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Jim Cates, CIO of Altera, talks with Taos about Business Intelligence
For this addition of IT Intelligence, Taos sat down with Jim Cates who recently joined Altera Corporation as CIO. As we discuss the building blocks to good BI and how BI tools play a role, Jim references a framework he created called LOBI (Ladder of Business Intelligence).
Taos: How do you act as a partner to the business on the issue of Business Intelligence?
Jim: I start by educating the business leaders and my team on LOBI and have them read a book by Peter Keen called “The Process Edge”. This starts us off with a common framework of language and approach. Then you might say I have a scout team of six or seven individuals that I send out into the business units to lead them through the definition of business processes that will in turn define what tools/applications we need. This team is made up of people who naturally believe in process, and they aren’t project managers. They are BSA (Business Systems Analysts), Managers and Directors. During my first three months at Altera I’ve probably talked to sixty or seventy folks as I’ve tried to figure out the company’s business model. Based on this knowledge, we will define the business process team.
Taos: And how do you get to Business Intelligence out of this?
Jim: Business Intelligence is about visibility into the answers to 5- 10 key questions that get to the heart of the health and success of critical functions within the business and the business as a whole.
The methodology that I use is to get the Business Units to have each key business role (BR) define these key questions about their role. The answers to these questions form the BI for their roles.
Taos: And what’s your role there?
Jim: I help facilitate this process, and really drive the business to get to those few questions that really matter and uncover where the answers to those questions lie. My team takes them through a BRIA (business role information analysis) and has them map questions, information, data, and data sources in a way that allows us to see what we’re trying to get at and where it exists. In this exercise we also ask “does this information really matter” and “what decision(s) will this allow us to make?” A risk you fall into without proper BRIA is ending up with hundreds of reports from various BI tools that you think are intelligence providing that really just add clutter and confuse good decision making.
The other thing I do is help the business leaders avoid the common mistake people make of equating BI with a tool. I drive the discussions and the work around business process, business roles, and key business questions. BI tools are at Levels 2 and 3 in LOBI. They bring in data and they transform the data into information if they are effective. But the real intelligence comes from asking the right questions and knowing how to aggregate the data and information from all your various sources to get the answers to those key questions and make truly informed decisions. If you cannot create the right questions for your business domain, you will never have true intelligence.
Taos: In that sense then the really successful BI tool is one that lays on top of all other business applications and is able to know that when I have the question here, I have to pull and integrate data from x, y and z applications, and perhaps even some external sources.
Jim: That’s right. True BI tools are at the information level, which is Level 3. And you are right, they can pull the data from all the various L2 sources which may be in the company. The BI infrastructure should allow you to build L1 and L2 in a reusable fashion. Those are the primitive blocks to delivering BI to all of the different business contextual situations. So I can use the same data, if I’ve done it correctly, and it answers one set of questions for the supply chain operations executive, and it answers another set of questions for the finance person but it’s the same data. When BI truly matures and is implemented correctly you’ll get the output of the tool and immediately be able to make a decision. If you have to go anywhere else to get more derived data, or you have to do the analysis and integration in your own head, to that extent the tool falls short.
Taos: In the way you pursue your role you really make sure IT matters; is a true partner to the business.
Jim: Yes. Where Nicholas Carr is right “IT doesn’t matter” is at the layers up to L3. L1 and L2 are necessary but not sufficient for effectiveness. You need the data at L1 and L2, and you need the right business processes and structure to make sure it’s clean data; it’s just that that’s not a differentiator. All the money you pour into those two levels won’t give you your competitive differentiation. Everybody has an ERP. Everybody has a database. Everybody has a LAN.
Taos: How much should you spend on BI?
Jim: Ten to fifteen percent of whatever a company invests in L1 and L2. That’s what I think it will take to get a useful BI display function on top of the data you’ve built. It’s a good rule of thumb that I use.
That said, you can get fairly decent BI without having to spend millions. You could for example get a tool like Celequest and sit it in front of a set of data sources and get some decent little lightweight BI in a matter of weeks. A solution like that might set you back two hundred thousand dollars or less.
Taos: Who should own BI?
Jim: It all depends on the focus of the people at the top. Normally, if you have a business oriented CIO, I think the IT group should own it. Next to the CEO (and less so, but also the CFO) the CIO understands how information flows across the business as a whole. Most business unit leaders understand their unit and the touch points it has to other units, but not necessarily the business as a whole. IT touches all functions of the business.
However, if I had a traditional IT organization where the CIO was more reactive to business unit demands rather than a true partner in figuring out how to turn data into information, then I’d probably have Marketing own BI, or maybe Finance. These would be a far distant second. Marketing is an option because they are usually the next best function to understand the value of information. A core part of their job is to derive information from data.
Taos: From your perspective what is the ROI timeframe for implementing BI?
Jim: I think it can be anywhere from three months to a year. At Brocade the team got it up in three months, the beginning of it. It depends on how grandiose the scheme is, and what you’re trying to do for some of the tougher business issues. For example, getting information out of data is tougher for Marketing, because they ask more difficult/more global questions. Remember that before figuring out how to get to the answers to the questions you ask, you need to ask the right questions. This is really the key. Your ROI can be huge or, if you ask trivial or irrelevant questions, non-existent.
Taos: How far off do you think we are from BI technology being where we need it to be?
Jim: This next round of the ERP systems, those built on the concept of service oriented architecture are going to go a long way toward what we’re talking about. I believe that in the next 3 to 5 years SOA is going to make a big difference; it’s .Net, Websphere, BEA, Oracle with Fusion, SAP with NetWeaver. There will be application server platforms where a lot of the function that’s in the ERP systems gets sucked down into these application platforms. And then I think you’re going to be buying software and BI is going to just come along for the ride. You’ll buy a solution, some of which will be on demand so more and more it will be possible to buy your capability over the web. In my opinion, that’s where the world is going in the future.
Taos: What advice or guidance do you have for companies exploring BI?
Jim: It’s not a technology. Learn how to do the people process in technology. And learn how to get the business units to generate the questions. If you can ask and answer the right questions in the needed time frame, success will follow. If don’t ask the right questions it doesn’t make any difference which BI tools you use.
James E. Cates is a keen advocate of converging IT to business goals. He is currently the CIO of Altera Corporation, the world's pioneer of system-on-a-programmable-chip (SOPC) solutions. With annual revenues in CY 2004 of $1.02 billion, Altera combines the reprogrammable logic technology originally invented in 1983 with software tools, intellectual property (IP), and design services to provide high-value programmable solutions to approximately 14,000 customers worldwide. Altera is headquartered in San Jose, California, and employs approximately 2,200 people in 19 countries.
Jim draws on more that 30 years of executive leadership in software development, IT deployment and corporate management in leading companies including Brocade, Information Technology Solutions, Synopsys, Silicon Graphics and IBM. He serves on several university advisory boards and holds an MS in Computer and Information Science from Ohio State University. He is a recipient of Ohio State’s Distinguished Alumnus Award from the college of Engineering.
LOBI Abstract:
The promise of performance management through technology-enablement seems to be perennially elusive. However, with the right BI framework and an analytical approach that measures not just the end-results, but tracks and understands the causative assumptions and drivers behind them, a company can go beyond mere analysis and reporting through BI to actionable insights that impact performance. Today CIOs are looking for vendors that have technologies that can help them deliver performance management or the infrastructure that supports it.
The Ladder of Business Intelligence (LOBI) Framework has been used successfully to deploy BI effectively within two fast growing Silicon Valley companies. The approach uses six levels of framework, effective ways to move up the ladder and a methodical process by which to reach the top level. For example by using the BRIA (Business Role Information Analysis) model, each business role can identify the top 10 performance metrics that they need to monitor and understand, and use that as the basis for driving the system design and development.
The LOBI levels are:
- Facts
- Data
- Information
- Knowledge
- Understanding
- Enabled Intuition
To move up the ladder, you employ the "LOBI Triple"—at each level, you identify the business role, determine the business processes that make that role more productive, and finally implement the technology.
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