Implementing Business Intelligence from scratch – first steps

The implementation of a Business Intelligence system within a company is both unique for each company, and at the same time can be unified by using existing experience and knowledge. This article provides basic principles for building BI systems that you can follow in order to save time and get a high-quality BI system for your company. Those who are interested in the basics of BI systems are welcome 🙂

As a short introduction, it makes sense to note two features of BI systems. BI systems are based on calculated key performance indicators (KPIs), but nevertheless, it is the system or set of indicators that is valuable for company management, and not any single indicator. Another feature is that the BI system accumulates data from various systems and at various frequencies, for example, financial indicators from accounting systems, customer data from CRM systems or from customer feedback systems, and all these integration tasks face the company that implements B.I.

Let's consider the selection of key indicators of the BI system “from scratch”, which will determine the essence of the company's future BI system. Of course, you can also use a ready-made set of indicators, which are often available for different subject areas in various BI platforms; this article draws attention to the choice of a KPI system “from scratch”.

A popular approach to KPI management is the Balanced Scorecards (BCS), proposed by R. Kaplan and D. Norton “Balanced Scorecard” in 1996. The book recommends a management approach based on key performance indicators (KPIs) that track strategic progress toward key goals in four areas: financial performance, the company's customer experience, the company's internal processes, and the learning/growth of the company's employees.

For reference, you can give examples of indicators from the four groups of BSC indicators and methods for calculating them.

1. Financial indicators

• Income growth: percentage increase in revenue from products and services compared to the previous period:

  [(Текущий доход – Предыдущий доход) / Предыдущий доход] x 100%

• Profit Margin: percentage of profit received from products or services:

  (Net Profit / Total Revenue) x 100%

• Return on Investment (ROI):ROI:

  (Net Profit / Total Investment) x 100%

2. Customer Engagement Metrics

• Customer Retention Rate: percentage of customers retained over a given period:

  [(Количество клиентов на конец периода – Количество новых клиентов, привлеченных за период) / Количество клиентов на начало периода] x 100%

• Customer Satisfaction Rate: Using surveys and customer feedback to calculate an overall satisfaction score.

3. Indicators of the company's internal processes

• Project success rate: percentage of successful projects completed on time and within budget:

  (Number of successful projects / Total number of projects) x 100%

• Data Quality Index: Accuracy and completeness of BI data. Use data validation tools and workflows to calculate the data quality index.

4. Indicators of training and growth of company employees

• Employee training hours: Number of training hours provided to employees to improve their skills and knowledge.

• Employee turnover: percentage of employees leaving the company:

  (Number of employees who left during the period / Average number of employees) x 100%

It is important to regularly review and update these metrics to ensure they are aligned with the company's goals and objectives. Continuous monitoring and analysis of these metrics can help a company improve its performance and succeed in a competitive market.

Thus, we got an idea of ​​the classification of indicators within the BSC and examples of their calculation. In addition, the BSC-based approach involves not only calculating indicators, but also achieving the company’s strategic goals based on BSC and KPI. The following steps can be identified within the BCS.

1. Determining the company's strategic goals. Clearly define the key goals and objectives that your company wants to achieve. These goals should be specific, measurable, achievable, relevant, and time-bound (SMART).

2. Development of key performance indicators. Select appropriate KPIs to help measure progress towards each strategic goal. These KPIs should be metrics that can be measured and tracked over time.

3. Selecting goals and benchmarks. Set specific goals for each KPI that indicate the desired level of performance. These goals may be based on historical performance, industry standards, or other metrics.

4. Defining initiatives and action plans. Identify specific actions and initiatives that need to be implemented to achieve strategic goals and achieve the targets set for each KPI.

5. Creation of a balanced scorecard BSC. Create a visual representation of key strategic goals, key performance indicators, objectives and initiatives in the balanced scorecard. The balanced scorecard typically includes four perspectives: financial, customer, internal processes, and learning and growth.

6. Information exchange and BSC cascading. Share the BSC with all relevant stakeholders within the company to ensure alignment and understanding of strategic goals and key performance indicators. Distribute the balanced scorecard throughout the company so that everyone understands their role in achieving strategic goals.

7. Performance monitoring and analysis. Regularly monitor performance against targets and key performance indicators in the balanced scorecard. Use the data collected to identify areas for improvement and make adjustments to initiatives and action plans as necessary.

8. Assessment and adaptation. Periodically review and evaluate the effectiveness of the BSC in improving productivity and achieving strategic goals. Make any necessary changes to the Balanced Scorecard to ensure it remains relevant and aligned with company goals.

In conclusion, I would like to note that from a technical point of view, there are many platforms, products and tools for implementing BI systems (for example, one of the simplest and most affordable solutions Microsoft Power BI), including BI systems of our own design, created in-house by the company’s IT department; There are also domestic solutions, for example, Visiology. But regardless of the implementation of the BI system and the method of choosing a “first approximation” of the company’s KPIs (a ready-made set of KPIs or deeper research results), the success of the BI system depends on the choice of key indicators, the ability to manage the company’s strategy based on these indicators and on adapting the BI system to external and internal changes in relation to the company.