What data should a BI system track to gain (or maintain) a competitive advantage? Well, that all depends on your organisation’s unique circumstances. The following management frameworks provide insight to the internal and external parameters to be considered.
Internal Organisational Data:
The Value Chain Framework created by Harvard Business School professor Michael Porter, examines the value streams across an organisation to determine its core competencies and activities which give it a competitive advantage.
The model is divided into Primary Activities and Support Activities:
- Primary activities transform raw materials to finished products or services and provide them to customers. These include Inbound Logistics, Operations, Outbound Logistics, Marketing & Sales and Service.
- Support Activities are those activities in the organization which make the primary activities possible. These include Infrastructure of a Firm, Human Resource Management, Technology Development and Procurement.
- It is important to note that value chain activities are linked to one another and are not isolated. Thus data (and KPI’s, score cards, metrics, reports etc) that are relevant for one organisational function, may be relevant to other functions too.
Whilst a mature business intelligence system will provide relevant BI for all the organisational functions as shown above, the big challenge is where to start on a new BI implementation. Assuming you are using an agile project management approach, maximise your project ROI by starting with those functions and activities that ADD the largest competitive advantage to your organisation. Practical details of using this framework to be included in future posts.
External organisational Data
Porter’s Five Forces model provides a framework for identifying the external organisation data to be tracked by analysing the attractiveness of an industry through its micro-environmental factors ( i.e. those external factors which affect the company). They include Threat of New Competitors, Threat of Substitute Products or Services, Bargaining Power of Customers, Bargaining Power of Suppliers and Intensity of Competitive Rivalry.
Whilst the model is conceptually simple, external organisational data is somewhat esoteric, hard to quantify and potentially hard to obtain. This should not deter you from tracking and analysing this data as it provides powerful business intelligence that enables organizations to create strong and holistic strategies. Practical details of using this framework to be included in future posts.
Show me the data
The data for the above areas can be found in :
- Existing financial, ERP, HR or production database systems.
- The form of electronic chats, e-mails, image-files, marketing material, memos, notes, PDF files, presentations, reports, spreadsheets, web-pages, word documents, user groups and videos.
- Public and competitor websites.
- Competitor annual reports
- Available for purchase from data vendors (eg Dun & Bradstreet)
- Paper based reports, documents, newspapers and magazines.