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Business Intelligence:
The Value of Business Intelligence Applications: Part 2

online columnist Jonathan Wu     Column published in DMReview.com
June 25, 2001
 
  By Jonathan Wu

While data may be abundant within an organization, the process of effectively obtaining and utilizing information can be challenging. The challenge may stem from the management philosophy that information is power and should only be in the hands of key decision-makers. Or the organization may not appreciate the value that business intelligence (BI) applications can provide.

The first column in this three-part series established that BI applications not only empower users with easy access to information but also increase users' knowledge of the business by enabling them to identify and analyze trends and exceptions. This second column focuses on how organizations govern their data and the factors that can help them realize the value of their BI applications.

Individuals' access to data varies by organization. In his book E-Business Intelligence - Turning Information into Knowledge into Profit (McGraw-Hill, 2001), Bernard Liautaud identifies four models that govern information within an organization. They are dictatorship, anarchy, democracy and embassies. Your organization may fit distinctly into one of these models, or it may be a blend of models.

Models of Information Governance

An information dictatorship makes information readily available - but only to a few individuals within the organization. Information is provided to senior management, to the information technology group that controls it centrally, or to both. For the most part, information is not shared within the organization other than through standard reports. At one of our clients, for example, the tax director requested information from the IT group to make quarterly decisions about tax planning and estimated tax payments. He waited more than a year without receiving the information he had requested. In this case, the IT group controlled the data and doled it out based on its own priorities.

When managers and other individuals lack access to the information they need, they base business decisions on gut instinct rather than on actual data. An information dictatorship eventually fosters information anarchy within an organization.

Information anarchy occurs when managers and others within an organization develop their own reporting systems to obtain the information they need to make good business decisions. Information anarchy is a grassroots uprising against information dictatorship. Users create separate and disparate reporting systems that seldom, if ever, agree with one another. Information from different reporting systems is rarely comparable because it has been drawn from different sources, at different points in time or via different transformation processes.

In the previously mentioned situation, the tax director and his group developed a series of spreadsheets to address their information needs. They identified data from several standard reports, manually selected the data and entered the data they needed into a new report. This solution was time consuming, labor intensive and error prone. However, it was the best available solution available needs because the IT group was ignoring the director's request.

As senior management becomes aware of data redundancy within an organization - as well as duplication of efforts, wasted resources and information discrepancies, their support for correcting information anarchy grows until they are willing to sponsor an enterprise reporting solution.

An information democracy is best supported by an enterprise reporting architecture that can share information among individuals, groups and departments within the organization. BI becomes valuable as an ad hoc query and reporting tool when individuals within an organization can access data, analyze it and make business decisions based on data rather than gut instinct. According to a recent study by Business Objects, three factors highly influence the value of an organization's BI:

  • The level of democratization of BI software within the organization (measured by the ratio of BI-enabled users to the total number of desktops).
  • The level of empowerment (measured by the number of users entitled to perform ad hoc requests for data vs. the number of total users).
  • The cultural propensity to break organizational stovepipes (represented by the number of departments involved in the deployment of the solution multiplied by the capacity to get access to other departments' information).

Liautaud showcases numerous examples of the value of BI in his book. In one example, Bellini, a small insurance company, provided its employees with a BI application to access data. Through the BI application, they identified unprofitable product offerings. And by addressing these unprofitable offerings, Bellini achieved a 650 percent return on investment.

Once an organization realizes the benefits of information democracy, it can extend its BI to user communities outside the organization. Information embassies extend the information democracy to other user communities - such as customers, vendors and business partners - that are interested in an organization's information. With information embassies, or extranets, user communities outside of the organization can access the information they need. According to Liautaud, these deployments can be grouped into three application areas:

  • Supply chain extranets - Enable users to view the distribution cycle from supplier to distributor to end user. For example, customers who buy computers from Dell Computer Corp. can check the status of their order via Dell's Web site, which leads them from the manufacturing process to the date of shipment.
  • Customer relationship extranets - Allow customers to easily access data about their activity and transactions with an organization in which they do business. For example, customers of Wells Fargo Bank can access their account information and perform online banking from Wells Fargo's Web site.
  • Information brokerage extranets - Give organizations that are in the business of collecting and selling information a fast, secure way to deliver goods to customers. For example, customers of Dun & Bradstreet (D&B;) can purchase credit reports or find new customers via D&B;'s Web site.

Whichever model of information governance your organization uses, the progression from information dictatorship to information democracy and embassies requires the leadership directive of the chief executive officer. Without the CEO's leadership or approval, organizational change from one model of information governance to another is extremely difficult, if not impossible.

By understanding which model of information governance fits your organization, you can determine the course of progression toward realizing the value of the information being captured by your organization's information systems. BI applications make information more accessible, but they also must incite individuals to act upon that information in a way that benefits the organization. Organizations that want to survive in today's competitive environment must provide their employees with BI applications and begin developing an extranet strategy.

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For more information on related topics visit the following related portals...
Business Intelligence.

Jonathan Wu is a senior principal with Knightsbridge Solutions. He has extensive experience designing, developing and implementing information solutions for reporting, analysis and decision-making purposes. Serving Fortune 500 organizations, Knightsbridge delivers actionable and measurable business results that inform decision making, optimize IT efficiency and improve business performance.  Focusing exclusively on the information management disciplines of data warehousing, data integration, information quality and business intelligence, Knightsbridge delivers practical solutions that reduce time, reduce cost and reduce risk. Wu may be reached at jwu@knightsbridge.com.



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