Effective Business Intelligence - The Use of Business Intelligence in the Digital Economy

8/3/2019 Effective Business Intelligence - The Use of Business Intelligence in the Digital Economy

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Effective Business IntelligenceThe Use of Business Intelligence in the Digital Economy


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Copyright Business & Decision 2011, all rights reserved. No part of this document may be reproduced without written consent.

With thanks to the author - Ian Marshall, Business & Decision


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Business & Decision

We have entered the digital age, but despite signicant investment in digital technologies and services, our abilityto make effective use of business intelligence from the rapidly growing digital resources remains surprisingly

inadequate.

Business Intelligence is not just a matter of collecting, collating and managing data. Rather, Business Intelligence

will only be truly effective if there also exist empathetic organisational structures and processes, apposite skill sets,

adequate digital infrastructure, and a management ethos that encourages real time decision making.

As digital technologies continue to proliferate pervasively and rapidly, the volume of data from internal and external

sources is exploding but our ability to make effective use of such digital resources has failed to keep pace. Adding

to this is the problem of data accuracy and consistency small errors in different datasets become amplied many

times over through each stage of aggregation and analysis. The problem is particularly acute for large organisations

with legacy systems and for those that combine digital resources from internal and external sources. With only a

few exceptions, the solutions attempted in different sectors have so far only resulted in limited success.

This report is timely. It not only highlights the enormous challenges and opportunities in making effective use of

Business Intelligence in the digital economy, but also explores various approaches that can be deployed to take

your organisation forward. Doing nothing or simply following the leaders is not an option. To survive and thrive in

the new digital economy, all organisations need to fundamentally review their digital infrastructure, the way they

exploit Business Intelligence and connect with their customers.

Professor Feng Li, PhD

Chair of e-Business Development

Newcastle University Business School, UK

Foreword


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Business & Decision

Executive Summary

1.0 Introduction

2.0 The Digital Revolution

3.0 Challenges of Digitalisation

4.0 The Evolution of Business Intelligence Technology Approaches

5.0 Business Intelligence in the Organisation

6.0 Business Intelligence - The BI 1.0 & 2.0 Generation

7.0 Business Intelligence in the Digital Economy

8.0 Organisation and Technology

9.0 Skills, Communication and Information

10.0 The Information Spine

11.0 Information Proling

12.0 Information Integrity

13.0 Implications of Cloud Computing

14.0 Operational and Cultural Shift

15.0 Conclusion

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Contents


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Effective Business Intelligence


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Business & Decision

Page 1

Executive Summary

This report on Effective Business Intelligence examines the challenges of Business Intelligence (BI) in the digitaleconomy and assesses the level to which organisations can, and do use BI and the emerging support technologies

to develop their channel strategies. But the report also highlights the very real issues facing organisations unable to

effectively respond to the challenges being posed by the digital economy.

For them, reacting to the rapidity of change so characteristic of on-line channels, and being able to use Business

Intelligence effectively to respond to such change, is fundamentally constrained by rigid and misaligned resource

structures. These structural issues could include for example, poorly trained or inappropriately skilled staff.

Furthermore, if that resource condition applies to an organisation then it typically suggests that an unresponsive

management hierarchy is in s itu. Experience has also shown that if the latter is applicable then almost certainly

inadequate operational processes will be the norm, as will the presence of a legacy technology base unable to

cope with any of the demands of the on-line channels.

The report takes a broad sweep through the main areas that are likely to have an impact on the effectiveness of

Business Intelligence, its application and relevance, as well as providing an analysis of the issues that organisations

will almost certainly have to address in order to have any chance of surviving in a vibrant and fast-changing digital

economy. The report examines not only the BI challenges faced by organisations using on-line channels as one

of their major routes to the consumer but also tracks the evolution of BI and assesses its role within the digital

economy.

In addition, in order to provide an overall landscape for BI, the report reviews key impact areas such as

organisational structure, skills and communication, operational culture, technology (including the relevance of Cloud

Computing aka virtualisation - to BI) and information management, focusing on areas such as data integrity,

proling and structure.

The report concludes that the UK is in the midst of a fundamental digital revolution which is reshaping many of our

attitudes, responses and demands. It is a revolution in which individuals, consumers, and others driven by specic

needs or interests can organically form and re-form into borderless digital groups and societies, digitally connected

and supported by infrastructure providers, information content markets and digital savvy organisations.

In the wider digital context, businesses, public sector agencies, diverse demographic groups and individuals

are able to connect and communicate. Thus, through digital connectivity choice can be exercised, productsadvertised, goods and services purchased and sold, and individuals as well as all types of groupings can inform,

interact and access vast repositories of information.

The report identies one of the key aspects of the digital revolution as being the rapid development of the digital

economy. Its speed of growth and the extent to which it is re-shaping markets and business sectors has been

astonishing. And it has been driven forward by a range of factors such as, the availability of reliable and economic

network infrastructures and the ubiquity of mobile technologies supported by highly consumer-oriented software

and increasingly sophisticated hardware technologies.

By mid-2010 for example, the UK consumer was sufciently comfortable with on-line sales channels, such that

they accounted for almost 10% of total retail sales in the country. As a result, a staggering 42.7bn has been

forecast as the likely value of on-line sales for 2010. In addition, the level of consumer condence in on-line

channels being capable of handling big-ticket items in a secure environment, has meant that over one quarter of

consumers are now sufciently committed and prepared to spend more than 1000 on a single purchase.

This shift in purchasing behaviour has been recognised by marketing agencies and major brands alike. It is nowestimated that digital marketing expenditure is increasing by 17% year-on-year with the result that companies are

now prepared to invest around 24% of their overall marketing budget in order to sustain their digital channels.

However, as highlighted earlier there are signicant challenges to overcome. Market sectors such as Travel &

Leisure, Retailing, Media and Insurance (particularly motor, home and travel) have undergone massive sea-changes

in order to respond to digital market challenges and competitor pressure. And it is ageing products, poor service

and uncompetitive pricing that are being challenged by consumers and new market entrants alike.

For companies unable to respond rapidly or exibly to these market pressures and consumer demands, the

impact is potentially severe - particularly in being able to sustain any medium to long-term position in a chosen

marketplace. Indeed many have already experienced a measurable loss of market share and/or a decline in brand

acceptance and recognition levels within the market. Typically, the company response has been to review the

operating rationale, re-appraise the long-term potential for those markets where digital interaction is seen as the

norm and then develop a responsive strategy.

The report suggests that there is growing evidence across many key industry sectors that companies lacking

the means to connect digitally with consumers are showing signs of strain. With the combination of in-builtorganisational inertia, a distinct lack of pace in terms of adopting new technologies, minimal new investment, a

grid-locked management structure and rigid legacy operating environments, a companys ability to respond to the

pressures exerted by the digital revolution can be severely impacted. Companies in this situation nd themselves

unable to intelligently appraise their business operations performance or indeed effectively use any Business


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Intelligence they may have and increasingly operate with only limited vision. This fundamentally impacts any view ofthe way forward in the medium to long-term.

The report nally concludes that many of our existing large and well-known business brands will of course continue

to exist and adapt in the medium term as the digital economy becomes an everyday feature of our l ives. But there

may be others that will not survive and will inevitably disappear from the market over time. Only those businesses

that are adaptable and responsive, that rise to meet the challenges and understand the fundamental shifts taking

place, will survive albeit sometimes in a very different form.


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1.0 Introduction

There can be no doubt the digital revolution is now fully underway. All the indicators, whether they relate totransaction volumes or value, revenue, advertising expenditure, technology investment or levels of consumer

acceptance, highlight an inexorable rise in activity year on year. Two reports produced at the beginning of 2010

conrmed this trend - the Centre for Retail Research (CRR) report on Online Retail Sales in the UK and an

Effectiveness, Measurement and Allocation Report on

Marketing Budgets for 2010, produced by Econsultancy

and global digital marketing provider ExactTarget. A further

report produced in July 2010 by the IMRG (the industry

body for Global Internet Retailing) provided measurable

evidence of the increases in 2010 activity as suggested by

CRR and ExactTarget.

The CRR published a report at the end of January 2010 in

which it calculated that online sales now account for almost

10% of total retail sales in the UK. The report anticipated

that web-based shopping would continue to grow sharply

in 2010 with the total of online sales reaching 42.7bn.

CRR stated that online shoppers in the UK were growing

in condence, with the proportion of them prepared to

spend more than 1,000 or more on a single transaction

rising from 12% in 2008 to 25% in 2009. CRR Research also suggested that German online consumers were the

next most prolic spenders online last year with a total expenditure on the web of 29.7bn, while French on-line

consumers spent 22bn.

More specically, the IMRG conrmed the trend forecasted by CRR and reported that in July of 2010, web-based

sales increased at their fastest rate since prior to the

recession in 2008. The IMRG also stated that online sales

grew by 18% in July 2010 compared with a year earlier,

thus recording the largest increase since 2007 with UK

shoppers spending 5bn online in July, more than in any

other month of 2010.

The Marketing Budgets report for 2010 published by

Econsultancy and ExactTarget reported that based on the

survey data taken from the input of over 1000 companies:

spending on digital marketing will increase by an

average of 17% year-on-year in 2010;

on average, digital marketing accounts for 24% of

overall marketing spend.

The majority of responding companies are increasing their budgets for most digital channels. Social media

marketing is the area where companies are most likely to be spending more money during 2010, but areas such

as search engine marketing (both search engine optimisation and paid search) and email marketing will remain

buoyant.

UK shoppers spent more online than

anywhere else in Europe last year,

accounting for almost a third of all

European sales, recent research

suggested. UK consumers spent 38bn

online in 2009, or an average of 1,102

per shopper

Centre for Retail Research - 2010.

Research shows a healthy outlook for

the digital marketing industry, with 66%

of companies increasing their online

marketing spending in 2010 and afurther 30% saying they will maintain

the same levels of budgets.

Marketing Budgets for 2010 report.


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The digital revolution is one in which unseen, borderless digital groups and societies, information content marketsand repositories and digital savvy organisations can organically form and re-form. An intrinsic element of this

revolution is the development of a digital economy which is only possible through the widespread availability

and acceptance of digital connectivity (provided through a range of network infrastructures Broadband,

Wireless, GPRS, Fibre Optic, etc.). The nature of this connectivity enables businesses, agencies (government

and non-government), diverse demographic groups, societies and individuals to connect, communicate and

share (knowledge, information and images, etc). Through digital connectivity, choice can be exercised, products

advertised, goods and services purchased and sold; individuals, groups, organisations, societies and governments

can inform and interact and participants can access vast repositories of information (although there are well-

publicised restrictions in force in certain overseas regimes) and up or download an increasingly diverse range of

multimedia content.

2.0 The Digital Revolution


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With the evolution of the digital economy there are inevitably winners and losers. Some market sectors such asTravel & Leisure, Retailing (including consumer goods and groceries, books, etc.), Media and certain areas of

Financial Services (e.g. General Insurance motor, home and travel) are undergoing massive sea-changes. Ageing

products, poor service and uncompetitive, composite pricing are being challenged by consumers and new market

entrants alike. For those companies unable to respond rapidly or exibly to such market pressures and consumer

demands, the impact can be severe in terms of sustaining their medium to long-term position in the marketplace.

Indeed for those which have already experienced loss of market share and/or a decline in their brand and

recognition levels within the market, the emergence of such challenges have forced them to review their operating

rationale and indeed re-appraise their long-term position in those markets where digital interaction is becoming

more decidedly the norm.

So why is it that previously successful organisations now nd themselves in this position?

There are a number of factors that can lead to a loss of market position. For example, unwittingly losing touch

with the consumer, misreading trends and tastes and unwilling to keep up with market shifts are but three of

the major inuencing factors. However, many organisations have found that an unforgiving digital marketplace

has also sharply brought into focus their product, service and operational shortcomings (e.g. clunky semi-

automated or manual interfaces linking the web connection with the user and the actual delivery of the product or

service). Meanwhile, others have found inherent weaknesses exposed by the demands of the digital marketplace;

weaknesses such as:

Ineffective product distribution capability;

Arthritic and unresponsive organisational structures;

Ageing and unresponsive technologies unable to effectively manage the volume of information generated

by and transported through the digital infrastructures;

Scarcity of in-house skills and competencies to analyse, interpret and use the information generated

either for tactical or strategic benet.

Being able to respond to burgeoning consumer demands and the real-time nature of information distribution which

could be termed as the information tsunami is sweeping through the digital economic market and is a signicant

challenge for all. Many organisations, despite being surrounded by and having access to vast amounts of data,

appear to lack structural, operational and management exibility (i.e. organisational responsiveness, processimprovisation and political will). They are also hampered by limited resource (i.e. it could be insufcient depth of

analytical skills available in-house and/or lack of interpretative toolsets within the organisation). A limitation of such

resources means that these organisations are unable to intelligently and effectively analyse the range of information

that they hold and manage, e.g. having the capacity to consistently and sustainably process data on groupings

such as customer, product, service, nancial and operations.

Such organisations appear therefore, to be unable to create, maintain or even easily access coherent, timely and/

or accessible bases of the information they hold (in other words primary information content (e.g. customer

data) that is accurate, timely, explicit and usable). The impact of this is that within many organisations, there exist

localised department specic views of the information required by them to function on a normal day-to-day basis.

In addition, there will be individually generated views of data which are used by staff to facilitate processes and

requirements and cover the data and operational gaps that may exist. The consequence of this is apparent in

the proliferation of hundreds (and undoubtedly thousands) of fragmented data les held within a disparate range

of technologies and facilities. The use of Access databases, departmental/individual spreadsheets and other

personal and secondary data marts is therefore widespread. In essence the emergence and continued existenceof these localised facilities and workarounds within organisational structures is primarily due to the extreme difculty

in generating, analysing and using the business and operating intelligence/information that resides in the central

databases.

3.0 Challenges of Digitalisation


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4.0 The Evolution of Business Intelligence Technology

Approaches

Although the use of information in all its forms has been fundamental to how businesses perform and improve, theadvances in technology (particularly in the decades from 1970s onwards) has enabled all those engaged in the

commercial world (i.e. manufacturers, distributors, nancial institutions, insurers, retailers, etc.) to collect and hold

increasingly vast repositories of data.

For example, in what could be viewed as the early formative period of e-business from the mid to late 1990s

through to 2005 onwards, achievement of operational excellence was perceived as the key differentiator in terms

of a successful e-business operation. Organisations able to commit and then achieve punctual delivery (in other

words ensure that not only was the overall delivery process efcient but also that the last 6 yards of the delivery

chain were completed to the customers satisfaction) became winners in the e-business marketplace.

However, as the decade has progressed from 2006 onwards and the web has become increasingly entrenched in

the daily working as well as personal life, not only is operational excellence a must rather than the key competitive

differentiator (exemplied by delivery punctuality), but it is the capacity to inform and advise on a real-time basis

(and often personal recommendation derived from networks such as Twitter, Facebook, etc. can supplement such

information) that now differentiates online sales websites. Organisations operating in the web sphere and with the

capability to respond to such challenges can therefore be more precise and targeted with regard to their product

and service offerings, thus aligning the latter against known customer needs and views.

(Reference BeyeNetwork.com J-M Franco Master Data Management A Matter of When and How Rather

than If).

Figure 1 - 1980s Point-to-Point Information Infrastructure

In the 1980s it was the emergence ofpoint-to-point systems architectures and

information infrastructures that created a myriad of communication channels

leading inevitably to confused and individualistic interpretations of the information,

no agreed single view of key data leads to a fragmented and sometimes

uncoordinated intelligence community.

Figure 2 - 1990s Hub and Spoke Information Infrastructure

The 1990s saw the development of the hub and spoke systems and

communications architectures within organisations. This was a period in

which companies were seeking to use the distributive power of networks

and mainframes, the capacity and management potential of large Database

Management software and dedicated hardware, and the thin client terminal.

However, there were issues for unsuspecting developers and operators of the

hub and spoke infrastructures. For IT Divisions operating as a centralised

controlling function, there existed the tendency to create over-rigidity in terms of

information usage, construct large and operationally unwieldy data repositories

and offer an often unresponsive and bureaucratic service with regard to user

demands.

Figure 3 - 2000s Service Oriented Architecture

The noughties (early years of 2000) saw the emergence ofSOA (Service

Oriented Architectures) with information being layered and structured with

metadata views of data (i.e. Metadata is information about data, apart from the

data itself). Metadata was typically held within the central hub point whereas other

local/divisional/individual information was collected and retained nearer the source

point of data use and capture.

The delivery of the information was based on service principles based on

business processing operational environments. SOA sought to encourage both

users and providers to enter into a contract with each other as they would for

any other service being delivered.

However, there were unexpected consequences arising from this approach.

There was evidence that the over-capture of data could lead to vast repositories

of unused (and unusable) information being created. Furthermore, much of the

information content lacked relevancy to the business in terms of its contributionto improving organisational performance and revenues. Finally, the complexity of

providing a service oriented environment through SOA based on technologies

and application systems not originally designed with that concept in view, led to

unsustainable levels of operational complexity for many organisations.

Data Linkages

Data Links

Data

Broker

Data Linkages

Metadata

Data Hub


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Figure 4 - 2010s - Information Intelligence Infrastructure (Business IntelligenceCompetency)

With the start of the new decade (2010 onwards) organisations are witnessing the

growth of the information-intelligence business environment with a multiplicity

of connections available from/to individual points (at home, at work or at other

external points). Much of the information being distributed and/or accessed

however, is abstract in nature and content and therefore the contextual relevance

may often be limited.

Nevertheless, organisations are beginning to recognise the power that can be

generated from appropriately collecting and collating accurate and timely data,

holding it at almost the point of source and then undertaking meaningful analyses

on the data itself which can then be properly interpreted through the availability of

apposite analytical skill sets. For many, this is translated into creating a Business

Intelligence competency.

(Reference Figures 1 -4 which highlight the key shifts within information architectures through the decades since

the early 1980s)

As illustrated, just as business priorities and challenges have evolved, so has IT with its infrastructure, network and

Information Management philosophies responding to these shifts throughout the decades. As the decades have

progressed, information as a fundamental resource has increasingly assumed a strategic position, primarily as the

key asset that organisations require if they are to differentiate their products and services in the digital economy.

Information

4.0 The Evolution of Business Intelligence Technology

Approaches Continued...


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So what is meant by Business Intelligence?

Over the past decade and more specically from 2006 onwards, Business Intelligence has emerged as the number

1 priority of CIOs. As organisations increasingly recognise and understand the value of the information they hold,

they have begun investing in the hope that the use of this information intelligence will enable them to create

optimum decision-making opportunities, to intelligently and effectively measure, manage and subsequently improve

performance so that both efciency and effectiveness are achieved whilst accruing realisable and sustainable

nancial benets whatever the market sphere they operate in, be it manufacturing, services, distribution, nance or

government.

In order to enhance accessibility (and implicitly attempt to create commonality in views) much of the data used

as Business Intelligence may be explicitly held and managed within designated data warehouses (e.g. for

customer, suppliers, agents, marketing, nancials, product or service management) or be made available for

analysis, reporting and interpretation on specically created BI databases. The following diagram outlines a typical

topography for an approach to BI through the creation of a series data warehouse building blocks.

Figure 5 - The Enterprise Information Warehouse Building Blocks..... Business Intelligence Services Components

However, although the data warehouse/data mart building blocks are specically designed repositories of

information components for BI, there is recognition that as part of the overall gathering of BI within such an

architecture there will also exist information in other unconnected environments which can be used to populate

the BI paradigm. Such information may only be available from either manual records/reports created and used

by individuals within organisations (essentially viewed as tacit information) or from explicit data which is

departmentally (i.e. locally) generated and therefore potentially held on departmental servers and LANs, Access

databases or in a multitude of spreadsheets. It is acknowledged therefore, that such localised or individually held

information bases and content may act as key explicit and tacit inuencers when Business Intelligence analysis

and reporting are applied. This mix of manual and automated localised information (i.e. the tacit and explicit data),

undoubtedly has a limitation in terms of its transparency within an organisation and as such, its potential therefore

may not be fully recognised or made easily available or usable to decision-making groups within the company.

In addition, the lack of transparency can create a degree of uncertainty with regard to the quality, accuracy andcomprehensiveness of the output content derived from BI analysis (as well as potentially generating a level of

ambiguity in the outputs and impacting the rigour with which the sequenced decision making approaches can

subsequently deliver anticipated results). Nevertheless, making all efforts to combine this range of tacit and

explicit information is fundamental to the successful construction of the business intelligence paradigm within an

organisation.

5.0 Business Intelligence in the Organisation

Data Warehousing

Provides full extract,transform and load

facilities

Provides a Metadatarepository describingthe contents and derivations

Can handle large volumes

and types of data, includingweb site usage data

Relationship Analysis

Opportunity Identification

Enables inference ofappropriate marketing,sales and service

responses e.g. cross-sellrecommendation

Decision Effectiveness

Business Performance Analysis

Relationship DevelopmentEffectiveness

Emerging Trends

New patterns in typesof issues being notified e.g.Prevalence of interest-only

mortgages, commercialpaper developments

Data Warehouse

Data Extract and Load

Analysis Workbench

Advanced

Analysis

Tools

User - friendly

Inquiry & Reporting

Tools

Data

Marts

Others

Static Data

Customers

Products

Others

External Data Sources

DemoGraphics

MarketingLists

Operational Data Stores

Transactions

Business Events

Accounting Events

Visitor Activity

Metadata

Data Model

Transformation Rules

Call Centre

Internal Data Sources

Web Logs

Applications

Finance Risk Other

Analysis of customer behaviour

across all touch-points

Analysis of consistent patternsof customer activity, correla-tions, and affinities andpropensities

Automatically assigncustomers/visitors to varioussegments and propensitygroups

Maintain customer scorecards

Effectiveness ofunderwriting decisions

Monitor impact of pricingdecisions

Provides standard reportsto monitor impact of relation-ship development activity for

sales, profitability, quality ofcustomers attracted, retention,etc.

Performance vs. strategy

Multi-dimensional P/L analysis including all aspects of cost behaviour

Bad & Doubtful Debts experience and risk exposure

Product performance analysis


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6.0 Business Intelligence - The BI 1.0 and BI 2.0

Generations

For most companies, the existence of legacy systems environments and operational processes based on suchenvironments means that the approach to developing a level of Business Intelligence has been based on using

historical information generated through a non-real-time environment in other words data processed, organised

and available for analysis and reporting on either an ad hoc or a cyclical basis (e.g. daily/weekly/monthly, etc.).

Typically, this is recognised as 1st generation reactive BI in other words Business Intelligence 1.0.

For those organisations operating within the digital economy and therefore using digital channels as either their

primary delivery mechanism to the purchase/supply source, or at least as one of their mainstream delivery

channels, the operational rationale and systems architectures will be based primarily on on-line if not real-time

systems and operational environments. For such companies, one of the key foundation stones for their Business

Intelligence will be based ideally on the on-line/real-time information generated through their systems and

operations (or as near real-time as they can operationally achieve) so that there exist opportunities and the means

(including improvised and unplanned responses) to rapidly adjust to sudden market or economic events, consumer

needs or transaction volume spikes. Within the information management area of Business Intelligence this is

recognised as 2nd generation real-time BI in other words Business Intelligence 2.0.

However, whatever the context of Business Intelligence (irrespective of whether it is 1.0 or 2.0), the issues are not

merely focused on investment in appropriate technologies, or the development of operating processes or indeed

the availability of specically organised BI data warehouses all of which can create an operating environment

in which Business Intelligence can ourish. If an organisation is to adjust to the complexity of Information

Management and to effectively manage the information ow throughout its operational structures, it has to develop

a holistic and integrated approach to ensure that it can create and sustain value from the Business Intelligence held

not only in its information bases but also in its other organisational resource pools.

When looking at the differences between how BI 1.0 and 2.0 can be applied it is useful to outline both the fallacies

and the realities of operating in either BI environment. The chart below outlines those commonly publicised fallacies

around the application of BI 1.0 as well highlighting a number of the key realities behind operating in a BI 2.0

environment.

Figure 6 - The Differences between Business Intelligence 1.0 and 2.0

(Reference Fig 6 BI 1.0 Fallacies and 2.0 Realities provides a response to some of the common misconceptions

around BI 1.0 and 2.0)

BI 1.0 Fallacies

Most users wish to be spoon-fed information and will

not take the initiative to create their own environment

or to investigate the optimal approach to obtain theanswers they require

Vendors will obfuscate and slow down the drive forsimpler and more affordable tools to preserve their

product bases

Only air traffic controllers and credit card approval

applications need real-time data

Analytics cannot be supported until there is an

enterprise data warehouse, with a metadatarepository, data stewards and a comprehensive data

model that represents the "single version of the

truth"

Operational systems cannot be queried for analytics

Data must exist in a persistent data store for

analytics

BI 2.0 Realities

The Consumer Web invalidates this idea. When

given simple tools to do something that is

important and/or useful to them, users find a wayto "mash up" what they need

Vendors will, but demographics will pressure them.Most BI "users" will be members of a generation

that lives in technology and will reject the

functionality of current BI

The availability of fresh data, from ever-widening

sources, generates its own demand

Data comprehension will displace data

warehousing, to some extent. The single version ofthe truth will give way to context, contingency and

the need to relate information quickly from many

sources

There is no longer a good reason for this

prohibition. In particular, SOA enhances theanalytics capability

Message queues, logs, sensors "transient dataand caches, temporary aggregates, lingering partial

results files" - all of these can be leveraged now

with the resources at hand


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The world of real-time interactive information management and provision that companies operating in the digitalspace come to support and deliver, (effectively what is arguably a pre-requisite for the Digital Economy and

Connectivity) requires that information is available on a 24 x 7 basis. It may be that this real-time information is

collected and collated from a variety of sources (including explicit visible and structured data, as well as tacit

experiential knowledge). Effectively, the information then has to be packaged up for delivery across a range of

media, but whatever delivery channel is used as part of the digital connectivity, that information must be delivered

rapidly and on reaching the consumer of the content must be easily accessible, accurate and understandable.

The diagram outlined below, provides a basic, structured view of the constituent elements in a digital economy

framework. One of the important features of this structure is the focus on Channel and Consumer Intelligence i.e.

the building blocks for deriving informative and usable BI.

Figure 7 - The Digital Economy - The Key Foundation Elements for Digital Economy for Delivery Channels

However, to incorporate these key foundation elements and thus achieve the basic but fundamental objectives for

digital connectivity, (i.e. that information must be delivered rapidly and on reaching the consumer the content must

be easily accessible, accurate and understandable), then companies seeking to participate in the digital economy

have to radically change their information management approaches. This would include dealing with change in

technology strategies, operating processes, departmental mindsets and workforce participation to ensure that they

can maintain and deliver real-time interactive content.

As an example of the type of change in approach that needs to be considered, Figure 8 (overleaf) outlines a series

of possible but practical steps in developing a series of insights into customer, product and service which can thenlead to a more visible level of Business Intelligence within the Digital Economy.


Respond

& Design

Product

Product

Product

Customer Interaction Channel Catalogue Channel & Consumers

Intelligence

Primary Support

Operations

Customer

Web Sites

Voice

of the

Customer

Legacy

Technology

&

Application

Environment

Business &

Operational

Intelligence

Customer

Memory

Organisational and Information based Business Intelligence

Services


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Figure 8 - Business Intelligence in the Digital Economy - The Practical Steps

Example - Development of customer, product and service insight (Use of Explicit and Tacit Workforce Knowledge

and Experience)

Although Figure 8 only outlines a few basic but practical steps, what it does seek to emphasise is that Business

Intelligence may not only be derived from the explicit data that internal/external systems collect and collate,

and neither just from the output created through the application of analytical and interpretative toolsets on the

organisational information repositories containing this data. But Business Intelligence can also form part of an

organisation-wide focus and effort that fundamentally involves the workforce, accessing and using both their

explicit and tacit knowledge as well as their harnessing their commitment.

Create company-wide

repositories containing customer

transaction, product and service

information from organisational

business streams

Where each business stream/

channel contributes information

to the repositories then the

customer - not the productnor a reference number -

is set as one of the fundamental

units of data analysis for BI.

Use expert and predictive

analyses tools to interpret

customer, product and service

information for business unitsso that it can be used to

serve and target their markets

and channels more profitably.

For customers for example, the

information can be used to

determine which customers might

switch to a competitor or purchasea new product or service offering.

Models can be created to

predict customer behaviour

which be used as the basis for the

design of interventions to alter

customer responses.

Provide organisation workforce

with a range of technical tools

and a level of autonomy toenable them to make

customer-focused decisions.

Share insights derived from

customer information (as well

as product and service data)

across organisational boundaries

Anticipate and shape future

customer interactions,

product design/innovation

and service propositions

Weave customer focus, (as well

as product innovation and service

improvements) into the

organisation workforce behaviour

and psyche

Continued...


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Page 12

8.0 Organisation and Technology

Research suggests that if organisations are to derive sustainable benets from Business Intelligence, then theymust develop a holistic and integrated approach towards BI through marrying data, technology, structure and

resource competencies. All should then be underpinned by a management consensus to drive intrinsic value from

BI. However, for an organisation to introduce such a paradigm shift, the will (i.e. consensus) has to visibly exist

within management as to how the company can develop its BI approach. And nally, there must be agreement as

to how the organisation would continue to operate in order to full that strategy (Lillrank et al., 2001).

(Note: Indeed, Perez (1985) in relation to views expressed on the dynamics within a manufacturing organisation for

example, extended this philosophy further and suggested that:

....when the full constellation of a new techno-economic paradigm tends to take over the bulk of production

within a society, it will not yield its full growth until the socio-economic framework is transformed to adapt to its

requirements.)

It is plausible that the organisational structure of a manufacturing company (or any other type of company

operating in other industry sectors) could be considered as a socio-economic framework in miniature. Therefore if

the emergence of Business Intelligence for the Digital Economy is viewed as one of the key elements of the new

techno-economic paradigm, then applying the Perez perspective suggests that BI wi ll not yield its full potential

until all elements within an organisation (e.g. resource skills, competencies and management and performance

philosophy) are harnessed and fully engaged in sustaining Business Intelligence.

The recognition and acceptance that such an integrated and holistic approach to Business Intelligence could and

should exist, would enable the organisation to harness all the contributory elements (for example, processes, data,

skills, software, hardware, communications, products, services, delivery channels, consumers, etc.) so that the

information content could be effectively managed and the data intelligently processed to retain its integrity. The

integrated and holistic BI approach allows an organisation to develop a more informed and robust understanding

at all levels of management on how to create optimum decision-making opportunities within areas such as

performance, targets and responsibilities.

For a number of organisations there are signicant constraints to overcome (e.g. manual hand-offs between

automated and semi-automated business and operating processes, lack of interpretative and analytical skills).

They are signicant enough to act as blockages to fully implementing the integrated BI approach within their overalloperating and management framework. In those instances, affected companies have tried to strengthen their

BI approach with the implementation of organisational change programmes (e.g. the use of LEAN/Six Sigma to

deliver measurable process improvement benets) focusing on the operational framework and deliverable metrics

as well as initiatives to socialise the approach to Business Intelligence throughout the company. In doing so, the

organisation creates an opportunity to move towards implementing a harmonised and integrated BI approach,

thus providing the means by which it can intelligently and effectively measure, manage and subsequently improve

performance so that both efciency and effectiveness are achieved whilst accruing realisable and sustainable

nancial benets.


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In assessing the potential of Business Intelligence to deliver sustainable and measurable value within anorganisation, there are many aspects to consider. Primary, amongst the key organisational elements that have a

determinant impact on the ability of an organisation to use Business Intelligence effectively, is the existence of high

levels of complexity in the formal and informal networks of communications that can exist within an organisation.

Highly complex formal and informal communication linkages within an organisation can have a profound impact on

the effectiveness of Business Intelligence.

Typically, these communications complexities can arise as a result of the network of business and operational

functions that have either developed organically over time, have grown rapidly because of business demand

or have emerged (and in many instances been retained) through the implementation of periodic mergers and

acquisitions. In addition, the scale and interlinking of functional networks have also increased signicantly as

businesses have strived to meet the massive expansion in market and consumer demands generated by highly

competitive national and global environments and of course by the borderless digital economy itself. All these

factors can act as severe constraints to the effectiveness of Business Intelligence if the organisation does not seek

to understand and analyse the communication patterns that exist within its operating framework.

The origins and analysis of communication networks in business and operational functions within organisations was

founded in the 1940-50s through the research work undertaken by H.J. Leavitt (1951). The ndings from Leavitts

research (ref - Some Effects of Certain Communication Patterns on Group Performance) into the effect of certain

communication patterns on organisation performance, found that all-channel networks were the most suitable

for organisations seeking corrective feedback possibilities an important factor if an organisation was to take rapid

decisions and deploy actions (a key deliverable from todays Business Intelligence data). Nevertheless, Leavitts

research also established that as more groups become involved within a communication network, so the level of

the complexity increases.

(Note: For example, if 16 individuals or organisation departments are represented in an organisational model, then

the research conrmed that a total of 120 bi-directional channels would be required (combination rule) for effective

cross-functional collaboration in carrying out a task.)

In modern-day organisations the need for these bi-directional channels to exist within an organisation is recognised

as fundamental to the long-term development of the company. For many, the requirement has been addressed

through the investment in and the availability of a formal, organised network and information infrastructure (forexample, supporting an organisation-wide intranet or providing the ubiquitous email system usually Microsoft

Outlook or Lotus Notes). The operating objectives (and of course the design) of these infrastructure facilities are

aimed at providing an efciently managed and structured layer of intra- and inter-organisational connectivity, leading

ultimately to offering the potential for more organised, cross-department and collaborative working.

The disadvantage of creating this level of managed formality in the network and information infrastructure

means that it typically operates on a one-to-one or one-to-many communications approach and therefore

does not easily enable the many-to-many interaction required by the bi-directional channels. Nevertheless,

the opportunity to create a many-to-many connectivity can be realised through harnessing the power of the

informal, more dynamic but less controlled personal explicit and tacit networks (for example, using the explicit

social network sites in a business context to create socio-business communities and/or the peer-to-peer tacit

socio-conversational channels to increase the range of connectivity). These informal networks, many of which

are capable of forming and re-forming according to need and personal involvement are seen as being potentially

important to the long-term sustainability of bi-directional channel communication in the organisation.

9.0 Skills, Communication and Information


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Page 14

For those tasked with the responsibility in an organisation to organise, collate, manage, analyse, interpret andreport on the information available to them in all its forms, there are some basic questions that appear to remain as

constants

what does all this data mean?

and

how can full value be generated from all of the data held?

For many organisations the development of a formal organisational Information Management structure has been

the initial response in seeking to resolve these basic questions and so provide a visible level of structural and data

responsibility and accountability.

(Figure 9 provides a schematic view of a structure which examines a typical approach to creating a perceived level

of effectiveness in intelligence management within the organisation.)

Figure 9 - An information Schematic (reproduced and adapted from Zvi Schreiber, Unicorn.com)

Data Semantics

Information

Resource

Manager

IT

Professional

Knowledge

Worker

Information Model(agreed model of the business)

What does it all mean...?

Meta Data(understand data environment)

Active Services

Utilise the Semantic Information Architecture to actively support data users

Understand

your Data

Know your

Business

Information Model:Desired business

vocabulary; entities,

relationships and rules

Semantics:Capture meaning of data

structures by mapping to

information model

Metadata:Catalogue of data assets,

their structures,

characteristics and usage

Set up information

architecture

Find /decommission

redundant assets

Apply data policy

Find / understand

data

Data integration

Data mapping

Impact analysis

What information

is available?

What does it

mean?

How reliable is it?

Know yourData

However, even if such a structured and role-oriented approach to Information Management delivers against its

stated and agreed objectives (not always successfully if roles and responsibilities are not adequately dened or

perhaps not even recognised by other key participating elements such as individuals/departments/groupings of

the organisation), there remains a requirement for an architectural and operational response to delivering Business

Intelligence to the business community.

There are of course a number of systems architectural frameworks and operational approaches that organisations

have to consider when assessing the optimum approach to deliver and use Business Intelligence within the

business. For many, the question centres on a fundamental issue which has been a core question for organisations

(and governments) which is whether to centralise or decentralise. From an IT, Operations and indeed a BI

perspective that question is always in the background:-

.....should BI be operated through a centralised or a decentralised structure?



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In other words, the question focuses on the potential outcome from the ever-current centralisation v de-centralisation debate that is extant in organisations, in relation particularly to their IT and Operations areas.

On the one hand there is a view that a centralised structural approach devolving responsibility to either an in-

house area (for example, a new or a specically enhanced grouping set up within the organisation to handle the

management of Business Intelligence) or perhaps to a specically engineered Business Intelligence Competency

Centre (for example, outsourced to an external third party to centrally assume responsibility for the provision and

management of BI) is the most apposite response to the question.

On the other hand, the decentralised approach could well consider as feasible the devolution of BI into a

potentially fragmented framework with various organisational divisions or external groupings responsible for

Business Intelligence specic to their area (e.g. the Database Marketing department of a Financial Services

company may be purely focused on campaign developments, customer analytics, etc.). The potential outcome

from this approach would be that the BI needed for each of the business and operating areas would remain at

that local level, whilst extracts of BI deemed to be material to the organisation as a whole, would be identied

and then synthesised and shaped for clearer understanding as it made its upward transition through the senior

management levels of the organisation.

However, even if an organisation is able to reach an agreed position on the question of centralised versus

decentralised as an operating approach for its BI, there are still some signicant and fundamental operating issues

to address. For example, it is understood that irrespective of whether the BI operating approach is centralised

or decentralised, that approach will mirror the operating management philosophy of a company which is based

essentially on a command and control hierarchical structure originally shaped in the 1850s.

(Note: the Badak/Abbas/Herron NEPA Review of an IT Perspective of Lean 2007 highlighted the archipelago

nature of this command and control structure. The proposition outlined in the review suggested that companies

operating within this structure are actually composed of a series of operational and management islands which

display a landscape similar to that of an archipelago.)

Figure 10 - Evolution of an Organisational Archipelago

+ =

Organisational Tiers Functional Silos Organisational Archipelago

Strategic

Tactical

Operational

(Reference: Figure 10 highlights the evolution of the organisational pyramid to a potentially disconnected and

incoherent operational archipelago.)

The challenge for any organisation is of course how to connect these in-house islands within the operational

archipelago. In all probability, such island connectors have to be a combination of linkages for example,

application systems, data management facilities, intuitive network topologies, business processes (subjected to

review and improvement through LEAN/Six Sigma initiatives as highlighted in Badak/Abbas/Herron NEPA Review

of an IT Perspective of Lean 2007), structural and management mechanisms and apposite skills and competency

resource pools.

However, historically the track record of companies actually achieving a workable level of connectivity betweenislands within the organisational archipelago is not compelling and this has had a direct and detrimental impact

Continued...



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Continued...


on cross-departmental IT programmes. For example, since the mid-1970s there has been a consistently highpercentage of IT strategies and programmes failing to deliver against objectives set, of technology architectures

being unable to respond exibly to organisation structural demands, of data management mechanisms becoming

overly bureaucratic leading to a stiing of responsiveness and growth, and of an inherent lack of organisational and

management cohesion. All contribute fundamentally to a failure in connectivity.

(Note: 78% of all IT projects initiated since the late 70s have been recorded as missing their objectives budget,

timescale, deliverables and with some types of projects (data driven projects are a very visible example of this)

the failure rate in terms of delivery and expectations is considerably higher with percentages of 90%+ being

experienced.)

Nevertheless, there are organisations that recognise that the collection, collation, analysis, interpretation and use of

Business Intelligence is fundamental to sustaining a successful business model.

For many, the strategic and operational proposition that has evolved has centred on the concept of what is viewed

as a structured information environment. In essence this structured information environment is represented by the

creation of what could be termed an information spinal cord which through its organic design is able to provide

the sustenance for an information environment that enables an organisation to continue its development and

growth. This information spine reaches out through its systems connections (i.e. in a manner similar to the bodys

nervous system connections) linking departments and groups within organisations intelligently and responsively

and providing them with the appropriate single views of information across all information categories and

groupings (e.g. consumer data, product data, supplier data, transaction data, etc.).

In this context, the Information Spine may be viewed as a logical and interlocking framework which allows

information to be created, received, maintained and supplied ensuring the content is appropriate for distribution

from the digital organisation to the digital networks and the web-based channels. The interlocking nature of the

spine with its range of nervous system connectors thus ensures that the information generated is coherent,

accessible and timely as well as offering usable business and operational intelligence.

Figure 11 - Effective Business Intelligence - The Information Spine for a General Insurance Company

Content

Services

The Information Spine

BusinessIntelligence

OperationalIntelligence

Interaction

Services

Direct Customer

e.g. via Web, Phone

(small ticket)

Broker

via several Channels

Direct Contact

e.g. Account Manager

or Underwriter

Third Parties

e.g. Medic, Engineer,

Surveyor via several

channels

Touch-Points

External

Agencies

Internal

Back-Office

Systems

Workflow

Process

Services

Relationship

Development

Services

Profiling

Services

Membership

Services

Application

Services

(Reference: Figure 11 The Information Spine provides a high-level schematic outline of the basis of the

information spinal cord supporting the operational frame of the organisation.)

Page 16


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Continued...


However, irrespective of whether the strategic imperative of many large organisations is to create the equivalentof a business intelligence information spine or whether it is to embrace the digital economy across all market

sectors, the major issue that many of them have to counter is that they remain overly-dependent operationally

on ageing, inexible legacy process and application systems environments. And these environments are not

particularly conducive to enabling Business Intelligence to be used effectively and efciently in a dynamic digital

economy.

Despite this however, it appears that for many companies much of their organisational focus, structure, cost base

and resourcing skill sets are actively directed at preserving the legacy operating environments. This is particularly

evident in the IT sector where, the emergence of off-shore and on-shore based outsourcers (Indian software

houses particularly evident in this market from the early-1990s onwards Tata, Wipro for example from India

as well as IBM and CSC from the USA and Accenture from the UK) have all encouraged senior management in

organisations to view the outsourcing of the legacy IT environments as a solution to what has historically been

viewed as a constant problematic area in terms of operational effectiveness, project delivery failures and resource

issues around cost and availability. As a result, the senior management perspective is that, not only could an

external third party become contractually responsible for the problem, but in addition the problem could be dealt

with at an apparently signicantly lower cost.

However, such is the long-term nature of the contractual terms negotiated between outsourcer and client that it

could be that with some of the contracts negotiated, the lifespan of these legacy environments has actually been

assured, and although efciently and effectively maintained by the outsourcer, the operational issues that surround

the inherent problems of retaining the legacy systems as part of the daily operational infrastructure remain as a

fundamental part of the operating environment.


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11.0 Information Proling

Where legacy applications form a key element of the operating environment within an organisation, the overall resultis that from an Information Management perspective, the organisational information databases maintained within

the legacy environments will typically operate using a range of existing (and occasionally rather dated) standard

data access methods. Historically these access methods have been dened by external and internal software

applications (some of them extremely aged), hardware manufacturers operating software, network interfaces,

database management systems, data exchange formats, etc.

However, given the volume, content and channel orientation of information now being viewed as simply meeting

the basic needs of the digital economy and its participants (i.e. businesses, consumers, network providers, media

groups, governments, etc.), the so-called legacy structures used within the mainstream operating environments

of many organisations is now no longer able to create or maintain a credible information delivery proposition within

the fast developing digital economy. Therefore to address what is a major stumbling block to providing real-time

interactive information content on an effective, efcient and timely basis, there is an acknowledged need to confront

the realities of this demand and re-address the structure and accessibility of Business Intelligence information. By

so doing the opportunity to increase the depth, spread and applicability of Business Intelligence can be seized.

It is possible therefore, that a key access change may reside in organisational information bases being accessed

via semantic proling rather than via existing legacy numerate/name-based data access methods. Semantic

proling effectively responds to the need to access information subjectively as well as objectively and very

signicantly is a feature of Business Intelligence 2.0. (- Ref Fig 6, page 11). By embracing this major shift in

structure and accessibility, it is believed that organisations are able to create an opportunity to effectively maintain,

develop and enhance their Business Intelligence within the context of a digital economy and so disseminate the

interactive information to the digital world.

For those organisations that remain dependent on accessing, collating, analysing and reporting on data through

the existing standard approaches, undoubtedly there will remain fundamental problems in creating and

maintaining a sustainable connection to the developing digital economy. In addition, these problems will be further

compounded by having no real process understanding or organisational awareness on how to move towards

Business Intelligence 2.0 and so use an approach based on semantic proling to create their Business Intelligence

and Information Management facilities.

Such organisations therefore, have to engineer a solution which allows a transition from their existing dataprocessing environment to real-time interactive Information Management.


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So far, this paper has examined Business Intelligence and the information underpinning it from the standpoint ofstructure and deliverability. However, the issue of data accuracy and integrity also has to be viewed as a primary

consideration. There is a view now emerging amongst a number of Information Management specialists and

organisations that the endemic and industry-wide problems associated with data accuracy and integrity may prove

to be insuperable.

There are many reasons for the emergence of this view. For instance, although organisations have the capacity

within their operational and technology environments to hold vast repositories of information, there is a growing

belief that their capability to manage those bases of information effectively and with integrity is under severe strain.

This concern around capability is further exacerbated by the underlying view that the ever-burgeoning volumes

of information being collected, collated and re-distributed linked with the increasingly onerous demands of users

(consumers, government agencies, regulators and other businesses) for more information delivered across a range

of media, stretches to breaking point the capability of an organisation to effectively manage its information. Such

over-stretching of the organisational capability (resources, skills, processes, technology and infrastructure for

example) in its Information Management, is viewed by industry critics as creating an unacceptably high risk of a

systemic breakdown in data integrity.

To explore this issue of data integrity further, there is a need to examine the business processing environments that

for an organisation provide the essential backbone to their operational frameworks and sustain the information

ow. Over the last four decades, in order to counter threats from local and international competitors, organisations

have continually sought to improve the cost efciency and operating effectiveness of their business and operating

processes particularly in their back-ofces. For many of them, the creation of business process re-engineering

(BPR) and continuous improvement programmes (including Lean/Six Sigma approaches) have been an on-

going feature of their business operational strategies. These have usually focused on reducing costs (and by

implication resource headcount) and accelerating and streamlining operational processing. The key objectives of

such strategies has always been the exploration and development of effective and cost efcient automated and/

or electronic business and operational processes to deliver sustainable and realisable benets to the business. A

key output from these process-based initiatives is the production of information which is informative and timely and

with a level of accessibility and availability that enables analysis, reporting and decision-making to be the basis of

the organisation operating framework.

However, evidence suggests that between 60-70% of the BPR and Continuous Improvements programmesundertaken by companies have failed to deliver against their key objectives (Ref. The Labyrinths of Information

by Claudio Ciborra). The reasons for this high rate of failure are undoubtedly varied but one of the key issues for

most organisations has been that existing (and ageing) software applications, with their rigid logic structure and

their potentially aged and un-documented programming code, have proved to be very resistant to re-design. The

result is that it has been difcult to easily incorporate the BPR principles set by the organisation into the software

applications. Such applications, with possibly years of maintenance behind them and with on-going ad hoc

amendments, functionality add-ons and planned software package upgrades usually in progress, have not been

ideally placed to enable existing and new business processes to be developed.

Given this situation an organisation usually has to marry the ageing application software systems to the business

operating processes or alternatively, business processes have to be designed to reect the more rigid and

immutable software applications functionality. However, all too often the actual outcome is that business operating

processes have to accommodate the idiosyncrasies of these ageing software applications. The resultant outcome

has been the emergence of operational process areas which have had to incorporate a mix of automated and

manual processing so reecting the irregularities contained in the applications suite. For many organisations withlegacy technology and operational environments, effective and electronic processing remains tantalisingly out of

reach.

Of course this confused business process environment creates its own problems in terms of Information

Management. Too often the fractured nature of transaction, departmental or functional processes has a severe

impact on the way in which data is held, used or indeed transmitted. Issues around quality, timeliness and accuracy

of information are continually problematic and have a debilitating impact on the effectiveness of organisations to

respond to customer and market challenges.

(Note: Back-ofce and call centre operational processing typically contain a mix of both automated and manual

operational processes which are linked to mainframe/mainstream server legacy applications and data stores or

are maintained through IT-managed LANs. However, a typical feature of such environments is the presence and

use of localised and personal processes, spreadsheets and PC-held data, which have been developed over the

years by operational staff. These tend to be used tacitly (i.e. a highly personalised x to a problem which can

remain unknown to other operators) rather than explicitly to create their own public linkages between incompatible

processes, clunky handovers between paper-based and automated linkages, application requirements and dataprocessing demands.)



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Continued...


For many organisations, the response has been to outsource this Information Management, legacy maintenanceand development application systems problem to off-shore (or occasionally on-shore) IT service providers. The

argument is that it provides an economically sensible option since substantially lower costs can be contracted

with the IT provider based on a 5, 7 or even 10 year outsourcing agreement. However, although many of the IT

outsourcers will seek to improve these ageing applications and create a more responsive Information Management

environment, the objective for them is to make a protable return over the lifetime of the contract and therefore

they will tend to concentrate on effective and efcient use of their data management and applications maintenance

resources (off-shore/on-shore). The result of this is that the ageing applications with their inefcient data and

business processing structures may be sustained for the full term of the outsourced agreement. This obviously

has implications for any organisation seeking to fundamentally re-shape its operational process structure and its

information structures and content. Since the economic advantages gained from outsourcing this legacy problem

may well be outweighed by the disadvantages of not being able to respond rapidly, contractually or structurally to

major market shifts.


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As the concept of Cloud Computing emerges as a mainstream technology and operational option, it is perhapstimely to examine its potential as an inuencer for change in the Business Intelligence arena.

Essentially Cloud Computing can be viewed as providing IT on the same basis as Software-as-a-Service (SaaS). It

offers a choice for an organisation in that instead of creating, developing and then maintaining their own internal IT

infrastructure to host databases or run software applications, a selected third-party provider hosts these facilities

through their massive interconnected server farms. An organisation can then access its information and software

application suites via the Web, on a SaaS basis.

From an initial assessment, there appears to be a range of economic and operational service benets to be derived

from using the Cloud Computing approach, viz:

Cost-efciency - the Cloud IT provider will host services for a wide grouping of organisations and means

that organisations will only be charged for what they use in terms of facilities. Therefore the sharing of a

complex infrastructure will be seen as more cost-efcient for a participating organisation than operating

their own internal facility;

Capital Expenditure Reduction - for complex software and database solutions, Cloud Computing enables

organisations to avoid hardware procurement and capital expenditure costs particularly relevant for those

groups which are seeking to initiate a start-up to take advantage of market changes;

Continual Upgrade Programmes - since the majority of Cloud providers constantly update their software

offering, participating organisations will be able to take advantage of these new features as soon as they

become available;

Operational Effectiveness - where businesses experience exceptional growth or are subject to seasonal

operational spikes, they can easily adjust to such movements as Cloud software and data management

systems are designed to cope with these operational patterns;

Information and Systems Availability - Cloud services are designed with mobility in view as well as being

used from a distance, so for organisations with a mobile workforce, access to organisational mainstream

systems and data can be achieved on a location-independent basis;

Information-as-a-Service - for example, a bank can provide information to its customers for personal

nance management. However, instead of being delivered as a proprietary application, information is

delivered on the as-a-Service basis;

Scalability - Cloud Computing services provide an attractive level of easy-to-implement scalability. For

example, Aviva - one of the major insurers in the UK - moved its enterprise content management and

Business Intelligence tools online, using Microsofts SharePoint online service and was able to achieve

this over a number of months (rather than years if they had had to follow normal internal infrastructure

demands and requirements).

There are profound implications arising from the emergence of Cloud Computing as a mainstream operating

option. For example, it enables information and the supporting technology to be viewed in the same way as

utilities, with consumption, availability and chargeability treated with an economic framework similar to that used by

suppliers of gas, electricity, water, telephone and outsourced services.

There are of course issues to be overcome in moving towards a Cloud Computing services proposition.

Organisations have to assess and contextualise such issues if they are considering any approach to Cloud

Computing. For example:

Standardisation - to be able to provide a cost-efcient service, Cloud Computing requires levels of

standardisation. Whilst it is acknowledged that ageing/legacy applications may contain many little-used

features to cope with specialised needs, customising these via a Cloud Computing service will increase

costs. For others organisations, there may be a need to compromise on having in place standardised

network solutions although this should not necessarily prevent them from creating their own denable

band-oriented web channels if they believe that their market brand/position/customer base demands it;

Usability some organisations may well be completely wedded to their internal software applications and

Information Management infrastructures which reect perhaps their operational idiosyncrasies;

Connectivity there may be issues concerning speed and reliability although the existence of suchproblems may be symptomatic of other issues that are present within an organisations internal network or

applications rather than those specic to the Cloud Computing service;

13.0 Implications of Cloud Computing


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Security concerns around security, data protection and legal compliance (e.g. will corporate/customerdata be safe?) are key issues that have to be addressed by organisations contemplating using Cloud

Computing services.

Therefore, as Cloud Computing emerges into the mainstream as a utility providing IT as a software-as-a-service,

there are profound implications for those organisations attempting to manage their information, their operations

and their technology environments. For those, able to respond to the challenge and able to throw off their legacy

chainmail then the prize is potentially great. For those unable to rise to the challenge, the long-term future would

appear to be bleak.

13.0 Implications of Cloud ComputingContinued...


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The key question for these organisations is how can they operationally and culturally move towards being ableto create and sustain a Business Intelligence environment (i.e. BI 2.0) whilst still maintaining integrity around the

existing data management structures and requirements. In other words can they create a measure of response to

the challenges concerning:

The speed with which they are able to move their existing information (on customers, products, operational

and nancial data) from fragmented and ineffective data structures to information bases which are highly

responsive to digital servicing and almost tacitly recognised accessibility;

The time window they have available to them to feasibly retain their existing stovepipe operational

environments (which support services, systems, processes, etc. and are underpinned by increasingly

out-of-date skill sets) in the face of strong competition from new and existing competitors in the digitalised

marketplace;

The capacity they have to be able to adapt those inexible stovepipe operational environments to meet

the challenges posed by digital marketplace competitors. (Note: The capacity challenge is a particular

issue for many organisations which have long-term contracts for the support (and in many instances

maintenance and development) of their processing and software legacy environments to off-shore

outsourcing companies. Such contracts have heavy and prohibitive penalty clauses for early termination

and therefore where markets begin to change dramatically (as evidenced in some sectors where

digitalisation has taken a strong hold) the organisations nd it difcult to respond to the market shifts.)

For many of those organisations that have had to confront these fundamental operational issues, the strategic

response has been to create new green eld operations. For example, some major insurers have launched entirely

separate aggregator sites whilst others have created new and differently branded digital General Insurance sites.

14.0 Operational and Cultural shift


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Whatever the response of organisations to these challenges, it is evident across most key industry sectors thatcompanies lacking the means to connect digitally with consumers are showing signs of structural and service

strains. Unable to effectively create an intelligent appraisal of their business operations performance through

Business Intelligence, they exist with a limited vision as to how they are operating currently and which destination

they are travelling to. With an in-built organisational inertia, a distinct lack of pace in terms of adopting new

technologies, minimal investment, a grid-locked management structure and rigid legacy operating environments,

all of these combine to restrict a companys ability to respond to the pressures exerted by the digital revolution.

Only time will tell how many of our existing large and well-known business brands will exist in the medium term

as the digital economy becomes an everyday feature of our lives. What is evident historically through all major

industrial changes, is that businesses that are adaptable and responsive, that rise to meet the challenges and

understand the fundamental shifts taking place, will survive albeit perhaps in a very different form. For those unable

to do that, the industrial wastelands in Britain are visible reminders of the future.

(Reference. Leavitt, H.J. (1951). Some Effects of Certain Communication Patterns on Group Performance. Journal

of Abnormal and Social Psychology)

15.0 Conclusion


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Business & Decision

Business & Decision is an international Consulting and Systems Integration (CSI) company. It is a leader in Business Intelligence (BI) and

Customer Relationship Management (CRM), and a major player in e-Business, Enterprise Information Management (EIM), Enterprise Solutions

as well as Management Consulting. Business & Decision contributes to the success of customer projects by driving maximum business

performance. The company has a reputation for functional and technological expertise and has forged partnerships with all of the key

technology vendors.

Business & Decision

Broad Street House

55 Old Broad Street

London

EC2M 1RX

Tel: +44 (0)20 7997 6060

E-mail: [email protected]

Web: www.businessdecision.co.uk


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Business & Decision

Broad Street House

55 Old Broad Street

London

EC2M 1RX

Tel: +44 (0)20 7997 6060Email: [email protected]

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Effective Business Intelligence - The Use of Business Intelligence in the Digital Economy

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