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The Dawn of a New ERA: What's Next in Business Intelligence?

  Article published in DM Review Magazine
February 2006 Issue
  By Don Allen Price

...We shall rise to meet the dawning of a new era - a new order of peace and prosperity in which lion and hyena come together in a great and glorious future. Follow me, and you shall never go hungry again.

This famous speech (and one not often quoted in business publications) by Scar in The Lion King refers to a changing of the guard, new leadership and a new direction - a new era in which two groups who have been enemies will come together and live peacefully. First, the laws of nature would never allow this to occur in the animal kingdom; second, this was an animated movie where the animals talked; and third, in the end, this did not work out. What sticks in my head is the parallel with the lions and the hyenas to companies' IT organizations and the business users they support. (Depending on where you sit will determine whether you view yourself as a lion or hyena.) These two groups seem to be continually at odds. The business users make unrealistic requests, and IT is not responsive to the users' needs.

Business intelligence (BI) is leading us into a new era - an era where the business users have more control over how they analyze, report and manage the performance of the business. Business users are no longer dependent on IT to support their every need. As a result, they are making faster and better decisions.

IT organizations are now free to do what they do best - manage the technology and core transaction systems of the organization. IT can manage the hardware, security, stability, maintenance and integration of the technology infrastructure, which is the lifeblood of the organization.

The distinction of roles that BI created is now allowing IT and business to start living together in peace and prosperity. Neither is lacking in ways to add value to their organization. With these roles and responsibilities being clearer, new opportunities are now presenting themselves, opportunities that only a few months ago were not possible. This article outlines three of these new possibilities.

A New Era

The year was 1996. I sat in a generic conference room getting ready to try to stay awake during another software vendor's presentation. I was in need of a better financial reporting and analysis tool. Everything I had seen so far indicated that I would have to get rid of my financial analysts and replace them with programmers. That is not what I wanted to do. The vendor opened up Microsoft Excel, clicked his mouse a few times and numbers began to appear. Within a minute, he had built an income statement and was slicing and dicing information like I had never seen. I could not understand how those numbers were showing up. There was no formula, no keying of information. They were just there. I was in awe.

That was almost 10 years ago, and now I am the one standing up presenting versus the one who is trying to stay awake. These days I don't incite too much awe - at least I didn't until recently.

Twelve months ago I penned an article about what's hot and what's not in BI. Two of the items in the what's hot section were emerging at that time. The first is referred to in the article as "integrated BI architecture." Gartner Inc. has since expanded this concept and coined it "BI competency." There are many organizations embracing this, and IT and the business users are working together to capture the benefits. The second is the idea of "pushing" data - having a dashboard with the intelligence to identify the important leading and lagging events and delivering the information to the user on a single screen. Technology that makes this possible is now available. A third area that was not predicted and one that is still in its infancy is the idea of taking BI to the customer. These three focuses are bringing back the awe.

BI Competency

During the 1990s, BI was still in its early stages. It was a period of adoption. Those who saw the value and the potential spent their time convincing others. Technology and capabilities were expanding more quickly than they could be implemented. New companies came into existence trying to meet the new BI demands. In hindsight, this adoption was quick, but at the time it seemed very slow and painful. Explaining and accepting multidimensional databases, moving more responsibility to the business side, integrating data sources and getting users to actually use the new capabilities all seemed unachievable.

The first half of this decade has seen widespread acceptance of BI. It has spread from the CFO's office throughout the organization. Now, scorecards drive performance, marketing departments know more about their customers than ever before and IT is using BI to deliver better service to its customers. This period of rapid deployment and widespread use has resulted in many very successful siloed solutions. These siloed solutions have grown to the point where they are now inefficient to maintain and result in data management/integrity issues across the organization. They are beginning to cause some of the same problems they were originally designed to solve.

BI competency is all about context - understanding how your BI infrastructure fits into the organization across multiple dimensions. Defining the long-term objective of the organization and developing an enterprise-level roadmap for how your BI architecture will support these objectives is the key to success. Figure 1 demonstrates the interdependencies of these dimensions. Each of these areas must be understood and evaluated to determine each one's strengths and shortcomings toward achieving excellence.

Figure 1: Interdependencies of Dimensions

There are many tangible results from implementing a BI competency effort. There are obvious cost savings from having a smaller and more efficient technology footprint. There is also value in having consensus of priorities and objectives across the organization. However, the greatest value of a BI competency effort comes from being able to respond to market demands faster and more intelligently. As an example, if your organization is successfully delivering four BI applications in a calendar year, you are considered a high performer compared to market standards. The value of these applications is undisputed. By implementing the processes, procedures and architecture associated with BI competency, one can now deliver twice as many applications in a calendar year and for the same cost. The difference is that people are now free to work on strategic initiatives versus general baseline and tactical support.

Figure 2: BI Competency Results

Predictive Analytics

A majority of today's executives have some type of dashboard that they use to gain a better understanding of their organization's performance. Only a few years ago, these same executives were receiving hard-copy status reports about the events of the previous day. BI technology has allowed us to automate these status reports and put them on the executives' desktops so that they can easily see results and drill down to get more details. This has been a significant change. Executives have access to more information than they have ever had. However, it is difficult to keep this group happy.

The common theme heard from executives today is, "Yes, I have access to a great amount of information - so much, in fact, that I now get lost in the numbers. I still have to find the one or two areas that I need to focus on today. I want the dashboard to tell me what I need to focus on. I don't want to have to look for it." Dashboards have remained a rearview mirror for organizational performance. Executives want information pushed to them instead of them having to pull the data. Dashboards give executives insights into the areas that have not performed well. Dashboards have lacked the intelligence to predict what will not be performing well tomorrow. This is changing.

Companies are introducing dashboards with discovery and predictive analytics built in. This technology has resided with the complex and heavy data mining and data discovery tools that are not designed for the typical business user. Discovery focuses on root-cause analysis. The executive will no longer have to drill down to find the issue and risk getting lost in the data. Discovery allows the executive to go directly to the causes of the variance. Predictive analytics leverage linear regression and other statistical modeling capabilities. These predictive analytic capabilities mine the data, looking for anomalies and trends that fall outside of historical and/or tolerance ranges and alert the executive to the potential risk before it comes to fruition.

This results in a key change. Dashboards will continue to report on the events of the past, but they will also identify the areas that, if focused on today, will not be an issue tomorrow. Dashboards will quickly become less of a rearview mirror and more of a navigation system to help you reach your destination.

BI to the Customer

As previously mentioned, the concepts and values of BI are now very well understood in most organizations. It has moved to all areas of the organization and nearly every department leverages BI in some form. The next logical extension of this value is to the customer. This  area is still in its infancy, but for those early adopters, it will be a significant differentiator.

Only in the last year or so has technology advanced enough to support this type of capability. Internet functionality and security applications are just now opening up these possibilities. We can now deliver BI applications across the Web in a secured environment.

The idea is simple. Prior to BI efforts, companies with high-maintenance customers had to employ a large number of resources to support their customers' needs. A prime example is an institutional investment firm. These organizations bundle various type of securities and sell the revenue stream. The buyers of these securities require an enormous amount of information to ensure they understand the dynamics of the underlying securities. Historically, there were large departments dedicated to supporting these customers' requests. The work was very manual, time-consuming and expensive.

With the introduction of BI applications, these support areas were able to respond much more quickly to requests with significantly less effort. The size and expense of these support areas shrank almost overnight.

With the concept of BI to the customer, leading-edge companies are expanding their BI capabilities beyond their firewalls and allowing their customers access to their own data, leveraging the same functionality currently available in house. In the example, the investors (customers) have real-time access to their data. They can answer their own questions, model different scenarios and download needed information into their own BI applications. The middleman has been removed. Customers have access to the specific data they need in the format they choose and have access to it at any time.

The benefits associated with taking BI to the customer are significant, and the return on investment is very tangible.

There is a significant cost reduction associated with servicing your customers. Because your customers are self-serving, fewer requests are coming in. Cuts can be made to the team supporting the customer, with no deterioration of services provided.

Customers are happier. They have easy access to the information they need when they need it. There is no waiting on responses, no trying to communicate exactly what is needed and no issues associated with getting the information in a format they can use.

There is an increased revenue opportunity. You can provide this improved service as a product offering. There is value to the customer that they will recognize and for which they are willing to pay.

Expenses go down, revenue goes up and you have a happier customer. Companies who recognize this will have a distinct competitive advantage. Those who wait will be forced to do it just to compete. It will be a cost of doing business.

This is going to be an exciting time as we enter a new era in the evolution of BI. There is no reason to be left behind. All these possibilities can be realized today. The technology and know-how are there; it is simply a question of how quickly they will be embraced. 


For more information on related topics visit the following related portals...
Analytics and Business Intelligence (BI).

Don Allen Price is the director of banking services for Navigator Systems, Inc. Navigator is a full-service corporate performance management consulting firm providing strategy, best practices, architecture and implementation services to optimize corporate performance management. For more information, visit www.navigatorsystems.com. Price can be contacted at dprice@navigatorsystems.com.

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