Handling business intelligence
On this website, we have examined the second basic process of the major Business Intelligence cycle: the handling process. In fifteen steps we described the process of transforming data into information and knowledge that instigate action. The fifteen steps together in fact form the minor Business Intelligence cycle. The indicators and their context, which have been identified earlier, are used as a guideline for these steps. Next, we described the most important target groups (the processors) and usage roles within the Intelligent Organization and we concluded this article with the requirements we should place on the handling process.
The adaptive capacity of an organization largely depends on how well the organization processes information. The handling process is divided into two parts: steps 1 to 5 concern the automated conversion of data into ‘information’. The remaining ten steps mostly relate to human processes such as turning information into knowledge – through interpretation and internalization – that is then distributed throughout the organization. When we interpret information, its context is of great importance; when we internalize information we must be aware of the errors and misperceptions people tend to make during this step. Senior managers are extra susceptible to such errors because the information – due to its diversity – is often difficult to interpret. Read more in ‘The 10 Biggest Biases every decision maker should be aware of’.
Prevent false assumptions and misinterpretations
Human dialogue is an important aid to preventing false assumptions and misinterpretations. Decisions are also often almost invisible. The political behavior of managers plus the fact that strategies and opportunities sometimes present themselves naturally are frequently the reason for this. All in all the process is rather diffuse and managing based on intuition plays an important role. Read more in ‘From data to decisions in 15 simple steps’.
We distinguish eight processors in total: knowledge workers and operators, operational management, Board of Directors, clients, vendors, shareholders, government and information systems. Each processor has its own specific role, its own typical information use and does its bit in keeping the organization on the right track, each at a different level of aggregation. In this way, the organization achieves optimal transparency and is enabled to steer enterprise wide (from top to bottom) using the same indicators. Further reading in ‘The most important stakeholders of Business Analytics’.
The communication process runs much smoother and is more efficient
By ensuring that information is consistent and coherent, the different processors reinforce one another and as a consequence the communication process within an organization runs much smoother and is more efficient. Everyone speaks the same language and uses the same business definitions. The more processors can “feast” upon good information, the higher the yield of Business Intelligence. The processors have a duty to fetch; the employees who implement the processes have a duty to supply.
Farmers, tourists, explorers and miners
The processors we have discussed in various articles each have a personal use for information. This use is best described through distinguishing four types of user (Inmon, 1996, see figure below):
- Farmers normally have fixed information needs that do not vary much over time. They mostly work with standard reporting tools. Mainly because these users cannot build reports and do analysis themselves, it is important to regularly check that the reports still meet their needs. To some extent all processors are farmers, although knowledge workers hardly ever use fixed reports.
- Tourists use a large number of fixed reports but additionally require some degree of interactivity to be able to trace details.
- Explorers focus their search on the causes of problems and thereby combine a lot of information from diverse functional areas; they generally have rather unpredictable information needs and require interactive, analysis tools, to provide easier insight into the causes of certain problems.
- Miners have the least predictable information needs of the four and use almost all available data in order to detect more intricate and more complex relationships.
Information systems often use information from standard reports. Such is the case with CRM systems: customer sales reports are extracted from the Business Intelligence system and loaded into the CRM system. Information systems can also automatically make use of more complex relationships that were established through ‘mining’ processes.
Today, we increasingly find that customers and suppliers – knowledge workers within these organizations in particular – also feel a need to act like explorers and use organizational data for analysis. They regard fixed (printed) reports as outdated.
Become agile as possible
For an organization to become as agile as possible, the process of transforming data into information and knowledge should take as little time as possible and should run with minimal interruptions and errors. This requires the following: data and calculations must be highly reliable; the Business Intelligence system must try to avoid errors and fallacies; the actuality of information should match the frequency of events within the business processes and the Business Intelligence system should have a rapid response time. Finally, the system must have a memory function so that information and knowledge can be stored in case it is not yet relevant and awaits additional signals before action is taken.
We are ignoring the phenomenon of interactive analysis where users float around more or less randomly in the sea of information. A fast response time is necessary here as well. See also ‘Business Intelligence tools and applications’.