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Decision Frameworks

Published
  • June 05 2003, 1:00am EDT

Are More Reports the Answer?

Judging from the direction many organizations are heading, one would get the impression that if more individuals within an organization had access to reports and the interface was made friendly enough, then problems would fade away. Over the years, the major battle has been to make the interface easier and more intuitive with OLAP/reporting products aspiring to meet this challenge. IT shops have worked diligently to modify the presentation layer to make it more user friendly and tremendous amounts of time and money are spent training end users to leverage these reporting investments.

Can organizations remain competitive with reporting alone? Will innovations and competitive advantages surface from somewhere within the organization solely by report generation? The answer to both questions is obviously no. Business intelligence is more than just a reporting environment; preparing and planning for more skillful ways to leverage data is essential for a successful business intelligence environment. Providing frameworks that support actionable decision making will provide the right ingredients for success.

Actionable Decision Making

The data warehouse allows organizations to store conformed transactional data from multiple source systems in a separate environment. This environment and expanded view increases the data’s visibility and provides greater insight for decision making. This insight comes from surfacing a relationship, an unknown pattern or correlation from this expanded view.

Business stakeholders must move beyond simple report generation and toward identifying valuable unknowns, drawing conclusions and optimizing results that lead to action. These are the true drivers behind business intelligence investments. This can be accomplished by developing three fundamental optimization frameworks that facilitate actionable business opportunities:

  • Key Measure Optimization (price, profit, revenue, return, variance, etc.)
  • Product Mix Optimization
  • Scheduling/Logistics Optimization

Every business continuously strives for improvement. How assets (people, machines, products, money, etc.) are allocated to make a profit is one of the primary drivers. Since the optimization of these assets contributes to profit and loss, planning and preparing frameworks that support common optimization decision making is essential.

Three Fundamental Optimizations

Every business continuously strives for improvement. How assets (people, machines, products, money, etc.) are allocated to make a profit is one of the primary drivers. Since the optimization of these assets contributes to profit and loss, planning and preparing frameworks that support common optimization decision making is essential. The four characteristics common to all optimization problems are goals, variable assumptions, decision variables and constraints.

Key Measure Optimization. Key measure optimization’s objective is to maximize or minimize a key measure that can be counted or calculated such as price, profit, revenue, etc.

Product Mix Optimization. Product mix optimization is concerned with allocation of fixed amounts of raw materials for production.

Scheduling/Logistics Optimization. Scheduling/logistics optimization focuses on the effective movement and sequencing of events.

Understanding the basics behind each of these optimization categories and applying them to business problems is a more skillful approach for decision making. This approach takes advantage of information contained in the data warehouse, business context knowledge and optimization scenario modeling. Each scenario model should be designed as a template. The scenario model can be used as a starting position for the problem and then expanded given the details. The benefit of this approach is that one does not have to start with a blank sheet of paper each time. Additionally, the framework can be as a road map to facilitate necessary business context from the proper stakeholder.

Conclusion

The purpose of introducing these decision-making frameworks is to reinforce the spectrum of how information is leveraged by the business. Reporting is one band within the spectrum. While reports have their value, realize that so much more is possible. The fundamental value of developing the data warehouse is to support actionable decision making. Actionable decision making will not be accomplished through reporting alone. Investigate skillful ways to leverage the data warehouse investment.

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