Business Intelligence: Becoming a Smart Business

Originally published 24 January 2005

In my last newsletter, I reviewed a technology framework for supporting a smart business environment. This time I look at the types of business problems such a framework helps to resolve and the tasks involved in building a smart business IT framework.  

Most companies have successfully installed a variety of information technologies that support business user interaction, and the running and analysis of business processes. The problem with these solutions is that they have been installed by different groups within the IT organization. They support differing business needs because they have been used to meet the objectives of individual business projects. As a result, business users face many obstacles when trying to understand and optimize business operations.

  1. Business users find it difficult to collaborate on and access the many different types of business information they need to do their jobs. In most installations, this information is scattered across many different systems, and involves a complex web of security and logon procedures.
  2. Business users find business intelligence applications both difficult and time consuming to use. This is not only because of the complexity of many business intelligence tools, but also because the information produced by these tools is not tied directly to business processes, is not immediately actionable and often requires further analysis by experienced users before it can be employed to make informed business decisions.
  3. Business users cannot use business information to make timely decisions because the information is often inconsistent, inaccurate and out of date.

Most of these problems concern the currency and accuracy of business information, and how information is accessed and processed by business users in the decision-making process. These issues must be resolved if the full value of an organization’s information and employee knowledge is to be realized, and the organization is to become a smart business. Each of these issues is discussed in more detail below, together with suggestions on how new and evolving information and collaboration technologies can assist in their resolution.

Business Information is Difficult to Locate and Use

Business users require secure access to many different types of related business information such as transaction data, business intelligence, e-mails, marketing collateral, advertisements, press releases, product documentation and so forth, to have a complete picture of all the business activity that is related to the business topic or issue that is being addressed.

Business users can employ a number of tools to access and collaborate on business information, but often these tools are located on disparate systems, require different logon IDs and passwords and contain inconsistent data that is difficult to access and search. A large bank, for example, discovered that call center support staff typically had to access more than forty different systems during the course of a day when handling customer inquiries.

Information access is made more difficult by the need to expand the use of business information to a wider audience of line-of-business (LOB) users who often have limited computer skills, or who have little time to use complex tools. Business information, therefore, needs to be made easier to access, and should be tailored to suit the needs and skills of individual business users. An enterprise portal offers a solution to this problem.

A portal not only enables user collaboration and access to all types of business information, but also provides business users with a single interface to enterprise-wide business content that can be personalized to each user’s skills and role in the organization. A portal not only supports desktop business users, but also mobile workers, such as salespeople, who need to use wireless and mobile devices to access business information.

Business Intelligence is Complex and Not Immediately Actionable 

In a business intelligence system, data is extracted from business transaction systems and integrated in a data warehouse for analysis by business intelligence applications. Although a business intelligence system can provide a business user with a wealth of information about business operations, the user must proactively access the business intelligence system to analyze business processes to determine if business goals are being met and if any problems exist that require action. Furthermore, the user must have in-depth knowledge of business processes and operations in order to act on the results of this analysis. Many users simply don’t have the time, inclination or required skills to use a business intelligence system.

To solve these problems, business intelligence analysis applications need to do more than simply provide raw measurements, or so-called metrics, about business performance. These measurements need to be put into a business context, and business intelligence applications should compare performance metrics to business goals, and produce easy-to-use reports and scorecards that quickly indicate to business users where action is required. A portal is an ideal vehicle for delivering performance scorecards to users. Another option is to alert users via e-mail or a mobile device, when goals are not being met.

This approach to business problem solving enables business intelligence to be made more actionable, and enables a business intelligence system to be used not only to measure business performance, but also to manage it. This style of business intelligence processing is called business performance management (BPM) or corporate performance management (CPM). Rather than just producing metrics about current sales and product inventory, for example, a business performance management application can show how sales figures are tracking to sales objectives, and can identify situations where the supply chain is not satisfying the demand for products.

Business Information is Not Being Used to Make Timely Decisions

A business intelligence system integrates data from disparate transaction data files and databases into a data warehouse. This approach provides clean and consistent data, and enables a historical record of business operations to be maintained. Such a system is used for strategic planning and tactical analyses, and to provide early indications that long-term and tactical business goals are not being achieved.

Less use has been made of business intelligence for managing and optimizing day-to-day business operations. This is because most data warehouses contain historic, rather than low-latency transaction data. A business intelligence system, however, can be used for driving day-to-day business operations if the data warehouse can be enhanced to provide access to low-latency business transaction data. As shown in Figure 1, the action time between a business problem occurring and a user taking action to resolve it is dependent not only on how long it takes to analyze information about the problem, deliver an alert to the user, and the user to take action, but also on the latency of the information being analyzed. The lower the latency of data in a data warehouse, the faster users can react to business problems.

BusinessIntelligence:BecomingaSmartBusiness

Figure 1: The latency of business decision making and action taking[1].

Updating a business intelligence system with low-latency transaction data is sometimes described as real-time data warehousing. This term is rather misleading since it suggests a business intelligence system can be used to manage business operations in real time. There will always be a latency between an event occurring and the user taking action. Also, not all situations require instant action. Detecting a potentially fraudulent credit card transaction should occur in as close to real-time as possible, but determining that a store has run out of a specific product is not as urgent. The concept of real time must be related to the business need, and right time is, therefore, a better term to use than real time.

When business user action times are not fast enough to meet business needs, rules-driven decision-making applications can be used to automate the decision-making process. These applications receive alerts and use business rules to determine what actions need to be taken. These action rules encapsulate a business user’s knowledge and expertise, and are defined to decision-making applications by experienced business users. An example of an automatic action would be to sell stocks if stock market activity is causing an investor’s portfolio to exceed certain predefined risk levels.

The use of a low-latency Operational Data Store (ODS) in a data warehousing environment causes considerable confusion because this data may be used not only by business intelligence processes, but also by business transaction processes. The motivation in both cases for creating a low-latency ODS, however, is to integrate and cleanse transaction data, and to put the data in a format that can be understood and used by business users.

For business intelligence processing, a low-latency ODS can be used for near-real-time action taking (optimizing Web store-front product offers, for example), and for staging transaction data into a data warehouse for strategic planning and tactical analysis. For business transaction processing, a low-latency ODS can be used for transaction data reporting, and as a base for new business transaction applications, the staged migration of older legacy applications, and the propagation of transaction data to downstream applications.

Solutions for the Smart Business

From the discussion above, several new and improved information and collaboration technologies can be identified that can help companies solve usability issues, and enable them to become smart businesses through informed and faster decision making and by using business information to enable efficient business operations.

  • A business user portal can secure, access, manage and tailor all the types of business information to suit the needs and skills of individual business users, and can be employed by desktop and mobile business users to collaborate and share information with each other.
  • Strategic and tactical business intelligence and business performance management applications compare business intelligence results to business goals and alert users when goals are not being met.
  • Right-time and integrated transaction data enables business performance management and reporting applications to be used for driving day-to-day operational decision making.
  • Rules-driven decision-making applications automate the decision-making process for near real-time action taking.

A wide, and sometimes confusing, range of solutions are now offered by vendors to enable an organization to become a smart business. When selecting a solution for a project it is important to base this decision not only on the features it provides, but also on its ability to satisfy business requirements, and on its capability to deliver a low overall total cost of ownership (TCO). The test of any new project is whether it helps an organization achieve its business objectives and whether it can do so with a low TCO.

Not all technologies are appropriate for all businesses. As with all new technologies the benefits need to be assessed carefully, and the benefits need to be implemented in a phased manner to ensure successful deployment. Success will also be heavily dependent on whether business practices can be improved and business users trained to exploit the benefits offered by the new capabilities.

Figure 2 illustrates a roadmap for implementing the new and enhanced facilities identified earlier. As shown in the figure, one approach is to deploy these technologies in the following sequence.

  1. Implement portal and Web-based business content delivery and collaboration—This makes it easier for business users to locate and access business content, and to share it with other users both inside and outside of the organization. 
  2. Implement the delivery of actionable business intelligence and alerts to business users—This enables business users to react rapidly to business problems without the need for the skills and time to understand and use business intelligence tools.
  3. Consider automating certain business decisions and actions—This enables organizations to respond rapidly to business issues and questions, while at the same time decreasing user workloads.
  4. Evaluate areas of the business where right-time decision making offers business benefits and competitive advantage—This brand-new technology is immature and complex, but it has the potential to significantly improve business efficiency and competitiveness. 

Figure 2: Information and collaborative technology implementation roadmap

Figure 2 is only one possible scenario. Many others exist, and the most appropriate one to use will depend on business needs and the return on investment (ROI) to the business of any given technology. As always, it is important to have a business requirement for new technology, rather than to simply install technology for technology’s sake.


[1] This figure is based on a concept developed by Dr. Richard Hackathorn of Bolder Technology.

SOURCE: Business Intelligence: Becoming a Smart Business

  • Colin WhiteColin White

    Colin White is the founder of BI Research and president of DataBase Associates Inc. As an analyst, educator and writer, he is well known for his in-depth knowledge of data management, information integration, and business intelligence technologies and how they can be used for building the smart and agile business. With many years of IT experience, he has consulted for dozens of companies throughout the world and is a frequent speaker at leading IT events. Colin has written numerous articles and papers on deploying new and evolving information technologies for business benefit and is a regular contributor to several leading print- and web-based industry journals. For ten years he was the conference chair of the Shared Insights Portals, Content Management, and Collaboration conference. He was also the conference director of the DB/EXPO trade show and conference.

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