09 March 2006

Business Intelligence needs to get more strategic.

I would like to focus in the next few posts on a specific knowledge-related activity: Business Intelligence (BI).

I will start by quoting the following article. It introduces very well what BI can ultimately enable at the retail end of a supply chain. A question I am asking myself is: If relatively mass market companies eventually manage to provide tailored products and services to individuals, how will luxury market companies respond to maintain their competitive advantage in terms of personalized products and /or services?

Science fiction business is not so alien : The futuristic technology used by shops in the film Minority Report is not very far from current reality
James Murray, IT Week, 28 Feb 2006

When starting work on his 2002 sci-fi film Minority Report, one of director Steven Spielberg’s first acts was to invite a team of scientists, philosophers and designers to a “think tank summit” to envisage how the world would look in 2054.

[…] the summit proved pretty effective and the depiction of a dystopian society where all advertising is tailored to the individual customer is looking more prophetic with each passing year.

Minority Report’s vision of a world where people walk into Gap to be faced by holographic staff who greet them by name and ask how they’re getting on with their past purchases is intended as a nightmare scenario […]. But the fact Gap, as well as Guinness, Bulgari and Lexus, agreed to be involved suggests that this concept of individualised marketing is less a horror story, more a model of corporate efficiency.

The fictional systems that in Minority Report allow firms to tailor adverts to customers’ tastes are only an extreme version of analytical business intelligence (BI) tools that are already available and being embraced by many firms.

Even before 19th century department store mogul John Wanamaker complained, “Half the money I spend on advertising is wasted; the trouble is I don’t know which half,” firms were looking for ways to guarantee returns on marketing. But in the last few years, evolving analytical reporting tools coupled with an exponential increase in computing power have resulted in BI systems that provide an answer to this age-old dilemma.

The latest generation of BI tools can analyse massive data warehouses to give firms a much better insight into customers’ habits and work out which buyers to target with which products. Online vendors such as Amazon were among the first to use this functionality to recommend items based on preferences of similar customers, but such systems are now being widely used in traditional shops to optimise pricing and marketing.

Applying the same BI capabilities to internal data has also given firms real-time information on supply chains and performance, allowing them to optimise processes. For example, several US clothing firms now analyse demographic and sales data in such depth that they can tweak supply chains so that the right clothes always go to the right stores. New York gets extra Armani suits and Florida receives all the surplus XXL Bon Jovi T-shirts.

This level of insight may make privacy advocates nervous, but according to recent reports, the way BI systems help optimise almost every aspect of companies’ operations – from production, through the supply chain to marketing – means those with a BI strategy are already outperforming those without […].

Link to complete article:

Peter-Anthony Glick