Sunday, April 20, 2008

Business Intelligence (BI) – An analogy

This week I sat down to write a short piece to illustrate exactly what Business Intelligence (BI) is. A colleague of mine needed something to support a presentation he had to give to his directors. What I wanted to achieve was to create a lasting image of what BI is, how it can be useful and why it is absolutely needed in order to out smart the competition by seizing on opportunities that only knowledgeable and responsive companies have. So I wrote this story (in fact I wrote it a long while ago to explain something completely different to a bunch of investors, it worked then so hopefully it will work tomorrow in its new context)!

Imagine you are a fighter pilot in a state of the art F16. You are flying high over enemy territory when suddenly there is a blip on your radar screen. Your on board computer systems tell you that the blip is most likely another aircraft. Business intelligence is knowing whether the pilot of the detected aircraft is an enemy or a friend, before he even knows you are in the sky.

Today, most companies (without sophisticated Business Intelligence systems) can see a blip on their radar screen and, after some deliberation, can detect if the blip is another aircraft and if it is from their own squadron. But when it is not one of theirs, then they can not be sure about anything. The aircraft can be enemy or friendly (from another geographic location). Thus for companies with inadequate BI systems, fast global decisions can be risky and flawed. Quite simply their Chief of Staff (CEO) and Wing commanders can not see the complete global picture in front of them, and any picture they might have will most likely not take into account all of their assets, resources and opportunities.

To win in a competitive market place companies need to be able to detect enemy aircraft before they even leave the ground. This might sound like a dream but good (well integrated) global Business intelligence systems can give this kind of advantage.

Thus for me business intelligence is knowing what information you need to have and why you need to have it. It is no use simply gathering data on every measurable event. You need to know what matters and what does not. And then you need to know what you are going to do with the knowledge, once you have it. Far too much time and money is wasted by middle management collecting data to prove that their departments are running smoothly.

The best BI systems integrate external events with internal events and allow company managers to create opportunities by making intelligent decisions, based on real data. A classic utterance from a manager from an under performing company without good BI: ‘If only I had known that there was a shortage of my product in that geographic region, I could have shifted my overstocked product there and sold it at full list, instead of dumping it at a knock down price in the market where it was originally sent to!’

Interim managers need to be aware about BI, what it can do and how to implement it. It is a lot more than just a Balanced Score Card feeding results into an Excel spreadsheet.

As T.S. Eliot wrote “After such knowledge, what forgiveness” This can mean anything depending on how you interpret it, but to me it means ‘how can we excuse ourselves for the fact that we did not know better, and the mess we made because of it?’

No comments: