Advice on learning more about business analytics & business metrics?
January 19, 2010 4:30 AM   Subscribe

I'd like to learn more about business analytics and business metrics, but don't know where to start. Can you point me in the right direction?

I work at a software company and am working on a project to define and and measure metrics that help our customers understand the software's impact. This is a new area for us, so no one here has a background in analyzing a business' metrics.

I think this is fascinating stuff. I'd like to learn more about measuring a business' metrics and maybe do more of it in the future. But I don't know where to start - I haven't consciously studied business before.

I don't even know what to call it - so far I've picked up on the terms 'business analytics,' 'business metrics,' and 'key performance indicators.' It's tough to Google something when you're not even sure that you're using the right terms, so my searches haven't turned up much of interest. And it makes it tough to tell which book to buy on Amazon, too :).

So - can someone suggest some basic reading on business analytics? Or maybe you can help me refine my question? Later on I may get an MBA, but for now I'm looking for material I can just study outside of work.

I know the natural first question is "which industry?" I'd rather learn about metrics more generally - what defines a good measurement? What can you infer from your data? But feel free to tell me if learning about 'business analytics' without the context of an industry doesn't make sense. I'm not interested in metrics specifically for the software industry - to me, software is the tool for measurement, not the subject of measurment.
posted by Tehhund to Work & Money (2 answers total) 7 users marked this as a favorite
Ok...I waited a while to see if anyone else responded, but here we go.

"Business Analytics" as you call it, can be broken down more efficiently into several layers. Let's work through your question one step at a time.

1. "Define and Measure metrics that help our customers understand the softwares impact." This is part of the companys presales business case and forms a large part of the purchase requirements for your customers.

More specifically, your customers will define the software benefit as change in time, resourcing, productivity and cost. Those four areas will vary for each customer, but it is relatively straightforward with some help of your team to develop some easy to understand fundamental ways to present product benefit. On the customer side, we would look at a software project with some standard indicators such as the projected ROI etc, but more importantly what is the difference pre/post implementation yearly running cost, resource requirements (think FTE $ value), implementation costs, etc....Outside of costs, we look at productivity increase. There are many standard templates out there to use, just google.

One of your best points to start would be Gartner research. They have a wealth of papers that detail industry standard KPIs and layout the fundamentals of getting off the ground and running. Also, I would recommend getting people together at your company and creating a review board with the specific task of approving a set of metrics that measure customer benefit or as I would call it, customer satisfaction. That way it is possible take data from previous customers and bundle with new data to create a real sales and management tool.

2. The term "business analytics". Hooboy, this is where life gets more complicated. After years experience dealing at the executive and board level, I would suggest starting at the top rather than the bottom. I am a strong advocate of defining company performance metrics from the top level of your short (1 year) and long (3-5 years) strategic business plan. The strategic business plan enables all operating units and departments to focus on specific targets while making each unit responsible for planning how to meet the goal. Although the goals may change, it easier to define performance metrics once a cohesive, well designed business strategy is in place.

You don't mention what how big your company is, but from the statement none of your guys have this type of experience, begin with creating or refining a strategic business plan to incorporate targets. This again should be done in conjunction with the management team and individuals responsible for all business areas.

Creating the metrics themselves is a natural extension of measuring the activities against the strategic plan and should be straightforward.

3. Making metrics work for the business. As with anything created by a company to monitor or manage performance, follow up is key. A monthly review should be undertaken by the management team each month based on inputs by each responsible from the strategic plan. This is where you really start to get value from kpi's and metrics.

4. Resources. For a software company, a good place to start would be the ITIL process overview. This is a framework that provides total governance for IT endeavors. It's not the end all be all, but it is a great place to start to get a good idea of where your company can start and determine what makes good metrics for you.

Another place would be gartner research. They have a vast wealth of knowledge that with some sorting and much lower cost than bringing in the consultants you can get a good start.

I hope this helps. If you need more information, just mail me, and I will be happy to help. Have to get back to work. :)
posted by Funmonkey1 at 6:43 AM on January 19, 2010 [1 favorite]

Thanks, F. This is tremendously helpful. I especially like the idea of looking at Garter reports for KPIs - I was glancing at a Garter report just a week ago, and somehow it didn't click that I should dig deeper into their numbers for ideas.

One follow-up: I'd like to do some additional reading on the process of defining and taking these measurements - any suggestions for publications with more info?
posted by Tehhund at 3:36 AM on January 20, 2010

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