Have we really understood what Business Intelligence means?

Andy Mulholland has a nice build on my value of information bit over at Capgemini’s CTO blog, flipping the sense of the figure and showing how the time axis also connects to internal vs. external focus, and IT’s shift from cost control to value creation.

The value of information

The value of information and internal vs. external drivers

Check it out.

Update 2: Andy Mulholland came across a nice example:

Albert Heijn the Dutch Supermarket group lifts the pricing of ice cream and certain drinks when the temperature goes above 25’ C

Update 1: I’ve left a comment there building on what Andy has.

BI does seem to be moving in this direction, but still has a long way to go and is too internally focused. Customer Intelligence is moving the enterprise boundary out a little, and does not really address the challenge of integrating external information to create new insight. What about local events, weather, the memes from the social media community, the memes from our competitors customers, or anything else we can think of? The challenge is to fuse internal, customer, competitor, market and even environmental data to create new insight.

For example, consider current approaches to S&OP (sales and operations planning). We’ve take what is an inherently unstructured and collaborative activity and shoved it through the process and business intelligence meat grinder to create yet-another enterprise application. It’s no surprise that S&OP is a challenge to deploy, with few companies realizing (let alone capturing) the promised value. Customer Intelligence adds little to the benefit side of this this equation; it would seem impossible to justify CI in terms of cost saving, and challenging to justify it in terms of creating new business.

Imaging a world where we have our S&OP team focused on information synthesis rather than the planning process. They might pluck weather data (it’s going to be hot in St Kilda) and couple it with an event (the St Kilda festival), memes from their customers (and their competitor’s customers) plucked from hootsuite, and decide only 24 hours before the event to rapidly deploy a pop-up store. It’s this sort of sense-and-respond ability that will drive us to the next level of performance.

One of the best real world examples of this transition from internal-cost-control to external-value-capture has happened around the hand-held stock management devices used in retail. Initial deployed as a cost control measure (i.e. better information on what’s on the shelves) they have now become a tool for capturing value. Walmart has been using these devices for some time, devolving buying decisions to the team walking the shop floor and providing them with the information they need to make good buying decisions. As one reporter found:

“We received an inspirational talk on this subject, from an employee who reacted after the store test-marketed tents that could protect cars for people who didn’t have enough garage space. They sold out quickly, and several customers came in asking for more. Clearly this was a singular, exceptional case of word-of-mouth, so he ordered literally a truckload of tent-garages, “Which I shouldn’t have done really without asking someone,” he said with a shrug, “because I hadn’t been working at the store for long.” But the item was a huge success. His VPI was the biggest in store history—and that kind of thing doesn’t go unnoticed in Arkansas.”

Fly on the wall

In BI terms, we’re moving from large, centralized solutions used to drive planning, to distributed peer-to-peer networks focused on supporting local decisions. While corporate data stores will still play an important role, the advantage is moving to our ability to fuse multiple data sources, some which we do not own and some which only have local relevance. The right information, at the right time, in the right place, to empower knowledge workers to make the best possible decisions. Local Intelligence, rather than Business Intelligence.

Posted under: Business-Technology, The Value of Information

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