Business Intelligence - A Remedy
Author: Vikram Kole, Head – Marketing, MAIA Intelligence
Today, Business Intelligence (BI) is like physicians’ knowledge of medicine in the 16th century. Majority of the organization we see across do today is basic tracking of what’s going on in the organization. They know how to take the patient’s pulse, heal cuts, and set broken limbs. But most diseases remain a mystery, and the cures sometimes cause more problems than they solve. BI today is evolving which includes modeling, measuring, and experimentation.
Modern medicine started with the new beginning, with scientists and artists applying science to the human body, analyzing and formulating theories about how the body worked in order to better heal it. This is a shift from Measuring to Modeling.
Business intelligence is undergoing a similar evolution. Organizations are moving from simply measuring what’s going on to creating models and theories of how the organizations work:-
- Financial planning and budgeting helps organizations model how it should decide between different investment scenarios
- Dashboards and scorecards model the tiered, competing goals of the organization, and which teams it believes are able to influence those goals
- Management by objectives, bonuses, and incentive compensation management schemes model our beliefs in employee behavior
- Activity-based costing models how costs should be allocated
- Business process management models the relationship between different business processes and the steps that go into them.
These techniques force us to lay out all assumptions about how companies work, and let us verify their validity — the business equivalent of scientific inquiry.
Implement and Experiment: One large Financial Service Enterprise took the modeling approach - they first built up a solid set of knowledge of their business, using traditional BI techniques. Rather than just jumping to fix any perceived problems, they first wrote down their assumptions on how the organization worked - the cause and effect they expected between different variables. Then they started running experiments; changing rates, conditions, or employee for test groups of different segments of the market. And based on the results of the tests, they decided to extend the changes to the full population.
There’s a constellation of books and theories on what organizations should do to make themselves smarter, but the really smart organizations are using BI to learn about their particular environment by experimenting: changing prices, incentives or bonuses, tracking what happens, and making improvements. In short, acting like doctors testing new medical procedures.
In summary: as with modern medicine, there’s still much organizations can do about how they work, or how to fix what ails them. And just as doctors have associations that help collect and share best practice, 1KEY BI can “heal the world of business.“
If you have an example of BI experimentation you can share, please comment below...
Posted on January 24th, 2008 by Vikram Kole
Filed under: Business Intelligence
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