Originally Posted January 2 2011, 5:56 AM i
You know, I’m a BI consultant and this job is an invaluable input for the market in general. It’s not a matter of technologies, I’m not a technologist and, after all, technology it’s only a mean to an end. It’s the knowledge of the market, or better, the knowledge of how people work. This is the only competitive advantage that can’t be copied for sure.
I also try to work as broadly as possible with the customer, because the Business Intelligence definition that I practically apply is that “BI is everything related to the company control function”.
Within this frame, I realized in the last year of being questioned more and more about a topic: simulation.
Or better, business people call it simulation but it’s not. Few examples.
“I’m often questioned by the brass about costing. Sort of traversed costs. Kinda like the impact of using a PR agency on the specific product. What if we should switch our overall image from ‘this’ to ‘that’. If we change the market target what is going to happen to our administrative costs?”
Controller of a world famous shoes manufacturer.
“When the buyer calls in and asks for a rebate, I have no mean of knowing if I can actually concede something. I do a fast mental calculation and I reply, but I can make mistakes. Not to tell about the impact on the overall company performance and budget alignment.”
Sales director of a midsize CPG company
“Of this entire Datawarehouse stuff, I’m interested in future. I need to see what’s on the book now to calculate what will likely turn into actual cash and when. I must update this forecast almost daily.”
Revenue manager of a luxury hotel chain
What do they have in common? They do not give a dime to all the analytic and reporting features we usually talk about but they need to manipulate data.
The same data we provide with our BI tools, they need them to make calculations, design scenarios, pull levers, flip switches and see what happens.
They often have to reply to questions that are not modeled at all within the systems because systems built upon sound, established, mostly financial, business models. What if an important sales manager leaves? It impacts on sales, generates expenses for hiring a new one, requires a visit to all the major customers of her area etc. All of these changes can be calculated, and indeed they are, by hand on Excel, but the impact on a complex budget requires an enormous amount of work to be assessed. Get some of these bumps along the road and soon you’ll be out of course and your budget will become worthless.
We focus on giving business people with tables full of numbers, on making them interactive and drillable, on creating appealing charts which move and sound and blink. All of this is OK, and they provide a tangible value but they’re no longer enough. Now we are confronting a generation of business people who give the availability of data for granted and they are moving a step forward.
Many defined BI as the science of “providing the right number to the right people at the right time”;
ok, to do what?
Now they’re telling you what they need to do and what would help them. It’s up to us giving them a new generation of applications to help them be more successful.
Do these apps already exist? Tell me below!
Did I drink too much in these days, let me know!
Do you have the problems I describe here, then tell your story!
Jan 5 2011, 7:35 AM
Your analysis echoes what I have been sensing this past year. BI is moving out of the IT shop and into the functional areas where the "what if" and "so what" questions can be best answered. It's not enough to provide the right information to the right people at the right time if it doesn't enable different (hopefully better) business decisions.
Decision making is less about the IT component than the business and relational components. I believe this is where BI is going in 2011 and where it will have to continue to go to avoid becoming just another legacy application.
Jan 5 2011, 8:43 AM
Augusto Albeghi responded:
Well Doug, while we both agree on the point, I do not think that's where BI is going in 2011.
I see 2 well defined trends: megadata analysis and cool visualizations. There's little attention on this aspect.
It is an opportunity, someway...
Feb 23 2012, 1:33 PM
tobinharris (Twitter) responded:
Systems dynamics might be what your looking for. Its all about simulation.
Using SD you look at problems in terms of cause and effect, stocks and flows, and feedback loops.
You can detect virtuous and vicious cycles that lead to tipping points. Excel doesn't make that kind of thing easy IMHO.
I'm still learning this stuff, and read Seeing the wood for the trees, by Dennis Sherwood. It's good, but a bit of a slog!
You might find you can input outcomes of BI analysis as a baseline in SD models.
Feb 23 2012, 3:06 PM
Augusto Albeghi responded:
Thanks for the input, Tobin; you got the point. The main hurdle is that Biz people do not think in term of SD, but in terms of P&L and balance. I do not think that any CFO would listen further than minute two if I introduce the phase space of the company. Matching the two vision may be challenging.
Then, some quantities that could be crucial for a system dynamic model can only be grossly guesstimated. What I try to introduce is a boiled down implementation of SD.