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A long, long time ago I attempted to distill the role of IT down to a nice, concise motto. It took several years, a host of good and bad experiences, and several iterations; but I think I finally did it: IT has two, interdependent roles: to enable strategy and to achieve operational excellence.
This motto helped me crystallize how I approach
"The essence of strategy is competitive advantage," said Michael Porter, one of the most-admired gurus of business strategy. So, if one of their roles is to enable strategy, CIOs should directly support the ways their organization creates and maintains competitive advantage.
One way to create competitive advantage is to consistently make better decisions -- about products, markets, operations, customers and so forth -- than our competitors. Better decision making is the key function that, if we take the right approach, BI can support in our organization.
BI should equal better decisions
So, whenever I start to ponder a BI project, I put the project into the context of better decision making. I ask myself and the organization two questions. The first one: "If there were no barriers, what decisions would you like to be able to make?" The second: "What information would you need in order to make those decisions?"
The answers to these questions help us avoid the trap of confusing BI with reporting and thus thinking that BI is owned by the IT department. Rather, BI is about better decision making -- and that is the role of decision makers. Our role is to provide the tools for better decision making.
Taking this decision making approach to BI sets the right attitude, but does not by itself guarantee success. To really make sure that we get BI right, there are two more things I like to do:
Start small. Often, designing BI around decision making involves a seismic shift in thinking that can be daunting for the organization. Decisions imply accountability. What happens if we aren't sure we are up to the task? To overcome this, I like to start small -- sometimes really small. I begin with targeted prototypes and pilots.
For my pilots, I enlist either the group that is the most willing to try (then support) new things, or the group that is in the most pain. We work closely on the decisions the group would like to make and on the information it needs to make those decisions. We then select a subset of these decisions as our test case. We design our BI and thought process to support just these decisions. Once we have confirmed that things are better, we move onto the next subset, or pilot group.
This prototype-pilot approach provides the added benefit of helping to justify the investment. Often the benefits of improved decision making can be difficult to quantify, and the process is little more than guesswork. By doing pilots, however, we can keep the project small while we prove its benefits through the results the pilot group achieves.
Think about the perfect future. A persistent issue in designing for better decisions is the feeling that we are limited by either technology or access to the right information. I solve this by basing my BI designs on the assumption that at some point in the future, both business intelligence technology and access to information will be perfected. As we envision without any limitations the decisions we could make, our BI design will anticipate the technology and information as they become available.
More on BI strategy
Taking a decision-centric approach to BI helps me generate amazing value. In one case, we wanted to make better decisions about new product development. We asked ourselves which information we needed to make better decisions. Then we gathered information outside our transactional systems so that we better understood our customers' needs. That in turn improved our customer relationships.
In another case, we wanted to make better decisions about inventory and supply chain management. As we looked for the information that would improve our decision making, we exposed several information gaps. In filling those gaps, we identified process improvements that more than paid for the BI tools we implemented.
In a final case, we designed our BI system anticipating that we eventually would know the location of our retail customers. That way, when smartphone technology came to the fore, we were ready to use the data. We had already thought through what we would do when location information became "perfect."
Niel Nickolaisen is CIO at Western Governors University in Salt Lake City. He is a frequent speaker, presenter and writer on IT's dual role enabling strategy and delivering operational excellence. Write to him at firstname.lastname@example.org.
This was first published in June 2011