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Business Analytics – A Business Capability or a Tool?

Global Insurance Industry Executive, IBM

This morning I read this post on Toolbox

Self-Service Business Intelligence is…

- A win-win for IT and business professionals
- A trend that could possibly threaten some IT professionals’ livelihoods
- A disaster waiting to happen…sounds like a reporting nightmare
- Other

What do you think and why? I began to type a response to post but then decided to share my reaction/response with you instead. 

MY RESPONSE -

Considering that Toolbox.com is primarily focused on “Tools”: this inquiry may make sense to some of your reader base.   But from my perspective it doesn’t make much sense. 

Let’s first try be re-wording your question:  “Should business people make the best informed decisions they can and make them in context with the ultimate goals and objectives of their endeavor?”  

I think the answer is pretty obvious. 

There seems to be an inordinate amount of focus on tools and technology and not enough focus on growing the business acumen with regards to the application of analytics to the business of making decisions.  At IBM we refer to this as the Analytics Quotient

Let’s think of it this way.  When the calculator first became commercially available did anyone wrestle with the idea of how to utilize this new tool in the office?  When the electric toothbrush hit the market did any one even read the instructions?  Besides charging your first cell phone, did you have any issues with how it would complement your personal or professional communications?  I bet not.  These appliances simply enhanced your day-to-day life.

Admittedly, this analogy breaks down a little bit with regards to business analytics, but in only two ways, which I’ll touch on later

Business Analytics (BA) is and should be an enhancement to the business decision making process.  Unfortunately, most people think they don’t know enough about their business to really know the next level of decision making that modern business analytics affords them the ability to explore.  But really they do – they just don’t realize it. 

Any time a business person looks at a set of data, a report, or a PowerPoint with pie charts and tables and asks “why”: they are beginning to analyze.  The desire to “drill down” to lower levels of detail or “across” to other dimensions or related measures – even if they don’t yet use those terms – they are analyzing the situation.  Looking for cause and effect is another natural extension of their analytics.

The issue has had more to do with the fact that original computer systems required IT to translate its understanding of business needs into code to automate various processes.  The residual data has been stored and then at some point in time someone asked for a “data dump” so that they might create a report.

In my industry, insurance, most of those original reports that were designed as many as 30 years ago remain the “standard reports” today.

Only recently (relative to the age of many of these reports) have business people begun to search for new, more reliable and efficient ways to answer questions and delve more deeply into analyzing the results of their business processes and business decisions.

The technology is no longer the issue.  By and large the bigger issue has to do more with the adoption of this technology as a day to day “appliance” – like the electric toothbrush.

Now to the exceptions.  I will readily admit that business analytics is a lot more complicated than using the electric toothbrush.  But I will argue that this is primarily because we as business people are still honing our analytic thinking – as afforded by modern capabilities.  Second, I fully subscribe to the observation that data quality has a huge impact on analytics and is a major issue for IT – but also business.

However, and here’s the rub, businesses make hundreds, and in most cases, tens of thousands of business decisions every single day.  Reports are generated all the time.  Analyses are generated usually using “trusted” spreadsheets in never ending cycles.  But here’s the point – it’s all with the same data everyone has said is too dirty to power business analytics!

Let me ask another question – “So, if you data is too dirty to make business analytics solutions of use then, when did you stop reporting?” 

Actually, what I have experienced is that those firms that overlook this illogical standing and begin to develop modern analytics skills, their organization benefits in a number of profound ways.  I’ll mention just a few.

Beginning to bring efficiency to the reporting and analytics processes as they stand today ultimately results in more time for people to develop their analytics capabilities.  Said differently, instead of spending the majority of their time preparing reports, users of business intelligence consistently report that they now spend 80% of their time reviewing (analyzing) the contents of their reports rather than simply preparing them.  This naturally leads to the asking of more and better questions and what anyone will recognize as an opportunity to develop analytics skills and better apply analytic based decisions.

Another great realization is that once businesses begin to exercise their data they begin to appreciate what data is critical, important, nice to have, missing as well as irrelevant to their analytics processes and in turn  prioritize their data needs.  This immediately translates into clearer prioritization and thus a better roadmap for IT to be successful in meeting the business needs.  And, isn’t that what the business/IT partnership all about?

If business can serve its own analytics needs, can this be anything but good for all concerned?