Customer Lifecycle Value

Depending upon on how well your know your business, a great discussion to have somewhat regularily is whether or not the customer lifecycle value is increasing or decreasing. To achieve this we need to know a few things...

• How much has the customer purchased from us?
  
• How long are they likely to stay with us?
  
• What does it cost us to serve them?
  

None of these are necessarily easy questions to answer, but that does not mean we should not talk about these items. Worst case, you should at least be looking at the average revenue and cost per client and see how those are changing. They are probably pretty good indicators of lifecycle value. If we look at the trends of our revenues, costs (COGS & SGA), and profits per customer this should certainly indicate if we are doing better or worse.

While most of us do this to some degree, we probably also throw in a great deal many more variables and business rules and end up discussing various concepts. What about once a month or once a quarter getting all the department heads together and discuss progress on only these items.

Business Intelligence vs Business Analytics

Current Blogs: Peter Thomas / Gaurav Verma (SAS) /James Taylor / Neil Raden

There is a growing debate over Business Intelligence vs. Business Analytics and what the future holds.  Clearly the Business Intelligence world has been shaken with Hyperion, Business Objects, and Cognos all now smaller parts of bigger companies.  This has created a number of marketing opportunities for the likes of Microstrategy and SAS.  The obvious marketing play was independence.  Now it is clear that SAS is taking a slightly different tact by claiming that Business Intelligence is dead and the future is Analytics.

Marketing messages aside, what we need to be focusing upon how we use information and the management process.  Call it data, information, intelligence, analytics, or whatever we come up with next, it is all irrelevant if we don't understand how to use it.  A basement full of great tools doesn't mean the house remains maintained.  

• Do you have rules on when to use the specific tools in the BI suite?
  
• Do your people have the analytical skills required?
  
• Do you have a process where the information can be discussed and actions agreed upon?
  

We all agree that organizations need to make fact based decisions.  The other thing we should all be working upon is creating a common vernacular for each of the tools.  As analysts, consultants, pundits, bloggers, we do little good if we don't teach the value of how to use each of the tools.  You don't need predictive analytics for an exemption report.  You don't need a sexy looking reports that do little to explain the goal.  Organizations don't need real time scorecards.  

What organizations do need are ways to make people comfortable to take decisive action.  We also need these actions to align to company goals and strategy.  The tools we use need to be consistent enough for us to trust them, and the minds that analyze them need to be able to use the tools well enough to communicate only what matters in a digestible presentation.

Scorecards & Dashboards

These are two terms that the BI world uses interchangably.  The only thing they should have in common is that they both can visually display data.  

Defined:

Scorecards are tools that help facilate discussions around strategy and operational performance management.  The indicators (KPIs) should foster discussions about corporate direction, resource allocation, priorities, and initiatives.

Dashboards should be used for tactical discussion triggers, like inventory orders, technical support, phone coverage, etc.

What should be happening with these tools is a far more structured use for each (and throw in reporting as well).  All too often these tools are used without discipline which leads to mulitple versions of the truth, lack of focus, red herrings, miscommunication, and ultimately a waste of time and energy.

IT and business users need to work together to better understand what each tool can provide, when that tool will be used, how it will be used, how it will NOT be used, and who should be using them.