Business Intelligence is designed and implemented to enable managers to make better business decisions. Business Intelligence provides metrics or numbers that reflect the organisation’s performance. At a high level this could be more profit, reduced costs or confirmation of adherence to laws, however does this reach as far as game changing strategies?

Part of the reason I am interested in this is because the value an organisation gets from Business Intelligence determines how much they will invest in it.

The question I have is how useful it is at doing this, this question is borne partly from my experiences of implementing Business Intelligence systems for a number of clients, and partly from my own experiences of running Rittman Mead. The key definition for me is what are the key decisions that define businesses and what are the day to day decisions that sustain businesses.

I would suggest that decisions that define businesses, for example, that take them into a new market, start producing a new product are made using acumen, experience and intuition. These are human traits, not something derived from numbers. Decisions that sustain the business are much more effectively made by using metrics.

Examples of sustaining a business for me, I and based on our experiences at Rittman Mead would be looking at project profitability, staff utilisation, cash flow and overall profit and loss. We have very detailed metrics for these items. If any of them fall too far from target, the company could be in serious trouble, so maintaining these is essential to maintaining the company. Business Intelligence is key here and we use tables, graphs and dashboards to view this data.

For more strategic decisions, such as opening an office in the US or India, or purchasing an Exalytics server then it comes back to a human decision, with the current tools we use there is no way we can prove this is going to be a ground breaking decision, or a ruinous one. What we can to is plan for the impact it has, we can see if we have the cash reserves to do it, and we can measure what the impact will be by doing it by measuring pipeline, sales, revenue and costs against their current values.

Books such as Competing on Analytics argue that some organisations get ahead by using analytics (read numbers, business intelligence etc), i would argue that often in the examples analytics is used to support and enhance strategies, not define them.

Therefore in order to understand how to run a business successfully a manager must understand their own psychology of decision making, and potentially the industry or market they are in.

So to understand how to make a company great do we need to understand how humans make decisions better, for example looking at various biases and heuristics we follow, or do we have to get better Business Intelligence or analytics systems.

For me the answer is both, people have to come up with strategies and then use Business Intelligence to prove they are sustainable.

One footnote I would like to add to this is Big Data. Where Big Data can potentially change this paradigm, Big Data and it’s exploration allows organisations to potentially find out new information which they were unaware of, which could then become the seeds for future strategies.