BI is a cycle, not a project
Business Intelligence is not a project or a series of processes that we execute just once. Instead, Business Intelligence is a repetitive cycle of processes. The figure below shows that this cycle consists of three basic processes: the major BI cycle. In turn, the processing process of the major BI cycle is subdivided into a sub cycle of collecting, analyzing and distributing (C-A-D). This is the so-called minor BI cycle.
Figure 1: The major BI cycle consists of three steps: registering, processing and responding.
The Business Intelligence process begins with focused observation and registration of signals concerning customers, suppliers, employees, process lead times, orders, competitors, market developments, new legislation and so forth. We distinguish two types of signals:
- raw, meaningless signals that have not yet been structured and recorded in operational information systems
- key performance indicators (KPIs) that function as sensors as it were in order to scrutinize and closely examine specific signals.
The signals we capture must be stored and then processed (transformed) into information and knowledge that says something about our organization’s performance in relation to its environment and its strategy. This practically concerns the collection, analysis and distribution (the minor BI cycle) of new information and knowledge within the organization in the form of simple reports, dashboards or complex analysis models, depending on both the situation and the target audience.
Information should lead to an adequate response
The information and knowledge should ultimately lead to an adequate response, which the organization (ideally) reveals to its environment. The responses can vary from simply improving certain processes to announcing new products and services. Initially, some responses are barely noticeable – gradual optimization of the business processes, for example -, while others are very apparent – such as entering new markets. Business Intelligence thus begins with proper registration of data, because without reliable and complete data sets, there is no reliable information or valuable knowledge.
BI should also begin with a good look into our behavior
That is not all though: Business Intelligence should also begin with a good look into our behavior. After all, if we lack an analytical organizational culture and if do not know what behavior we wish to manage and what responses to expect, than a dashboard – even the finest – will barely produce any return, if at all. In short: the core of Business Intelligence (processing data into meaningful information and knowledge) can only function well when the data are available and of good quality (registering) and when both the organization and the people who will use the information and knowledge are ready to actually do something with that information and knowledge (responding). This is where things become truly exciting.
Rerun the steps for each level and discipline
The three steps form a cycle because we basically need to rerun the steps for each level and discipline within the organization. Business Intelligence is an ongoing process (that never stops) and each time we go through the cycle, whether consciously or unconsciously, we evaluate both our efforts and the results to then start a new cycle afresh. After all, while responding – when we introduce a new product to the market, or when we make a special offer to a customer – we will need to ‘adjust’ our registration systems. The speed with which we complete the cycle varies per case: from websites that will only need seconds to adapt themselves to the click behavior of visitors, to public bodies that may need years to optimize their policies and politics. However, it does provide a huge advantage when we complete the cycle faster than our rivals do.
BI will have little effect if we purely focus on collecting data
Regardless of the pace at which the organization goes through the cycle, its attention should be balanced across all processes of both the major and the minor BI cycle. Business Intelligence will have little effect if we purely focus on collecting data or on data analysis and leave out the actual application of information and knowledge. This is also true when we do in fact apply the information (and knowledge) but we subsequently respond half-heartedly or we implement changes inefficiently. Both examples do not indicate truly intelligent behavior. The effectiveness of Business Intelligence stands or falls with the consistent implementation of all steps of the BI cycle, regardless of how easy or complex these steps are or appear to be. We therefore use both the major and the minor BI cycle as guidance for our work.
The Intelligent Organization also assesses whether its responses have indeed been adequate – where possible – with respect to the original signals the organization had collected. During this evaluation process, we also examine whether the organization still collects and registers the right signals. If necessary, the organization then gathers additional data or adjusts the BI cycle at certain points.
Everyone in the organization is involved
Everyone in the organization is involved in completing (parts of) a cycle. These cycles however do not always run in sync with one another. The marketing manager may for instance worry about the data that relates to the latest advertising campaign while the general manager, together with the management team, tackles the new business location policy and the logistics manager is initiating actions in order to maintain stocks. At the lower levels of the organization, account managers are busy improving sales results, recruitment takes place, discounts and return orders are being monitored and so forth.
Align the different cycles of the various employees
Everyone is doing his or her ‘job’ in a certain part of the cycle. We can use Business Intelligence to align the different cycles of the various employees so that decision-making and actions do not obstruct each other, but reinforce each other instead. In this way, we can align the advertising campaigns with both the sales efforts of account managers and direct marketing actions, or we can use logistics indicators such as the reliability and speed of deliveries when formulating a business location policy. Clearly, this requires a high degree of uniformity and standardization with regard to definitions and data. In addition, Business Intelligence must be used and applied at all levels within the organization.