Part 3 – Justification, Funding, and Placement
In this third and last installment, I will focus on:
McKinsey found that only 20% of companies have maximized their potential and achieved advanced analytics at scale, even while most companies understand the importance.
PwC discovered that 61% of companies say the key to reaching strategic goals is collaborating more across functions, paired with faster decision-making and innovation.
The Analytics COEI needs to be staffed with key resources that understand business and data issues, the company’s business processes, plans, drivers and strategies, and what LOBs need to be supported, when, and how. In many implementations, some of these resources are not assigned to the COEI on a full-time basis but more on an as-needed basis, making funding the COEI and charging for its services more complex. Sources for these resources include:
The Analytics COEI is basically a cost center and needs to be funded. How companies pay for a COEI depends on many factors such as how the COEI is implemented, available chargeback models, its ownership and leadership, and how many LOBs it supports.
Common funding sources include the following organizations: LOBs, CDO, CIO/IT/CTO, CFO, COO, revenue from tools and license rationalization, and repurposing staff.
Some companies calculate the charge-back funding model of the COEI using criteria such as:
In order to justify the Analytics COEI, here are the key measures used to calculate what each LOB will contribute to the Analytics COEI budget. Each company uses different budgeting calculations, but here are some general guidelines used (per LOB):
As the Analytics COEI matures and more self-service capabilities are introduced, other ways to deliver value and charge for it can be introduced:
When multiple LOBs are supported, they are each usually charged according to the resources they consume. Initial budget allocations are based on:
Once budgets are calculated, they become part of the cost center expenses they will belong to (CDO, CIO, COO, etc.)
The question I always get focuses on the location of the Analytics COEI in the enterprise. Where does the Analytics COEI organization belong? The best place is under the CDO (at least in my opinion and based on my experience), but many organizations have placed the COEI under different groups. If the CDO reports to the CIO, place the COEI under the COO, the Chief Transformation officer or the CFO.
I have seen the Analytics COEI implemented under different executive/C-suite leaders, but the most successful implementations were when the Analytics COEI was part of the CDO’s organization, and the CDO reported directly to the CEO or president. Figure 1 (above) outlines the other potential placements of the Analytics COEI.
Another frequent question is about the Analytics COEI focuses on the COEI organizational type. Here are four different types with some pros and cons:
The Analytics COEI implemented as part of IT under the CIO: The Analytics COEI will provide support to multiple LOBs on an as needed basis, just as other IT resources and groups do.
This implementation is just an extension of the IT group’s responsibilities. It is not recommended because:
The Analytics COEI implemented as part of operations under the COO: The Analytics COEI will provide support to multiple LOBs on an as needed basis, just as other IT resources do.
This implementation is better but not optimal because:
The distributed Analytics COEI implemented under the CDO: The Analytics COEI will provide embedded support to multiple LOBs on a fulltime, dedicated basis.
This implementation is highly recommended because:
The virtual, fully shared Analytics COEI implemented under the CDO: The Analytics COEI will provide dedicated, virtual, not embedded support to multiple LOBs on a as needed basis.
This implementation is my second favorite and is also recommended because:
In closing, I will try to address one last question: which COEI is more important, and which one should I start with? I mentioned quite a few different COEIs in my first installment of this blog, and I still recommend that you focus on your Analytics and Integration COEIs first, mostly because that’s where most of the everyday work (data movement, processing, integration and analytics/reporting is). However, I hope I emphasized the importance of Data Management and Governance enough to realize that they are vital to the successful implementation of both the Analytics and the Integration COEI.
The Analytics and Data Integration COEs are very powerful. Implementing them with provide your enterprise with key competitive differentiators.
For additional information on setting up an Integration COE, please take a look at John G. Smith’s e-book Integration Competency Center: An Implementation Methodology.
I hope you’ve found this series informative, helpful, and actionable.
Need help partnering with your business stakeholders to drive more value, build a roadmap, build a COE, or design your data strategy and data governance programs and processes? Contact Informatica’s Advisory Services group for an initial consultation.