From Business Intelligence to Business Optimization: The road to increased business benefit

October 23, 2009

From Business Intelligence to Business Optimization: The road to increased business benefit

Authors: Dr. Fern Halper & Robin Bloor

Sponsored by IBM

Companies run on information. And in today’s dynamic and changing market, businesses need trusted and actionable information more than ever. In order to be successful, businesses must maximize their information assets to capture new opportunities and remain competitive. What does a company need in order to do this?

 

Let’s examine how one company that we call OldStyle Company dealt with many dramatic market changes. New competitors were entering its market with exciting new products and innovative delivery methods. OldStyle needed access to a lot of information to be able to compete against the unexpected innovations of its competitors. It needed to understand its current position in the market by analyzing data about its current products, customer status, distribution channels, and sales trends. OldStyle needed to analyze information about its business holistically, across all business units. OldStyle’s executive team posed a series of questions to each of the company’s thirty divisions to help develop a new business strategy, including:

  • What products and services is each division selling?
  • Are there duplicate offerings? Components?
  • Who are the customers for each of the products?
  • What are the costs to manufacture each product?
  • What have the trends been on defects?
  • What is the sales trend of each product over the last three years?
  • What is the forecast for each division?
  • What are customers complaining about?

Faced with this complex information requirement, the managers did the best they could.  However, they were missing information. Data was too scattered across the divisions.  Nobody was sure if data was accurate. While several organizations had business intelligence systems in place, each division had its own vocabulary. This meant that managers could not agree on the definition of terms such as customer, product, or even how to measure sales effectiveness. The result was that it became difficult for line of business managers to get the right information to aggregate together. And, even when they had the information, they still needed the IT department to generate a set of new reports, which took much too long to create. Finally, managers could not get this information to the sales teams, who were on the road, for timely validation. The upshot? OldStyle Company simply did not have the tools in place to feed the new strategic plan. OldStyle Company did not make the best use of its information assets. Managers had to make many manual adjustments and correct inconsistencies in the data every time information was needed at a company level. The situation was not tenable and the company could not optimize its business performance. What OldStyle needed was a set of foundational information capabilities to achieve Business Optimization.

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