our previous BI Tools news alert, has continued to develop: in early August, HPE announced that it would be taking over all the assets of MapR, which was in financial hot water. In the wake of this news, Cloudera announced that it had received the go-ahead to acquire Arcadia Data’s technology and assets.
Tech companies that have access to (patented) technology to acquire valuable insights from big data analytics in an accessible way continue to be interesting acquisition targets in a consolidating market that seems to be more and more focused on self-service BI and everything that comes with that.
A successful strategy leads to increased revenue from the target audience, and sometimes outside of it. It goes without saying that companies also hope to achieve greater profits in doing so, but this depends on the operational costs. The desired strategy shows an upwards-trending line of revenue and profits. But that dream is cruelly disrupted: all good things must come to an end.
The central tenet behind the strategy’s life cycle is that revenue will not keep increasing forever, due to all kinds of factors (saturation, competition, etc). At some point – we don’t know when – revenue will stabilize and then decrease. The organization can’t keep generating the same revenue using the old strategy. At this point, it’s time for a new product offering, strategy, or cycle.
Passionned Group recently researched the success factors driving Business Analytics. The research also revealed a list of the biggest blunders in Business Analytics & BI projects, which hadn’t been published until now. Here are the biggest blunders to avoid.
Our research compared 389 organizations on countless aspects related to Business Analytics. We asked these organizations whether or not they can demonstrate their successful use of BI. The successful organizations were put into group 1, and the less successful organizations in group 2. Then we examined the differences between these groups on each individual aspect.
When developing a KPI system, you have to identify search fields and translate them into one or several yardsticks. After that the targets are defined, possibly with gradations or tolerances. Connect this to a measuring system and you’re in business.
In practice, that means making clear agreements about how and when to measure, the design, and the starting date of an indicator. These are all important factors. But keep in mind our division of the Measuring Plan (yardstick, target, measuring system, and reporting).
Data-driven improvement cycles help you to keep making the right moves quickly and reliably. But why should people want to do this? Where do they get the intrinsic motivation to want to embrace data-driven working? Why should people want to take charge and be in control? The answer is simple: because data-driven working has a huge number of benefits. This blog will cover the six most important benefits of data-driven working.
Let’s take a look at a case study: a large housing corporation has a reputation for being an innovative, ambitious real estate agency. They operate in a dynamic market, which is one of the reasons they started the transition from being a task-oriented to a more completely process-oriented organization.
The (SMART) goals in this transition are organizing smarter, making processes lean, and driving the most critical success factors. The company is getting ahead of the measures that are expected to come from local and European governments in the coming years. Those measures will have financial consequences.
Data analysis, and data-driven working in particular, enables organizations to make the most of their improvement potential. But in order to live up to their fullest potential, some proverbial sacred cows will have to be sacrificed on the altar of progress. So says Daan van Beek, founder of Passionned Group and author of management books such as The Intelligent Organization. The idea of BI as a separate department, for example, is a thing of the past. “But that’s okay, because change releases new energy,” according to Van Beek.
During the month of May, the market for BI platforms and analytics carried on like business as usual, but early June brought with it breaking news. The BI community was shaken up by the acquisition of two promising BI Tools vendors, and there were some high-profile failures at two well-known specialists of big data solutions.
Let’s start with the acquisitions. Firstly, the Santa Cruz-based niche player Looker was acquired. Looker, mostly known for LookML as an alternative to SQL, disappeared into the Google cloud for 2.6 billion USD. Hardly a moment passed before Salesforce announced they were absorbing the Seattle-based market leader Tableau for 15.7 billion USD in stocks. Are customers going to have any choice left?
The increasingly dynamic world and growing mountain of data impacts the way in which intelligent organizations develop their products, services, and IT. They have to be agile by working and thinking in short cycles: agile working through scrum.
Traditional project management and product development according to the waterfall method has had its day. In many cases, it’s too sluggish and unresponsive. The difference is not unlike repairing clothes with needle and thread instead of a sewing machine.
The world around us is changing faster than ever. But most organizations aren’t agile enough to keep up. In China they can make a new car faster than you can make a PowerPoint presentation. The agile organization requires agile employees, autonomous, self-steering teams, a decision-making layer in the organization, and excellent information provision.
Here are some reasons why agile working is a necessity:
The difference between genuine key performance indicators (KPIs) and no KPIs (or false KPIs) is night and day. Genuine KPIs directly impact the three most important result areas of the organization: profit, employee satisfaction, and customer satisfaction. Normal (performance) indicators like revenue or profit margins don’t directly impact all three of these, or only do so with a greatly delayed effect.
Earlier, we covered several methods of defining the right key performance indicators. Many organizations still use “false” KPIs: they may be indicators, but they’re not necessarily key! There are several negative side effects of measuring performance using false indicators instead of genuine KPIs (de Bruin, 2001). This can lead to perverse incentives and negatively impact the business. Below, you’ll find seven common pitfalls of working with false KPIs.
Many organizations are paying more and more attention to PDCA and continuous improvement. That’s no surprise, because this powerful improvement method leads to much better results. PDCA is embedded in the heart of every intelligent organization.
If you want to successfully apply the PDCA methodology, you have to be cautious. There’s a slim margin for error. Employees have to be inspired and mobilized, feel appreciated, and be able to reflect on their actions. Without taking the right steps, the approach could fail, and your team might sour on the whole approach. Here, we’ve compiled the 5 biggest pitfalls to avoid when implementing PDCA.
Valuable insights can be found not just in KPIs, but also in good management information systems. These insights, when used well, can really make a difference. They could, for example, instantly reveal that you can save millions of dollars. Or that the lead time in a process can be greatly reduced. Or that you can substantially increase your market share. An insight could reveal that you can increase the quality of a product with a single action. Unlike KPIs, such insights can be financial. Sometimes, these insights also contain KPIs.
Four years ago, when we published the second edition of this survey, we saw that not many ETL tools had good, reliable functionality for real-time application integration (EAI) projects. Since then, many ETL tools have added tools for real-time extraction, transformation and integration, and there has been an almost complete convergence between ETL and EAI tools into a new market which is being called Data Integration.
In our regular BI Tools News feature, Passionned Group, publisher of the popular Business Intelligence Tools Survey 2019, walks you through a selection of the most interesting announcements made by BI vendors over the last two months. This is the May 2019 edition of our BI Tools News Alert.
During the SAS Global Forum 2019 in Dallas, SAS made several announcements. Key among these is the company’s praiseworthy (if not entirely selfless, of course) attempt to democratize the field of (big) data analytics further. The software vendor is offering free AI software to teachers; launching a new analytics simulation game (at a price); and awarding AI certificates and badges. SAS is also investing in the Boys & Girls Clubs to teach kids the tricks of the programming trade.
Not all indicators are genuine KPIs. Finding the right KPIs for your company can be a lot like looking for a needle in a haystack. To make your search a bit easier, we’ve described the 7 hallmarks of genuine KPIs, allowing you to identify and build on them more quickly.
What sets a Key Performance Indicator apart from a regular indicator? This question is the key to a lot of the confusion surrounding KPIs. Using the 7 criteria below, you can determine if your indicator is truly Key, or just another gauge on a dashboard somewhere.
Business Intelligence is essential to the effective and efficient manage of any organization. Managers can’t get insights into operational performance fast enough. Fortunately for them, BI software is becoming easier and easier to use. Managers don’t have to rely on stressed IT staff to provide the right data anymore. Long live self-service BI! Right? Well, yes and no. There’s a danger to using data in this way. If you don’t take the limitations of self-service BI into consideration, its success rate is very slim. Our 6-step improvement plan reinforces the foundation of self-service BI.
Defining the right KPIs (Key Performance Indicators) alone won’t get you where you need to go. The biggest challenge is taking data and using it to continuously learn and improve, and eventually achieve better performances. Intertwining KPIs and (big) data with the daily process of continuous improvement using so-called PDCA improvement cycle leads to sustainable value creation. Doing this will let you reap the advantages of working with KPIs while operationalizing the results.
Software developers and analysts are experts at coming up with new acronyms and exotic-sounding names for their platforms, BI tools, features, plug-ins, and add-ons. NLG, VBD, MOLAP, BIaaS, federated analytics, augmented intelligence, the Prep Conductor, Vizzes, smart analytics, the list goes on. End-users have the unenviable task of looking past the jargon and trying to judge all new announcements on their own merits. A critical attitude, focusing on the promised functionality, will get you far.
Earlier, we covered two different approaches to defining KPI requirements: the strategy-driven approach and the process-driven approach. Today, we’re covering two other methods: the data-driven and the market-driven approach.
The data-driven approach defines KPI requirements using the registered data in the information systems supporting the business operations. External data sources could also fulfill the information requirements. An intelligent organization will also consider any other potentially interesting sources. Possibly even sources that don’t exist yet, but that have the potential to generate a lot of interesting data. For example, (IoT) sensors built into pills, trucks, or plane engines. This approach works as follows:
Earlier, we covered the strategy-driven approach to determining KPI requirements. Today we’ll cover the process-driven approach. Closely examining your business processes in the framework of the process-driven approach will give you insight into how your organization adds value, and how you can measure the performance of its activities.
The business processes are a crucial starting point for defining the information needs and improving the performance of the organization (Kerklaan, 2009; Van Leeuwen, 1997; Tideman, 1993). This approach gives “certainty” that the required information is also relevant for the user. “Every company on earth consists of processes. Processes are what companies do” (Hammer, 1995).
Research among almost four hundred organizations has shown that the famous PDCA cycle (Plan-Do-Check-Act) is crucial to achieving better business results. Not only can it improve your profit margins and drastically reduce workloads, it can also lead to increased customer satisfaction. Dr. Deming’s quality cycle has proven to be the foundation of using management information and KPIs to achieve great success.
There are various approaches you can use when identifying, defining, loading, benchmarking, visualizing, and operationalizing Key Performance Indicators (KPIs). This article will discuss the strategy-driven approach, a top-down method where the mission, strategy, and goals of the organization are the starting point.
To start off, we’ll answer the question of how to derive a strategy from the organization’s mission, and how to derive indicators from goals.
The number of projects, programs, and portfolios is rapidly growing all around the world. Over the past forty years, project management has become a prominent discipline that’s undergone a lot of development and has become highly visible.
However, despite this growth in the field, the amount of successful projects isn’t growing at the same rate. Studies show that only twenty percent of all projects are completed successfully. The biggest culprits that cause failure: limited budgets, poor communication, unmotivated team members, not enough time, wrong priorities, and scope creep.
Software developers and analysts are experts at coming up with new acronyms and exotic-sounding names for their platforms, features, plug-ins, and add-ons. NLG, VBD, MOLAP, BIaaS, federated analytics, augmented intelligence, the Prep Conductor, Vizzes, smart analytics, the list goes on. End-users have the unenviable task of looking past the jargon and trying to judge all new announcements on their own merits. A critical attitude, focusing on the promised functionality, will get you far.
The world around you is changing. Your organization is changing. The demands the organization places on management information is also changing. There comes a point where you realize that your current tools are inadequate in this new moment. You need newer, modern Business Intelligence tools. But what should this tool be able to do? Polling the organization reveals a diverse set of needs and wants from the various employees, depending on their role in the organization. You may begin to wonder if there are any tools that meet all your needs.
Not everyone gets excited about the prospect of discussing information entropy, shadow IT, and technical debt. But for Martijn Evers, it’s all in a day’s work. We had an animated discussion about holistic data management and the art of taming bulls.
Together with Ronald Damhof, Martijn Evers, co-founder of i-Refact, started an online movement dedicated to perhaps the ultimate job of the future: full-scale data architect. It’s a job that has to suit you. “Usually, you’re born a data architect”, the self-appointed data missionary says. In other words: abstract thinking has to be in your genes. That’s why organizations usually call on people with real passion to fill this key role.
In practice, Martijn Evers, co-founder of i-Refact, believes there’s a desire for data architects with a holistic vision (read part 1 of our interview here). Architects that can effortlessly switch between various modes. He jokingly refers to the contrast between a gorilla architect, who is assertive and supported by the direction, and a guerrilla architect, who doesn’t have a wide base of support in the organization due to all kinds of politically sensitive matters, and thus is forced to operate under the radar.
If the challenges associated with Big Data are handled well by making things relevant, digestible, and specific, you can go from Big Data to Right Data and then make the Right Decisions. Then, you’ll be able to make the four Vs of Big Data work to your advantage: you’ll see more and see better as an organization!
Volume: see more.
Velocity: spot things faster.
Variety: see more detail and more nuance.
AI may be currently dominating the discourse, but BI (Business Intelligence) is proving to be a term with staying power through 2019, both for BI tool vendors and end-users. Nevertheless, BI vendors dating back to the early days of the field are having a hard time staying out of the danger zone. Microsoft, on the other hand, is rising above the pack with Microsoft Power BI. This product has the potential to become the de facto BI standard. These are the results of the updated Business Intelligence Tools Survey 2019, which Passionned Group has been publishing as the Passionned Parabola™ since its early beginnings.
In a recent poll on our website about Business Intelligence, we asked visitors to give us their opinion about the following statement: “A business intelligence track can’t succeed if…”. Below, you’ll find the results of this poll.
Respondents indicated that the chance of a BI track failing are the biggest when there are too many KPIs and the top management isn’t actively involved with BI. These two options were far ahead of the other three, which were: lack of a data warehouse, wrong tool choice, or the project is in the hands of the ICT department.
As we recently pointed out, data literacy is a hot-button issue. Only 24% of the decision-makers in international business spheres indicate that they have complete confidence in their own ability to read data, work with it, analyze it, and discuss it. This alarming conclusion was drawn by the worldwide Data Literacy Project. Spoiler alert: 2019 could be the year of data literacy.
The concept of literacy is a lot broader than most people think, according to Wikipedia. It’s the ability to work with information, understand it, and use it with purpose. In the Netherlands, Princess Laurentien has been working tirelessly to promote literacy since 2001. At her behest, the Foundation for Reading & Writing was founded in 2004. Although the foundation achieved successes in its fight against illiteracy, the war is far from won.
Data is becoming a bigger presence in our lives every day, whether we know it (or like it) or not. Naturally, this doesn’t just affect individuals, but businesses too. Smart use of data separates the winners from the losers. The most prominent Business Intelligence trends for 2019 are all about (use of) data, and above all: using data responsibly.
Datacratic working brings passion and joy back to the workplace. Connect data with continuous improvement and PDCA, and your organization will flourish. Becoming a true datacracy is the end goal that every organization should strive for. In this scenario, every decision will be supported by relevant data which is collected, stored, and then analyzed. This frees people from the drudgery of indecision and tyrannical managers who loudly proclaim their opinions while managing on gut feelings.