Thursday, September 18, 2014

Business Intelligence in the Modern Era

This post offers an updated definition for BI, and suggests that you don't have to think about it as a box on an org chart.

BI has changed a lot in the last two decades. Technologies and best practices have evolved, and we've found more ways in which a BI program can deliver value. Some of these innovations have occurred outside of IT or the BI Competency Centers that many businesses have established. At the same time, many organizations are moving to make business units autonomous.

These changes lead many people to ask what exactly is BI? Is it a box on the org chart? Does it include analytics that were never done by IT? How do data governance and master data management fit in?

Business Intelligence Defined

I define BI as follows:
Business Intelligence:
The use of information to improve business performance
- Chris Adamson

The first thing to note about this definition is that it does not address any specific technologies or methods. These aspects change over time, and they certainly influence what we may be able to achieve.  But the objective is always to provide business value.

Secondly, note that this definition is not beholden to the boundaries of a departmental structure. Regardless of who develops, supports or uses solutions, it's all considered BI.

Let's take a quick look at both these aspects.

BI Services and Activities

The reason we commit resources to BI programs is simple: we intend to use information to deliver some kind of business value.  The definition has been crafted to cover any activities that support this objective.  It can be used to describe a variety of activities that provide business value, both old and new.

Among the older activities it covers:
  • Traditional reporting, OLAP and ad hoc functions
  • Dashboards and scorecards
  • Traditional data warehouses and/or data marts
  • Data integration services
At the same time, some newer uses of information are covered:
  • Business analytics and predictive analytic
  • Master data management
  • Data governance
  • Virtualization and federation services
The definition also covers activities that some people think of as on "the other side of the fence" from BI:
  • Transaction processing
That's intentional; transaction processing manufactures much of the "raw material" that BI programs attempt to leverage.  When we plan an operational solution, we should be thinking about these downstream uses.

BI and the Org Chart

While you may have a group responsible for BI program management, it is important to understand that the scope of BI reaches well beyond this group. The delivery of business benefit from information impacts the entire organization.

Some of the functional areas that participate in BI are:

  • Business units  All of the value from BI happens within business areas that use information. This is where decisions are made and impacts are realized.  For many businesses, responsibility for development of BI solutions also lies in business areas.  This is particularly the case for analytics, but also increasingly for the traditional forms of BI.
  • BI Competency Centers  Whether part of IT or external to it, many organizations have established a centralized resource for planning and overseeing the development of traditional forms of BI, such as data marts, dashboards or scorecards.  In some cases, these centers have become focused on providing advisory services to business units that create and manage their own solutions.
  • Analytic Competency Centers  Business analytics often begins within business areas such as marketing or risk management.  Analytic competency centers are developed to help other areas of the business leverage information in a similar manner. Whether part of the BI competency center or distinct from it, this is also a core BI function.
  • IT  At a minimum, IT has some responsibility for the technical infrastructure on top of which information systems are built -- networks, computers and the services that keep them up and running. IT may also have responsibility for some of the business applications and data management solutions.
Regardless of how your organization structure divvies up these responsibilities, BI is the sum total of these activities, and not the domain of a particular group or department. A business strategy to create value through information cuts across many departments.  It cannot be planned or executed in isolation.
The Future of BI

We're not far from an age where BI is not a separate part of our information architecture.  We're not there yet, but several trends have us on this path:

  • Focus on the future value and re-use of data managed by operational applications
  • Commitment to data governance
  • Maturation of master data management solutions
  • Technological advances in data management and information access

When we finally arrive at a unified information architecture, the definition of BI will still hold. We will be closer to delivering on its promise than ever before.

And, without a doubt, we will have come up with ways of using information to deliver value that have not even be thought of today.