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Blending History, Experience and Intuition

  • March 01 1999, 1:00am EST
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Data warehouses have become the new holy grail for decision support. A vital ­ I would contend essential ­ engine to drive decision support capabilities to the next level and into the next century. Data warehousing underpins the best decision support systems of today, as it will tomorrow, enabling organizations to become more scientific, consistent and fact based in their decision making and improving the quality and speed of decisions. Improving an organization's decisioning capability is tantamount to increasing its competitiveness. Sound familiar? Probably so. We've all heard about using data warehouses to turn data into information, information into knowledge and knowledge into action. But what about turning decisions into profits? Profits in business, after all, ultimately result from the decisions that people make ­ decisions often made in the context of complexity, uncertainty and risk. There indeed has been a lot of talk about the next century and the information age that will dominate it. The intent of this column, however, is not to rehash old arguments, but to look beyond the information age to the frontier looming ahead ­ the Decisioning Frontier.

Making the best decision ­ the decision that proves right as the future unfolds ­ is the real promise of the information age, and one on which few implemented systems have delivered. Decision support has become the forgotten goal. When senior managers evaluate a new information system, it's too often in terms of the numbers of users or number of gigabytes rather than in terms of impact on decisions. Few of the systems in place do more than make existing processes more effective or productive. If the discussion turns to individual decisions employees make, as long as they are directionally correct, then the information system supporting those decisions is deemed to function properly.

It's just not good enough. Despite substantial investments in decision support systems, decisions remain based on the information available rather than on what is really relevant. Given the level of investment required and the organization necessary to implement that investment, the goals for it should be equally compelling. Keep in mind that it doesn't matter how good the CEO's vision if the customer service manager and product manager are implementing that vision inconsistently ­ the market will go elsewhere. The record of the best long-term decisions combine history and experience with the flash of intuition: Shell Oil's prediction of the 1970's oil shock; Wal-Mart's decision to manage inventory so closely. These decisions stand out precisely because they are the exception to the general pattern ­ the recent criticisms against strategic planning bear witness to corporate belief in the failure of other decisions. And the reason for the poor track record is rather simple. One of the architects of Shell's win explained in an interview, "Too many decisions are set up with three possibilities for the future ­ it could go this way, or it go that way, but it will most likely end up somewhere in the middle. Unfortunately, in the real life of managers, very little happens in the middle."

So don't get caught in the middle. What will distinguish our near term future is speed ­ and the ability for everyone at every level of the organization to benefit from the history, experience and knowledge of the enterprise. The speed and quality of business decisions depend on the knowledge individuals possess at a particular time and place, as well as the information they have at their disposal. If the information is flawed or irrelevant to the issue at hand, the outcome will suffer. In short, the anchor of experience and knowledge will remain ­ but now it must serve as an anchor that stabilizes everyone in the organization. Prepare the decision support systems of the 21st century to be organizationally accurate ­ resulting in a build-up of consistent decisions based on the company's collective data, history and wisdom.

This is the real corporate frontier of the next century ­ to match a market exploding with information and access. The prophecy of the global visionaries ­ that eventually everyone everywhere would want everything ­ has now become a reality, thanks ­ in large part ­ to the Internet. This does not by definition need to make the corporation's job more difficult, but it does give it a new dimension. Winning will require a more savvy kind of information that focuses and leads the company in the right direction, coupled with timing that outpaces the market. To be smarter than the market, the company must give each of its employees access to the kind of inside information and knowledge that will help them make the decisions that will prove right nearly every time ­ even as the market evolves.

I look forward to exploring with you in the coming months the challenges and solutions of these next generation decision support systems, powered by data warehousing, which facilitate information flows up and down the organization to achieve alignment of key decisioning processes. Without alignment, decisions made at the operational and individual levels run the risk of side-stepping the firm's strategy ­ precisely the issue that keeps many CEOs awake at night. And heaven knows they could use some more sleep.

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