From Data Warehousing to Performance Management
Next year marks the 15th anniversary of The Data Warehousing Institute (TDWI), an association of data warehousing and business intelligence (BI) professionals that has grown nearly as fast as the industry it serves, which now tops $9 billion according to Forrester Research.
In 1995, when data warehousing was just another emerging information technology, most people—including some at TDWI—thought it was just another tech fad that would fade away in a few short years like others before it (e.g. artificial intelligence, computer-assisted software engineering, object-relational databases.) But data warehousing’s light never dimmed, and it has evolved rapidly to become an indispensable management tool in well-run businesses. (See figure 1.)
Figure 1. As data warehousing has morphed into business intelligence and performance management, its purpose has evolved from historical reporting to self-service analysis to actionable insights. At each step along the way, its business value has increased.
In the beginning…
In the early days, data warehousing served a huge pent up need within organizations for a single version of corporate truth for strategic and tactical decision making and planning. It also provided a much needed, dedicated repository for reporting and analysis that wouldn’t interfere with core business systems, such as order entry and fulfillment.
What few people understood then was that data warehousing was the perfect, analytical complement to the transaction systems that dominated the business landscape. While transaction systems were great at “getting data in,” data warehouses were great at “getting data out” and doing something productive with it, like analyzing historical trends to optimize processes, monitoring and managing performance, and predicting the future. Transaction systems could not (and still can’t) do these vitally important tasks.
Phase Two: Business Intelligence
As it turns out, data warehousing was just the beginning. A data warehouse is a repository of data that is structured to conform to the way business users think and how they want to ask questions of data. (“I’d like to see sales by product, region and month for the past three years.”)
But without good tools to access, manipulate, and analyze data, users can’t drive much value from the data warehouse. So organizations began investing in easy-to-use reporting and analysis tools that would empower business users to ask questions of the data warehouse in business terms and get answers back right away without having to ask the IT department to create a custom report. Empowering business users to drive insight from data using self-service reporting and analysis tools became known as “business intelligence.”
Phase Three: Performance Management
Today, organizations value insights but they want results. Having an “intelligent” business (via business intelligence) doesn’t do much good if the insights don’t help it achieve its strategic objectives, such as growing revenues or increasing profits. In other words, organizations want to equip users with proactive information to optimize performance and achieve goals.
Accordingly, business intelligence is now morphing into performance management where organizations harness information to improve manageability, accountability, and productivity. The vehicles of choice here are dashboards and scorecards that graphically depict performance versus plan for companies, divisions, departments, workgroups and even individuals. In some cases, the graphical “key performance indicators” are updated hourly so employees have the most timely and accurate information with which to optimize the processes for which they are responsible.
Organizations have discovered that publishing performance among peer groups engenders friendly competition that turbocharges productivity. But more powerfully, these tools empower individuals and groups to work proactively to fix problems and exploit opportunities before it is too late. In this way, performance management is actionable business intelligence built on a single version of truth delivered by a data warehousing environment.
As Timbuk3 once sung, “The future looks so bright I have to wear shades.” The same could be said of business intelligence as it increasingly becomes a powerful tool for business executives to measure, monitor, and manage the health of their organizations and keep them on track towards achieving strategic goals.
Posted by Wayne Eckerson on September 18, 2009