Archive for August, 2012

What is Business Intelligence?

Business Intelligence is Intuitive Actionable Data. Intuitive because a person should not need to look at the data for long periods of time to understand the data, and Actionable because the data should empower its user to take an action.

Business intelligence data is an elevator pitch to a user, it needs to be communicated concisely with brevity. If the user can’t understand the data or what they are supposed to do with it inside of thirty seconds, then the data is not intuitive. Just like an elevator pitch business intelligence data should be summarized to communicate the right information quickly. For instance, if I want to know how much I spent on gas this month commuting, I could look at all the transactions on my bank statement adding up the gas station transactions. However, that is not intuitive, as it requires me to dig through a mountain of data to find the desired information. Whereas if I had a summarized statement that gave me the total amount spent that month across a handful of categories, I could immediately spot the gas category and know if it was a good, bad, or ugly month for commuting to work.

In addition to brevity, business intelligence data needs to communicate an idea, not answer a question. A question is always narrow in scope and context, hence the answer to a question is equally narrow in scope and context, and thus an answered question tends to spawn more questions. Likewise an idea will spark additional ideas but a person with an idea is empowered to take an action, where a person with a question is blocked until they have an answer. So by setting a goal of communicating an idea instead of answering a question, business intelligence data can better empower users and avoid the spiral of questions. Going back to my previous example, my monthly bank statement should be designed to communicate the current state of my finances. Whether I’m trying to determine how much my commute costs each month, what is my monthly revenue, or can I afford a new Lexus, my bank statement can answer all these questions because it is communicating the idea of my financial state instead of trying to answer an individual question.

Business intelligence data should also be actionable. A user must be able to look at data and know what action to take. Data that does not drive a user to action is not useful data. When I look at my monthly bank statement I should immediately understand the current state of my finances and be driven to take any action needed to meet my financial goals. This can only occur if my bank statement is designed to be actionable, presenting useful data that clearly, concisely, and with brevity tells me the state of my finances. A list of transactions does not do this. A list of transactions will force me to sit and stare at my statement trying to mentally summarize the data I believe is relevant. On the other hand if my bank statement has summarized data about my total deposits, total withdrawals, the existing balance, and net total, I can easily assess my financial situation and determine my next action toward meeting my financial goals.

Intuitive Actionable Data, that’s business intelligence. By making data adhere to that simple fundamental, we can add value, increase productivity, and ultimately build a better business.

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