Start of my book for comments

 

  

The Business Bermuda Triangle

The Convergence of Business Intelligence, Performance Management and Business Process Management

Brian Keith Seitz

 

 

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The Business Bermuda Triangle

 

[Quotes from friends and colleagues]

 

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The Business Bermuda Triangle –The Convergence of Business Intelligence, Performance Management, and Business Process Management

Brian Keith Seitz

Copyright © 2008

 

 

All rights reserved.

No part of this book may be used or reproduced in any manner whatsoever without written permission of the author and the publisher.

 

Printed in the United States

Cover Design by Intellectual Arbitrage Group, Eatonville Washington (360) 832-2025

 Library of Congress Catalog Number:

ISBN: 

 

 

 

 

 

 

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“Zombie Zone”  and “Smart and Simple Marketing” is a trademark of Intellectual Arbitrage Group, B.K.Seitz & Associates, and Brian K Seitz, denoting a series of products that may include but is not limited to books, pocket cards, white papers, calendars, audio cassettes, CDs, Video tapes, DVDs, Seminars and Webinars.

 

Published by:

Intellectual Arbitrage Group

a B.K.Seitz & Associates subsidiary

36203 Pulford Road East

Eatonville, Washington 98328

 

 

Order Information

To order more copies of this book or receive a complete catalog of other products by Brian K Seitz contact:

Intellectual Arbitrage Group

By calling:

(253)219-8977

 

 

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Other Stuff

By

Brian K Seitz 

 

 

 

 

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Acknowledgements

Joel Orr Dana Campbell-Seitz
Brad Holtz Steve M Smith
Stanley Seitz  

 

 

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Dedication

Dedicated to:

My father and role model Stanley S. Seitz

My mentor Michael Kutcher

In addition, my wife Dana –for her inspiration to put down on paper what I have spent a lifetime collecting and her loving badgering to just do it.  I may not have always appreciated it at the time, but afterwards I do.

 

 

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Table of Contents

What is so intelligent about your business?. 1

A Rose by any other name. 1

A simple map of business intelligence. 1

Operational Intelligence. 1

Financial Intelligence. 1

Market Intelligence. 1

Organizational Intelligence. 1

Building a business nervous system.. 3

Business Intelligence Taxonomy. 3

The magic number seven. 4

Operational Nerves. 5

Financial Nerves. 5

Marketing Nerves. 5

Market Planning. 5

Customer Service. 5

Execution. 10

Organizational Nerves. 10

Ensuring your business intelligence is used intelligently. 11

Appendix. 12

 

 

 

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What is so intelligent about your business[b1] ?

 

 

 

 

A Rose by any other name

What is business intelligence?  Throughout the past several decades, various terms, concepts and technologies have been associated with the term.  If we look to human intelligence as a model for business, there are multiple forms of Intelligence. Dr. Gartner in his book defined several types of intelligence.  Each of these described various behaviors and attributes of humans, all of which are considered intelligence.  To add to this collection of intelligences others have branded other types such as Social, Emotional, and Moral.

If humans can have multiple types of intelligences then businesses which are nothing more that associations of people, processes and technology must also have the same.   For a type of Intelligence to have relevance in business, it must have several qualities: measurability, etc[b2] .             

 

A simple map of business intelligence[b3] 

 

  • ·         Operational Intelligence
  • ·         Financial Intelligence
  • ·         Market Intelligence
  • ·         Organizational Intelligence

Operational Intelligence[b4] 

 

Financial Intelligence[b5] 

 

Market Intelligence[b6] 

 

Organizational Intelligence[b7] [b8] 

 

 

 

Building a business nervous system

Business Intelligence is about gaining insight how a company operates and competes; to do this a business must be able to sense, measure, and analyze the attributes that effect its survival.  Were a company a biological organism this would be called a nervous system.

Nervous Systems enable both organisms and corporations to be aware of both internal and external conditions that both threaten survival and foster growth.  Without awareness of conditions entities often fall prey to those conditions.

Prior to building a nervous system, understand the taxonomies of the components of such systems and the decisions that need to be made based upon specific corporate culture and architecture is needed.

Business Intelligence Taxonomy

Understanding the Business Intelligence, landscape suggests that a map is necessary.   The primary map proposed here is offered as a simple visualization of function and location of decision making.  These dimensions were chosen as they most accurately reflect the application decisions corporations are involved today.

 

Intelligence Functions

 

Location of Decision Making dimension in the 50s was a fairly easy decision; the corporate mainframe or service bureau.  There really was no choice.  Computing and Data Processing was such an expensive undertaking all applications were corporate applications as the technology costs and maturity prohibited desktop processing.  With the advent of the integrated circuit the Personal Computer became possible that enabled processing power at the desktop.  This revolutionized and liberated decision making for all sizes of businesses. 

The end result was to expose that there are different types of decisions made, by various people within the organization that had various spans of effect on these businesses.  Thus not every decision needs to have a corporate decision support system, even if corporate data is being used. 

The magic number seven

Building a management system that creates and uses business intelligence is not really a technical challenge.  I can hear CIOs all over the world moaning and yelling now.  However, if you really think about it, the technology, tools and skills to build a world-class I.T. infrastructure to support B.I. are already in place or can be had fairly quickly. 

What is not in place is a definition for the specific business what needs to be measured and managed from a strategic perspective.  Once that is determined how it is to be measured and managed.   During my years of being brought into fix failing projects, reengineering processes and organizations I am always amazed at how complicated the management system has become.  This is not a phenomenon limited to just one type of business.  Companies needlessly overcomplicate monitoring and measuring.  There seems to be a mantra, if a little is good more is better and even more is great.  It just is not so. 

In today’s business environment, we are bombarded from every direction with data, most of which does not add anything to the decisions we make and execute.  There was actually a term to describe this coined in the 1990s: Information Glut.  Executives, Managers and Employees are now faced with problem on a daily basis.  New tools and techniques were developed to help address this self-induced problem.  There are actually consulting practices and gurus in the field with systems on how to be more productive and prioritize the things on your desk and in your in-basket. Most of these focus on reorganizing materials into piles you have eventually do in some priority order. I am not sure I would call this management.

In 1956, George Miller published an article in The Psychological ReviewThe Magical Number Seven, Plus or Minus Two: Some Limits on Our Capacity for Processing Information” that change the way people think about are abilities to manage information.  In that article, Miller professed there was a limit to the items a human being could manage effectively.  That number was seven, plus or minus two.  This was before the ubiquity of the personal computer.

Shortly after this article, many businesses started capitalizing upon this phenomenon.  The telephone company started clustering or chucking numbers together to make them easier to remember.  The federal government limited the numbers in a zip code and when they expanded the zip code, they chucked the additions into a dash appended to the original schema.   Personal Productive grew significantly.

When the digital computer was introduced and then later the personal computer, its first tasks were mathematical calculations.   Endless columns of numbers were processed and spit out in wide green bar fanfold paper reports that were barely digestible to only the bravest of executives.  As the computer was applied to other type of information processing tasks, the message of simplicity and effective human processing limits was lost in our zeal to use this new tool. 

Today information technology has become embedded into the very fabric of companies.  This is true whether one is conscious of this fact or not.  The benefit and the liability of this has been connectivity but not integration.                              

 

Operational Nerves

 

Financial Nerves 

 

Marketing Nerves

Market Intelligence unfortunately has been limited in scope to snooping and discerning what competitors of the company are doing.  This however skews the focus of the company aware from holistic survival and growth towards simply watching and reacting to the nearest and most visible competitors; enabling other threats to a company’s survival to go unnoticed.  

Market Planning

 

Customer Service

O

ver the past several decades there has been a lot of discussion around customer service.  Numerous books have been published extolling the value of extra ordinary customer service or promoting the slogan the customer is king.  Many organizations are now investing in Customer Relationship Management (CRM) Systems, Reengineering Customer Service Groups and significant training programs to improve customer satisfaction.  

While good or better still extra ordinary customer service is a nice idea, at what price is investing and improving customer satisfaction worth the effort?

Suppose your company invested two million to purchase and deploy a CRM system throughout and improved your customer satisfaction rating from a 65% to a 75% rating.  These sound like good results for your investment.  However, at the end of the year did this investment really affect the bottom line in a positive manner?

Customer Service Metrics

All too often companies invest in improving a rather vague measurement called customer satisfaction.   This metric is gauged typically by some survey asking the customer how satisfied are you with what you got from the company on a scale of 1 to X.  While for a quick snapshot like these sounds good, measuring this way gives a corporation only half the picture: Customer Attitude.  

Customer Attitude in surveys only tells you the customer’s state of feelings not his or her behavior toward the corporation.  I may have a satisfied attitude toward my purchase but does that mean tomorrow I’m going to purchase some more from your company or go out and tell everyone how great your products and services are. 

Having a customer satisfied is equivalent to being apathetic.  A satisfied customer is well, satisfied.  That means the customer’s needs have been met and does not see much of a value in pursuing any further relationship or procuring additional products and services.   It neither helps nor hinders you company.

While a delighted customer may be more incline to seek additional products and services of potential value from you, evangelize your company or both.

Likewise I may have a customer that indicates that they are not satisfied but still continues to purchase products and services at your current or increased return on investment.

This brings one to the next aspect of customer service measurement; Return on Investment.  At one end of the spectrum Customer Service is an added expense to fix mistakes in products, services, marketing and sales.  At the other end of this continuum customer service can be a profit center.  Customer Service can be a rich source for new requirements and product ideas, developing insight for marketing, leads for sales and also revenue.

Many software development companies had turned their customer service departments into profit centers that customers are willing to pay for in maintenance contracts and charges.  Some types of customer service customers see tremendous added value[1] and are willing to pay significantly for, while others are perceived to be of limited value and expected to be absorbed by the vendor as the cost of doing business.                  

Customer Service Effectiveness Matrix

 

Brian K Seitz © 2008

Before investing in customer service or specific customer service initiatives a simple check of effectiveness is desirable.  A way to gain perspective and insight on the effects of initiatives is to visualize the two metrics in a matrix.

By taking the time to determine customer attitudes accurately you will be closer towards making investment decisions that do more than just make you feel good that you did something.  The next step is to look objectively at your customer service and investments to determine the cost effectiveness. 

Questions to asked are; how much do I currently invest, what do I get in return, and can I get the same or better returns another way?

The simplest way to evaluate this is to capture customer service costs as they relate to revenues. Establishing a monitoring system such as this is beyond the scope of a traditional accounting system.  Thus, new types of applications have been developed to address the need such as dashboards and performance monitoring servers[2] that provides a rich set of capabilities and almost limitless scope of flexibility through programming.

 The unfortunate aspect of Performance Point Server and any other application that provides so much capabilities and flexibility is that it comes with a cost; increased complexity and learning curves.  This does not have to be an obstacle though, if you spend time to define what you are trying to accomplish instead of “fishing with metrics” hoping some improvement will happen magically because you are measuring things.  While something may happen similar to the Hawthorne Effect discussed so often in business school case studies, it may not be the desired results you hoped for.

Zones within the Matrix

 

Zombie Zone

The Zombie Zone is sinister in how it saps the vitality from a company without it being aware 

The Zombie Zone is that area of the matrix that traditionally never seems to get much attention from management.  It shows up neither red as a crisis nor green as superior results.  While these appear to be nothing terrible to report, this can be deceiving.  The Zombie Zone is almost sinister in how it operates.  The news and effects are not bad enough to attract management attention and intervention in the immediate context.  However, over time, this constant malaise saps a corporation’s resources and drains its vitality until suddenly all its reserves are gone when a new challenge arises in the same area.

The Zombie Zone is the organizational equivalent to the boil frog syndrome[3] where it is professed that a frog is insensitive to slight changes over time as opposed to a sudden change thus enabling someone to boil a frog with slow incremental changes.  While there is dispute about the truth of this myth, there is no doubt that organization due tend to ignore slow incremental changes in the business climate unaware of the threat until it becomes a crisis.

Being in the Zombie Zone is not a desirable state to be in.  It gives you a false sense of security and control; “My customers are not complaining that much so everything is all right”.  Meanwhile marketing and sales costs are increasing and profits margins are harder to maintain.  Your organization sees no imminent crisis to address so is hard to motivate and resistant to change. All of this should tell you your corporation is in the Zombie Zone.  Working while asleep at the wheel ignorant and unaware to its plight and potential fate.                

Life of the Party Zone

 

 

 

Eventually you wake up with a terrible hangover

 

 

 

 

Execution

 

Organizational Nerves

 

 

 

Ensuring your business intelligence is used intelligently

 

 

The triad that created the Business Bermuda Triangle also creates the physics behind the interaction between each.  A business to fulfill its primary mission, to survive and grow, needs to balance each of these functions and the underlying forces that created them.

Too much of a good thing, is too much.  If a business builds up its market sensing capability to such a degree that it dominates its business; over the course of time, it will become non-competitive as the tendency is for such organizations to become backward looking, always looking over its shoulder to see its competitor’s actions.

 If a business becomes obsessed with business performance management, here too the fallout will be poor results; measuring everything and understanding nothing.  Performance Management is a good strategy to follow, however, here the 80/20 rule definitely applies.  If a company is spending 80 percent of its time and effort managing and monitoring and 20 percent producing product and/or services its margins will evaporate in overhead costs.

While Business Process could be, consider the older brother of the previous two or possibly subsuming these, the obsession to manage the process above all else can turn a profitable enterprise into a dogmatic dinosaur over the course of its lifespan, unaware of its impending doom.  The case for having and managing processes, creating and managing business rules is strong.  However, without introspection and revisiting these from time to time the company will become caught in its own successes and failures with the refrain “We’ve always done it that way”     

 

 

Appendix

 

 

 

 

 

 

 

 


[1] During the 1970s through the 1980s IBM used the term ”IBM Added Value” to describe the system engineers and support personnel that were assigned to customer accounts to ensure product deployment and full utilization.  These services appeared to be free but in reality the cost and allocation of resources was factored into the purchase price of installed products.  If a Customer Account reduced its IBM footprint an equal reduction in support resources followed.   

[2] This paper will provide an overview of creating a Customer Service Performance Management System with Performance Point Server™ in later sections.

[3] G. Stanley Hall and Yuzero Motora, “Dermal Sensitiveness to Gradual Pressure Changes” American Journal of Psychology 1, No. 1. (1887): 72-98, on 72-73.


 [b1]Change title focus to convergence of BI/BPM/Perf Mgt

 [b2]Detail out this paragraph

 [b3]Introduce various domains of knowledge and the BI component for them

 [b4]The mechanic of how the organization operates including processes

 [b5]Knowledge of how cash flows and is used by the organization

 [b6]Knowledge about markets, competitors, products, customers, and behavioral dynamics of translating a company’s offering into revenue and profit

 [b7]Understanding of how organizations operate, how to build effective teams that support organizational goals

 [b8]Intro to the concept that is further detailed out in chapter three

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About briankseitz
I live in PacNW in a small town and work for Microsoft as a Enterprise strategy and architecture SME. I enjoy solving big complex problems, cooking and eating, woodworking and reading. I typically read between 4-8 business and technology books a month.

One Response to Start of my book for comments

  1. Adrien says:

    You seems to be an expert in this field, excellent article and keep up the great work, my friend recommended me it.

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