A few weeks ago, I titled a blog entry "BI 2.0," and it got a ton of reactions. So maybe it is good for my blog popularity to keep talking about the hypes. Here's another attempt ;-).
In the last few weeks, in my home country The Netherlands, I had a discussion with some fellow BI professionals about a very simple and fundamental question in our field of expertise: What is business intelligence? I pointed out there are many definitions, depending on whom you talk to. Accountants will relate BI to Control System Theory, which explains how to manage the flow of goods, the flow of money, and the flow of information. Technology people will see BI as an umbrella term, describing tools for querying, reporting, OLAP, statistics, advanced data visualization, dashboards, and so forth. I have always liked a more human oriented definition: "BI is structurally and in a structured way looking for data in order to come to fact-based decisions."
Most people in the discussion pointed out that BI is the supply of information needed to manage and optimize business processes. But the developments in BI over the last few years have made me doubt that traditional view.
- If you share management reports (one form of BI) with your customers for them to benefit from (such as managing the business relationship they have with you). It may help your customers with their business processes (or lives when it is about consumers), but for you it is not managing a business process. It has become a business process itself, BI becomes part of your customer value proposition.
- If you provide sales data to suppliers, and user that offer as a strategic instruments in a procurement process, it is not managing a business process, but creating a better procurement result in a different way.
- If you have an active policy of informing investors, through a fast close and transparent information supply, you are not only managing your business better, but BI is part of the process of attracting capital.
- If you invest in social and environmental reporting, BI is part of public relations, as well as managing business processes better.
BI is not only there to manage business processes, BI increasingly becomes an integral part of the process itself. To make a long story short, BI becomes a product or a service itself. From a macro-economic perspective, this makes sense. We have moved from the industrial age to a service, knowledge and experience economy. BI is simply following this trend.
In this discussion, Andries Bottema came with a very good definition, that I immediately liked and herewith adopt.
"BI is deploying information as a factor of production."
In other words, BI makes information the fifth factor of production, next to labor, capital, materials, and facilities.
I think this view is much more impactful than the technology-focused discussion on BI 2.0. Thoughts, anyone?
frank
Comments (5)
Yes! Complete agree -- or should it be "intellectual capital"?
Posted by Timo Elliott | September 18, 2007 3:51 PM
Posted on September 18, 2007 15:51
Howard Dresner, who coined the term i??Business Intelligencei?? in 1989 (have you heard of this guy?), said the definition has evolved to include i??ways to deliver information to end users without needing them to be experts in operational research.i?? And we have heard him talk about i??actionablei?? information as well.
Many business decisions are taken based on something not happening as expected (i??why did we miss our forecast,i?? or i??why are customers dissatisfiedi?? i?? and what are we going to do about it), or trying to leverage some success that happened (i??leti??s do that again,i?? or i??leti??s do more of that.i??). In order to do that, you need to get at variance information (actual vs. budget, actual vs. historical, actual vs. benchmark, actual vs. peer, etc.). Do you see BI as including all those kinds of information as well, or is that the domain of EPM?
Thanks!
-Ron
Posted by Ron Dimon | September 18, 2007 4:13 PM
Posted on September 18, 2007 16:13
Timo,
In essence I agree with you, but the choice of words is intentional. Intellectual Capital is a bit of a fluffy term, in the eyes
of many. Intangible. "Factor of production", like labour, capital,materials and facilities, or "asset" if you wish to use an even shorter term, are considered more tangible business terms. Does that make
sense?
frank
Posted by Frank Buytendijk | September 19, 2007 3:32 PM
Posted on September 19, 2007 15:32
Frank,
The definition of Andries of BI as a production factor comes very close to my definition, which is still way to long :-)
It also focuses on a more efficient commitment of scarce company resources.
Here it is: Business Intelligence enables the consumer to make processes, strategy or objectives - accountable, adjustable of adaptive resulting in a more efficient commitment of the scarce company resources and a better performance. This must by done by making univocal and reliable information available in the desired form and environment and based on internal and external data from past, present and future.
Posted by Jorgen Heizenberg | September 20, 2007 7:39 AM
Posted on September 20, 2007 07:39
Jorgen,
I agree with you on both points. 1) yes, that's what BI is about, and 2) yes, it's too long :-)
Posted by Frank Buytendijk | September 20, 2007 12:20 PM
Posted on September 20, 2007 12:20