Business intelligence capabilities and analytic prowess will play crucial roles in the most competitive sectors of the global economy, according to a new study by the director of research for Babson Executive Education (BEE) at Babson College in Wellesley, Massachusetts. But an organisation's efforts to develop fact-based decision-making capabilities are likely to fail unless they are closely supported by top management, the survey showed.
"We have reached a critical juncture in the history of global competition," said Professor Tom Davenport, president's distinguished professor in the Information Technology Management Division of Babson.
"After years of fitful progress, leading firms have begun basing their competitive strategies on the sophisticated analysis of business data."
Davenport cited progress at organisations such as Capital One, Harrah's Entertainment, Dreyfus, Marriott, Procter & Gamble, Verizon and the NFL's New England Patriots as clear signs of an accelerating trend toward greater reliance on analytic processes and technologies.
"Many companies today use business intelligence for specific applications, but these initiatives are usually too narrow to affect corporate performance," Davenport said.
"The organisations we surveyed, however, are building broad capabilities for enterprise-level business analytics and intelligence. Their capabilities go well beyond data and technology to address the processes, skills and cultures of their organisations. These strategies are driven by CEOs and senior executives who insist on fact-based decisions throughout their businesses."
The research study, which polled more than 40 C-level executives and directors at 25 globally competitive organisations, was conducted by Davenport's team over the first quarter of 2005. Each executive was asked 15 to 20 questions during a 45-minute interview.
"We were surprised by the extremely high degree of interest and involvement in this subject area," Davenport said.
"The executives we questioned were clearly interested in identifying the best strategies for organising analytic operations on an enterprise scale. They're really taking this seriously."
Three conclusions emerged from the study data, Davenport said. First, leading organisations are focusing more attention on developing fact-based decision-making processes. Second, initiatives which are tightly focused on achieving key strategic objectives are the most likely to gain traction. Third, the support and involvement of champions at the C-level are absolutely critical to the success of enterprise business intelligence initiatives.
"Professor Davenport's new research supports our longstanding belief in the strategic value of business intelligence," said Dr Jim Goodnight, CEO and co-founder of SAS, the leader in business analytics software.
"As the future unfolds, competitive organisations will depend increasingly on integrated processes for analysing data from multiple sources. More business decisions will be made on the basis of facts and evidence, and fewer business decisions will be made on the basis of instinct and guesswork. From our perspective, that's a positive development."
Davenport said the research study grew from his interest in learning more about how large organisations build analytic capabilities, convert data into knowledge and leverage business intelligence to create value. He said he was gratified by the level of engagement demonstrated by the executives.
"The net takeaway of the study is this: The ability to make business decisions based on tightly focused, fact-based analysis is emerging as a measurable competitive-edge in the global economy," Davenport said.
"Organisations that fail to invest in the proper analytic technologies will be unable to compete in a fact-based business environment."
The research study was co-sponsored by SAS and Intel. The results of the study were announced at SUGI 30, the annual SAS user conference in Philadelphia.
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Professor Tom Davenport holds the president's chair in the Information Technology Management Division and is director of research for Babson Executive Education (BEE) at Babson College. At BEE he is the academic director of the Institute for Process Management and Working Knowledge research programmes. He is an Accenture fellow and has taught at Harvard Business School, the University of Chicago, Dartmouth's Tuck School of Business and the University of Texas at Austin. He has directed research centres at Ernst & Young, McKinsey & Company, and CSC Index. Davenport has written, co-authored or edited 10 books, including the first books on business process reengineering, knowledge management and the business use of enterprise systems.
He has written hundreds of articles and columns for such publications as Harvard Business Review, Sloan Management Review, California Management Review, Financial Times, InformationWeek, CIO and many others. His most recent book, What's the Big Idea: Creating and Capitalising on the Best Management Thinking, was named one of the three best books of the Spring 2003 season by Fortune magazine. In 2003, he was named one of the top 25 consultants in the world by Consulting magazine. Davenport's areas of expertise are business intelligence, knowledge management and knowledge worker productivity, enterprise systems and process management.
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