Note from the editor: This is the fifth in our series of BI-focused blog posts. Thanks again to Bob Johansen for sharing his expertise as the head of the Deltek BI Affinity group. If you want to learn more about BI & Vision Performance Management, please register for this on-demand demonstration or read this whitepaper.
Stripped down, Business Intelligence is about visualizing data to help people make good decisions. But, how good is the data? How good are the decisions? Why is BI so popular? What is really going on behind all of those dashboards that drive many firms toward success? It is probably not what you think. The goal of any BI implementation is not to help people make the right decision every time. The goal is to help people less wrong. And this approach makes all the difference.
My friend, Nate Watson, thinks about BI a little differently from most people. His ideas about BI are powerful and his level of understanding on how things work and what people should be willing to pay for never fail to get me excited. Nate talks a lot about the intrinsic power of BI: Power to drive your business forward, power to undergird your strategic goals, power to help you see things differently, and probably most importantly, power that comes from being less wrong.
Being 100% right, all of the time, is expensive. On top of that, most companies don’t really need to be right 100% of the time; they only need to be less wrong. Nate explains it this way, “If getting you the 100% perfect answer costs you $100,000, you could probably get 70% or 80% for $20,000. The last little bit is more expensive than all the rest.” That being the case, who would pay all that extra money to be 100% certain? Some would, for sure, but most of us would be okay with only being 80% right. In fact, most of us would be thrilled to be 80% right, because we know that 80% right is a lot less wrong than we have been. In a world that cannot measure the accuracy of decisions or provide the means to make those decisions (i.e. a world without BI), most would kill to be 80% right.
Before a BI implementation, most companies have a few metrics they track and report on. Most are financial metrics (revenue growth, profitability, A/R balance) and the rest of the business is run on instinct. How do you know when the time is right to hire a new employee, acquire a new business line, market a new product, or purchase an expensive new capital asset? More often than not, these decisions are made based on emotions. It just feels like the right time. In a BI world, companies have access to a myriad of new metrics, KPIs, and dashboards. Is the intent of all this to make the right decision every time by every decision-maker? No. The intent is to help them make better decisions. More informed decisions. Being 80% right could be the big difference maker, signal a competitive advantage, allow fortunes to be made, and provide long-term wealth for generations.
Those firms that understand this have embraced BI and are rolling into the future with their collective heads full of information that makes them confident in their decisions. They know that there are no guarantees in life and that hard work pays off. They know that they have given their decision-makers the data they need to make decisions and they trust them to do the right thing. And they are okay with being less wrong. Are you?