BI: Transforming Data Into Usable Information

Never has so much data been collected and stored within organizations. Smart organizations want to make use of this data, not only to keep the organization going, but also to gain competitive advantage, or make a better, more efficient and effective workplace. Business leaders agree that business intelligence and analytics, based upon accurate information, are key components in achieving this.

Business intelligence (BI) is not a new phenomenon -- it has been with us for several hundred years. BI was first referred to in Sun Tzu's Art of War. Sun Tzu claimed that in order to win a war you had to have complete knowledge and understanding of your strengths and weaknesses -- as well as those of your enemy. This is the core idea behind modern BI. A company must know itself better than anyone else, and know its customers and competitors better than anyone else. It was first coined as a modern day expression by Howard Dresner, then of Gartner (NYSE: IT) , way back in 1989 to describe a set of concepts and methods to improve business decision-making by using fact-based support systems.

Spawning New Technologies

However, BI has moved on. Until the late 20th Century, BI was intuition-based -- now we have the tools and the expertise to make decisions based upon fact. Of course this assumes that we have access to accurate and consistent data and there lies one of the key elements of any BI strategy. Computer systems will only ever be as good as the data they have to process -- "rubbish in, rubbish out" remains an imperative statement.

As the demand for BI grew, the IT industry spawned a number of important technologies, from committed software vendors, that continually stretched the boundaries of the possible. From the early days of simple reporting through multidimensional analysis to visualization, planning and multilevel deployment. Even today, many organizations have not been able to grasp the advantage that real BI can provide. Multidimensional analysis has been with us for many years, and many organizations throughout the world rely on this type of reporting to continually increase the effectiveness of their organizations. Many do not.

Mark Twain encapsulated the need for accurate information in the first decade of the 20th century when he said, "When a man is buying a basket of strawberries, it can profit him to know that the bottom half of it is rotten." That is as true today as it was in 1908.

The reality is that all organizations have some elements of BI available to them. This may be simple operational reporting or more complex spreadsheet applications. What is often at issue is the quality of the data. One of the key elements of a BI strategy is the consistency and accuracy of the available data. How often have we heard the term "a single version of the truth?" Where organizations rely upon data to be supplied from a range of sources, the chances are that there will be inconsistencies.

Inconsistencies in Data

There are some inconsistencies in data that we see in our everyday lives away from the office . Mail addressed to you but your initials or surname is spelled incorrectly -- or perhaps mail for you with the wrong address and wrong name! The impact of this is generally to negate the effect of the communication -- why would we be interested in an approach from an organization that can't get even the most basic details correct?

Of course, in the office this problem is multiplied many, many times -- and so is its impact. How often have we looked at our customer relationship management (CRM) solutions to find that a company has been entered several times, each with a slight misspelling? There are lots of examples of this but if we place this all in a business context, the lack of data consistency can lead to poor decision making. If you examine your suppliers to understand who you are purchasing from -- in order to drive better prices or service -- what could be worse than misidentifying the major suppliers because there are several entries for the same company with slightly different spelling? Can we guarantee that data is consistent from application to application?

In today's increasingly competitive global market, the demand for increased effectiveness within organizations continues unabated. The need for competitive advantage has never been higher -- and is unlikely to reduce in importance. Organizations that are able to understand their strengths and weaknesses -- and their competitive advantage -- will be the winners in the next decade and beyond.

A Matured Market

BI is not just a set of software tools. BI is an approach to business operation that relies upon agility, responsiveness, awareness and an ability and willingness to look beyond the immediately obvious.

The market for BI has matured as more and more organizations have benefited from its adoption. From the early days of flexible reporting solutions through to the BI capabilities we see today, the market has continued to develop as organizations become more demanding of the software tools that they use. The pace of change increases as more and more products become available and the imagination of the customer develops.

Today there is the world of corporate performance management (CPM). Corporate performance management is a term introduced by Gartner Research in 2001 -- there is a common theme here -- to describe "all of the processes, methodologies, metrics and systems needed to measure and manage the performance of an organization." There have been many subsequent definitions and descriptions. You will hear of business performance management, enterprise performance management and even operational performance management

The reality is that CPM is an extension and broadening of traditional BI allied to budgeting, planning and financial consolidation systems. We have reporting solutions, we have analysis solutions, we have budgeting and planning solutions and we have financial consolidation and reporting solutions. The reality is that all organizations currently operate some form of CPM -- they have to. CPM is a term that describes a range of functions including budgeting, planning and forecasting, profitability modeling and optimization, scorecarding and analysis, financial and statutory reporting and financial consolidation. All organizations have their own approaches and solutions to these very necessary functions.

Here is the good news: all organizations are already engaged in some form of BI or CPM -- we have already begun the journey.

The concept of CPM is that these functions are all seamlessly integrated with a single version of the truth.

Every organization sets measures or targets for itself. CPM allows these measures to be monitored on a regular basis and for plans to be made to improve the overall performance. Of course this has to be an iterative process:

• Measure the organization's performance
• Monitor the organization's performance
• Manage the organization's improvement

BI allows us to interrogate huge volumes of information, to analyze and understand our day-to-day operations. Financial planning allows us to use the insight gained from the use of BI to plan and budget effectively. CPM allows an organization to harness all of these business effectiveness tools in a single, integrated, iterative platform.

Improving Effectiveness, Profitability

But what's in it for us? In order to remain competitive or to improve performance we must follow the basic tenet of The Art of War. We must understand more about our own organizations, our customers, and our competitors. As the volume of data held by organizations continues to increase we must find ways of harnessing that data and turning it into useful information. We must ensure that our organizations become information-centric and not just data-centric. We must find ways to examine that information to provide us with the insight that will enable us to set accurate goals. As John Lubbock once said, "What we see depends mainly on what we look for." Intuition is valuable but only when supported by accurate and consistent information.

We need to ensure that business processes within the organization are consistent and provide the infrastructure that allows the organization to succeed. Information assets include all of data sources that exist within an organization. This not only includes information from key operational and transactional computer systems, but also the many documents that are processed day-today. Accuracy, consistency, availability, insight -- all words that are key to the successful enterprise and the development of its information assets.

We are often told that organizations want to empower individuals. BI and now CPM provide individuals with the ability to perform their daily tasks, armed with more accurate and timely information. Improving the way that our organizations perform is something that we all share. The winning organizations will be those that embrace the concepts of BI and CPM rather than ignore them.

Is there an organization in the world that doesn't want to improve effectiveness, drive performance and increase profitability?

In the previous decade, many organizations embarked upon the journey that is business intelligence. In the next decade, more and more organizations will embark upon the journey that will deliver improved corporate performance management. As one of the leading business gurus, Peter Drucker, once famously said, "There is nothing so useless as doing efficiently that which should not be done at all."

May the journey continue!