If you are to compete with companies around the world, you need to be able to differentiate yourself and business intelligence gives one of the most powerful ways of doing this on a sustainable basis. Companies that learn rapidly are companies that do well.
Business intelligence supports decision making at the strategic and operational level and it is up to us as decision makers to be able to extract the best out of this investment. Typically, depending on how business intelligence is understood, there could be four ways in which it interacts with company strategy.
Value Addition by Business Intelligence
Obviously, how your company uses Business Intelligence will depend on what is its line of business, its size and the competitive environment. All companies use business intelligence in some form or the other - using post it notes, a good memory, ledger entries and office anecdotes, but with the explosion of data, the real benefits can only accrue if there is an institutionalized and formal method of capturing information, its proper analysis and even more critically, the willingness to change policy if the analysis indicates this.
When your company starts off with its Business Intelligence initiative, it will need to view the data that it holds as a strategic asset and define measurement metrics that will allow it to apply concepts of process optimization and quality improvement. This kind of value creation will provide opportunities to allocate resources better, reveal new opportunities and to reduce costs. All of these go on to make your company more efficient and competitive.
Business Intelligence also forces us to break silos in our thinking since it combines data from across the company and from outside it to bring out new insights.
You need not use Business Intelligence on a strategic level alone. A great example of using Business Intelligence on a daily basis can be seen at Disney Parks. This is used to predict the movement of visitors in the park based on daily trends and accordingly it directs the staff in their efforts to channelize visitors. Data on crowd movement is captured from 800 points of sale and 20 other types of data sources. Since the introduction of this system, crowds are managed better and customer satisfaction has increased.
The Criticality of Data
The focal point of all Business Intelligence initiatives is data. When you begin building your Business Intelligence systems, a natural question that often arises is whether data already in the corporate database will not suffice? Why should a separate database be required? There are several reasons for this –
- Different departments usually have their data held separately with different user rights and privileges assigned.
- The same data could be in different formats and field sizes in different databases, units could be different and these will need to be all brought to a common format. No DBA will allow alteration of data in the database by a third party or application not under his control.
- Running analytical queries across such diverse databases would be difficult and cumbersome and would probably impact the performance of the applications that are already using the databases.
- Often, DBAs who are aware of their data needs would archive their old data to tape and this would then not be available to the Business Intelligence specialist when he wishes to run his queries.
- There could also be data that is not available in databases but is kept in spreadsheets and in unstructured documents.
Therefore what is often done is to create a database exclusively to house the data required for the Business Intelligence application. This database is optimized for the needs of the BI application which ensures that the queries run much faster. Data can be held for far longer than corporate databases and cleaning, formatting and other actions can be programmed so that the process of populating the database is automated to the extent possible. Since all the data is now held in a single logical database, the analyst can move quickly from a summary view to a detailed view as required.
An interesting aspect of Business Intelligence is the lack of awareness many executives have about the capabilities it can give them. Some recent surveys have shown that executives do not feel they have BI support for all of their most important tasks and yet less than half of the surveyed executives used advanced and predictive analytic features of their Business Intelligence software. So there is a situation where executives clearly feel the need for advanced functionality and yet do not use the very functions they need. This is perhaps a function of training and also the willingness to spend time to explore the software and the interface.
One solution to this problem is to segregate your users into three groups – tier I, II and III. Tier I users are active in exploring the capabilities of their Business Intelligence solutions; they explore, experiment and draw conclusions. You do not have to do much with this group except support them with database access etc. Tier II users are fairly advanced users who are convinced about the usefulness of BI. They look to modify existing reports and may need some hand holding now and then.
Tier III users are those who do not create their own reports and rely on others to send them data. They will tend to lose interest in your solutions if they are not intuitive enough. These users can sometime be at the very pinnacle of your organization and thus may wield enormous influence. Their queries need to be supported and rapidly responded to.
While all executives demand better quality of data to make better strategic decisions, many are not aware of the capabilities of the Information Systems under their control. It is the responsibility of the IT managers to ensure that these capabilities are not underutilized. A related aspect is the willingness to use the Business Intelligence system to alter strategic decisions. When companies install such systems, they also need to commit themselves to analyze its output and to take action based on its conclusions. This last step is essential to get true value from the substantial investment in time and money that the BI system represents.