BI not only for better understanding
Business Intelligence is not only about developing a better understanding of the organization; it has wider ambitions: improvement and innovation.
The different levels of ambition
- Level 1 – understanding: provide insight into what is actually happening in an organization, for example by monitoring the customer response times and the number of complaints received. This gives a better view of how an organization is running and shows how various internal processes are intertwined.
- Level 2 – coordination: improvement of the level of coordination allowing tasks to be executed better and/or at lower costs.
- Level 3 – improvement: often resulting in changes in the internal processes which in turn allows optimisation of the complete system.
- Level 4 – innovation: when the system have been optimised as far as possible, it is easier for an organization to extend their range of products and services. An intelligent organization will then examine the new processes starting the process of understanding, coordination and improvement again – so forming a feed-back loop
A more integrated form of Business Intelligence
Higher ambitions require a better thought out and integrated form of Business Intelligence. Since (ambition) level two requires the integration of data from different sources, the various tasks and internal processes will need to be more in tune with each other. Generally we need more data from processes that run next to each other to improve the way that the tasks are executed. The next levels, improvement and innovation, require the consolidation of both external and internal data, for example information about the market, the competitors or the technological development.
The process described above allows the total ‘system’ to be optimised, leaves more room for successful innovation and fits the organization better into the environment in which it works.
Business Intelligence success and ambition
Is there a correlation between the ambition level for Business Intelligence and how successful it becomes? Research carried out amongst 389 organizations in The Netherlands showed that the differences between organizations that achieved significant improvement in their financial results using their Business Intelligence systems (Group A) and those who achieved little or no success (Group B) increase with their respective Business Intelligence ambition levels. The performance difference between Group A and B at level 1 “understanding” is a mere 2% whilst at level 3 “improvement” it has risen to 25% and at level 4 “innovation” has reached 50%. The higher the difference the higher the correlation between better performance, Business Intelligence success and ambition level. Source: Business Intelligence Pitfalls & successfactors.
The long term investments
In short we can conclude that it doesn’t make a lot of sense to just use Business Intelligence to understand an organization better. The long term investment needs to be much higher to pay significant dividends. However, it is very important to understand both the organization and the internal processes thoroughly – to apply Business Intelligence to those internal processes and to provide the information gained to be used by experienced people (Hammer, 1995).
Better cooperation between various disciplines
Conclusion: the higher the ambition level the better the cooperation needs to be between the various disciplines of Business Intelligence, knowledge management, performance management, data integration, change management and strategic management, in order to achieve the highest level of success.