The business of intelligence

A key challenge for financial services is of extracting understanding and intelligence from the enterprise’s data assets. FST spoke with Bloor Research’s Gerry Brown to bring some insight to the issue.

Business Intelligence in its pure form could be described as turning knowledge (in the form of information held within the business) into understanding (in the form of insight and business action). But for Bloor’s Gerry Brown, this isn’t quite such a simple proposition: “What is knowledge? What is understanding? What is intelligence?” he asks FST at the start of our conversation. Although it might be seen as a discussion of semantics, for Brown it is an interesting debate that serves as a way into thinking about what so called business intelligence (BI) systems can do for the enterprise.

“Plato says, for example, that things need to be justified, believable, and true,” he continues. “So you’ve got knowledge as the essence of truth. And if you consider the financial services area particularly, I’d say they need more knowledge than understanding. You need complete certainty that your numbers are true. And so, you need to be able to show that your strategy of accounting is accurate, that your compliance is accurate – that your management reporting reflects the numbers in the business, you performance management as a whole is based on true numbers, and there is only one version of the truth.”

With this in mind the underlying BI technology can be used as an enabler for performance management. “Performance management is a suite of analytic applications, built on top of some kind of business intelligence. You never get real performance management without having some BI underneath it somewhere,” Brown argues. The way he thinks about data management is that you have a hierarchy of understanding within the enterprise. At the bottom is the raw data, the actual numbers. Then you have information about that data – what it means in a simple sense. The next step for Brown is to have knowledge about that information. “It’s about know-how, a higher level of information that allows you to really understand what’s going on in the business.”

Brown admits this is “kind of a difficult discussion” with lots of different angles to it. “I actually think that over the next few years, it’s going to become a hot bed of intellectual debate within the IT industry. What is information, what is data, what is knowledge – because they’re all starting to converge in various different ways,” he suggests.

BI in practice
It is not every day that FST starts discussing Plato with a business analyst. While it is a stimulating and intellectually challenging debate, we steer the conversation back towards a more practical discussion of BI. In Platonic terms, we feel justified that there is a believable truth when we say that there are real marketing people selling BI solutions. So, away from the intellectual debate, what’s the advantage to business in getting involved now?

For Brown the technology behind BI and performance management systems is no longer an issue, and the real challenge is to identify areas where the business can gain benefits in deploying it. “Particularly companies need to look at where they can innovate and gain competitive advantage,” Brown argues, so they’re using BI in some clever way.”

Brown gives an example of insurance company Amlin, the biggest syndicate in Lloyds of London. It is using a BI system as its corporate performance management system, and “when Hurricane Katrina came around, Amlin was able to report its claims exposure at $110 million weeks before anybody else could, because their systems and their business intelligence was that much better,” Brown explains. “It had faster data, it was able to consolidate lots of information from different feeds and it felt confident enough to report its exposure to the regulator authorities early.”

The benefits of quicker reporting that the BI platforms provide in an insurance market are self-evident. “The ability to understand client profitability, to get a better, deeper understanding of underwriting risk, to look at similar cases in the past in order to evaluate what kind of premium to be charged, and what kind of return it will get, it all gives Amlin a business advantage.”

In this case Brown points out BI is being used as an operational function, in an ad hoc ‘ask the question, get an answer’ approach. “The knowledge or intelligence is where the number pops out of the bottom of the system,” he says. “In any case, with either a performance management set up, or a more strategic BI approach, the end goal is you need to report on something. It is about using the data to make something happen – it has provided Amlin with a competitive advantage.”

Using BI to differentiate
Getting a competitive advantage is always about differentiating yourself from the competition. So, what are the key areas where financial services can use BI to drive this differentiation in their customer offerings? In the financial services area Brown suggests that the faster reporting to stakeholders and increased accuracy of operations are the key areas. If you can consolidate different information quicker and more accurately than your competition, then this allows cheaper operations and the ability to position yourself as an industry leader.

There are other advantages that can come though. “I think business intelligence and performance management also helps you identify opportunities for innovation,” Brown suggests. And in the area of compliance, the practical advantage of knowing your data’s lineage is an important plus point. “If you can see where the numbers came from and you can source it back to the core transaction if you like or transactions, where the numbers came from originally it really helps with the whole area of auditing – the accounting line associated with the numbers.”

Much of this Brown concedes can be fairly intangible in terms of the customer facing side. “Externally you may look slightly more professional but it’s not going to be a highly tangible thing. But internally you can get much more efficient on the operational side, which is really where the advantage comes.”

Internal challenges
If then the benefit of BI is primarily seen on the internal operational side, what does this imply for internal processes? Doesn’t this kind of technology implementation imply that the enterprise needs to take a hard look at its internal workings, to ensure that it gets the benefit of the technology?

Brown agrees that you need to be clear about the scope of any BI implementation, and he warns that a key challenge is to “make sure you don’t get involved in over-ambitious projects.” As an example, he argues that most vendors will tell the business that they can do practically anything with the technology – that the business should define what they want to do, and the vendor will do it. “That’s like saying to a kid ‘you can have any cake you want’. So of course the temptation is to ask for the biggest cake in the world.”

It is important though that you don’t fall for this temptation. “Suddenly you get into trouble because it gets complicated,” Brown points out. “The successful BI projects tend to be under ambitious, minimizing the number of data feeds. They are discrete projects with clear objectives, goals, time scales and budgets. It’s all about good project management rather than setting your sights too high, because those big projects don’t work. They’re just too broad in scope.”

For Brown the first point here is to define the requirement of the scope. “You must be business-led and not technology-led. You need to be clear in your own understanding of intelligence and performance management and not necessarily believe everything all the vendors tell you, as they have different definitions. You have to drill down in order to find out what’s actually going on.”

In any technology implementation choosing the right vendor is critical, and BI is no different. The key is to find someone that you can work with in a flexible and collaborative manner. “Ultimately,” muses Brown “ a successful BI project is a collaboration between suppliers, customers and a number of other third parties to get the system up and running.” With this in mind it is imperative that you are able to get on with the people you’re working with and have a similar way of thinking about the project. “You need to see the big picture, but start with small deployments,” argues Brown. “Working in that way is better than just saying: ‘Okay, let’s do loads of stuff and have a grandiose roll out.’”

Brown really sees a BI project as an opportunity for a transformative project within your business. “There’s a lot of opportunity here for process innovation in your internal operations,” he states. “You shouldn’t approach the issue of BI from the perspective of throwing a bit of IT on top of what you already do. Potentially you can re-engineer how you do business and add value to your operations.”

BI 2.0
Looking forward we ask how the market will develop. For example there has been talk about the development of new real-time event reporting and in-process analytics, replacing a more batch-driven processing approach. How does Brown think this s-called BI 2.0 is going to develop? “Personally I think BI as a term, will disappear by 2010 – and I think it will be replaced with a phrase like content intelligence. Rather than business intelligence, which really pertains to the automation of numbers and data, what we’re moving towards is more a mix and match of unstructured and structured data.” These are developments that aren’t quite with us yet though. “My view of BI 2.0 is that at the moment, we’re in the mode of better and faster. There isn’t that much innovation out there actually at the moment.”

But when it does come, what will this ‘content intelligence’ wave of innovation look like? “It is going to be about content management, bringing unstructured and structured data coming together. It is all about users being able to ask questions of systems in a user orientated way, and systems being able to contextualize those questions and make sense of it all. It’s like you’ll be chatting with a highly knowledgeable human being as opposed to a system.”

Whether or not these systems will be available to everyone throughout the enterprise as some have suggested is for Brown still a moot point. He has the sense that actually many people won’t want too much access, as they’re only really interested in the data they need to do their jobs. And in any case, he is not convinced that from the business perspective you would actually want all your staff analyzing meta-trends within your operations.

“Do you want people analyzing your business all the time and coming up with all these conclusions? It’s a bit like being a doctor and having your patients come to you saying they’ve looked on the internet and found out loads of different things wrong with them. You know, do you really want that or do you want your staff to get on with their work, being a cashier, or a teller, or whatever it is. BI will become embedded within desktop applications and to the user it’s going to be transparent. There’s going to be a small number of people who use it as a dedicated tool, and those are going to be fundamentally the knowledge workers.”

Gerry Brown
Brown joined Bloor in 2006, and has over 20 years of experience in the software and services industry. He has worked in marketing and sales management positions for Xerox, ICL Fujitsu, Hyperion and MicroStrategy. As an external consultant he has provided strategic marketing advice for more than 30 systems, software and services vendors including IBM, HP, Sun, SAP, PeopleSoft, Cognos, and Epicor. Until recently he was Head of Marketing at BI vendor MicroStrategy, and prior to that Marketing Director at CPM vendor Hyperion Solutions.

Gerry is a Fellow of the Chartered Institute of Marketing (FCIM). He is also a university lecturer in the core subject areas of Strategic Marketing Decision Making, Marketing Analysis and Evaluation, and Managing Marketing Performance on the highest level CIM course, the Professional Postgraduate Diploma. He lectures at Thames Valley University, which is the largest educational establishment in Europe with 45,000 students. At ICL Fujitsu he was a BS 5750/ISO 9000 Quality Instructor. He has also trained and facilitated marketing and sales teams at Motorola, Metrologie, and Unisys.