Analyzing data to measure performance, use goals in decision-making, and predict the impact of decisions on your firm
You know how it goes — you’re constantly asked questions that you have to quickly find the answer to; Is your firm profitable? How profitable are your projects? Do you know the status of each project? What’s your pipeline revenue? How accurate is your data? So let me ask you — how readily available is this information?
You may have to dig through separate systems, multiple excel spreadsheets and various reports to find what you’re looking for. If your data is this hard to find, how can you be sure that it is accurate, consistent and not outdated? How can you make the best strategic decisions for your firm if you’re spending more time trying to find the data, than actually analyzing it?
What if you could:
- Empower those in your organization to make decisions based on facts, and not gut feelings?
- Use the data your firm is collecting to make intelligent decisions on markets to penetrate, and projects to pursue?
- Get an accurate view of your entire firm in a single location?
- Have a proactive approach to decision making, which could give your firm a strategic advantage over its competition?
With the challenging global economic environment, shorter business cycles, and changes in the competitive landscape, design firms must be agile if they want to survive and be successful in today’s market. Most firms already have the critical asset that’s needed to help ensure their success — data. But simply having data isn’t enough — it’s how the data is used that separates the successful firms from those that are struggling. Organizations that have a clear strategy for organizing and normalizing data for both tactical and strategic purposes can accelerate their business decisions to help them stay afloat in the fast-paced market. This is possible through Business Intelligence.
What is Business Intelligence?
Business Intelligence (BI) represents the tools that play a key role in an organization’s strategic planning process. These tools allow a company to gather, store, access and analyze data to aid in decision-making. For professional service organizations, BI helps show project trends and multipliers, project status and key performance indicators.
All companies, regardless of size or industry, need Business Intelligence. BI is essential to all organizations as it enables you to see what is happening in the business, understand how successful the business is operating and make well-informed decisions.
Your success is hinged upon having the ability to evaluate how your business is operating. You must be able to monitor organizational performance, make necessary adjustments as things change and measure the results. You can accomplish these tasks by using BI. Organizations employing strong data integration practices and using advanced analytics are more likely to be successful. If it is used right, BI drives business decision-making that leads to improved performance.
Two thirds of companies describe their company as data-driven, yet only 27 percent of companies have a clearly defined BI and analytics strategy.
That’s a shocking statistic! Does your firm have a strategy in place to get the intelligence it needs from its existing data? Are you able to analyze that data in a way that is meaningful for your firm? Are you making effective decisions to propel your firm to grow and be profitable?
Data production will be 44 times greater in 2020 than it was in 2009.
Years ago, companies did not have access to real-time data in a secure environment, or the means to share common, consistent data among the workforce as they do today. The technology and systems for business intelligence have evolved at a remarkable pace to give companies a serious competitive advantage in the marketplace.
Firms that use strong data integration practice are more likely to be successful, than those firms that do not.
If the median Fortune 1000 company were to increase the usability of its data by 10 percent, company revenue would be expected to increase by $2.01 Billion.
Firms, however, have to be careful as they move forward with BI. There seems to be a commoditization of BI with the evolution of technology-based tools that has diluted the concept of a decision support system. The problem with this approach is there has been too much emphasis on just the data. Data is only a part of the BI equation. In order to make BI work you need a defined process to allow for decisions to be made based on the data that is available.
One of the most effective tools for this is the feedback loop. The feedback loop enables organizations to systemize the business intelligence process, which allows them to dive deeper into the data and use it to make more strategic decisions. BI is not just about data and technology. The feedback loop allows for actions and decisions — moving an organization closer to its goals or further away from potential failures. It’s a cyclical approach to performance management, which allows organizations to continually monitor, review and understand what is going on. This type of systemization of BI enhances an organization’s culture by
- Encouraging and instilling good habits
- Avoiding “dumb data” that is not useful to the organization
- Preventing the use of technology for “technology sake”
But how does an organization get started?
Having a feedback loop in an organization is very important because it allows for more effective decision making. The first step in a feedback loop is evidence — performance of the organization must be measured, captured and stored. Organizations need a disciplined work process to capture relevant data in the business system in a consistent manner. Companies that successfully use Business Intelligence have diligently thought through what they need to measure in order to monitor the health of the business. BI is not a series of reports — it’s analysis that enables you to measure your business using defined metrics.
The second step in the feedback loop is relevance — set the context that makes the data relevant in terms of the organization’s goals. Your team needs to ask tough questions and agree on the top metrics that will be used to measure the overall business. Once you’ve determined these metrics, your team can break them down even further to measure the business at a division, department, business line or project level. Your metrics should be reviewed monthly, quarterly and annually and be incorporated into the heart of the business. At any given time, department heads should be able to see key trends that impact the health and growth of their portion of the business.
The third step is consequence — information is used to determine one or more paths the organization can take. Defining the consequences of your firm’s actions leads it in one direction or another.
The fourth step is action — make a decision based on the information presented, act on that decision, close the loop and start the process to measure again.
BI Best Practices and Results
To use BI effectively, a firm must first examine how it operates. Each A&E firm has its own distinct processes and cultures, that should be taken into consideration when evaluating how to use BI. Additionally, the following best practices contribute to the success of BI.
Communicate openly and often. The firms with the best BI programs are those that champion openness and transparency. This isn’t just about the numbers and the data — it’s communicating how decisions were made based on that information. Advertise how and why decisions were made, communicate to all levels in the organization and give visibility to everyone who needs information to understand and make decisions. It’s also important to foster a common vocabulary around the use of terms and metrics to keep everyone on the same page. Training users is a crucial step in making this work.
Set Goals. Defining success is critical to ensuring that individuals can use the information obtained from BI to make decisions that align to your firm’s goals. These goals should be realistic and focus more on the future, and less on the past. As you are setting your goals, don’t try to tackle too much at once. Start small, maybe with the monthly revenue forecast. Your staff will realize that the more information they add to the system, and the more up to date they keep it — the better information they will receive. Determine the metrics to focus on, and ensure to identify benchmarks that are indicators of the health of the firm or the project, such as utilization, WIP, backlog or effective multiplier. Each firm needs to choose what is right for them depending on their own culture, maturity level, size, location and strategic plans.
Show the Value. Firms must also focus on proving the value of its BI program. Driving adoption, understanding and buy-in are critical in managing expectations. Develop internal PR around your program — share successes and, show how data driven decisions have improved performance. The firms that demonstrate the value of Business Intelligence to their employees are able to drive adoption more effectively. Once project managers can see a project’s status and t profitability more easily, they are more apt to use the intelligence and input the data needed to get the information.
Business Intelligence tools offer KPIs and dashboards, providing critical information in real time that can be used to gain increased visibility into organizational performance. Many individuals in the firm benefit from using BI tools, from the executive level to business development managers, project managers and finance managers. These tools should be available across your organization. The more individuals that have access to data that is specific to their role, the better they can perform. For example, what executive would not benefit from a Revenue Analysis of the firm? Could a promotional cost analysis or pipeline revenue analysis help your business development team? This type of intelligence is used to make key decisions about running the organization, offering alerts and data for better decision-making. Business Intelligence data can be tailored to the user. For example, a CFO may want to know how profits are trending, a project manager may want to know if projects are on budget, and a sales manager may want to know the opportunity wins and projections — all of which can be determined using BI.
When implementing a BI solution, you may not have 100 percent buy-in from the start. There is no doubt BI will bring value to your firm, but some individuals might not be so quick to jump on board, and instead, continue performing their jobs the way they are used to. Once the value of the BI solution becomes more apparent, buy-in across the firm increases. You might actually be surprised to see how many people are eager to adopt the BI solution, once they see the positive impacts others have had using it. Establishing a culture of project management, including standards that identify a common language of terms and metrics, will further propel adoption. It’s ultimately up to the discretion of firm leaders to determine if BI is a non-negotiable component of each role.
Leverage BI Software
Let Business Intelligence software do the heavy lifting to be as effective as possible with your BI execution. While these solutions are relatively simple to implement compared to the solutions of past, these systems are designed to do the majority of the work for you. Purpose-built tools allow you to simplify the entire process. Firms that attempt BI by using multiple spreadsheets that require manual calculations run the risk of negating the very purpose of a BI strategy. Using spreadsheets can create silos of data within the organization that generate data that isn’t reliable or consistent across the firm. A purpose built BI tool allows you to foster consistency across the firm and have one version of the truth — calculations are based on the same formulas and the same data.
Success Requires Commitment
Do not be fooled, success with BI is not easy and it will not happen overnight. The effort from the firm will not be insignificant and there will be no end to the process. BI will continue to evolve and expand, just like your firm does and the feedback loop will allow you to drive new BI strategies over time.
BI not only enables you to spend more time analyzing data, instead of searching for it, it also gives you the ability to share performance data across the firm, use goals to drive the decision-making process, and predict the impact of decisions on firm performance.
In closing, companies that effectively utilize a BI Analytics strategy experience 69 percent higher revenue per employee when a thorough understanding of business and technical requirements for BI is in place.
Isn’t it time for your firm to become more business intelligent?
Currently Manager of Product Marketing for Deltek, Michelle Cipollone has spent the last twenty years working with firms helping understand trends, best practices and tools that help people and organizations streamline their business and processes.