Originally published September 23, 2008
If we think of business intelligence (BI) as business information and business analysis in support of fact-based decisions in the context of business processes that impact profits, it quickly becomes clear that business intelligence is a broad concept. The nature of business information varies along a number of dimensions, including whether the business information:
In addition to the wide range of types of business analyses, there is also a broad range of business analysis techniques that may be used alone or in combination with each other to support business analysis. The appropriateness of these techniques vary, based on the subject of analysis (e.g., data mining techniques applied to risk analysis in contrast to trend analysis applied to sales performance analysis). Figure 1 shows a sample list of analytical subjects and techniques.
Figure 1: Sample List of Analytical Subjects and Techniques
As Figure 1 suggests, there are many different possible combinations of types of business information and business analyses. Selecting the relevant business information and analyses is a function of the kinds of business decisions that must be supported by BI, which, in turn, is a function of the type of business process within which the BI will be deployed. Business decisions are generally classified as strategic, tactical, and operational, though, in practice, the distinctions can be blurred. These classifications tend to imply differences in:
Business decisions also take place in the context of business processes, such as management processes, revenue generating processes, and operating processes. Depending on the process and whether the decisions to be made are strategic, tactical, or operational, different combinations of business information and business analyses will be appropriate. The general relationship between business decisions and business processes is shown in Figure 2.
Figure 2: The Relation Between Business Decisions and Business Processes
At the core of Figure 2 is a highly simplified representation of value chain business processes (i.e., supply chain processes, operating processes, customer relationship processes, management
processes, intra-company processes, and support processes). In the context of these value chain processes, companies make a variety of decisions, shown in the arrows surrounding the core business
processes. To illustrate, manufacturing companies make long-term, strategic decisions about supply chain and operational processes, such as the number and location of plants and distribution
centers and investments in IT to enable planning and operational collaboration with suppliers. For a service company such as a bank, the long-term strategic decisions about supply chain and
operational processes might address the question of whether to outsource check-clearing processes. In general, value chains differ by industry and product, and companies occupy different positions
in those value chains. That being said, the value chain construct is very useful for stimulating thinking about BI opportunities.
Faced with the many combinations and permutations of business information, business analyses, and fact-based decisions that BI can deliver or support, we need a general framework that delineates the major types of BI opportunities that can be considered for inclusion in a given company’s BI portfolio. With such a framework, we can further stimulate our thinking about potential BI opportunities as we conduct an analysis of BI opportunities. Figure 3 presents some of the major types of BI opportunities, upon which companies in a variety of industries are capitalizing.
Figure 3: Major Types of BI Opportunities and their Relation to Categories of Business Processes
What we see in Figure 3 is that BI opportunities can be segmented into three major business process categories: management processes, revenue generation processes, and operating processes. Within
these major business process categories, proven BI opportunities are aligned with key business sub-processes, such as forecasting, customer segmentation, and order processing. While the exact way
that a given company competing with a certain business design in a specific industry might design its BI applications will vary, the typical BI opportunities outlined here cut across industries.
Further, while the business vocabulary of industries might vary, the need for management processes, revenue generating processes, and operating processes is a constant. Accordingly, we believe that
starting with this list of BI opportunities can be useful when determining the specific BI opportunities your company should pursue.
This article is adapted from The Profit Impact of Business Intelligence by Steve and Nancy Williams.