Making the Case for BI

In this episode, Brick and Caleb discuss how to get internal buy-in for BI by making a clear connection between your BI projects and the anticipated ROI.

Mentioned in this episode: Elgin Fasteners case study

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Blue Margin helps private equity owned and mid-market companies organize their data into dashboards to execute on strategy and create a culture of accountability. We call it The Dashboard Effect, the title of our book and podcast. 

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#BI #businessintelligence #adoption

Episode Transcript

Brick Thompson (00:05):
Welcome to the Dashboard Effect Podcast. I'm
Brick Thompson.

Caleb Ochs (00:08):
I'm Caleb Ochs.

Brick Thompson (00:09):
How's it going, Caleb?

Caleb Ochs (00:10):
Not bad.

Brick Thompson (00:11):
All right. So today, we wanted to talk about
how to make the case for doingBI at a company. And this can
seem obvious to someone who hasthe vision already. But
sometimes it can be hard to freeup the budget to do it or free
up the time of the people thatare going to be involved. So

(00:31):
we've been talking a little bitabout how to approach this in a
way that's comfortable foreverybody so that you can sort
of get on that road.

Caleb Ochs (00:40):
Yeah, I mean, we see it a lot with our prospective
clients, and people we just talkto. It is that they think BI is
a good thing to do, they want todo it, they want to have some
good, cool reports, they maybesaw it at someone else's
company, they may have used itbefore, but then they're having
a hard time justifying what it'sgoing to take to do it where

Brick Thompson (01:02):
Right. I mean, intuitively, for all of us,
they're at now.
well, especially if you have thedata gene, as we call it. You
know, if you're driven by data,and like getting into the
numbers and analyzing things, itcan seem obvious, like, "Of
course, I need to do a bunch ofBI, it will make things better."
But that's not the case foreverybody. And there are
competing priorities andstrategic priorities. So if

(01:22):
you're looking to get momentumwith BI in your department or
your company, I think one of themost important things to do is
really look at it from an ROIstandpoint. And do that to keep
yourself honest, too. So thatyou're really thinking about,
"What will it mean for us interms of business success if our

(01:43):
BI initiative is successful?"

Caleb Ochs (01:45):
Yeah. Right. And it's just satisfying to. To be
able to look back and say, "Weset out to do this, we built
some cool reports. And now,look, the data shows that we did
it."

Brick Thompson (01:56):
Yeah, I think one of the most important things
to do when you start is to keepyour focus narrow. It can be
tempting to want to doeverything, you know, eat the
whole elephant at once and goout and get all your data
sources together and get it intoa unified data model so that you

(02:16):
can do reporting. We thinkthat's a mistake, actually, for
a starting point. Eventually,you'll get there. But the way to
start is, be narrow. Find anarea where you can connect the
impact of the decisions you'llbe able to make and the
behaviors you'll be able todrive, directly or very close to
directly to cash, to impact onthe company, to profit.

Caleb Ochs (02:38):
Yeah, right. I mean, some are a lot easier to make
that case than others. Right.
Some, you have to kind of gothrough the trenches and follow
the money back to where It'sactually going to impact your
bottom line. And sometimesvalue, which we may we get into
in a later episode, sometimesvalue to people is just having
peace of mind.

Brick Thompson (02:58):
Yeah.

Caleb Ochs (02:59):
But if you're trying to convince other people just,
"Peace of mind," probably notgoing to do it. Right. You want
to have something that'stangible. And if you can find
something that's easy to tieback to finances, it makes a lot
of sense.

Brick Thompson (03:14):
So we were talking about manufacturing
customers, we were talking aboutone in particular that we had
here at Blue Margin. Andthinking about this
specifically. And there was ametric that we went after, a
report that we went after, rightat the start of working with
this company, their called ElginFasteners. Actually, we'll link
a case study if anybody'sinterested. But this podcast is

(03:37):
not about them, in particular,but as an example, for them
being able to improve machineand workforce utilization, they
could tie very directly toprofits. Because if you can
produce the same amount ofproduct with the same machinery
and people, same amount offactory space and time, you can

(03:59):
figure out "Okay, if we improvethat utilization by 3%, what
does it mean, in terms ofdollars to the bottom line," and
then you can measure thatagainst the effort. Let's say
you're going to spend a six weekor eight week effort internally,
or let's say you're bringing ina partner and you're gonna
spend, you know, x10s of 1000sto get that done. It's very easy
then to weigh that and say,"Okay, this is something we

(04:20):
should go after. And that makesit much easier to get buy in
with fellow executives and otherpeople in the company.

Caleb Ochs (04:26):
Right. That's exactly right. You know, another
one that comes to mind is thatevery company has their AR. If
you can collect your AR better,that's just directly into your
account.

Brick Thompson (04:39):
Yeah, exactly.

Caleb Ochs (04:40):
So some some easy ones, right.

Brick Thompson (04:43):
I think another one along those lines is
backlog. So business that you'vesold that you're waiting to
deliver, if you can get thatnumber down by improving
throughput, utilization, thattype of thing, that can very
directly impact how much moreyou can sell, and so on.

Caleb Ochs (04:59):
Right, right. But then, you know, there's those
easy ones, and there's thosereally hard ones. So another
hard one, especially inmanufacturing, one that Elgin
looked at was, on time delivery.
If you're a manufacturer, youknow how important on time
delivery is. But it's nottotally clear how on time
delivery is going to translateto bottom line improvement,

(05:22):
right? So you've got to jumpthrough some hoops in order to
get there.

Brick Thompson (05:27):
Right. So you can't necessarily easily say,
"Okay, if we improve on timedelivery by 3%, that It's going
to mean x dollars to the bottomline." We know that better on
time delivery should make abetter impression on our
customers. So maybe they'llreorder more. It should give us
better reputation in the market,so it's easier for our sales

(05:48):
teams to go out and sell. Itmeans that we potentially have
more capacity overall, to takeon more business, if we're just
moving things through quicker.
And then there's sort of anobvious metric of time from
order to cash that has an impacton how much cash you need to
operate the business. So it maybe a little more difficult to

(06:09):
say, "Alright, x percent isgoing to get us xy dollars." But
you can know intuitively that,probably, it's going to improve.
And in fact, you may have such aproblem that you don't even need
to spend too much time gettingdown to the exact dollars, you
just know that, "We have to fixthis, we have customers
complaining," or something likethat.

Caleb Ochs (06:29):
Right, exactly. It may not be necessarily you're
gonna make an improvement, butmaybe you're gonna save some
customers from leaving. That canalso mean ROI, but it's still
much more of an exercise then,"We're just going to collect
more money quicker."

Brick Thompson (06:43):
Yeah. So if it's obvious there was a problem that
just has to be fixed, great,that can be a good place to
start. But if this is just oneof those things, the operation
is going pretty well, you'rethinking this might be something
that would be good to improve,that may not be the best place
to start if you've got a moredirect impact on bottom line
that you can go after first.

Caleb Ochs (07:03):
Right, exactly.

Brick Thompson (07:04):
All right. Well, to wrap up, I would say our
advice would be keep it narrow,keep it focused, think about
ROI.Really resist the temptationto sort of have a shopping list,
and instead prioritize. You'llstart to get momentum with your
company and with the rest ofyour colleagues when you can
start to show results. And it'seasier to do that when it's

(07:28):
narrow than when you've got abunch of stuff that you're
waiting for to come to fruition.

Caleb Ochs (07:31):
Yeah, spend the time on defining that ROI. You know,
it sounds so elementary, butbuild a business case for it.
Really think through thosethings. And that's going to help
you make sure that yourinitiative and BI doesn't just
fizzle out at your company,because it's like, "Well, we
spent all this money and itdidn't seem to do anything,"
because you didn't set out firstto say, "This is what we think

(07:54):
it's going to do for us." Sodefinitely spend the time to do
that.

Brick Thompson (07:57):
Yeah. And even if your ROI analysis is just
based on some rough assumptions,like "We think a person costs
this much per hour, and we thinkour utilization is that much,
and we think we could maybereduce it if we were able to let
our factory managers have abetter view on it by this
amount. That would be roughlythis much savings to us, or this

(08:20):
much increased capacity for us."Even that rough estimate can
sometimes be so obvious like"Okay, we don't have to get it
to the dollar because it'sobviously valuable, we can just
go after it." But but do it ifyou can.

Caleb Ochs (08:33):
Yeah, it'll pay off.

Brick Thompson (08:36):
All right. Well, thanks, Caleb.

Caleb Ochs (08:37):
Thanks.