A BUSINESS APPLICAION FOR AN E-COMMERCE BUSINESS MANGEMENT THAT ANALYSES THE BENEFIT GAINED FROM USING E-COMMERCE WEB SITES
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The document discusses the benefits and critical challenges associated with business intelligence (BI) projects in e-commerce. It outlines the advantages of BI for customer management and revenue growth, while also addressing ten key challenges that contribute to project failures, such as lack of skilled staff and unengaged business sponsors. The text emphasizes the importance of data quality and involvement from business representatives to maximize return on investment in BI implementations.
A BUSINESS APPLICAION FOR AN E-COMMERCE BUSINESS MANGEMENT THAT ANALYSES THE BENEFIT GAINED FROM USING E-COMMERCE WEB SITES
- 1. Instructor: Bill Chadwick SCS 0245-026 Business Intelligence Fundamentals A BUSINESS APPLICAION FOR AN E-COMMERCE BUSINESS MANGEMENT THAT ANALYSES THE BENEFIT GAINED FROM USING E-COMMERCE WEB SITES Exercise # 3 Waseem Bari
- 2. Instructor: Bill Chadwick SCS 0245-026 Business Intelligence Fundamentals 1 | P a g e Part 1: A BUSINESS APPLICAION FOR A E-COMMERERCE BUSINESS MANGEMENT THAT ANALYSES THE BENEFIT GAINED FROM USING E-COMMERCE WEB SITE Identifying new customers supporting better Better management of marketing Fast product development life cycle More revenue from info which leads to Existing custom Increased sales from new sale leads which leads to: Most responsive marketing Supply chain cost reduction communication which leads to Revenue from new customers 10% increase in profit Reduced time in customer service reduced cost of keeping = 10% of $300,000 which leads to inventory =$30,000/yr 5% more revenue , 1000 customers Cost reduction in online sales 20% reduction in inventory 2k profit/client = 20% of 3 million = 50 x 2k = $600,000/yr = $100k/year 30% cost reduction in online sale = 30% of 1 million = $300,000/yr Cumulative Dollar Benefits: $100,000 + $30,000 + $300,000 + $600,000 = $1,030,000
- 3. Instructor: Bill Chadwick SCS 0245-026 Business Intelligence Fundamentals 2 | P a g e Part 2: Critical Challenges for Business Intelligence Success Organizations must understand and address these 10 critical challenges for BI success. BI projects fail because of: 1. Failure to recognize BI projects as cross-organizational business initiatives, and to understand that as such they differ from typical standalone solutions. 2. Unengaged business sponsors (or sponsors who enjoy little or no authority in the enterprise). 3. Unavailable or unwilling business representatives. 4. Lack of skilled and available staff, or sub-optimal staff utilization. 5. No software release concept (no iterative development method). 6. No work breakdown structure (no methodology). 7. No business analysis or standardization activities. 8. No appreciation of the impact of dirty data on business profitability. 9. No understanding of the necessity for and the use of meta-data. 10. Too much reliance on disparate methods and tools (the dreaded silver bullet syndrome). Here we will discuss the solutions of few selective challenges: Business Sponsors Strong business sponsors truly believe in the value of the BI project. They champion it by removing political roadblocks. Without a supportive and committed business sponsor, a BI project struggles for support within an organization and usually fails. Business sponsors establish proper
- 4. Instructor: Bill Chadwick SCS 0245-026 Business Intelligence Fundamentals 3 | P a g e objectives for the BI application, ensuring that they support the strategic vision. Sponsors also approve the business-case assessment and help set the project scope. If the scope is too large, sponsors prioritize the deliverables. Specifically for BI projects, business sponsors should also launch a data-quality campaign in affected departments. This task goes to business sponsors because it’s business users who truly understand the data. Finally, business sponsors should run a project review session at assigned checkpoints to ensure that BI application functionality maps correctly to strategic business goals, and that its return on investment (ROI) can be objectively measured. Dedicated Business Representation More often than not, the primary focus of BI projects is technical rather than business-oriented. The reason for this shortcoming : most BI projects are run by IT project managers with minimal business knowledge. These managers tend not to involve business communities. Therefore, it’s not surprising that most projects fail to deliver expected business benefits. It’s important to note that usually 20% of the key businesspeople use BI applications 80% of the time. Therefore, it’s vital to identify key business and technical representatives at the beginning of a BI project — and to keep them motivated throughout the project. A BI project team should have involved stakeholders from the following areas: Business executives are the visionaries with the most current organizational strategies. They should help make key project decisions and must be solicited for determining the project’s direction at various stages. Customers can help identify the final goals of the BI system. After all, their acceptance of products or service strategies is what matters most. Key business partners provide a different view of the customer and should be solicited for information at the start and on an ongoing basis. The Finance department is responsible for accounting and can provide great insight into an organization’s efficiencies and improvement areas. Marketing personnel should be involved during all phases of the project because typically, they are key users of BI applications. Sales and Customer Support representatives have direct customer contact and provide customer perspective during a BI project. They must have representation on the team.
- 5. Instructor: Bill Chadwick SCS 0245-026 Business Intelligence Fundamentals 4 | P a g e IT supports the operational systems and provides awareness about the backlog of BI requests from different groups. In addition to providing technical expertise, the IT staff in the BI project team must analyze and present BI-related requests. Operations managers and staff make tactical business decisions. They provide the link between strategic and operational information, making them important during some key phases of a BI project. Availability of Skilled Team Members BI projects differ significantly from others because at their outset, they tend to lack concrete, well defined deliverables. In addition, the business and technical skills required to implement a BI application are quite different than other operational online transaction processing (OLTP) projects. For example, while operational projects normally focus on a certain area of the business, such as enterprise resource planning (ERP), CRM or supply chain management (SCM), a BI project integrates, analyzes and delivers information derived from almost every area of the business as a whole. The required technical expertise varies as well; typically, for example, a database administrator’s focus is efficient retrieval of data using OLTP systems. By contrast, where BI systems are concerned, it’s vitally important to focus on data storage in addition to data retrieval. A BI project team lacking BI application implementation experience will most likely fail to deliver desired results in the first iteration. Since most BI projects have aggressive timelines and short delivery cycles, an inexperienced and unskilled team is a risk that must be avoided. Mandatory BI project skills include: • BI business analysts who can perform cause-and-effect analysis to develop business process models for evaluating decision alternatives. These individuals should also be able to perform what-if analysis by following a proven BI methodology. • A KPI expert experienced in creating balanced scorecards. These experts must be able to identify the KPIs that meet business needs, calculate and report them and monitor performance. They also should iteratively re-evaluate KPI effectiveness and must integrate these KPIs into the balanced scorecard. • Balanced scorecard experts to continuously develop and fine-tune scorecards. Measuring success in a dynamic business environment requires an effective toolset. With a balanced scorecard, an organization’s vision and strategy can be translated into objectives, targets, metrics and incentives to meet those objectives and targets.
- 6. Instructor: Bill Chadwick SCS 0245-026 Business Intelligence Fundamentals 5 | P a g e • Data warehouse architects with experience developing BI-related logical and physical data models, including both star schemas and OLAP. Ideally, these people might also have experience with such technologies as statistical tools and datamining algorithms. • Cube developers and implementers with experience implementing BI-specific data models, OLAP servers and queries. These individuals must be able to develop and deploy complex and intelligent cubes to conduct multi-dimensional OLAP analysis for different users. • Personalization experts experienced at developing Web-based generic BI applications that can not only meet the reporting needs of many users, but also provide a personalized view to each user. Business Analysis and Data Standardization By now it’s clear that BI projects are data-intensive and that “data out” is as important as “data in.” It’s crucial that the source data be scrutinized. The age-old saying, “Garbage in, garbage out,” still holds true. In most BI projects, business analysis issues are related to source data, which is scattered around the organization in disparate data stores and in a variety of formats. Some of the issues include: Identifying information needs. Most business analysts have challenges when it comes to identifying business issues related to BI application objectives. They must evaluate how addressing these issues can help in obtaining answers to business questions such as, “Why is there a decrease in sales revenue in the fourth quarter on the West Coast?” Once the issues are identified, business analysts can easily determine related data requirements, and these requirements can in turn help identify data sources for the required information. Data merge and standardization. The biggest challenge faced by every BI project is its team’s ability to understand the scope, effort and importance of making the required data available for knowledge workers. That data consists of fragments in disparate internal systems and must be merged into a common data warehouse not a trivial task. Data requirements normally extend beyond internal sources, to private and external data. Therefore, data merge and standardization activities must be planned and started at the beginning of the BI project. Impact of Dirty Data on Business Profitability Inaccurate and inconsistent data costs enterprises millions. It’s imperative to identify which data is important, then find out how clean it is. Any dirty data must be identified, and a data-cleansing plan must be developed and implemented. The business objectives of any BI project should be tied to financial consequences such as lost revenue and reduced profit. The financial consequences are usually the result of a business problem related to inaccuracies in reports due to reliance on invalid, inaccurate or inconsistent data. However, most BI projects fail to tie financial consequences to dirty data through monetary expressions (such as losing $10 million in quarterly revenue due to the enterprise’s inability to up-sell).
- 7. Instructor: Bill Chadwick SCS 0245-026 Business Intelligence Fundamentals 6 | P a g e Even the best BI application will be worthless if driven by dirty data. Therefore, it is important for every BI project to employ knowledgeable business analysts who understand the meaning of source data and can ensure its quality. Underestimating the data-cleansing process is one of the biggest reasons for BI failure. Inexperienced BI project managers often base their estimates on the number of technical data conversions required. Project managers also fail to take into account the overwhelming number of transformations required to enforce business data domain rules and business data integrity rules. For some large organizations with many old file structures, the ratio of a particular data transformation effort can be expected to be as high as 85% effort in data cleansing and only 15% in enforcing technical data conversion rules. Therefore, even if estimates appear realistic at the project’s outset, you must factor in data-cleansing efforts. Note that full-time involvement from the right business representatives is mandatory for data cleansing activity. Conclusion: Maximizing ROI BI applications, if implemented efficiently and properly, have tremendous payoff. They can help an enterprise increase its business agility, decrease operating costs and improve its customer loyalty and acquisition. And in most cases, these improvements bring a host of tangible benefits (better customer satisfaction, increased revenue and profits, cost savings and higher market share). Bottom line: a successful BI project is a genuine, often dramatic, improvement to any organization. Ah, but there’s that word again: successful. As we’ve seen, many complex factors go into the successful BI project. By paying attention to the 10 critical challenges for BI success, your enterprise has a great chance to complete and deliver the features and benefits agreed upon at the beginning of the project.