Business Intelligence and Management

What is Business Intelligence?

Business intelligence (BI) is both intelligence as in information gathering, and intelligence as in intellectual capacity. It is a process to gather and compile business data into information. This information is then analyzed to support intelligent or at least better decisions. Often the decision is apparent just by looking at the auto-compiled information.  The BI information is often visualized as key performance indicators (KPI), the measurements we choose to monitor and quantify how well we run the business. BI keeps track of both short time measurements as stock values for day-to-day operational support as well as more long time financial measurements for strategically decisions. BI is also used for finding correlations between e.g. advertising, customer loyalty and sales. Sales leads can be found by e.g. searching for customers who have bought spare parts but not service. Since BI systems contain information from many sources they can often give the complete picture of single entities like a product. With these capabilities there is little wonder BI systems are recognized as a valuable asset and is becoming more and more a management tool.

Classic Business Management

What gets measured gets managed, or what gets managed gets measured. Measurement is intrinsic to management. Not all aspects of management can be measured. Good management includes culture, mentorship, supervising etc.  Business management is the aspects of management based on tangible measurable facts from production and sales. Traditionally much effort has been spent on manual information gathering and analyzing business activity to conceive better production and sales strategies. By quantifying measurements and using their business skills which they subsequently acted upon.

           Measurement -> Quantify/Think -> Act 

Figure 1 Classic conceptual business management model

 The old fashioned manager

Traditionally a good manager has been a reasonable intelligent person, with very good understanding of the business. They needed experience to cope with changes in the world. The manager had to have all important information on top of his head. Managers of large corporations needed to have exceptionally good memory ^[1] . But they also had to have less tangible qualities like intuition and good judgment. In essence they had their own business intelligence system in their head. ‘Good old’ managers were precious since they had to master so many skills.

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The new business management.

Management by measurement, measure and rally the masses around one KPI at the time. With the introduction of modern BI system ^[2] , capable to process gigabytes of information in seconds, business management is changing focus. Managers no longer have to spend time memorizing and analyzing data, since BI systems compile data into simple KPIs. It is becoming more important to rapidly convey alarming KPI to the workforce so the entire organization or company can attend problems instantly. Modern team/production leaders frequently assemble the teams around visualized KPI boards. Top management use mass meeting to mobilize the company around important KPIs ^[3] . This is an efficient way of instantly deliver orders to the organization ^[4] .  Knowing the BI systems ^[5]  is necessary for understanding and managing the company. Opinions not based on the common information will not be understood or listened to.  Actions not based on the common information are likely to be misunderstood and carried out poorly. Reports will only be acknowledged if they are created from the company BI storage.

          KPI -> Mobilizing -> Act 

Figure 2 New conceptual business management model

The modern manager  

With the introduction of modern BI system, capable to process gigabytes of information in seconds, the role of the manager is changing. With the BI in the laptop there is no need to have the business intelligence inside the head ^[6] . The modern manager must have proficient knowledge of the BI system, and be a great communicator conveying KPIs to the organization. In future the manager will be a generalist. Since business knowledge is easily attained from the BI system, the manager can more easily be redeployed from one business area to another. The future manager will have more time for managing the business. ^[7]

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[1]  ‘Why do people read fiction, when there are balance sheets?’ - The late chairman of Atlas Copco Marcus Wallenberg jr was one of many big enterprise leaders with a photographic memory.

[2]  The spintronic revolution in the late 1990thies made it practically possible to create hardware infrastructure for OnLine Analytical Processing.

[3]  One interesting aspect on KPI. Who is responsible for creating and interpreting the KPI? This is clearly a management task. KPI is in a sense the essence of BI and worth a paper of its own.

[4]  This new management style is often confused with indecisiveness and an anxious wish for consensus instead of leadership.

[5]  Managing and knowing how to change the BI system is equally important.

[6]   You can argue if judgment and intuition can be found in BI systems. But good analytical and visualization tools will at least aid both intuition and judgment.

[7]  Yes I know the spelling on the pictures is not correct. And I pinched the pictures from the web, 'the modern manager' is a photoshop collage.