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A value proposition is a promise of value to be delivered and a belief from the customer that value will be experienced. A value proposition can apply to an entire organization, or parts thereof, or customer accounts, or products or services.
Creating a value proposition is a part of business strategy. Kaplan and Norton say "Strategy is based on a differentiated customer value proposition. Satisfying customers is the source of sustainable value creation."
Developing a value proposition is based on a review and analysis of the benefits, costs and value that an organization can deliver to its customers, prospective customers, and other constituent groups within and outside the organization. It is also a positioning of value, where Value = Benefits - Cost (cost includes risk).
We noted earlier that “business intelligence” is a multi-dimensional tool, and different BI capabilities have different value propositions (we’ll take a closer look at the various styles of BI in a future post) :
At a higher level, business intelligence and business analytics are all tools for either planning and control or enhancing the performance of an important process. That being said, many business executives, managers, and analysts we have worked with are uncertain about the value proposition for BI, and thus they hesitate to move forward with BI initiatives as aggressively as might be to their advantage. This problem can be overcome.
Essentially, leveraging business intelligence to create business value is about aligning application the BI capabilities described above with the core business processes of the firm so that business performance – and profitability – is improved. The steps for doing so include:
Clarifying the BI value proposition is a straightforward process that pays dividends in the form of business sponsorship and business engagement. Further, it helps move the business intelligence initiative from being an IT-driven initiative to being a business-led initiative. This is the proper place, because while business/IT partnership is crucial to success, only business people can achieve the business process changes necessary to capture the business value of business intelligence.
It includes the following topics -