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Pablo Picasso once said “Computers are useless. They only give you answers.” The truth is that computers have to work very hard to provide answers to what appear to be simple questions. While we are buried in terabytes, petabytes and exobytes of data – answers and information can be very hard to come by, especially information necessary for serious business decisions. Data must be viewed in context of a subject area to become information, and analytic techniques must be applied to information in order to create knowledge worthy of taking action. The challenge is getting data into context within a subject area and applying the right analytic techniques to get “real” answers.
Enter Wolfram Alpha, as an “answer” engine. Once touted as the next generation of search engine, this web application combines free form natural language input, i.e. simple questions, and dynamically computed results. Behind the scenes, a series of supercomputers provide linguistic analysis (context for both the question and the answer), ten terabytes of curated data that is constantly being updated, dynamic computation using 50,000 types of algorithms and equations, and computed presentation with 5,000+ types of visual and tabular output. Sound impressive? It could easily be a glimpse of the next generation of business intelligence and decision-support systems.
Wolfram Alpha lets you input a query that requires data analysis or computation, and it delivers the results for you. It’s “curated” data is specially prepared for computation— data that’s been hand-selected by experts working with Wolfram, who go through steps to make sure the raw data is tagged semantically and is presented unambiguously and precisely enough that it can be used for accurate computation. Alpha demonstrates the real power of metadata – data about data, and the importance of semantic tags for categorizing data into a context necessary for providing knowledge and, thus, answers.
Wolfram Alpha is not a search engine according to Wolfram Research co-founder Theodore Grey. It is not a replacement for Google. He says that Alpha is very, very different from a search engine. “Search engines are like reference librarians,” Grey explained. “Reference librarians are good at finding the book you might need, but they’re useless at interpreting the information for you.” Alpha takes reams of raw information and performs computations using those data. It produces pages of new information that have never existed on the Internet. “Search engines can’t find an answer for you that a Web page doesn’t have,” Grey explained.
“It’s been a dream of many people for a long time to have a computer that can answer questions,” said Grey. “A lot of people may think of a search engine as that, but if you think about it, what search engines do is an extreme limited subset of that sort of thing.” Examples of how Alpha can be used today range from solving difficult math equations to doing genetic analysis, examining the historic earnings of public companies, comparing the gross domestic products of different countries, even measuring the caloric content of a meal you plan to make. You can find out what day of the week it was on your birthday, or show the average temperature in your area going back days, months or years.
Wolfram Alpha would make an “ultimate” business intelligence application by computing over an enterprise data warehouse once the data was properly “curated.” The ability to create knowledge from data, particularly to create actionable answers is what business executives really expect – not prettier presentations. The only questions left for Alpha are:
- who can curate your data for you, and
- how quick can you see Alpha running over your data?
In the current economic climate the CIOs and IT managers are constantly pushed to “do more with less”. However, blindly following this mantra can be a recipe for disaster. These days IT budgets are getting squeezed and there are fewer resources to go around however, literally trying to “do more with less” is the wrong approach. The “do more” approach implies that IT operations were not running efficiently and there was a lot of fat that could be trimmed — quite often that is simply not the case. It is not always possible to find a person or a piece of hardware that is sitting idle which can be cut from the budget without impacting something. However, in most IT departments there are still a lot of opportunities to save cost. But the “do more with less” mantra’s approach of actually trying to do more with less maybe flawed! Instead the right slogan should be something along the lines of “work smarter” or “smart utilization of shrinking resources”; not exactly catchy but conveys what is really needed.
When the times are tough IT departments tend to hunker down and act like hibernating bears – they reduce all activity (especially new projects) to a minimum and try to ride out the winter, not recognizing the opportunity that a recession brings. A more productive approach is to rethink your IT strategy, initiate new projects that enhance your competitive advantage, cut those that don’t, and reinvigorate the IT department in better alignment with the business needs and a more efficient cost structure. The economic climate and the renewed focus on cost reduction provides the much needed impetus to push new initiatives through that couldn’t be done before. Corporate strategy guru Richard Rumelt says,
“There are only two paths to substantially higher performance, one is through continued new inventions and the other requires exploiting changes in your environment.”
Inventing something substantial and new is not always easy or even possible but as the luck would have it the winds of change is blowing pretty hard these days both in technology and in the business environment. Cloud computing has emerged as a disruptive technology and is changing the way applications are built and deployed. Virtualization is changing the way IT departments buy hardware and build data centers. There is a renewed focus on enterprise wide information systems and emergence of new software and techniques have made business intelligence affordable and easy to deploy. These are all signs of major changes afoot in the IT industry. On the business side of the equation the current economic climate is reshaping the landscape and a new breed of winners and losers is sure to emerge. What is needed is a vision, strategy, and will to capitalize on these opportunities and turn them into competitive advantage. Recently a health care client of ours spent roughly $1 million on a BI and data strategy initiative and realized $5 million in savings in the first year due to increased operational efficiency.
Broadly speaking IT initiatives can be evaluated along two dimensions cost efficiency and competitive advantage. Cost efficiency defines a project’s ability to lower the cost structure and help you run operations more efficiently. Projects along the competitive advantage dimension provide greater insight into your business and/or market trends and help you gain an edge on the competition. Quite often projects along this dimension rely on an early mover’s advantage which overtime may turn into a “me too” as the competitors jump aboard the same bandwagon. The life of such a competitive advantage can be extended by superior execution but overtime it will fade – think supply-chain automation that gave Dell its competitive advantage in early years. Therefore such projects should be approached with a sense of urgency as each passing day erodes the potential for higher profits. In this framework each project can be considered to have a component of each dimension and can be plotted along these dimensions to help you prioritize projects that can turn recession into an opportunity for gaining competitive edge. Here are six initiatives that can help you break the IT hibernation, help you lower your cost structure, and gain an edge on the competition:
- Server virtualization
- Enterprise application & data audit
- Cloud computing
- Business Intelligence (BI)
- Business process automation
- Centralization & automation of IT operations
Figure 1: Categorization of IT Projects
In the current economic climate no project can go too far without an ROI justification and calculating ROI for an IT project especially something that does not directly produce revenue can be notoriously hard. While calculating ROI for these projects is beyond the scope of this article I hope to return to this issue soon with templates to help you get through the scrutiny of the CFO’s office. For now I will leave you with the thought that ROI can be thought of in terms three components:
- A value statement
- Hard ROI (direct ROI)
- Soft ROI (indirect ROI)
Each one is progressively harder to calculate and requires additional level of rigor and detail but improves the accuracy of calculation. I hope to discuss this subject in more detail in future blog entries.
Image courtesy of BusinessWeek 9/25/08: "AmerisourceBergen's Scrimp-and-Save Dave"
The financial panic of late has caused a lot of attention on cutting costs – from frivolities like pens at customer service counters to headcount – organizations are slowing spending. Bad times force management to review every expense, and in these times obsess with them. Financial peace however has two sides – expense and revenue.
A side effect of cost cutting can be stunted revenue, over both the short and long terms. It is easier to evaluate costs than to uncover revenue opportunities, such as determining truly profitable offerings and adapting your strategies to maximize sales. Also as difficult to quantify are the true loses in unprofitable transactions, and competitive strategies that can negatively impact your competition.
The answers to many of these questions can be unearthed from data scattered around an organization, groking customers and instantly shared knowledge between disciplines. For example, by combining:
- customer survey data;
- external observations;
- clues left on web visits;
- and other correspondence within the corporation;
…an organization can uncover unmet needs to satisfy before the competition, and at reduced investment cost.
When external factors, like a gloomy job outlook, cause customers to change behavior, it is time to use all information at your disposal. Those prospects changing preferences for your offerings can provide golden intelligence about the competition or unmet needs.
Pumping information like this is the heart of business intelligence. Marketing and Sales can uncover the opportunity; however, it is up to the enterprise to determine how to execute a timely offering. Financials, human capital planning, and operations, work in concert to develop the strategy which requires forecasting data, operational statistics and capacity planning data to line up.
The Holidays are a great for watching “End of the World” shows on the History Channel. They were a great comfort, actually almost encouraging, because all of the prophecies target 2012. “The Bible Code II”, “The Mayan Prophecies”, and the Big 2012 Special compendium of End of the World scenarios, covering Nostrodamus to obscure German prophets, all agree that 2012 is the big one (Dec 21 to be exact!) What a relief!, the rest of the news reports are trending to canned goods, shotguns, and gold by the end of the year. We really have almost a whole 48 months before everything goes bang (I wasn’t ready anyway, procrastination rules!).
Unfortunately, we need to do some IT planning and budgeting for the new year and probably should have some thoughts going out 36 months (after that see the first paragraph). As I discussed in a prior blog, the reporting, BI/CPM/EPM, and analytics efforts are the strongest priority; followed by rational short cost savings efforts. All organizations must see where they are heading and keep as much water bailed out of the corporate boat as possible. Easy call, job done!
Then again a horrifying thought occurred to me, what if one of these initiatives should fail? (see my nightmares in prior blog posts on Data and Analytics). I am not saying I’m the Mad Hatter and the CEO is the Red Queen, but my head is feeling a bit loosely attached at the moment. Management cannot afford a failed project in this environment and neither can the CIO in any company (remember CIO=Career Is Over).
The best way to ensure sucessful project delivery (and guarantee my ringside lawn chair and six-pack at Armageddon in 2012) lies in building on best practice and solid technical architecture. For example, the most effective architecture is to use a layer of indirection between the CPM application (like Planning & Budgeting) and the source data systems (ERP, Custom transactional). This layer of indirection would be for data staging, allowing transfer to and from fixed layouts for simplified initial installation and maintenance. In addition, this staging area would be used for data cleansing and rationalization operations to prevent polluting CPM cubes with uncontrolled errors and changes. In terms of best practice, libraries and tools should be used in all circumstances to encapsulate knowlege rather than custom procedures or manual operations. Another best practice is to get procedural control of the Excel and Access jungle of wild and wooley data which stands ready to crash any implementation and cause failure and embarassment to the IT staff (and former CIO). When systems fail, it is usually a failure of confidence in the validity or timeliness of the information whether presented by dashboard or simple report.
CPM, EPM, and Analytics comprise and convey incredibly refined information and decisions of significant consequence are being made within organizations to restructure and invest based on this information. The information and decisions are only as good as the underlying data going into them. So skimping on the proper implementation can put the CIO’s paycheck at serious risk (Ouch!).
When contemplating which business units or product lines to put up for sale in today’s challenging market, it might be wise to borrow some tactics from the real estate market. It really comes down to three important guiding principles in planning a divestiture as part of your deleveraging strategy:
1. Know your market – cultivate target buyers to avoid a fire sale. Identify players looking for complementiarity in products, services or customer base.
2. Model the outcome on your going-forward financials – freeing up cash may be top of mind for everyone, but we all need to think past the current crisis and understand what the impact will be on sales and profitability going forward. If you don’t have a business intelligence toolset in place already, you may have difficulty in achieving the type of agile scenario modelling that is necessary here. Infoworld is reporting BI as a key spending area in the recession, specifically for determining profitability.
3. Know where to invest, or “design to sell.”
– there may be secondary benefits, above and beyond a divestiture’s products, services, and customer base. Specifically in the technology architecture, especially if the business unit is on its own (instead of shared corporate) platforms. Ancient mainframe technology is like the walnut panelling and avocado shag carpeting lurking in the basement. Customized applications with their big in-house support teams are like the pink stucco patio and poolhouse a proud homeowner showcases, causing the buyer to race down the road to the next listing. Call in the design team, these could be good spots to begin a corporate makeover, as they are very likely to increase the value of the sale.
On the flip side, things like collaboration tools and business process management suites are like the well-appointed master suites and media rooms that can help a buyer warm up to the sale. In addition to things like a lean operating architecture, these technologies help make a divestiture an attractive asset for buyers looking to build out a platform company.
The current business environment reminds me of being socked in a fog bank in minutes, after being on a pleasant summer sail. The entire episode puts the pucker factor meter in the red zone. One minute clear sun and nice breeze, the next you can’t see your hand in front of your face. Your other senses become more acute — suddenly you hear the splash of the waves on the rocks you cannot see (funny I didn’t hear that a minute ago). The engines of power boats are closer, seeming to come at your every quarter (PT109 how bad can it be?).
As you sit in the cockpit with your canned air fog horn and US Coast Guard approved paddle, you think that the portable marine radio you bought will not save your sorry carcass (at least you can get the Coast Guard to retrieve your drowned body as you go down). You kick yourself for not buying that radar instead of the case of wine as a boating accessory (in fact, you think of downing some of that right now to ease your passing). What you would not give for just a little visibility.
That’s what running a business feels like right now (makes you want to puke doesn’t it, what fun). My Kingdom for some Visibility! Sure, you can see what the others are doing; cut a few heads there, shut a facility there. Is that the right thing to do? Are you killing your future seed corn or bailing the water which will sink the company? Ugh! In this case, you really wish your company’s reporting could be that radar to tell where and where not to go (sure wish I got that CPM Package rather than that Sales meeting in Napa Valley). With dashboards, planning and budgeting, consolidation, and operational BI, I would have a much better sense of what to feed and what to kill to take advantage of my competitors coming out of this economic fog (Aye Captain! in the Bay of the Blind the One Eyed Man is Admiral!). Wishing and regrets won’t get you much, and capital investment at this point seems to be a dirty word (Yep, there it is on George Carlin’s list).
In the case of my sailing experience, the way I dug out of the fog and fear was to dig out the depth finder the former owner left behind and the charts I bought because it seemed like a good idea at the time. I then proceeded to steer the sailboat in circles matching the readings on the depth finder with the depth readings on the chart based on my dead reckoning of my location (you reckon wrong, you’re dead). Needless to say it worked, the fog cleared, and I was within a quarter mile of where I should have been (Cool!). Just straightening out existing corporate reports and cleaning existing data is the equivalent of using the depth finder and charts already on hand (Yes! I know the difference between capital and expense). In fact, that effort usually saves money by eliminating old unused reports (Oh, I feel so green!).
In any case, take a solid first step by getting those state-of-the-art visibility tools of BI/CPM/EPM when the current problems clear or things become so dire as to require dry dock repairs. That way, the pucker meter won’t be buried in the red the next time this happens, and it will.
Image courtesy of Herbert Knosowski, AP
Document examples of manulytics (manual analytics) activities to illustrate hidden fixed costs. Any BI investment initiative needs executive support and budget. You need to make a case for the investment to improve your BI capability and show the business a ROI (Return on Investment). The cost of the current manualytics activity needs to be documented to highlight the hidden fixed costs of the current way of doing business to help build consensus to make improvements.- Identify manualytics processes to be moved to production and automate.
- Raise awareness of data as a corporate asset.
- Enlist and cultivate a C-level executive sponsor for your Enterprise BI effort.
- When the business asks a question that is difficult to answer – keep track of the level of effort expended to generate the information. How many analysts with spreadsheets are compiling information manually? When the answers accuracy are questioned, how much more time is spent proving the numbers are correct.
- Development and document metadata wherever possible – Build in metadata requirements gathering into your SDLC – Create and standardize a process to capture table and column definitions and business logic into a standard format. Get tribal knowledge documented so that the business can continue to operate if people leave or move on.
- Data Governance – develop a committee to work towards managing the data and IT assets of the organization.
- Create/Assign data stewards for each of the source systems to agree on service level agreements for your source systems and resolve data quality issues.
- Work to centralize your reference data – business hierarchies like department and product need to be centralized, agreed upon by all stakeholders – this is a task that can be driven by your corporate governance committee.
- Don’t boil the ocean – Look for candidate pilot projects with a narrow scope to show quick wins to the business (90 day max.)
- Work toward tool standardization – many organizations own one of each BI tool – work to standardize on one or two.
- Build a Center of Excellence around BI and ETL – work to centralize your internal expertise for BI and ETL.
Well we ended up with twelve items, any one of which could fill a book or whitepaper and may be the subject of a future post.
As we work with different organizations, similar themes emerge. Every organization is different and your road to BI maturity is different from other companies. Sometimes it pays to have a fresh set of eyes come in and survey your current state to get you started on the right foot.
What? Operation what? That’s right, Mincemeat and I am not referring to scrumptious pies at Christmas…..no I am referring to the reality of misinformation. What was a successful operation and asset to the Allies has become a minefield for today’s enterprise and a thirst, or more likely a downright need, for the ability to utilize our valuable data in a meaningful manner.
Let me digress for a second……I do not think we all need to be reminded of what Business Intelligence can do for us today – the facts and the benefits are plain and clear – take your data and make it actionable. Remove the idea of reporting on data and realize the vision of using data….
So one wonders why we have not all embarked upon our voyage of discovery aboard the great ship “B.I. Enlightenment.” And when we start to walk up the boarding ramp, waving goodbye to the stale data of yesteryear and the meaningless seventy characters of green bar reports we never understood anyway, we spare a moment to think “are there any icebergs in this sea?”
Of course, when one makes that pause there is a realization – what are you really gaining intelligence into? For many enterprises, our data is split across several systems and platforms; some of which are real time in nature others of which may be a week behind the times.
From what I have seen, many people are requesting more information on the tools – Which is best of breed? What do I get out of the box? Can my analysts use it? Can my dog understand it as he brings me my Sunday morning paper? How quickly can you show me my data in action? These questions can all be answered and the “wow factor” of BI can take precedent and the definition of KPIs ensues full steam ahead for some people.
What is missing? I appear to be on the first landing but I do not remember taking the first flight of stairs…….well let’s flip back to “Operation Mincemeat”: or now to be known as “Is my data ready for Intelligence?” A critical step that must be considered lies not in the value of BI but in the readiness of your data. Misinformation was wonderful in the 1940’s but it has no place in the business arena.
When your data becomes an actionable entity you must be able to rely on its accuracy and ease of access. Reporting on reports was the way of the past – “That looks great Bill but can you cross reference that with data store “x” as sometimes we can be a little stale”. The true key to embarking on Business Intelligence is understanding where you are today in your data maturity and most important, how do you get where you need to be – reliable, reusable, actionable information.
So what does it all mean? It means, assess where you are before you set sail……the voyage is glorious and the sights not to be missed but make sure you have a ticket for the right ship.
Manualytics (manual analytics) is the labor intensive, manual process of creating information. It involves finding, loading, correlating and consolidating data into spreadsheets to answer a particular question.
The business leadership asks a question which initiates a number of analysts to start sift through the silos, usually with spreadsheets.
The answers from different departments don’t agree. That spawns a second round of analysts with spreadsheets trying to prove whose numbers are correct.
The business is left with an answer they don’t trust which leads to decision making with inordinate risk.
Does this sound familiar? Can you give examples in your organization that resemble this process? You are not alone. Manual analytics exists in virtually all organizations because the business can create questions faster than IT can provide answers.
The problems with Manualtyics include:
- It is inefficient and labor intensive
- It produces inconsistent results and can compounded errors
- It buries complex business logic in spreadsheets
- It introduces uncertainty and confusion
- It engenders mistrust of the data
- It leads to risky decisions
- Second and third layer of analysis
- Data Untraceable from Target to Source – compliance anyone?
One of the largest problems is that Manualytics is a hidden overhead cost/activity in many organizations. If the manual spreadsheets (or any desktop system) are run every month and are business critical – then they need to be productionalized and automated.
If you don’t have a program to improve your BI capabilities and limit/reduce the amount of manual analytics then you are treading water at best.
This siloed architecture and manualytics activities describes what we call a typical BI current state. We see this situation to varying degrees, in one form or another, in virtually all organizations.
So how do we break out of this cycle?
How do we position our systems and people to obtain actionable information?
How do we overcome our siloed architectures and maximize our long term IT investments?
With all the easy to use business intelligence tools and technology we have today, why is it so difficult to create actionable information from the wealth of data in our organizations?
One needs to understand, at a high level, the systems we have built and how they got that way. Your core business systems have evolved over time, budget cycle by budget cycle with no eye towards the overall enterprise. Systems were built to support core business functions – Payroll/HR, General Ledger, Inventory, etc. They were transactional in nature; designed to meet the immediate requirements (e.g. cut payroll checks, track inventory, manage an assembly line, etc.) which did not include getting business intelligence out. Over time these systems became islands of data, popularly known as silos.
Add the fact that silos are structured differently and common data like product and customer is typically not standardized, answering questions across silos is difficult and labor intensive.
As these systems matured, the owners of each silo had departmental Business Intelligence needs. So as budget became available they added a data warehouse or data mart on top of their silo and created something like this.
The result is larger silos with larger sunk investment and still no ability to provide enterprise answers or actionable information. This approach worked for immediate departmental BI needs but if the business asks a question from data that resides in two or more of the silos, getting the answer usually involves a significant IT effort. By the time IT responds the business has gone onto a different question. The business analyst starts gluing spreadsheets together to provide some insight kicking off the next activity in the BI food chain – manual analytics.
