VideoMore to the point is CFO Lawrence Jankovic, who spearheaded the BI strategy at Bedford, Freeman & Worth, a New York-based higher education publishing house. Jankovic says his data shows the publisher has realized a 1,163 percent ROI from its BI project, which was implemented in 2001. "I was the advocate here and had to get buy-in from our project managers, which wasn't easy," says Jankovic. "I had to continuously sell the idea that BI is a decision-making tool that would provide immediate utility." He pauses. "Given the ROI, I think I proved my point."
Bedford, Freeman & Worth was faced with a difficult financial picture and, says Jankovic, needed to improve the quality of its decision-making. Each of the company's project managers oversee a group of textbooks and related supplementary material, such as videos and multimedia, that support teaching the textbook content in class.
It's a tall task. "They've got to figure out how much it will cost to develop the project and promote it, including author royalties and other editorial expenses, calculate how much cash will be produced over the course of time, including sales of the ancillary material," notes Jankovic. "Then they have to give senior management a forecast of expected profitability."
The problem was pulling all this data together to get a snapshot of the entire enterprise. "The project managers were spending an enormous amount of time entering data to support the budgeting and planning process," says Jankovic, "and yet we were still unable to get a complete picture of all the elements that affected a project's profitability."
The company turned to business intelligence, deploying a system designed by Adaytum. "They needed a way to roll up data in such a way as to determine whether a particular project made sense from a profitability standpoint," says Mark Stimson, vice president of international marketing at Adaytum. "Then, they needed to analyze this information across the spectrum of projects."
CFO Jankovic says BI software helps with the analyzing. Project managers feed data and enter queries into the Adaytum packaged application to extract answers asking questions like, "What if revenues are below expectations for this project — how will that affect projected costs for the project and across the enterprise?"
"Finance does less from the top now, as far as asking for information," says Jankovic. "We're more like financial advisers now."
Living in a Spreadsheet World
If sellers of BI software and users of BI software recommend a phased-in deployment strategy, that raises the obvious question: where to begin the phasing-in?
The answer is also obvious. "Finance is the natural entry point," asserts Stimson, "since most of the planning and performance management processes in an organization essentially filter up and feed to finance."
In fact, IDC estimates that 70 percent of the performance metrics a business tracks are financial in nature — and therefore reside in finance. Of course, if finance is the starting block for a BI enterprise strategy, then a company's CFO is the likely choice to be the BI advocate.
"CFOs have been doing data analyses for as long as there have been enterprises," points out Howard Dresner, vice president and research director at Gartner. "They live in a spreadsheet world, understand BI better than anyone, are usually tech savvy as well as business savvy, and have proven via all those ERP installations in the '90s that they're great project facilitators."
By implementing business intelligence first in finance, a CFO can extract value right away. As in Jankovic's case, that gives the finance chief ammunition to champion BI across the enterprise. "Success breeds success," Dresner says. "It's either a modular approach or the Big Bang, where you hope to incorporate all the data across the enterprise through a single effort. That takes enormous time and money and involves tremendous change management and people issues."
Others agree. "In today's economic climate," says Henry Morris, group vice president for applications at IDC, "companies want to show ROI more rapidly. By focusing BI on one area and proving the return fits the organization's physics, you have an argument to move it to other parts of the enterprise."
Siloed
The key to a phased-in approach, experts say, is remembering that it is just the beginning of the journey. "A particular department can extract value from BI," says Paul Fitzpatrick, senior manager of product marketing at Cognos. "But the real value proposition is in leveraging it across the enterprise."
Rolling out a BI system across several departments can foster better communication between employees. "Often, departments speak different languages and define things differently," says Fitzpatrick. "For example, HR may define 'customer' in a different way than marketing and finance, and consequently might be under or over-allocating personnel resources to a particular customer segment. BI helps organizations act in a coordinated way."
That's what happened at Consolidated Container Co. The Atlanta-based plastic container manufacturer, with 2001 revenues of $786 million, came into being as an amalgamation of several blow-molding companies. "We had tremendous fragmentation," notes Joe Baird, vice president of IT. "There just wasn't a single source of good information to support decisions."
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