Business Intelligence in a Cold Climate – A Cautionary Tale

Originally published 3 February 2010

I didn’t make it home last night. A simple 10 mile journey which would normally take well under half an hour turned into an epic battle against the elements in which I covered no less than 40 miles using four different modes of transport.

By the time I spotted my house in the distance and I trudged up the final snowy incline, I’d had over 15 hours to contemplate my decision to buy a sleek sporty set of wheels when a big 4x4 would have been far more practical for where I live. I’d also had plenty of time to think about the role of business intelligence in the current economic climate (the topic of a forthcoming IPL seminar). I was rather surprised that the two have far more in common than I ever would have imagined.

Why on Earth Did I Buy a Sports Car?

Don’t get me wrong – I love my car. On an open road, with the sun shining and the needle teasing the redline at 9000rpm nothing in the world comes close.

But at times, I hate my car. On a wet road, with the wind howling and the back end dancing around like John Travolta nothing in the world makes sense.

Sports cars for instance. Why on earth would someone who lives in the middle of nowhere choose to buy a sports car? I’m sure that very question was going through a number of my colleagues’ minds as they watched me the previous evening, wheels spinning, failing to even negotiate the gentle ascent from the car park of the conference centre. In the end, I had to admit defeat, abandon my car and reassess my options.

I guess it was partly my fault for not leaving earlier, when the first few flakes of snow started to fall, but I was keen to catch a few people to discuss IPL’s forthcoming BI seminar. Plus those desserts did look delicious.

But it wasn’t just me who struggled to make it home last night. Even one of my directors in his “ultimate driving machine” ended up abandoning his journey and staying the night with friends.

What’s the Key to Survival in an Adverse Climate?

It was during the final three mile cross-country hike towards my village that I had my Eureka moment. Perhaps it was the cold crisp air and eerie silence that focused my thoughts. Or maybe I was suffering the early onset of hypothermia. All I can say is things started to make sense. And it came down to one simple question: What is the key to survival in an adverse climate?

I thought about the events of the previous evening. What was it that made the difference between getting home to the arms of loved ones and having to pitch up at a friend’s house for the night? Three little words came to mind: Four-wheel drive.

Whilst those with rear wheel drive (like myself) snaked, skidded and pirouetted their way out of the car park (I believe a few were a little more successful than I), the 4x4 owners wondered what all the fuss was about. Even those with front-wheel drive seemed to negotiate the slippery two mile stretch of lane up to the main road without too many incidents.

As I pondered the reasons why I opted for a rear-wheel drive sports car over a chunky 4x4 something struck me. When conditions are good, the roads are dry and the sun is shining my car is fine. More than fine. In fact, even in the wet I’ve learned to handle its over-exuberance on cornering. It’s only really in the most adverse weather conditions, such as those crippling the UK at the moment, that I struggle.

How Does Four-Wheel Drive Relate to Economic Adversity?

By now, I suspect you’re thinking the arctic temperatures have temporarily (or even permanently) frozen my brain cells. You’re probably also wondering what any of this has to do with business intelligence and the current economic downturn. Let me offer you this analogy.

During favourable economic times, organisations can (and do) survive in spite of their deficiencies in BI. They prosper because everyone is prospering. Public confidence is high and people are happily spending their hard-earned cash on that exotic holiday or fitted kitchen. Even some of the most badly managed companies stay in business. The pace of growth and the balance sheets might distinguish the high flyers from the laggards, but essentially everyone is making a living. This is our dry, sunny road where it doesn’t matter whether you have rear-wheel drive (RWD), front-wheel drive (FWD) or four-wheel drive (4WD).

However, when the economic cycle reaches a downturn it’s a very different story. As people (and governments) start to tighten their belts, the differentiators quickly become apparent. Badly managed companies struggle to respond to the changing market conditions, and those that had previously survived with little or no effective BI suddenly realise that they are hopelessly ill-prepared for the blizzard ahead. This is the dark, icy road where those with RWD struggle to get home whilst their better equipped 4WD neighbours simply slow down and take a little extra care.

Actually, the similarities between the global economy and global weather patterns are worth noting. Both are notoriously difficult to predict, being the result of unimaginably complex cause and effect relationships. Not only are they hard to predict, they are impossible to control. As the past two years have shown, there’s precious little anyone can do when the economic blizzard starts to blow (does anyone really believe that quantitative easing really works?). Some would argue it’s simply a case of taking shelter and waiting for sunnier skies to return.

What’s the Difference Between Knowledge and Intelligence?

Before I take this analogy any further, it’s worth remembering the four key facets of the concept that has come to be known as business intelligence:

  • Reporting – what happened in the past?
  • Analysis – why did it happen?
  • Dashboards – what is happening now?
  • Predictive analytics – what’s likely to happen in the future?

To be honest, the term business intelligence has always caused me a certain amount of mental discord. After all, intelligence is generally accepted to be “the ability to solve new problems through the application of acquired knowledge”. To my mind, this should exclude reporting and dashboards from the scope of BI. I’m not denying their importance in the context of an overall decision support system, but (notwithstanding their use as a vehicle for the other two facets) I would claim they are far more concerned with the presentation of accumulated information (i.e., “knowledge”) than the application of that knowledge. However, since the term business knowledge is unlikely to gain much support among our BI community and established tool vendors, I’ll just have to toe the party line.

Fortunately, I have no such issues with the other two facets of BI – namely analysis and predictive analytics. These are the true champions of business intelligence, helping organisations understand the “whys” and the “what ifs” of their complex business operations. In particular, predictive analytics is the key to gaining competitive advantage regardless of which market you operate in, providing invaluable insight into the questions that really matter to you.

  • Is this person likely to default on their mortgage?
  • Are any of my customers likely to switch to my main competitor’s products?
  • Which of my patients are most likely to require hospitalisation this year?

As a senior police officer remarked at a recent supplier briefing I attended, “we’re not interested in where the last crime occurred – we want to know the location of the next one.” You can’t really argue with that.

Are Four Wheels Always Better than Two?

So when it comes to assessing BI capability, don’t assume that all business intelligence is created equal. An organisation that relies exclusively on reporting and dashboards to support its decision-making process is really only driving the rear wheels. It will make progress for sure (after all any BI is better than none); and in favourable economic times, it might not even notice the lack of power to the front wheels. But when the climate changes, it will be relying solely on the skill of its drivers, the individuals that interpret the reports and apply their own intelligence, to keep them on track.

On the other hand, organisations that embrace business intelligence fully and invest in all four facets of BI will have a huge advantage throughout the economic cycle. In good times, they will gain market share and creep ahead of the competition. And in bad times, they will understand their business well enough to ease off the throttle and steer a steady course until the market conditions improve.

It’s also worth mentioning that business intelligence cannot exist in isolation. Effective information governance is essential to provide the right climate for BI to flourish. Poor data quality, for instance, will hinder any BI initiative so the real message is to take a holistic view and don’t wait for the first signs of snow before taking information management seriously.

Figure 1: 4WD Business Intelligence

 

Two Final Questions

As I finally walked up my garden path to be greeted by my lovely wife and adorable two-year-old son I felt I had been on quite an adventure. But as I gave them both a big hug, I was still pondering two questions.

Will organisations learn from their previous mistakes and improve their business intelligence capabilities before the next economic blizzard reaches our shores? Unless they’ve already taken decisive action over the past two years, there’s probably little they can do to improve their chances of survival this time around. That’s not to say they shouldn’t invest in BI now – as the climate improves, having a head start on your competitors will be key to future success – but ultimately the fate of those that haven’t yet got the message is in the lap of the gods. They will just have to fasten their seatbelts and hope they come out the other side in one piece, albeit rather battered and bruised. And most will. Almost 150 years after Herbert Spencer coined his famous phrase, the fittest aren’t the only ones who survive.

So to return to my question, as the economic cycle brings warmer conditions and the ground starts to thaw, will organisations start trading up their BI capabilities to 4WD, eschewing their current report-centric solutions for something that provides them with better control, improved visibility and greater ground clearance? My answer is simple: Some will. Some won’t.

The answer to my final question isn’t quite as simple. Precisely, how am I going to rescue my car from the middle of nowhere whilst the UK is in the grip of its worst snow and ice for 30 years?

Acknowledgements:

Christine Harrison (Head of Training, IPL) – for demonstrating her exemplary driving skills in her Fiat Punto and helping me complete the first leg of my journey home.

Chris Daniels (Business Consultant, IPL) – for kindly offering me a bed for the night and providing me with hot coffee and biscuits.

  • Jon EvansJon Evans
    Jon is a Principal Business Consultant at IPL, a leading UK IT services company specialising in the delivery of intelligent business solutions. He has more than 15 years experience helping a wide range of high profile clients exploit the full potential of their information.

    With significant information management expertise gained across a variety of sectors, Jon has most recently applied his skills in the area of health informatics. As the senior consultant within the Audit Commission’s Payment by Results Data Assurance Framework, he has played a key role in the application of sophisticated statistical techniques to identify anomalies within health data. He can be reached at jon.evans@ipl.com.

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