“BI will provide a tighter connection between our strategy and operations thereby helping us be more productive and more profitable”.

OR

“BI will deliver greater insight to our decision makers, enabling them to make decisions faster, and in a way that adds more value to our business”.

Your vision then defines the bones of your BI strategy – the best combination of techniques and technologies to meet the business intelligence [BI] vision of any one organization.

Read the full article ‘What is a Business Intelligence Vision?”

A KPI is a key measure that is linked directly to a strategic outcome. With a fast moving market, strategies can change significantly more often than just ten years ago. This means that KPI must also change and be monitored using a transparent performance management system. The key in selecting and filtering KPI are the decisions that the organization makes, and which of those decisions are most critical at any one time.

There are effectively three kinds of decisions made in any organization:

1. Strategic decisions – these are the small group of ‘big’ decisions, made by the small executive group, that involve big investments, with significant outcomes. For instance, developing a new product line to attract a new market or acquiring a competitor.
2. Tactical decisions – those decisions made by a larger, but still contained group of managers that determine exactly how the strategic decision will be put into play, in terms of approach and offering. For instance, a product manager making decisions around a pricing schedule and launch bonuses relating to the new product line.
3. Operational decisions – the business decisions made by many people, on a daily basis, that have a smaller business impact when measured independently, but when aggregated with multiple operational decisions add up to a lot of value. For instance, a sales person may offer an additional discount to add leverage to a significant account to sign up to the new product.

Using the above example, the new product group, the executives will be making strategic decisions around meeting EBIT targets, the product manager will have KPI focused around profitability and portfolio contribution to EBIT, and the sales person will be tracking to sales targets related to account revenue and profit. If this discount was offered to his entire account portfolio, the impact on profitability and EBIT contribution could be significant, and could drive decreased performance to KPI up through operational and strategic levels. And this is where the critical missing component comes in.

KPI’s must have business rules attached. Business rules help to define how performance to a KPI must be implemented, and will in this case restrict the offering of additional discounts to drive revenue at the expense of profit. Implementing KPI without business rules definition is a common occurrence in businesses, and accounts for many instances of targets not being met. This is the reason that The Logical Organization focuses very much on decision making when defining its business intelligence strategy.

Check out the article and comments and let me know your views – I like to know what you think?  The Rise of the Chief Performance Officer

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Selling will always involve emotion – even to the most rational, hard headed buyer. All prudent marketers are aware of the decision making profiles of their main market segments. Some buyers make decisions purely on emotions and never really apply any logic. Some buy on emotion, then attempt to rationalize their purchase afterwards with rationale to either support their purchase to others or overcome buyers remorse. And the rationale, intellectual will carefully analyze all the pros and cons, but will always be swayed by an element of emotion – more in terms of fear or ego, rather than pleasure. Businesss Intelligence should lead marketing efforts in terms of segmentation and knowing your customers, then emotion comes into play in carefully crafting advertising copy to entice the desired response.

There is always a role for good judgement in business, even outside the hard data.

On the positive side, the report suggests that although cloud represents a ‘great opportunity to exploit unprecedented IT resources it has a number of obstacles to overcome”, ten according to the report.

In the report ‘Above the Clouds: A Berkeley View of Cloud Computing‘ the group ,which works in the Reliable Adaptive Distributed Systems Laboratory funded by companies such as Google, Microsoft, IBM and Sun, argued that “the construction and operation of extremely large-scale, commodity-computer datacenters at low-cost locations was the key necessary enabler of Cloud Computing”.

In respect of service provision, the paper defines different types of cloud computing providers, ranging from the infrastructure end typical of Amazon EC2 to the application-specific services such as those provided by Google AppEngine. Providers must also do their bit to ensure availability by accessing massive bandwidth to insulate against the impact of DDoS attacks. And some good news. For those who fear that commoditising computing power will lead to a low-margin business model, the Berkeley team disagrees, stating “The apparently low costs offered to cloud users may still be highly profitable for cloud providers.”

Not a lot to add to that we already know. But they did highlight that “vendors need to rethink the way they build their products”. In particular they referred to the ability to both scale up and DOWN to meet the changing needs of users, and that service plans must also accomodate short term needs for computing power.

The hardware needs must also be scaled up, with larger racks, energy efficiencent servers and flash memory.

A key enabler of multi cloud computing vendors will be the development of a standard set of application APIs – it doesn’t matter what the technology, standardisation issues always rise to the top and act as a major constraint.

The 10 obstacles to cloud computing:

1. Availability of service
2. Data lock-in
3. Data confidentiality and auditability
4. Data transfer bottlenecks
5. Performance unpredictability
6. Scalable storage
7. Bugs in large distributed systems
8. Scaling quickly – up and down
9. Reputation fate sharing – an interesting term the report elaborates on
10. Software licensing

Not a lot the industry is not already aware of, however, the report also provides some good suggestions for customers of cloud computing, such as procuring services with several cloud providers to ensure service availability.

Download Report

Today, 75% of IT budgets are spent on keeping the lights on. This is severely restricting allocation for business building technologies such as business intelligence. However, cloud computing will change that. The strategies and concepts around cloud computing and BI are challenging IT managers to rethink and restructure the role of IT in business. To many, the fear of being made redundant to outsource providers keeps many IT managers awake at night. However, the reality is more that the role of IT will change, rather than reduce. A change that will see IT become more engaged with the business outcomes of IT, rather than the technology itself.

Just as markets have evolved, communication formats have evolved, and IT hardware has evolved – IT infrastructure has evolved in its entirety. Just as the provision of electricity moved from individual generators to centralized mainstream services, so too are IT services.

It will be the role of IT to keep abreast of new technologies and work with the business to understand how this might help the business become more productive and more profitable. Combined, BI and Cloud computing have already bubbled to the surface of the business – from being part of backend, ‘under the covers’ infrastructure to being the center of strategic strength of the business. Those CFO’s and CEO’s who understand this will be the industry leaders of the future.

With the launch by VMWare of its innovative cloud operating system vSphere 4, virtualization has almost been demoted from being the latest word on everyones lips, to being a small part of something much bigger – and something much more exciting.

Cloud networks keep the lights on – and let IT managers sleep at night. Not only are cloud infrastructures intelligent in recognizing that a network is failing to meet a client SLA, they are self healing, adding additional resource or capacity on demand. No IT intervention required. This is exciting news for many businesses who are struggling with their BI programs through underperforming infrastructures, and prior to vSphere the nightmare of ungrading to meet the processing demands on BI.

Rather than being afraid of upcoming technology, IT managers should be rubbing their hands together in delight at the prospect of no longer having to go to the business begging for more budget, just to keep the basics alive.

More about VMWare vSphere 4

Top 8 Sleep-Killers

The top eight issues keeping business leaders awake at night include:

1. “the constant pressure to meet and beat my quarterly targets” – since the outputs are very data driven, make more use of data to drive the inputs to meet these targets.
2. “how to balance my work pressures with the needs of my family and my health?” – reduce the time spent managing and performing repetitive tasks that can be taken over by intelligence driven processes
   “how can I recruit smarter, more productive people?” – even as a strong supporter of BI software I was unaware of how effective BI was in the area of recruitment until I spent some time investigating this further for my book. Even understanding how BI will transform businesses and how important change is as an everyday part of work recruiters can evaluate candidates for their willingness to collaborate, share ideas and let go of old concepts and assumptions and adopt more modern methods of logic driven decision making. As we go through this period of transition between Socratic right/wrong mentality to one of fluid thinking and multiple options of exploration, we find that not all people are willing or have personalities that are comfortable with releasing old styles of thinking, decision making and management and not adaptable to constant change.
3. “I’m losing good people. How can I keep them from leaving?” – The power of BSC type strategic methodologies and personal productivity dashboards cannot be underestimated in the value of helping each individual understand the value they contribute to the overall organizational goals and in self managing their performance and decisions on a day to day basis.
4. “I need to develop a lot more leaders in our enterprise” – Leaders today need to be more coaches than managers, but the overwhelming amount of information needed to complete every task prevents many from implementing productivity and development programs. By releasing much of this load to BI tools and combining insight driven decision making into more innovative channels, teams feel more empowered and naturally more motivated.
5. “to better manage a much more competitive culture” – it is predicted that the capability of artificial intelligence will surpass that of human intelligence within the next 20 to 30 years. Those companies which do not start the transition to leverage this capability through the adopting of BI tools will not only struggle to keep pace with competitors who do, but fail to deliver insightful products and services to retain their existing customers.
6. “we need to find a more effective communications strategy” – communication is wasted if it does not effectively transfer valuable information. The degree to which the information is valuable is determined by its relevance, accuracy and timeliness. BI tools are effective in all these three domains and the collaboration tools inherent in BI solutions ensure that information is not silo’ed or hoarded.
7. “our metrics are not up to scratch. How to better analyse sales and KPIs” – strategy is too often poorly implemented and/or devolved throughout the organization. By integrating Balanced Scorecard and BI KPI’s are easier to detect and more appropriate to measuring the businesses performance in reaching its goals. I often find that businesses have implemented sound KPI measuring mechanisms but they are either measuring the wrong things or too many things. BSC + BI help businesses avoid both of these mistakes
   “I worry about whether our security is OK” – most large corporates have sound security policies. For those small businesses, the benefits of SaaS BI, CRM and other business software ensures that data is more secure than most previously experienced.
8. “how to ensure the survival and succession of my business” – when we look back at why only 18 of the Fortune 500 companies in 1974 still survive today, the underlying reason has been failure to change the way the business operates to keep up with changes in the business and consumer environments. The lack of flexibility through rigid ego-driven hierarchies, lack of information and poor collaboration has been the demise of many previous great companies. When BI is fully integrated into the operating environment, the infrastructure almost self evolves as new data-driven insight highlights new opportunities – new decisions to be made – new processes to implement and new relationships to form.

I congratulate all on a great debate. All contributors made valid points, albeit from different perspectives. As a corporate performance consultant for 20 years I have developed an in-depth understand of technology and am often charged with vendor selection.

I acknowledge Nigel’s statement that we all agree that “when it is implemented well, business intelligence technology can and does stimulate better management and innovation”. I also agree that more focus needs to be on “how technology solves business issues” rather than how well the IO can manage queries. Nigel caps the major challenge that most BI vendors and business managers don’t recognise – “not enough businesspeople understand what the technology can do”. It’s very much a matter of they don’t know what they don’t know!

BI impacts processes and decision making in often revolutionary ways for many businesses. This aspect is rarely highlighted in BI vendor marketing presentations. They talk about better decision making – but do not state why or how. Having better data is not the answer. Using better data and embedding that use in every day processes is how decisions will become data driven.

I agree with Nigel that BI has been IT-led. This has largely been by necessity. Executives today that sign off on technology investments don’t have the time or desire to understand how technology works. But in failing to do so, they fail to recognise the significant value BI can have in the organization.

BI and performance management matter in ANY size company and decision making must be supported by facts, not individual recollections of what happened last time we tried that.

I don’t read that Nigel suggests that BI is not suited to SME, rather he rightly emphases the real truth that all business owners and managers [not just SME] “must make the effort to learn how they can adapt the available BI tools to their business needs”

Tony adds to this dilemma by pointing out one possible reason for this – that many BI vendors fall short in communicating the value of BI tools to the business – they tend to concentrate on regaling the many benefits of the BI features in terms of how they easily fit into the IT infrastructure and the performance power of the engines – Business people don’t give a hoot about any of this. They want to know only three things – how it makes me more money, how it saves me money, and how it will keep me out of jail!

As Paul says “Managers across all organisations of ALL sizes have the identical issues” But in saying this, business managers need to take more responsibility about IT as a critical business capability and get more savvy and knowledgeable about business technology in general. If they don’t understand how BI technology works – how can one expect them to trust and rely upon it to support their most pressing business decisions. They won’t do this if BI is seen as part of BI. I advocate BI as a separate function that provides capability across the business – just as IT or finance support aspects of all functions. In this way it provides a strategic and operational bridge between IT and the business. The more BI gets ‘operationized’ the more its value is released.

As Bob states one of the prime reasons that so many businesses “go to the wall each year is due to the lack of financial information”. But I would add that its not just financial information that is needed – but market information and operational performance information. Too much emphasis is given to financial reporting – when it is purely an outcome of good decisions around product development, marketing, supply chain, manufacturing etc etc. The closer to the source of the driver of performance the information can be monitored – the more likely any damaging flow on effect can be contained.

I got so frustrated by all these issues that I decided to do something to help resolve these problems so have recently published a comprehensive guide [“The Logical Organization”] covering all these important points – what BI does and what business managers need to know about the technology, but written in a way they understand. BI is about executing business strategy, business ownership of data as a valued asset, data quality governance, business process automation, evidence based decision making, personal performance management, effective planning and governance – and a whole raft of business competencies. Collectively, we all need to include more about these items in our communications about BI and move away from the tech speak that scares most managers away, and sends the rest to sleep.

It’s not about technology – it’s about accepting that the operational framework businesses need today is vastly different from 10-15 years ago and that BI needs to be integrated [using BI technology] at every critical point of performance. And that applies to any function, in any business [small – medium and large], and in any industry.

The Logic Evangelist