Course Name: Business Intelligence
Year: 2009
Identifying and Prioritizing Business
Intelligence
2nd Meeting
Source of this Material
(1).
Williams, Steve & Williams, Nancy (2007). The Profit
Impact of Business Intelligence. Chapter 2
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BI Opportunity Analysis: Overview
Figure 2-1
The principal methods of BI
opportunity analysis are to
identify and prioritize
opportunities to use business
information, business analyses,
and structured decisions.
Figure 2-1 shows an overview
of the BI opportunity analysis
approach. As indicated by the
arrows cascading down the left
side of figure 2-1.
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Case Study: McCormick Opportunity Analysis
McCormick is a $2 billion manufacturer of commonly known food an beverage
ingredients. Bases solely on publicly available information, this section shows
step by step how McCormick might analyze its BI opportunities and applied that
analysis to improve its profits and operating effectiveness.
McCormick sells ingredients to food and beverage processors, which in turn
sell them to food and beverage retailers. The food industry is a mature,
fragmented, international industry that is undergoing substantial structural
changes typical of industry evolution. Changes in the food and beverage
retailing industry affect the food and beverage processing industry
(McCormick’s customers), and the resulting changes to the food and beverage
processing industry affect McCormick’s business. From a BI strategy
perspective, we are most interested in changes that affect McCormick’s
customers and how they make money. The nature and extent of those changes
may create opportunities for McCormick to use BI to its strategic and
competitive advantage.
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Evolution of McCormick’s Relevant Industries
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•
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Three key industries were relevant to McCormick’s BI planning: the food and
beverage retail industry, the food and beverage processing industry, and the food
and beverage ingredients industry.
The food and beverage retail industry has historically been fragmented and regional.
By 1999, however, it had become increasingly concentrated and global.. The industry
is a mature, consolidating, slow-growth industry with intense competition based on
price.
The food and beverage processing industry is affected by trends at the retail level.
The McCormick company’s primary interest is in indentifying the major trends and
their likely impact on the bases of competition in its ingredients businesses. This will
suggest potential areas where McCormick can leverage BI.
The Food and Beverage ingredients industry is similar in structure to that of the
related downstream industries: mature, slow growth, fragmented, and increasingly
global.
When planning for BI, pay careful attention to the strategic business drivers in your
industry and to how the organization competes in the marketplace. These insights will
provide vital guidance in helping you identify high-value BI opportunities.
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Summary of Food Industry Drivers and Trends
Growth and profitability could
be enhanced by effective use
of BI that supports those
objectives. BI capabilities that
promote top-caliber customer
service and make it easy to do
business with McCormick are
also important.
Figure 2-2
A summary of food industry
drivers and trends is shown in
Figure 2-2.
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Application of the Business Intelligence
Opportunity Analysis Framework at McCormick
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Business Drivers
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Consolidation
Wal-Mart Factor
Increased Pricing Pressures
Slow Growth
Global Expansion
IT as an Competitive Weapon
McCormick Business Strategies,
Goals, and Objective

Retain/increase revenue and
market share trough developing a
broad lien of differentiated product
and services.
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Reduce costs and improve service
through strengthening supply chain
collaboration and improving sales
forecasting.
Improve profits by utilizing customer
segmentation approaches to indentify
the most profitable customers and
retain these customers by providing
high-quality, differentiated service and
support.
Preserve margins by refining pricing
strategy to determine the potential
short-term and long-term cost/benefit
of adjusting prices for different
customers and segment; make pricing
decisions based on cost/benefit
analysis.
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Application of the Business Intelligence Opportunity
Analysis Framework at McCormick (cont…)
•
McCormick Business Design
 Value Disciplines
o Customer Knowledge
o Consumer-Focused Product
Development
o Leveraged IT
o Continuous Process Improvement
o Niche Focus
 Core Business processes
o
o
o
o
o
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Product Development
Customer Service
Supply Chain Management (SCM)
Manufacturing
Financial Planning and Control
•
McCormick Business-Driven BI
Value Creation Opport.
Based on McCormick’s industry
environment, business drivers,
strategies, goals, and business design,
the following BI Opportunities can be
indentified. Each would help
McCormick improve profit and
performance.
 Product Development BI
 Customer Service BI
 SCM BI
 Manufacturing BI
 Financial Planning & Control BI
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Application of the Business Intelligence Opportunity
Analysis Framework at McCormick (cont…)
Figure 2-3
Figure 2-3 shows the continuation of
the BI opportunity analysis from the
point of having identified opportunities
of business-driven BI value creation to
the point of having used a portfolio of
BI Opportunities to create a BI
opportunity map.
The BI opportunity map is a
conceptual framework aimed at
prioritizing BI opportunities based on
what amounts to a risk-reward
tradeoff.
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Application of the Business Intelligence Opportunity
Analysis Framework at McCormick (cont…)
Figure 2-4
Figure 2-5
Figure 2-4 The Initial BI opportunity map for McCormick. Business and IT leaders and managers can use
the initial BI opportunity map as the starting point for discussions addressing the underlying assumptions of
the initial project placements, and then they can potentially adjust those placements, as illustrated by figure
2-5.
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BI Opportunity Analysis: Practical Considerations
The BI opportunity analysis framework encompasses a mix of analyses and
processes: some are relatively straightforward, and others are more art that
science. It is important to identify some key practical considerations that affect
the cost and quality of the BI opportunity analysis.
• Art Versus Science in BI Opportunity Analysis
 The process of indentifying how BI can be used within core processes to impact
profit is where art comes into play.
 The process of indentifying business-driven BI value creation opportunities
requires knowledge of a company’s core business processes and knowledge of
how BI has been used in different contexts to improve profits.
 Numerous generic frameworks can stimulate thinking about how BI can improve
the results at your company. There are enterprise management frameworks,
functional management frameworks, business process management
frameworks, value chain frameworks, and so forth. The art, lies in picking
suitable frameworks to fit the scope of the BI Opportunity analysis and in
bringing the right business and IT leaders and managers into conversation.
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BI Opportunity Analysis: Practical Considerations (cont..)
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BI Opportunity Analysis: Practical Considerations (cont..)
•
Quality of BI Opportunity Analysis
 A key element of business-centric BI methods is the BI opportunity analysis and
the creation of the BI opportunity map.
 To score potential BI opportunities effectively on the business impact scale, the
BI opportunity analysis team must rigorously examine the business value
capture mechanism for each identified opportunity.
 Effectively engaging business executives and managers so that the quality of
the BI opportunity analysis and the BI opportunity map is good enough to justify
multi-million dollar investment decisions.
•
Risk-Reward Tradeoffs and The BI Opportunity Map
 The BI opportunity map is a tool for promoting informed discussion of the risks
and rewards associated within given BI opportunities.
 The business risks and the technical risks associated with the proposed BI
investment on the BI opportunity map must be evaluated.
 BI readiness assessment as a tool for identifying key BI risks of a given BI
investment and/or a portfolio of BI investment.
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BI Opportunity Analysis: Practical Considerations (cont..)
 The Critical prerequisites for successfully leveraging BI investment are as
follows:
o
o
o
o
o
o
o
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Strategic Alignment
Business and IT Partnership
Continuous Process Improvement Culture
Culture that Supports The Use of Information and Analytical Tools
Decisions Process Engineering Culture
BI and DW Technical Readiness
BI Portfolio Management
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“… not many executives are information-literate. They know how to get data. But most still have to
learn how to use data. Few executives yet know how to ask: What information do I need to do my job?
When do I need it? In what form? And from whom should I be getting it? Fewer still ask: What new
tasks can I tackle now that I get all these data? Which old tasks should I abandon? Which tasks
should I do differently? Practically no one asks ‘What information do I owe? To whom? When? In What
Form?’”
-Peter F. Drucker, from “Be Data-Literate: Know What to Know”
End of Slide
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