Why Analytics and Business Intelligence
Analytics and Business Intelligence provide a framework for process improvement that drives operating efficiencies and enhances business value. Most business owners and managers want to increase business value to benefit shareholders, stakeholders, and investors. Individual investors and investment professionals direct capital towards companies that can demonstrate sustainable value. Changes to performance in revenues, margins, and risks can become a catalyst to invest or divest. Business value is often measured by three performance criteria – revenues, operating margins, and risks. Therefore, factors that contribute to revenue growth, margin expansion, and risk mitigation become the overarching goals to improve business value. We add that sustainable value includes resource conservation and efficiency.
Just how does analytics and business intelligence address revenues, costs, and risks in improving business value? To understand the integration of analytics and business intelligence in improving business value, let’s look at two initiatives in formulating business strategy.
In his book Measure What Matters, John Doer describes how establishing goals and objectives along with the corresponding performance criteria provide a better method to assure that key metrics are aligned to goals and business objectives. This process of mapping performance metrics to business objectives defined as Objectives and Key Results (OKRs) determine what is relevant to measure and track. Adding to OKRs is the balanced scorecard approach which pulls reporting data from each business unit and department and explained by Robert Kaplan and David Norton in their Harvard Business Review article “Using the Balanced Scorecard as a Strategic Management System” to provide an assessment of conditions and performance.