Thanks to the guys at bitsnbytes.
The business environment today is a tougher place than it was a decade ago – the internet and social media has created as many competitors as opportunities and the world is still experiencing economic hardship. Yet there are businesses out there who are bucking the trend and experiencing substantial growth.
Looking further into these businesses, one of the commonalities between them is that they all have all three levels of business intelligence in place working together – Strategic, Analytical and Operational. These businesses have recognised that while each of these levels are unique in their own way, they perform as a cycle. Strategical analysis drives analytical BI, while analytical BI directs the focus of operational initiatives. And it is these operational initiatives that enable today’s fastest growing companies with the agility, productivity, cost efficiency and profitability to achieve this growth.
So let’s look at these three levels in further detail and see how they relate.
Strategic Business Intelligence
The primary objective of Strategic Business Intelligence is to drive the overall objectives of the business as well as the individual departments and business units that make and deliver the company’s products/services. Once management has collaborated and agreed on a strategy, tools such as scorecards, reports and dashboards are used to reveal the progress of the strategy in the form of measurable goals which reflect the critical success factors for the business. Examples of these are customer satisfaction scores, market share, profit margins and overhead costs.
Analytical Business Intelligence
Following the embedment of the business strategy and identifying the critical success factors for the business, analytical business intelligence comes into play. When a Strategic BI tool uncovers a problem, Analytical BI tools, such as OLAP, predictive analytics and ad-hoc queries, are used to drill down to determine the location or cause of the problem from many different angles. For example, if customer retention rates are low, is it because of poor product/service quality, or lack of success in customer loyalty programs? If profit levels are declining, is it because of slow sales or increasing expenses?
Operational Business Intelligence
The results that come out of Analytical BI tools are then used to drive the Operational Business Intelligence initiatives which are facilitated by business applications and process improvements and in the form of day-to-day decision making at the lower levels of an organisation and enables the achievement of critical success factors.
Example from our everyday lives
Now lets put this into a simple example from our everyday lives to comprehend why these three levels work together as a cycle – by using the dashboard in your car. When your engine starts to overheat, a warning light on your dashboard (Strategic BI) starts flashing. Further analysis using specialised mechanical tools (Analytical BI) shows that the overheating is the result of a broken fan belt which is preventing the cooling of the coolant. The mechanic then puts the operational fix in place by repairing the broken fan belt (Operational BI). Imagine if the three steps worked individually. The flashing light on the dashboard would do nothing to solve the issue if it wasn’t investigated further, the mechanic would need to look in a hundred places to find what is wrong with the engine without his tools, preventing him focusing time on the operational fix to the car.
So, how exactly are the fastest growing businesses using Strategic, Analytical and Operational BI?
The business’s strategy and performance is clearly communicated to all employees and forward thinking management have implemented predictive analytics at the operational level to anticipate the factors that affect the critical areas of the business. For example, they are able to predict which customers are most likely to defect to their competitors and use this information to increase retention. Employees on the frontline are provided with access to real-time information to quicken and improve decision making. Further to this, they are also using business intelligence to drive efficiencies not only with internal employees, but with customers, vendors, suppliers and other strategic business partners while management are constantly looking for ways to drive revenue by using the information they collect.