Frank Buytendijk Blog

In the Strategy Team of Oracle's Enterprise Performance Management (EPM) GlobaI Business Unit, we want to ensure that Oracle defines and leads the future of EPM. Where will the market, the technologies, and most important, the business be in 5-10 years from now? In this weblog, on a weekly basis, I will touch on one of those topics. Sometimes futuristic, sometimes a bit off-the-wall, sometimes sharing some best practices. But always strategic in nature.

Strategy is a funny thing. Everyone has a strategy, to some degree, but it seems hard to articulate at times.

The best way of looking at strategy, at least in my opinion, comes from Henry Mintzberg. In his excellent book Strategy Safari, he defines strategy not as an exercise done in the ivory tower, before tossing it over the wall to operations, but as a continuous process. We set out a high-level goal, more or less define the broad steps we would like to take, our "letter of intent" if you will, and fill in the details as we go. While we travel towards our goal, we will see the circumstances change and we need to take a shortcut or a detour. Organizations that take this view on strategy, are more adaptive and as a result, more agile. The fact we can adapt, instead of being hardwired towards our goal, helps us to reach our goals earlier. But equally important, this take on strategy means that we learn more. Through continuous feedback, we can reapply new insights in our next strategic increment.

Contrast this to the grand plan we all need to stick to. If the situation changes, tough luck, we can't. The program is in place. And only in the next big iteration of updating our strategy, every few years, can we apply those lessons learnt in the meantime.

In a sense, enterprise performance management is the driver for strategy formulation. Let's explore that a little by talking about an automobile "driver" in a literal way. Continuous feedback through dashboards tells us about our mileage, the estimated time of arrival, our fuel efficiency, the temperature outside and the road condition. It tells us how we've been doing so far and how far we still need to go. Our annual budget has been complemented or even replaced by a rolling forecast. You can compare this to the navigation system, that doesn't only show us the newest roads and bridges, but actively tells us how to avoid the traffic jam. It helps us to adapt to changes in the traffic. Once in a while we consolidate and report. We bring the car to the shop, they hook it up to the system, check emissions, kick the tires, and we get a permit to drive another year with the car. On to the next journey.

Gone are the days of monster-size strategy sessions, run by the strategic planning departments. Welcome to the days of the information democracy, where strategy is "consumerized", like so many other things. What we need is a framework, a big picture, a dream of where to go. With that, we can sit back and enjoy the landscape.

Oracle's EPM Strategy Group is no ivory tower as well. Most of our time we spend on the road. Visiting you. Discussing what's on your plate, and on ours, for that matter. We'd love to speak to you as well. Please let us know and react to this blog.

frank

P.S.  At Hyperion I did have a blog as well, and some of the topics that are still near and dear to my heart, I copied into this blog, a series called "Best of Blog." I hope you enjoy them.

Time flies. It's already more than 10 years ago that the term OLAP was coined. It was Arbor Software, now part of Hyperion, that was instrumental in the research of Dr. Codd. The idea of multidimensional databases is even older. Actually, it's older than the relational database.

Today, OLAP has a crucial role in the governance discussions organization have when they need to weigh flexibility 'against' control. Business users work in an agile world. Today's insight is tomorrow's old news. Organizational structures become more fluid, making the company orgchart look like a dancing Octopus. Mass customization trends make there is no standard set of products anymore that organizations sell. Customers buy their own combination. And customers are less easy to define, they shop direct and also buy as part of purchasing collectives, or go for your second-hand market. Business hierarchies change on a daily basis.

'Ad hoc querying' seems such a beautiful solution. They offer the flexibility of making every single combination possible. But is it the right combination? Different people each creating a query to get to the same data, most likely get different answers. And who is right and who is wrong? We'll never know, as the next query, again slightly different, is on its way already. This way of working, offering the ultimate flexibility, in the end does more harm than using spreadsheets. Spreadsheets we know are not reliable as a data source, all we did with ad hoc query tools is institutionalize bad results. Management theory argues for collaborative teams, yet this very collaboration grinds to a halt when the collaborators arrive at their own different answers to the same issue, while using the exact same data.

There's nothing wrong with ad hoc query technology itself, it just asks for solid control. The control of standard, static reports, with data that has been checked, double checked and checked again. The problem is that static reports may service the needs for IT governance, creating high quality data, but it doesn't serve the need for flexibility of the business.

Competitive forces and the need for control seems to be at odds with each other. What we need in today's business world is an environment where you have freedom to roam around, knowing that whatever you do, the data is always right. End user empowerment is a beautiful thing, as long as everyone is using the same set of lenses to view the data and has a set of guardrails that prevent them from straying off the path. And that's where OLAP comes in. OLAP allows you to freely move through large sets of data, allowing you to compare data, as well as drill down into lower levels of detail. The predefined model ensures that whatever you do with the system, the outcome is guaranteed and certified correct. Now try that with a spreadsheet or a query tool. The users have the flexibility, the IT department can ensure quality. OLAP is since many years a solid, trusted technology. And hotter than ever.

Ok, I made up a story. It's not true. Just trying to make a point. The story is about Queen Beatrix of The Netherlands. As a Dutchman, I thought it would be appropriate. Or... not too inappropriate.

The story is about the Queen needing a bit of money. She decides to open up the gardens of one of the palaces. As she is a clever businessperson, she creates a well-designed plan. At the gate there is an admission booth, where you can buy day tickets and season tickets. A few pathways are changed and a few trees are planted, to make sure the queen has enough privacy, while people are walking through the park. The queen thinks of everything, she even buys a little tractor to mow the grass, a few rakes and other tools. After, the park needs to look nice!

The plan is a huge success, and hundreds of thousands of people visit the park. But after the summer, the number of visitors collapses, as the park doesn't look nice anymore. How silly, the queen forgot one vital thing: to hire gardeners.

Duh....... Or not?

Rethink the story, but now with corporate data in minds. We invest heavily in the infrastructure, such as data warehouses, to make sure the data (= park) is accessible. There are many tools to manage the data, keep it nice and clean. But who owns them? Sometimes when I use this example, someone smart remarks it is the power users. But the power users are the season's ticket holders. You can't ask them to maintain the park!

In our organizations we have an owner for everything. Capital is actively managed by Finance, Employees by HR and as my former colleague Andy Bitterer from Gartner would point out, most organizations even have someone responsible for minding the parking lot. But who minds the management information?

The biggest trend currently in BI is figuring out how to do that, and many organizations have set up a BI competency center... more on that subject later...

Wishing you sunshine on your walk through the park,

frank

Brasseries de Bourbon, an operating company on Ile de la Reunion of beer brewer Heineken, has been pioneering the concept of what I have been calling "business interface metrics" for a few years now.

La Reunion found out that the traditional ways of target setting and ownership led to organizational silos and suboptimal results. For instance, it is in the best interest of the production department (a business domain) to have as large as possible production batches. The marketing department (another business domain), in the meantime, would prefer as many production variants as possible. The solution has been to introduce a shared objective and target between both departments called "time to market", to manage the business interface between those two business domains. Another example is the shared objective between HR and production, each being equally responsible for an efficient workforce planning.

Throughout the process La Reunion has developed some interesting insights into successful management of business interfaces, including its measurement. To show the concept of shared responsibility (part of the concept of business interface metrics) in a non-confrontational way, the Controlling department decided to measure its degree of health with an official performance indicator called "total weight". The weight of the three people within the department was not to exceed 250kg. Every month, in the management report, the team would have to comment on whether the team target was achieved . Brewery-wide, Brasseries de Bourbon organized a meeting for all process-owners twice a year. In this meeting, all participants would have to explain their processes, how they contributed to overall objectives, as well as to other processes, and what they needed from other process owners in order to be successful. Each process-owner would build a little stand and show what it was doing. In this way, the different process-owners would not only consider the needs of their process, but the needs of other process-owners as well.

Co-ownership was cascaded down into the organization. For instance, the Head of accounting department was made co-responsible for the days-sales-outstanding (DSO), a metric with great financial consequences, but which, as a process, was the responsibility of Sales.

Brasseries de Bourbon concludes there are a few essential preconditions successful implementation of business interface metrics. First of all, it requires a strong process orientation. Secondly there needs to be strong commitment of every director to focus not only on the business domain, but also on the interfaces, in order to optimize the performance of the organization as a whole. The targets on the business interfaces then need also to be connected to the bonus plan, so that there is a strong incentive for collaboration. Lastly, there needs to be an adaptive culture, in which the managers allow themselves to be coached by each other and are willing to change their plans if certain performance indicators show failing targets, regardless if this happens within one's own domain or someone else's.

This is perhaps the most important precondition of all: information shouldn't be proprietary and shared on a need-to-know basis. Successful collaboration hinges strongly on information democracy: an open sharing of information between the various stakeholders.

Heard recently on a conference:

"We currently have 38,000 reports and queries" (4,000-person insurance company

"We should spend more time analyzing data, and not that much time collecting it" (controller, large multinational)

Did NOTHING change??

The first time I heard these comments was 20 years ago...

Management theory teaches us there are 'core strategies'. Each core strategy represents an area in which companies could excel. The 'catch' is that companies must choose, they cannot excel in all areas. You can't be the cheapest, the best and the most customer oriented at the same time. Porter, and later Treacy and Wiersema have done a lot of research in this field, and 'operational excellence' (or cost leadership), 'customer intimacy' (or customer leadership) and 'product innovation' (or product leadership) are considered the three core strategies. Others have suggested customer lock-in and brand mastery (brand leadership?) as the fourth and the fifth core strategy, but for the purpose of this story, let's stick to these three.

Many organizations do not understand they need to make a fundamental choice between these strategies, and in their mission statements claim to be everything for everyone. Usually this leads to a bland value proposition that is not recognized, and as a consequence not overly successful, in the marketplace. Choosing for customer intimacy means more expensive processes to cater to special wishes. Choosing for operational excellence means creating mass markets. Choosing for product innovation means creating new markets, instead of catering to existing customer requirements.

But some organizations break the 'rules' and get all three right, who -- in the words of management author Jim Collins -- move from the 'Tyranny of the OR'  to the 'Genius of the AND'. Recently I spoke with the CEO of a website that offers second hand cars to the general public. Their customers are the car dealers, who offer their cars through the e-business website. Although the website did not have first-mover advantage, it entered the market relatively late, it quickly gained marketshare and is now market leader in the region where they are active. Customers get the value proposition intuitively, probably without knowing about beating the three core strategies. The website itself is about product leadership, as it positions itself as the most reliable website for second hand cars. It has achieved so by a highly automated process (operational excellence) in which the characteristics of the car (such as age, mileage, maintenance details) are thoroughly checked against external data sources. At the same time, it offers the car dealers a system (customer intimacy) to enter car data and pictures themselves. Car dealers that repeatedly try to 'cheat the system' are being barred.

How do you call an organization who is a product leader, a customer leader and a cost leader? I'd like to call it a 'strategy leader'. The conversation with the CEO revealed there was no grand design when they started the business, the business model was perfected over the last three years. Slowly it discovered that 'data quality' was their unique selling point, which drove a high level of automation and process integration with the car dealers. Provocative marketing campaigns did the rest, the general public picked up on the concept.

In essence, it shows strategy leadership is a continuous process. Continuous improvement of processes, systems and practices. Continuous feedback on how the business is going. A continuous finger on the pulse. If strategy is a continuous process, business performance management (BPM) is the engine. BPM can best be explained by the metaphor of 'connecting the dots' of a circle. Connecting the dots of the management processes, such as planning, measurement and reporting. Connecting the dots of performance indicators, to create insight in cause-and-effect relationships. Connecting the dots of systems, to make sure there are no conflicting versions of the truth. Connecting the dots of management, by creating a collaborative culture. And if all dots in the circle are connected, strategy formulation and strategy execution become one.

Does this mean Porter, Treacy and Wiersema are out of the window? I don't think so. What the website did is create a new level, where the competition now needs to live up to. The triangle of the core strategies still plays the same role, and the stakes are upped. Until the next one finds a way to break the new rules...

Sometimes it takes 20 years or so to return to the basics you learn in school, or maybe I am just not that fast. Recently, I started toying with the question "What is an organization?", and I only now feel this question has become meaningful.

Effective Performance Management will look different, based on how you view an organization. Many of the current methodologies are aimed at an organization as being a vehicle to maximize shareholder value. Although this definition may work for many people, somehow it doesn't work for me. I need a more inspiring definition.

The most common definition of an organization, if you look around a little, is "a group of people, sharing the same objectives". That one is better already. It's about people and what they would like to achieve. One problem though: "shared objectives" may sound logical in the definition, but in practice, the various stakeholders rarely share the same objectives!

I've recently been studying the field of "transaction cost economics" (TCE) a bit, and found a very interesting definition. According to TCE an organization consists of all activities where the costs of internal coordination are lower than the costs of market transactions.

What I like about this definition, is that it is "open". The definition suggests that organizations interact with other organizations via markets. This definition suggests that next to the "command and control" model (how our performance management currently looks, usually), there is the need for an approach to "collaborate and communicate". TCE takes a very cost based approach, but we can easily broaden that focus, to also include innovation, market access, economies of scale and other themes that are important to business. Where it is easier or better, or more efficient to interact with others, than to coordinate activities yourself, relationships should be forged.

This all leads to the definition that I like best, it defines an organization as a katalyst between stakeholders:

"An organization is a unique bond between stakeholders, through which each stakeholder can achieve objectives, that it could not achieve alone".

In other words, stakeholders need each other. They may not have the same objectives, but through the organization, they align them. Some bring capital, others supply labor, others are business partners, or for instance society provides us with an infrastructure to do business. This definition requires quite a bit of change in our current ways of thinking about performance management.

What is your favorite definition of an organization?

I have been working on the concept of "performance networks", as I believe there is great value in using performance management to manage relationships between stakeholders, and not only within the business, towards a single stakeholder. Interestingly enough, there is not much thought leadership available on this topic.

I recently wrote a paper on the subject, structuring some basic thoughts. Over the coming months, I will be posting much more on this particular topic.

Here is the summary of the paper:

"There is a gap between the state of performance measurement and much of the innovation taking place in business models. Where business models are becoming increasingly networked due to outsourcing and various forms of inter-organizational collaboration, performance measurement remains a very hierarchical exercise. This paper discusses the use of transaction cost economics (TCE) in performance measurement. The paper introduces TCE -- which is not traditionally well-known by performance management professionals -- and applies it to performance measurement. It proposes a framework of three levels of relationships organizations can have with their stakeholders; transactional relationships, added-value relationships and joint-value relationships, and how to use these three levels to define better performance indicators."

You can download the paper here:

Download tce_in_pm_fabuytendijk_weblog.pdf    

frank

For a few years now, I have had this thought in the back of my mind that I would like to research BI and EPM deployments in Japan. I have often read in the press and in analyst comments that "BI and EPM are lagging in adoption in Japan", and it always did strike me as somewhat odd. How can the country that has had such a massive impact on global management practices on quality management and operational management, NOT be at the forefront of performance management. Are Japanese managers not interested in numbers? Not that I have seen the times I visited the country!

I recently read a well-known paper on control principles, by Ouchi (*), a famous management professor. He writes:

"... Japanese firms rely to a great extent upon hiring inexperienced workers, socializing them to accept the company's goals as their own, and compensating them accordingly to length of service, number of dependents and other nonperformance criteria. It is not necessary for these organizations to measure performance to control or direct their employees, since the employees' natural (socialized) inclination is to do what is best for the firm. It is also unnecessary to derive explicit, verifiable measures of value added, since rewards are distributed according to nonperformance-related criteria which are relatively inexpensive to determine (length of service and number of dependents can be ascertained at relatively low costs)."

The article is from 1980, and much has changed, but this is a very interesting view. Perhaps BI and EPM principles are not universal, and can be rejected, which is not the same as 'not adopted'. There are other ways of getting grip on an organization, in this case much more behavioral of nature.

Is it coincidence that the concept of Keiretsu is Japanese as well? Not only  can we socialize our employees to adopt the overall objectives as their own (as Ouchi writes), but we can do the same with our complete business environment (what Keiretsu stands for).

Interesting... exactly the topic of my research these days. Unfortunately I am not an expert in intercultural management. Does anyone care to shed some light on Keiretsu style BI and EPM?

frank

As a performance management professional, dashboards should be important to me. Dashboards contain key performance indicators that are needed to manage the organization.

So I should practice what I preach, right? Sometimes I do, sometimes I don't. Last week I just bought this car, just for fun. It's a 21 year old Citroen 2CV. If you are from Europe, you will certainly know it. Coming from the US, maybe you've seen it before in pictures; Citroen never had a big presence in the US.

Here's a picture of the car.

Would you like to see the dashboard? Here it is...

I guess today you could call it "minimalistic design." But who cares about the dashboard? I get all the experience I need not by looking at the speed, but by feeling the road going underneath me, the wind coming through the open roof, and from the steering wheel in my hands.

frank

Last week I did a webinar on the topic of Performance Networks, my favorite topic lately. For those interested, you can download it through this link: "Performance Networks: Understanding Stakeholder Dynamics and Business Indicators"

In the webcast we ran a little poll with some interesting results. In fact, much more "enlightened" than I would have thought. On one hand side it means that my research is perhaps not as weird as one would think: go figure, it's actually happening (I mean, ofcourse, where else would I get it from). On the other hand, probably the webinar had some kind of self-selecting mechanism, only the ones ready for more advanced forms of performance management (PM) would invest the time to listen to a webcast on the subject, so the sample has a bias. Lastly, the survey was not really scientific, it is pretty clear what the "advanced answer" is. So, with these sidenotes, here is a loose summary of the results.

Question 1: What is the main purpose of PM in your organization?

Only 8% answered that with "financial control", and 12% with "external reporting". The most popular answers were "operational control" with 32% (which means PM would be expanding and leaving the realms of finance) and 48% answered "driving strategic behavior of the organization and employees". Wow.

Question 2: What describes your performance measurement best?

21% still responded it was a set of performance indicators across the business without obvious structure. 9% stated it was a structured set of performance indicators, but 45% pointed out it was not only structured, but also linked to strategic objectives. 24% claimed it was a structured set of indicators linked to stakeholder needs and contributions. That 24% sounds very high to me.

Question 3: What's the management control approach in your organization?

46% of respondents said it was a top down process, prescribing vision, mission, values and purpose. 11% stated performance indicators were used to monitor implementation of objectives, and 42% involves employees regularly in decision making activities. I do believe that participative decision making indeed is the common model in many western countries.

Question 4: What is your knowledge of stakeholder relationships?

This was the "beef" of the webinar, using PM to improve stakeholder relationships. 11% stated they had an incomplete understanding of stakeholder relationships, while 85% claimed they had a partial understanding. 3% claimed to have a complete understanding of these relationships.

Well, with the content of the webinar, and the paper you can download in previous posts on this weblog, perhaps the understanding of stakeholder relationships can be improved!

As a performance management professional, dashboards should be important to me. Dashboards contain key performance indicators that are needed to manage the organization.

In the Strategy Team of Oracle's Enterprise Performance Management (EPM) GlobaI Business Unit, we want to ensure that Oracle defines and leads the future of EPM. Where will the market, the technologies, and most important, the business be in 5-10 years from now? In this weblog, on a weekly basis, I will touch on one of those topics. Sometimes futuristic, sometimes a bit off-the-wall, sometimes sharing some best practices. But always strategic in nature.

Strategy is a funny thing. Everyone has a strategy, to some degree, but it seems hard to articulate at times.

The best way of looking at strategy, at least in my opinion, comes from Henry Mintzberg. In his excellent book Strategy Safari, he defines strategy not as an exercise done in the ivory tower, before tossing it over the wall to operations, but as a continuous process. We set out a high-level goal, more or less define the broad steps we would like to take, our "letter of intent" if you will, and fill in the details as we go. While we travel towards our goal, we will see the circumstances change and we need to take a shortcut or a detour. Organizations that take this view on strategy, are more adaptive and as a result, more agile. The fact we can adapt, instead of being hardwired towards our goal, helps us to reach our goals earlier. But equally important, this take on strategy means that we learn more. Through continuous feedback, we can reapply new insights in our next strategic increment.

Contrast this to the grand plan we all need to stick to. If the situation changes, tough luck, we can't. The program is in place. And only in the next big iteration of updating our strategy, every few years, can we apply those lessons learnt in the meantime.

In a sense, enterprise performance management is the driver for strategy formulation. Let's explore that a little by talking about an automobile "driver" in a literal way. Continuous feedback through dashboards tells us about our mileage, the estimated time of arrival, our fuel efficiency, the temperature outside and the road condition. It tells us how we've been doing so far and how far we still need to go. Our annual budget has been complemented or even replaced by a rolling forecast. You can compare this to the navigation system, that doesn't only show us the newest roads and bridges, but actively tells us how to avoid the traffic jam. It helps us to adapt to changes in the traffic. Once in a while we consolidate and report. We bring the car to the shop, they hook it up to the system, check emissions, kick the tires, and we get a permit to drive another year with the car. On to the next journey.

Gone are the days of monster-size strategy sessions, run by the strategic planning departments. Welcome to the days of the information democracy, where strategy is "consumerized", like so many other things. What we need is a framework, a big picture, a dream of where to go. With that, we can sit back and enjoy the landscape.

Oracle's EPM Strategy Group is no ivory tower as well. Most of our time we spend on the road. Visiting you. Discussing what's on your plate, and on ours, for that matter. We'd love to speak to you as well. Please let us know and react to this blog.

frank

P.S.   At Hyperion I did have a blog as well, and some of the topics that are still near and dear to my heart, I copied into this blog, a series called "Best of Blog". I hope you enjoy them.

I recently had a discussion about terms such as BI and EPM being so confusing with a BI consultant. He said it was hard within his organization to use the term BI because different people had different definitions. The business used the term as "business information", some IT people did mean a set of tools for query, analysis and reporting, and others immediately did expand the scope to include a data warehouse infrastructure. My discussion partner argued for a generic, single, independent framework, that everyone could use and see their requirements recognized.

I am all for a good framework. A framework helps to put different definitions into an overall context. When I was still at Gartner we defined a pretty useful BI framework consisting of four layers: an infrastructure layer, in which you discuss data warehouse, data quality, metadata management, ETL, etc. A technology/applications layer, in which you discuss BI tools and EPM applications. Then there is an organizational layer, where it needs to be discussed how to manage the environment, and which skills are needed, or in broader terms, how to define a BI competency center. And there is the strategic layer, where you discuss the business case, return on investment, and how BI impacts, changes or even transforms the business. This framework has helped me many times of driving conversations in a useful direction. And everyone knows how their particular point of view aligns with the other point of views.

Yet, I don't believe in generic single independent frameworks that everyone can use. First of all, what is independent, everyone who could come up with a framework, such as technology providers, consultants, academics and user organizations have their own point of view. There will be no independent framework. Second, I think there is value in understanding different points of view, to compare and contrast. It is useful to have to choose a point of view, and understanding different frameworks helps this process of undersdtanding. And I don't believe in generic frameworks at all. Frameworks are supposed to guide us, and that means making choices. Generic frameworks are most probably pretty useless in practice.

What you should do is to understand the various frameworks that there are. Vendor frameworks, consulting frameworks, academic frameworks. Based on that scan some kind of preference will develop, which is the first step in making the right choices. Then you pick one and adapt it to your own specific needs. And then... you stick with it. I can't count the times I have heard "Yeah, we tried the balanced scorecard for a while, it didn't work". It's like getting your driver's license. Only after getting it, you learn how to drive.

I don't think that any of the frameworks that are somewhat accepted is bad. There's only bad implementations. Or... in more positive terms: success is entirely in your own hands ;-).

frank

Performance Management typically helps organizations set goals, create plans on how to reach those goals, monitor execution, analyze any differences, and provide strategic feedback through management reporting. All those tasks aim to create focus on strategic goals, and make sure all parts of the organization are aligned.

But how do we know these are the right goals? We don't really know; most people focus on reaching the goals, not really questioning them. And are the strategies we devise sustainable in a changing market? How will our strategy lead to long term success, way beyond the goals of the coming period? Will our business model still work in 3-5 years? Do we have a sustainable business model?

In short, sustainable business models add value to their stakeholders, and are rewarded for that, which helps adding more value. A virtuous cycle. Non-sustainable business models are focused on extracting value from their environment. A zero sum game. Performance management will have to evolve in dealing with these questions, too; but in the meantime, here are a few pointers to see if you have a sustainable business model.

Signs your business model is sustainable:

• Your mission statement describes what you achieve for your customers.
  
• If middle management is asked what the most important goal is, the question is answered with something like "making good shoes" (or whatever it is the company produces).
  
• Senior management sees market share and shareholder value as a reward for the value they have created for all stakeholders.
  
• Profit is a win/win situation.
  
• The key questions of performance management in your company are: how do we optimize our performance, how can our stakeholders contribute to our performance even more, and what do I contribute to the success of my stakeholders?
  
• Continuously focused on reconciling conflicting objectives of stakeholders, "The Power of the AND."

Signs you may be doing fine today, but could be in trouble tomorrow:

• Your mission statement says you want to be the biggest, largest, fastest most innovative provider that has operational excellence and knows exactly what all customers want.
  
• If middle management is asked what the most important goal is, the response is "making money."
  
• Senior management sees market share and shareholder value as a goal to reach.
  
• Profit is a zero sum game: my profit is your loss.
  
• The key question of performance management in your company is: how do we optimize our performance?
  
• Continuously focused on making quick decisions on how to solve problems, "The Tyranny of the OR."

BI 2.0. So now I have your attention, as everyone wants to know about this 2.0 hype. Everything has to be 2.0 today and that goes for BI as well. And I can't wait for the first clever marketeer who thinks (s)he can introduce a market game change by announcing BI 3.0! Aaargghhh.

But what is BI 2.0? Most of all, it's ill-defined. BI 2.0 is supposed to be more interactive, collaborative and should take care that all users have the management information they need. So what's new? The old Executive Information Systems in the late 1980s and early 1990s had discussion threads, public folders and advanced interactive OLAP capabilities.

Don't get me wrong, I am all for technology advancement, to deal with increasing data volumes and complexity, and to satisfy changing user requirements. But hasn't the point of BI not always been about making information a corporate asset to be exploited like capital, labor, materials and facilities? And what is blocking you from doing that with current or previous generations of technology? Probably it's not BI 2.0 that would achieve this goal, maybe we should introduce Organizational Behavior 2.0, as collaboration, interaction and information democracy are more cultural issues than anything else.

If you want to achieve a solid return on investment with BI, these are things to consider. And that's not BI 2.0, but BI 101.

frank

This week I visited the TDWI Summer Conference in San Diego, with close to a thousand attendees. I did the Monday keynote presentation and did teach a half day class in advanced performance management.

If you click this link below, you will see a very good summary of the presentation, in which I try to make a few points as confrontational and provocative as I could: http://www.esj.com/business_intelligence/article.aspx?EditorialsID=8561

In the class that I taught, it showed that the more things change, the more they stay the same. Many people are still struggling with the "one version of the truth" problem. This problem has been around for 20 years, and it is still on everyone's calendar. Although more organizations are succcessful with their enterprise data warehouse strategies, tactical approaches still reign. They are easier to fund, as they support an immediate need. Unfortunately, it leads to a further accumulation of silo-systems. People find it hard to break the paradox. It is easier to do the wrong thing, ultimately leading to a high TCO. It is harder, if not impossible to do the right thing, that leads to the expected ROI.

There is a clear trend towards more heterogeneous business processes (due to mass customization), business models (due to sourcing and cross-company collaboration) and business systems (due to continued M&A for instance). Business is becoming more heterogeneous. This calls for a strong infrastructural IT approach, certainly for data and information management. However, most of the data architects that I spoke still felt they were not appreciated and didn't the chance to take a more strategic approach.

Something needs to change? But how? I don't have all the answers. What do you think?

frank

I would like to thank Paul Gallagher for his great contribution to the blog. He says: