In Part 1 of ‘How to cut the cost of insights, without cutting intelligence’ we argue that data alone is insufficient for building a culture of insight. Today in Part 2, we begin to solve this very problem reviewing where people currently go for insights, identifying costly bottlenecks and pain points.
The following figure shows where people go for information in a large organisation, dividing information into 3 broad types: hindsight, insight and foresight.
Where do people go for HINDSIGHT? Your Routine Decisions
There is no shortage of access to ‘hindsight’ in large organisations, with both tools and BI teams answering “how many / how much?” questions:
- “How many customers do we have?”
- “How many visitors do we have to our website?”
- “How much revenue did we make this year vs. last year?”
1) Source Systems - exporting data directly or accessing reports from the source system (e.g. Oracle, SAP). PROS: As the data is taken from the source system, you can trust the numbers and know that the data is up to date. CONS: Not built for a business user. The process is fiddly and time consuming, reserved for both the patient and data savvy.
2) Dashboard Reports - designed to solve the problem with source systems, making data accessible to a business audience. Reports range from basic to more sophisticated. For example, a one-pager built in Excel and published as a PDF for circulation, or built using tools like Tableau or Power BI and broadcasted online.
Custom built. Provides a clear and consistent overview of performance. Serves as an ideal talking point / meeting-aid for weekly meetings.
While the clear and predictable format of a report is a major benefit to the business audience (reliable, simple, relevant), it’s also the major limitation (and a hidden cost of insight). Want to ask questions beyond what’s on the page? You can’t. Reports are limited by predefined dimensions.
3) BI & Insights Teams - a team of highly skilled data and analytics professionals, tasked with answering higher value business questions where product solutions (systems and dashboards) fall short. Unfortunately, the reality is like being on a hamster wheel, unable to relieve the organisation of the never-ending hindsight, data and reporting backlog.
Highly motivated problem solvers, on the mission to discover insights that enhance operational and strategic decisions across the business.
The bulk of actual work is hindsight reporting, leaving no time for the pursuit of higher value insight or foresight. Coupled with the high cost of building and maintaining a team of specialists (combination of fixed FTE and the variable cost of professional services), this leaves the organisation with insight gaps OR a very high cost to service insights.
Where do people go for INSIGHT? Your Operational Decisions
You’ve gone to your high-level reports as a starting point, tick. You know revenue is down.
But now you want to drill deeper and by deeper, you mean, by country, age, gender, category, subcategory and product. That’s just the starting point.
Here you want answers to your “What is the impact of / what caused this / why?” questions, such as: “How does sales vary by customer demographics?” or “What caused 24-35 year old customers to decrease spend in Singapore?”.
So where do most people* go for insights?
*We’re not talking about people who have budget or authority (e.g. to spend on consultants or influence priorities of the BI & Insights Team).
They go to Excel.
4) Excel - these are your pivot tables, cross-tabs and spreadsheets. Exporting data from source systems or reports, the goal here is to see the data in a way that makes sense for ‘my’ problem / area / line-of-business. Manual and time consuming; analysis never goes beyond what individuals have experience in knowing what to look for. Finding insights, is like searching for a needle in a haystack, impossible!
Given the effort involved in using spreadsheets (“what’s the v-lookup formula again?”), many business people will simply give up. And this makes sense. After all, they are not data analysts or have ever received formal training in data manipulation or analysis.
But if business-critical, where can these people go for insights?
They go back to the BI and Insights Team.
But as previously mentioned, this team is swamped, struggling to keep up with the demands of the business. So instead of answering request after request for ad-hoc operational insights, and with access to reporting tools like Tableau and Power BI, the BI Team gets stuck into alleviating the never-ending insight backlog with more dashboards. Which kinda makes sense, except for two issues:
- There is a huge cost involved (more below).
- Dashboards must be pre-defined, so while ideal for the pursuit of hindsight, they aren’t designed for the pursuit of insight.
“But I thought tools like Tableau and Power BI products for business audiences?”
Yes and No.
Once built, they are designed for anyone to consume. However, what is often unclear in the sales pitch is the following:
Audience of dashboards ≠ people who build dashboards.
Within a large organisation, the average time and cost to spec and build a report may be months and fixed FTE resources (often specialist BI developers). This means most questions go unanswered.
Want to accelerate the build and launch of more dashboards? There is no shortage of consultants happy to solve this problem for you. But the cost of professional services is high. Extremely high.
So yes, your BI tools like Tableau and Power BI are ‘products’.
But the process to deliver and maintain these reports is a combination of both: (1) product / licence fees (lower cost) and (2) a combination of fixed FTE and variable professional services (much higher cost).
Where do people go for FORESIGHT? Your Strategic Decisions
These are answers to your future-orientated “what if / what will / what is?” questions, such as ‘What is our go to market in 5 years to maximise share of wallet?’
5) Consultants - In general, the most common way of getting insight are projects or partnerships with professional service firms (e.g. Big 4, MBB, research agencies).
Highly skilled and always available to solve challenging problems.
The extreme cost. Reliance on others also means losing a source of competitive advantage; proprietary knowledge and intellectual property being solely your own.
So what does this all mean? The state of insights today.
In brief, you have highly skilled people spending way too much time on lower value reporting, rarely solving problems of higher value (and a great source of demotivation). Leaving a huge gap in your organisation’s capability to make insightful decisions, the only way to enhance this is with huge spend on professional services to fill reporting and insight gaps.
Now with pressure to reduce costs and/or headcount, what can leaders do today?
Read more in Part 3 of ‘How to cut the cost of insights, without cutting intelligence’ where present a 3-step framework for solving this very problem, reducing the cost of insights, enhancing - not sabotaging - your organisation’s ability to make decisions. Which jobs are most at risk? Where does automation make sense? And what should BI and Insights team look like 12 months from now?
But for today, we wanted to focus on the status quo, making sense of the state of insights today.
So, that’s our thoughts for today. Good luck in your businesses. Stay tuned for more on how to thrive with insights during these challenging and uncertain economic times.