Even today, Business Intelligence is one of those very popular and least understood terms.
I have always had my reservations on the very definition of Business Intelligence as term. Infact, since the day I jumped into the thick of how it has been defined, understood and implemented (as if it is a program or project!), I found it to be extremely limiting and misguided.
Recently, I saw a blog post in a popular Information Management portal where the current evolving definition of Business Intelligence was posted; I simply could not resist expressing my views to a broader audience. Here is the definition that I saw:
“A set of methodologies, processes, architectures, and technologies that transform raw data into meaningful and useful information used to enable more effective strategic, tactical, and operational insights and decision-making”.
Even the Wikipedia defines BI as –“Business Intelligence (BI) refers to skills, processes, technologies, applications and practices used to support decision making”
If you closely look at these two definitions, they have the following serious limitations:
1. It’s not defined in a Business language
When you look closer it seems to be plausibly good definition for Information Supply Chain rather than Business Intelligence, although information supply chain is a critical and integral part. Also, we need to define the term “Business Intelligence” and not Business and Intelligence as two independent definitions
2. It does not contain a Business purpose
What should a business do better in business terms that is clearly measurable and can be benchmarked over the long term? Let me borrow the definition of BUSINESS from Wikipedia to explain this better – it says business is a legally recognized organization designed to provide products and services to consumers for a profit. The purpose thus should be on providing these in ways that increases return and wealth of owners.
3. It seems to capture information life cycle only
Behaviours and people are the core to being intelligent. It does not specifically highlight if organization has the motivation to exploit the information and act on it. It also does not capture if organizations know what to measure and analyse to run the business better.
4. The word “Decision–making” used in the definition can apply to life in general and not Business in particular
Here is an alternative definition for Business Intelligence Iam proposing to the broader business community.
According to me, Business Intelligence is “An organization’s motivation and ability to effectively create and use information to execute business activities that deliver higher and sustainable profitability compared to competition”
What does this definition imply?
1. Sense of Urgency to Succeed – “Motivation”
2. Action – “Execute business activities that deliver”
3. Focus on clues that matter – “ability to effectively create and use information”
4. Customer-centric and Ethical - “Higher and sustainable profitability”
5. Measurable and Benchmark able – “compared to competition”
I welcome your thoughts and suggestions to improve the definition.
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Hi Nikhil, this is my best definition for BI:
ReplyDeleteAn organization strategy to create, store and analyze information for better decision making in order to create a competitive advantage.
You could expand the definition little bit more like
ReplyDelete“BI is the left brain of the organization, when used effectively; helps you to outrun the competition and generate significant revenue and profits”
Data that speaks to decision makers.
ReplyDeleteGood critique of the existing definitions and I really like your 5 point test of your new definition. I think that is the strongest part and really helps me to understand where you are trying to get to. But definitions themselves are notoriously hard to write in such a way that they can only be read in the way intended. I do think you are going in the right direction though.
ReplyDeleteA very good business definition of BI. BI defintion so far has always been technology centric and your definition speaks what BI really is and gives a new angle to look at when working on BI projects.
ReplyDeleteThanks for the very useful and encouraging thoughts and inputs. An intelligent business is easy to spot - its "Business As Usual" cannot be copied by competition! - Nikhil Datar
ReplyDeleteNikhil,
ReplyDeleteWhy define? Definition by its very nature limits. For example I would not like to define BI from a sustained profitability perspective. What happens when you are running a not for profit organization for instance. Secondly, does an organization need to create information for use? By conducting business activities it generates data. One needs to collect data and put it to good use. Intelligence should not contain execution. For execution is not learning...using the feedback in the course of execution could be part of intelligence. My take is definition puts limits and I would rather have the term more free wheeling. Intelligence anyway is not so common attribute
Ajit, The purpose of suggesting a definition is to create a context for correct approach to BI which has conventionally celebrated technical excellence rather than focusing on how organization thinks.
ReplyDeleteHi Nikhil,
ReplyDeleteI would think that "information" is just one of the resources to execute business activities.
Will it make sense to use the term "organisation's resources" rather "information" in the definition?
Jincy
Good Point Jincy. I would assume the other resources are inputs to produce two aspects that a business really competes on - Motivation and Information. But interesting thought.
ReplyDeleteNihil - I very much like your definition of BI especially the part where you introduce the aspect of motivation. It might be over complicating it but I think that as well as representing the business motivation, that BI should be utilised as the means to understanding the customer motivation as well (a little bit holy grail i know).
ReplyDelete