These days, it’s no longer just a question of analyzing the data. Why business intelligence — and decision-making — is getting more complicated all the time.
EDGE: What exactly is the difference between business intelligence and business performance management?
The way I like to describe it is that if I go to a business user and say, “”How are you using business intelligence to better run your organization?”” I get a blank look from them and they’ll say, “”You mean competitive intelligence?”” That term never resonated with the CxOs or with the generic business user. If you go to the CIO and say “”How are you using business intelligence?”” he or she will know exactly what I’m talking about. We’ll be talking about query and reporting, data mining, data warehousing and all that good stuff. The interesting thing is that we’ll spend the entire time talking about technology. If I talk about business performance management with a business user, we’ll be talking about financial consolidation reporting, budgeting and planning, logistics. We’ll be talking about solutions and business processes and may not mention technology ever. We think business intelligence technologies fold into business performance management. The key message is that the business agenda is being driven by business performance management as opposed to a technology agenda.
EDGE: Two different terms but describing the same thing?
KOPCKE: Actually, I don’t think it is describing the same thing. For example, query and reporting. I never go back to my office and say I’ll be doing query and reporting. The secret sauce in what makes this all different is not only do we have to talk in terms that make it relevant to the business user, we have to fold this technology into what you actually do.
EDGE: Is the problem just the lack of a common language?
KOPCKE: You literally have systems pulling organizations in multiple directions right now. I’ve got a sales force tasking system that says this, I’ve got a planning system that says something else, I’ve got numbers I’m reporting to the street that say a third thing. That just used to be bad business practices. With the regulations that are coming down, it could land you in jail.
EDGE: It almost seems obvious: Stick to one financial package and these problems go away.
KOPCKE: We’re humans and we’re doomed to repeat the same mistakes over and over again. One of our views of the world is that if you went back to 1980 and if I walked into any major company in Toronto, I would see five different hardware manufacturers, and the reason was sales and corporate accounting were making hardware decisions based on a departmental or business unit decision. All of a sudden we realized that’s not the right way to run thing…
In the ’80s, they had an accounts payable system that didn’t talk to accounts receivable that didn’t talk to the general ledger, and nobody could agree what a customer was. Once again, we learned that coming up with standardization strategy in the enterprise is an effective way to drive something, and ERP and CRM emerged. Business intelligence and decision support systems are now the next emerging category that says, “”You know, making all these piecemeal, point decisions just isn’t the way to do it.”” We really have to come up with a strategy to understand how it is going to work across the enterprise. It’s the same lesson that’s going to be learned.
EDGE: All this said, business intelligence has yet to go mainstream.
KOPCKE: But the stars are aligning, and there are a couple of reasons why it’s going to happen. First, we needed an infrastructure and transaction system to emerge. In 1980, when I went to do a decision support system for the Liquor Control Board of Ontario, the first step was just trying to find the data. You did not have the infrastructure to put information out to hundreds of users in your organization. The other thing that needed to take place is some of the technology couldn’t handle large volumes of data. Then from a macroeconomic perspective, it’s really hard to compete out there. More and more organizations like Wal-Mart are taking the message that this can be a huge competitive advantage. Then the final thing that will push us over is called compliance, because now the executive says I can lose my bonus, stock options and my freedom if I run my business recklessly.
EDGE: Is upcoming legislation such as Sarbanes-Oxley helping to drive the market or just making it all more complicated?
KOPCKE: This hasn’t shaken out yet. Many companies haven’t gone through their first audits… There is a concern that you can over-legislate to drive compliance. I used to work in Germany and got to used to a whole new phenomenon around expense reporting. For example, I would write in how many miles it would take to go from my house to the airport and someone from the finance department would actually go out and drive that to validate that the number is right. That’s taking it to the extreme.
I often argue with the CFO that if we save all the money we spend validating this stuff, yes, we’ll have some people who cheat on expenses, but it’s probably cheaper. We’re obviously in a state where some of this compliance is necessary but it’s also forcing executives to better understand what is going on in their business.
What’s good out of this is not so much that we are trying to find the criminals and put them in jail, but it’s causing people like the board of directors to take their responsibility much more seriously and to take a much bigger interest in their business. But it can be taken too far and I certainly worry about that.
EDGE: That’s only one dimension. There’s a complexity issue too.
KOPCKE: And what kind of measure are you going to apply? So I’ve got a backup and recovery that’s reasonable. How frequently do I have to test it? I don’t know what that answer is. And is it a material issue and do I have to disclose it?
EDGE: Does risk management enter into it?
KOPCKE: What we address is, how agile is your organization to address world issues? You can’t predict world events, you can’t predict where the next disaster will happen, where the next hurricane will be, but you can sit and say how your processes and controls are, and it is possible for that to become a material issue.