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How to build a BI business case in ERP environments

Building a BI business case can be tough in any organization, but ERP-centric organizations have unique challenges they need to overcome.

Building a business intelligence (BI) business case is tough, especially in organizations with heavy investments in ERP. Challenges range from explaining why standard ERP reporting capabilities aren't enough to simply getting executives to sign off on yet another big-ticket IT purchase. In fact, building a BI business case is tough in any environment, with or without ERP. The return on investment is elusive, the implementation costs can ramp up beyond initial estimates, and business needs are constantly changing. And yet BI systems are getting increasingly intelligent, integrated and automated. There are plenty of successful BI case studies. Is signing off on the BI business case still really that big a leap?

"It's not a complete leap of faith," said R. "Ray" Wang, a partner in enterprise strategy with Altimeter Group. "You have to start by addressing the questions you are trying to answer. If you can figure out why your accounts receivable days are so long, you have answered a question with a huge dollar value. If you could identify the customers with the biggest credit risk or exposure, you could minimize your losses. It's key to use quantifiable answers to provide a directional guidance."

Even with that, it can be a tough road, another expert agrees. Building BI business cases is not easy, conceded Boris Evelson, principal analyst of BI for Forrester Research. Still, there are some excellent rules of thumb that can help drive a business forward. First, Evelson noted, don't even try to build an "all-encompassing, comprehensive, cross-functional, enterprise-wide" ROI business case for BI. Even if you manage to nail down every possible user's BI needs, by the time you can deliver on any of it, old needs will have changed and new, pressing matters will have exploded.

If someone involved in the business shows any kind of willingness to be involved in this project, exploit it.
Martin Murgatroyd
Director of ITBrunner Mond

Instead, start with BI requirements gathering, before getting into the ERP vs. pure-play vendor decision. Evelson recommended organizing BI cases into distinct categories, then prioritizing them according to degree of complexity and difficulty. Promising quick wins can help get the project funded. If your plan starts with delivering on the easiest problems to solve, your BI implementation team will learn from it, but you'll also bring onside the business users who've experienced the success.

First, try looking for a way you can automate a manual process. If you've got full-time workers consolidating and reconciling statements each month, then pouring that information into spreadsheets for distribution to managers and executives, and all of this takes four full days, then you've got hard numbers to work with and clear results. Nail down a list of similar future projects, which can lead to justifying initial BI investments by showing how it can deliver top-line business results.

Of course, every organization is unique. CEOs, CIOs and line-of-business managers all need different things and react to plans in unexpected ways, which means a BI business case is sometimes about long-term education.

"You have to create a business awareness of the value of information," said Jeff Woods, managing vice president of ERP and SCM for Gartner Inc., a Stamford, Conn-based analyst firm.

"Many business users feel they do not have the information they need to make decisions, and at some point the business has to connect that need with the absence or quality of the BI strategy -- that's the trick," Woods said. "If people feel they don't have the information because the BI systems don't work or, say, they are waiting on SAP to provide this, they are never going to connect those two things together. It's up to the IT department to make that connection for the business and create the urgency behind the need for a BI strategy."

Once your business owners understand the need, finding the right hot-button areas can lead to a green light for investments in BI.

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"You want to be focusing on your strategic business processes, and that's a discussion every IT department needs to have with the business. They need to be asking, 'What are our strategic business processes?' not, 'What are our important processes? What creates competitive differentiation for us in the marketplace?'" Woods said.

"That's where you want to focus innovation -- that's where you want to focus analytics. There are other answers, but that's one possible way to do this," he added.

Another way to turn on the light bulbs for ERP-focused business users is to look at embedded analytics, which is when an ERP organization has integrated BI features into transactional-based ERP processes. Organizations running ERP have been doing this for years without realizing it, through custom application and process enhancements. ERP vendors, though, are increasingly looking to embed analytics into processes that can empower users to make decisions based on the analysis of data. Awareness of embedded analytics is fairly low, Woods said, and these options are still fairly rare and new. Of course, it should be noted that embedded analytics can be more difficult if a customer chooses a third-party BI system, giving ERP vendor BI a bit of an edge in meeting that type of requirement.

Building a BI case not always about ROI

"In a lot of cases, people will look at investments seriously when they save money, and a lot of investment justification in BI is in insight and value -- and that's hard to pin a dollar amount on," noted John Hagerty, vice president and research fellow of BI and EPM for AMR Research.

"A lot of BI programs are not justified on ROI; they are based on, 'If I don't do this, will we miss big things?'" he said. "In a lot of cases, if a businessperson feels exposed, that's a justification regardless of whether it's going to save money. In the past, BI has largely been in the realm of the IT group. Now businesspeople are more savvy and adept at figuring out how to use it, and before when the IT folks were scratching their heads trying to get a justification, the business can now put together a business justification rather than a financial one, so a lot of these projects are moving forward because the business execs are driving it."

Lesson? Using all of the tactics above, you can often find a business executive to kick-start BI projects.

Martin Murgatroyd, director of IT for Brunner Mond, a manufacturing-focused organization in the U.K., boils down the lesson to its elemental essence. "If someone involved in the business shows any kind of willingness to be involved in this project," he said, "exploit it."

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