Developing an Information Strategy

Strategize, Align, Govern, Execute, and Optimize

A White Paper
by Kevin Quinn

Kevin Quinn

Vice President, Product Marketing Bringing more than 25 years of software marketing and implementation experience to his role as vice president of Product Marketing for Information Builders, Kevin Quinn oversees marketing for all product lines. Mr. Quinn has been credited with helping to define business intelligence (BI) end-user categories through his creation of guidelines for using business intelligence tools. He has helped companies worldwide develop information deployment strategies that accelerate decisions and improve corporate performance. His efforts in this position have helped propel Information Builders WebFOCUS and iWay Software solutions to category leadership in their respective areas. Mr. Quinn is also the founder of Statswizard.Com, an interactive sports statistics website that leverages BI functionality. Mr. Quinn holds a Bachelor of Science degree in Computer Science from Queens College in Flushing, New York.

Table of Contents
1 2 3
4 7 8 10

Executive Summary Which Came First, Your Strategy or Your Data? Data Governance and Performance Management
Strategize and Align: Define Organizational and Functional Strategies Govern: Prioritize Data Governance Initiatives Execute: Focus on Operational Applications and Initiatives Optimize: Leverage Business Analytics

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Why Information Builders Conclusion

Executive Summary
An information strategy defines how a company will use the data it collects to achieve a competitive advantage. It is a comprehensive, constantly evolving plan that encompasses five distinct actions: strategize, align, govern, execute, and optimize. When working in harmony, these actions, improve processes, increase productivity, and enhance decision-making. Information strategy permeates every level of the business, from the CEOs office down to frontline workers and out to customers and partners. In this white paper we explore how these five vital actions, as well as the technologies that enable and support them, can help organizations develop an effective and broad-reaching information strategy that drives positive change.

Information Builders

Which Came First, Your Strategy or Your Data?

Which came first, the chicken or the egg? This age-old question has never been answered definitively. Some might say it doesnt really matter. What does matter is that they are forever bound together. There can be no more chickens without eggs, and no more eggs without chickens. Consider a similar question. Which came first, your strategy or your data? That is, did you develop a strategy for your organization before you started collecting data? Or did you simply begin your business, start collecting data, and then use it to develop a strategy as you moved forward? Like the chicken and the egg, it doesnt really matter which preceded the other. The only thing that counts is that both are forever tied together. Your data will help you determine the best strategy for your organization moving forward, and your strategy will help you prioritize which data-related projects you address first.

Developing an Information Strategy

Data Governance and Performance Management

Two critical practices must align to help organizations in their quest for success, although not everyone sees them as linked in the same way as the chicken and egg. Performance management is the practice of articulating, communicating, and measuring the achievement of an organizations strategic objectives. Data governance is the practice of overseeing the people, systems, and processes that produce the data that is the lifeblood of your organization. In any business, strategy defines which data elements are critical to execution, and that data helps you make decisions that facilitate achievement of your strategic goals.

An Organization and Its Data: Strategy directs the organization and data is critical to its operation. Performance management manages the strategy and data governance manages the data.

This paper is intended to help organizations develop an information strategy. An information strategy is a perpetually evolving plan that leverages key technologies to create channels of constant improvement in how data is generated, handled, stored, transformed, and used. These channels synchronize with a corporate strategy and change as the organization matures.

Information Builders

There is a difference between technologies and practices. For example, generalized integration technologies like data adapters, extract, transform, and load (ETL) utilities, and business process automation (BPA) suites can be used in thousands of different types of projects. A practice, like data governance, uses these technologies (and others) for a very specific purpose such as promoting data integrity. The same is true about performance management. Although it uses business intelligence (BI) technologies like dashboards, reporting, and information delivery, it has a very specific purpose the use of metrics to communicate, measure, and monitor the achievement of strategic objectives. These two practices, performance management and data governance, are the bookends for an information strategy. Very often companies try to determine which integration projects or which BI projects they should initiate first, often prioritizing projects by determining which has the highest return on investment (ROI). Whether you can identify ROI for your performance management or data governance initiatives up front is irrelevant, given the fact that both of these practices will determine your ability to execute, prioritize, and measure ROI for every other project in the future. While you consider which IT project has the highest ROI, you should first lay the groundwork for assessing ROI more accurately and definitively in the future.

Strategize and Align: Define Organizational and Functional Strategies

Who do we want to be? This is the question an organizations executive management team continually ponders. Do we want to be the biggest in our industry or the most profitable? Do we want to be known for providing the best customer service or the best value? These questions help a company define its corporate mission. One management expert has suggested that by reading the annual report of a company, and specifically its letter to shareholders, one can glean the primary intent of a companys overall strategy. Whether you know it or not, a corporate strategy directly governs the IT projects that an organization will undertake. A corporate or organizational strategy defines areas where the company wants to excel and which areas of the business need attention to deliver momentum for reaching strategic objectives. Every business unit within an organization (from finance to sales and marketing to customer support) can then develop its own plan in alignment with the overarching organizational strategy. This is known as a functional strategy. For example, assume a companys strategy is to improve profitability. Its plan for achieving this is to increase repeat sales from its customer base (selling into the customer base is less costly than marketing and selling to new customers). At a functional level within the organization, each business unit would design a strategy to align its own activities and objectives with the overall corporate goal of improved profitability. Customer support would focus on improving customer satisfaction, because a customer is 80 percent more likely to purchase from their existing vendor if they are happy. Marketing campaigns would target existing customers for upgrades or complimentary products and services. Sales would increase the number of meetings with existing customers to expand up-sell and cross-sell opportunities.

Developing an Information Strategy

Organizational and Functional Strategies Determine Which Data Is Most Important When you look deep within a strategy, first at the corporate level and then at the individual functional levels, you begin to understand which data is most important for achieving strategic goals. In the preceding example, existing customers were most important to reaching the objective of increased profitability; so customer data is of the utmost importance from a data governance perspective. This information needs to be complete, consistent, secure, and available. Without workflows for managing data, business units will be hard-pressed to meet their goals. Incorrect customer information for billing, shipping, and support will affect customer satisfaction. Duplicate records in contact data could increase the cost of marketing to these customers (i.e., they may be sent the same catalog twice). Without the ability to instantly analyze customer purchase histories, understanding buying habits and potential up-sell opportunities can be a challenge for sales reps.

Strategy and Data Bookend a Corporate Mission: Performance management and data governance are the practices that can enable information strategy execution.

How to Communicate Strategy The concepts presented so far are simple. Now, lets dig down and see how a company uses technology to achieve results. Management expert Peter Drucker once said, What gets measured gets managed. The intent of performance management is to help a company measure the status of the strategic objectives intended to drive it towards its goals. If we look at the previous example of the company aiming to drive profitability by increasing repeat sales into its customer base, we should ask such questions as: How would it measure its achievements? Which measures would help it better understand its performance in this area?

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Profit, of course, is the most important measure. However, it is the end result of the strategy. The company has determined that the way to reach this goal is through its customer base. What measures provide insight into the progress towards increased profitability? The number of repeat sales (more specifically, the increase in repeat sales from one period to the next, by year, quarter, month, or week) could be one of those measures. Think deeper. How will a manager determine if a sales rep has really aligned with this effort? He could measure the number of meetings or phone calls the rep makes into the customer base, compared to previous time periods. How can it be determined if marketing is on board? Perhaps by measuring the number of campaigns in progress targeting the customer base, or by tracking the number of leads or opportunities generated within the customer base. How can the company determine if customer support is aligning with the strategy? This is particularly important because, as we mentioned earlier, happy customers are more likely to purchase from the same vendor. What is the customer satisfaction level in this period, compared to last? What is the rate of first-call resolution? How long were customers on hold before speaking to a representative? All of these measures lead to customer satisfaction. What weve just learned is a lesson about lagging and leading indicators, as described in Norton and Kaplans book The Balanced Scorecard1, which describes a popular method of performance management. The following diagram is a simple strategy map that shows objectives and the related measures that help a company monitor and manage the achievement of strategic goals. Sharing this information with each of the stakeholders in the form of scorecards and dashboards lies at the heart of performance management.

This strategy map highlights the functional goals (at the lower levels) that align with overall objectives. It also shows the measures that are related to monitoring the status of those goals.

Kaplan, Robert S. and Norton, David P. The Balanced Scorecard: Translating Strategy Into Action, Harvard Business Press, First Edition, September 1996.

Developing an Information Strategy

The strategy demonstrated in the previous diagram might also be made available as a scorecard, which lists each measure, its previous period counterpart, and its positive or negative movement towards a target goal. This combination is called a metric. A scorecard shows all metrics, or a combination of metrics, that are specific to a business unit, or even an individual. Here is an example of a scorecard that shows all metrics for the above strategy:

This scorecard lists the metrics (current, previous, target, change, direction) associated with the strategy in a single concise report.

Sharing and communicating the organizations strategy in e-mails or on the corporate website is one thing, but translating strategy into measurable objectives that are made available as on-demand dashboards and regularly distributed scorecards makes it easier for everyone to see how their particular business unit is contributing. When scorecards can be broken down to an individual level, it also shows the part each person plays in the strategy. This aids in both motivation and alignment for the individual and the business unit.

Govern: Prioritize Data Governance Initiatives

Lets relate the strategy, objectives, and scorecards to their initial data set. It should be obvious from the strategy discussed earlier that customer data is key to executing and achieving related goals. Ensuring data is accurate and complete gives the company the ability to service the customer appropriately. It also ensures that when customer reports are being run (for example, performance reports), the metrics are accurate. If there are duplicate records for some customers, the measure for Customer Visits will be inaccurate, as will the measure for Revenue Per Customer. If there is duplicate, missing, or incorrect data, the company may not be able to efficiently market to the customer. For example, one customer may receive three of the same pieces due to record duplication, while another doesnt receive any because of an incorrect zip code.

Information Builders

Data quality and master data management (MDM) are technologies that can improve data management. They can be used to identify duplicate records, automatically correct mismatched addresses and zip codes, help centralize and manage critical data about customers so that all touchpoints (i.e., sales, marketing, and customer support) are working with the same information, and can even enrich customer data with external information about its location on a map, the customers current economic standpoint, its industry, and other information. The enriched information can also help design campaigns that specifically target the highest value customers. At this point the information strategy is formulated by breaking down the corporate plan into measurable objectives. Defining functional strategies helps align the operations and activities of individual business units with the overall goals of the company. This is the first step in understanding how an information strategy highlights the data that is critical to achieving strategic objectives. The next step is to create a data governance workflow (see our white paper titled Seven Steps to Data Governance for further detail on this topic), which includes business users from each functional area as well as members of the IT team. These people are responsible for defining policies and critical data elements, are involved in processes that identify and correct suspicious customer data, and manage the data used to measure and execute on the strategy.

Three of the five actions that are critical to formulating and executing an information strategy: strategize, align, and govern.

Execute: Focus on Operational Applications and Initiatives

Lets assume that a company has made great strides in the first three areas of its information strategy implementation. Corporate strategy gave birth to functional strategies, and those functional strategies helped the organization focus on critical elements for its data governance 8

Developing an Information Strategy

strategy. The next step is to figure out which operational initiatives can have the biggest impact on reaching the specific goals that are tied to that strategy. For example, at one large telecommunications company, profitability goals were very much tied to customer retention. Customer retention was tied to customer satisfaction, and customer satisfaction was tied to the quality of support customers received through the call center. Performance reporting told this company that a key contributor to customer attrition was their frustration with sluggish resolutions to support issues (as is the case for many organizations). Upon investigation, the company found that many customers were spending too much time on hold, being transferred from one representative to another, and often required a call back to resolve relatively minor issues. The reason for this was that support information was stored in three separate databases, creating silos of customer data. This problem is not unique to this organization; it is common among many businesses. Very often, these transfers, or the need for multiple interactions with different representatives, are due to the fact that data exists in separate systems. Different representatives have expertise in each system, requiring several of them to handle a single issue. The organization decided that its first operational initiative was combining data from these disparate systems into a single, real-time customer support data warehouse. Transactionby-transaction updates from all relevant systems are sent to the warehouse so that all customer-related information is fully centralized, allowing every representative to support and resolve any customer issue. The days of putting a customer on hold or transferring them to another staff member were over. Customer satisfaction improved, customer retention increased, repeat sales rose sharply, and higher profitability was eventually achieved. IT could then focus its efforts on a very specific project that was critical to achieving company goals. This was brought about by liberal communication of the corporate strategy and its translation into functional requirements. Everyone can suggest how to reduce bottlenecks and drive competitive advantage through the use of information technology, and every organization will take different approaches to overcoming these challenges. Success is guaranteed by a companys ability to focus on operational projects that most closely align with corporate and functional strategies. Effective execution of these operational projects is how companies achieve ROI. Communication of a strategy through performance management initiatives helps provide direction. Timely access to rich and relevant information from data governance practices provides the means for communicating that strategy and delivering on its operational initiatives. The previous example showed how information technology was used to overcome a process bottleneck and correct inefficiency. Other approaches are more proactive. For example, Scottish and Southern Energy (SSE), a UK-based provider of energy to 420,000 customers, proactively sought to tighten its bond with clients by transforming the standard vendor/customer relationship into a more partnership-oriented one. By strengthening these relationships, it could improve communication, increase loyalty, and reduce attrition. SSE used information Builders scalable 9

Information Builders

BI technology to create a portal that allows customers to better manage energy consumption. Customers understand usage patterns and identify ways to reduce consumption to save money. More importantly, the portal is helping SSE reach its growth and profitability goals.

The Execution action frequently involves IT initiatives that aim to overcome bottlenecks or introduce new services (particularly ones that are not available from competitors) at the operational level, and are often executed by frontline workers in conjunction with technology initiatives.

Optimize: Leverage Business Analytics

The final piece of the information strategy puzzle is optimization. As companies mature, reduce or eliminate bottlenecks, and improve their competitive position through innovative uses of information technology, optimizing day-to-day decision-making though business analytics is the next logical step towards success. Business analytics allow a company to leverage historical data and apply statistical formulas to make more accurate predictions about the future. When a company has clean, accurate historical data, a mathematical formula can more precisely predict the future than instinct alone which is what many organizations rely on today. While business intelligence technology, such as reporting and query and analysis tools, can provide answers to the questions such as, What happened? and How, when, and where did it happen?, business analytics leverages similar data to forecast what will happen next and the best case scenario. While it is often assumed that statisticians and math majors can only do statistical analysis, todays software allows organizations to create formulas that can be embedded in analytical applications to be used by businesspeople and frontline operational workers. Decision-making is improved without requiring users to be experts in statistics. 10
Developing an Information Strategy

Many companies are even combining external data, like demographics, weather, and geo-coding (location intelligence), with their own internal data to improve the accuracy of their business analytics and extend it into new areas. Take our strategy example from earlier. For marketing to align its functional strategy with corporate strategy (increased profitability), it might run more campaigns into the customer base to drive more profitable sales. Using business analytics software, marketing could first identify which of the companys products are most often sold together. This is known as market basket analysis or identifying product affinities. Consider the sales clerk who asks a customer buying a shirt if he is also interested in purchasing a matching tie. Product relationships also exist on these more subtle levels, and the right software can reveal those relationships. Marketing could then pull a list of customers who have already purchased one of the two products that are most often sold together and send an e-mail promoting the other. Another example would be using customer support as the channel to offer new products to existing customers. As customer information appears on the screen, the support representative could see what the customer has already purchased and recommend companion or complementary products. This could result in high-probability, low-cost sales. With rich customer demographics (age, gender, location, income level, children, automobiles, etc.), companies can also apply statistical models to better understand their purchase trends. Resulting models can then be used to determine the products that are most often purchased by people with the same profile, boosting sales and profitability. Each of these examples demonstrates how optimization can be achieved by creating analytic applications that provide operational workers with timely, relevant analysis. Lets look at a story outside of the commercial space to see how optimization with business analytics software can have a positive effect on any organizational strategy. Take, for example, the City of Richmond Police Department. Ranked the fifth most dangerous city in the U.S. in 2004, Richmond, Virginia reduced its violent crime rate by double digits two years in a row after implementing our WebFOCUS BI platform to predict crime in its jurisdiction. The system, which won Gartners 2007 BI Excellence Award, provides predictive crime analysis, data mining, reporting, and geographic information system (GIS) capabilities to the entire department. With WebFOCUS, data from the records management system is integrated and analyzed on a continuous basis. The citys crime analysts now have the ability to look at the interaction between present and past data, such as arrest records, motive, and type of crime at a particular location, based on the day, time, weather, and coincidence of public events. This insight is used to optimize police resources for deterring crime. Before a shift, officers receive the most up-to-date information available, along with a screen of predictions of crime hot spots. The system is linked to Richmond.com, which feeds it contextual information about local activities, such as sporting events and a city-maintained weather data collection system. GIS capabilities allow officers to view specific types of crime for a given area, and perform crime-mapping and analysis functions. 11

Information Builders

Officers can view maps of crime-density hot spots based on location or crime type, such as car thefts, to see specific incidents within a zip code, neighborhood, city district, or other user-defined area. Data for weather, events, time of day, case history, associated suspects, and aerial photos can also be integrated. The result is a sophisticated data model of criminal activity with a user-defined set of elements that predict future criminal behavior. Moving from a reactive crisis-management structure to a proactive problem-deference model has not only increased protection of the citys 220,000 citizens, but also has resulted in numerous other benefits, including:

More efficient and targeted resource deployment A 49 percent reduction in random gunfire incidents, a 246 percent increase in confiscated weapons, and more than $15,000 saved in overtime costs on the first New Years Eve after implementation Significantly reduced rates of murder (32 percent), rape (20 percent), robbery (3 percent), aggravated assault (18 percent), burglary (18 percent), and auto theft (13 percent) during the first year A 42 percent drop in homicides and a 45 percent drop in commercial robberies in 2008

Most importantly, the city dropped from being the fifth most dangerous city in 2004 to outside the top 30 within two years. By 2010 it was outside the top 100.

The Framework for an Information Strategy: For most companies, initiatives that support each action happen simultaneously, but how an organization executes on its strategy will be unique.

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Developing an Information Strategy

Why Information Builders

Creating and executing an information strategy is an arduous task for any organization, requiring coordination and commitment from many people across the business. Executive management must commit to a strategy and be willing to take steps to make the execution of that strategy an inherent part of the companys culture. Business unit managers need to understand their departments role in the strategy, so they can clearly identify the areas where they will contribute to its success. The same is true for frontline operational workers, who must be aware that every decision they make impacts the organizations success in some way. As mentioned at the very beginning of this paper, the foundation of any strategy is data and the information derived from it. It contains the metrics that help various stakeholders track a strategys progress. As data is collected, moved, and transformed throughout the organization, it enables the processes that provide value to customers. The quality of the data, and the ease with which it moves from system to system to support production, shipping, accounting, customer support, and other core business activities, determines how successful the company will be. Information technology is what provides this ease. Unfortunately, it can also hinder some processes. When systems from one department dont integrate with those from other departments, bottlenecks are created. Sometimes the resolution of a bottleneck entails the re-creation of data from one system in another, which often causes inconsistencies and data quality issues. Information Builders is a very unique company because of its ability to provide a single platform that offers enabling technologies and professional services in support of all five actions of an information strategy.

Information Builders Technologies

Performance Management

Business Analytics Advanced Visualization

Business Process Automation Complex Event Processing Pervasive Business Intelligence Data Integration Data Quality Master Data Management Data Movement (ETL) Data Profiling

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Information Builders

Information Builders single, fully integrated platform offers all of these functions, so companies can get their information strategy off the ground with a minimal amount of specialized software. The platform also boasts the most comprehensive list of data adapters available; so all information that is collected can be accessed and used by the tools, regardless of its source. In fact, the largest software and hardware vendors in the world resell these adapters to their customers when integration with data and applications outside their boundaries is required. Information Builders supports the five actions of an information strategy with a suite of technologies: Strategize and Align Communication of strategy and measurement of its achievement at the organizational and functional levels, as well as on the frontlines, is critical to the top two actions of an information strategy.

Performance Management Framework (PMF) Provides a pre-packaged data mart and extensive reports, dashboards, scorecards, and dynamic alerts to help organizations communicate, measure, and manage the effectiveness of their strategy

Govern The Enterprise Information Management (EIM) Suite provides a complete set of tools which, along with people and processes, can facilitate the effective creation and enforcement of a formal data governance strategy. EIM includes:

Data Profiler Provides reports, dashboards, and analytics about the quality and consistency of critical data elements. Initially, it can help a business get started with data quality initiatives and can eventually serve as the foundation of key metrics about the success of the data governance strategy Data Quality Center Provides utilities to create scripts that can enforce information management policies regarding critical data. It can automatically correct many common issues with pre-existing and real-time data, and can build the foundation for a workflow that allows data stewards to monitor and correct issues that require manual intervention Master Data Center Provides utilities for centralizing and managing critical data elements used across an organization. It can enable the creation of a single, consistent view of customers, marketing, finance, and other key operational data for the entire enterprise to leverage DataMigrator This ETL utility helps companies merge, cleanse, enrich, and move data for any critical IT initiative associated with an information strategy Universal Adapter Suite Includes a broad array of read-and-write adapters that provide access to virtually any data source for integration, data quality, data movement, business intelligence, business analytics, and performance management initiatives

Execute Information Builders provides a suite of solutions to improve business operations. These tools can eliminate bottlenecks in processes, embed intelligence into processes, and improve decisionmaking by frontline employees through instant access to relevant, timely information. These solutions include:

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Developing an Information Strategy

Business Intelligence WebFOCUS is the foundation for all information access and delivery capabilities. It is a comprehensive platform for creating operational BI applications that blend into the fabric of a companys business processes, making information available to anyone during the course of their daily duties Business Process Automation Based on iWay Service Manager, this solution allows developers to easily leverage all other Information Builders products to script automated business processes Complex Event Processing This tool dynamically monitors business events in a visually oriented fashion, and automates decision-making based on a set of user-defined business rules

Optimize WebFOCUS also provides advanced visualization capabilities and predictive analytics to help identify outliers in any area of the business and predict and optimize outcomes.

Advanced Visualization Visual Discovery allows the human mind to easily process millions of rows of data by representing it as unique visual dashboards, making it faster and easier to spot trends, important relationships, and unusual events Predictive Analytics WebFOCUS Business Analytics allows users to leverage historical data to make accurate predictions about the future. These predictions can be embedded as scores in any operational or analytic applications built in WebFOCUS. With this, frontline employees can make accurate decisions that closely align with the companys strategy

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Information Builders

Conclusion
In summary, five actions are essential steps in an information strategy. They dont necessarily have to be executed in order. Very often, a proof of concept project at an operational level will help a company gain confidence in a supporting technology and the organizations ability to drive positive change. The lines between the layers may often be blurred. Corporate and functional strategies may be looked at as one top-down strategy. Components of analytical applications may be combined into operational applications that give frontline workers the ability to make fast, accurate decisions. Data governance workflows will permeate all levels of the business. The point is that each of the five actions makes up a well-executed information strategy. Here is a quick summary description of each action.
1

Strategize: Executive management defines and articulates the overall strategy of the company, answering the questions, Who do we want to be? and Where must we excel to reach our goals? Align: Functional managers create strategies that align their business units (finance, support, sales, etc.) with corporate strategy. These functional managers are creating cascading strategies that align with the overall corporate vision. Govern: IT focuses its attention on the data and projects that are most important to the execution of this strategy. They create a data governance workflow that leverages business unit advocates to monitor and manage data that is critical to implementing functional plans. Execute: Business and IT work together on initiatives directed by functional strategies. These initiatives focus efforts on projects that can use information to remove bottlenecks, improve efficiencies, and create competitive advantage. Optimize: With rich, accurate, and complete data, business and IT can build analytical applications that leverage business analytics to improve the accuracy of decisions in every area of the business.

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Developing an Information Strategy

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