Tuesday, April 21, 2009

Valuing Business Intelligence

I have a theory I am pondering based on my reading of the emerging business intelligence literature. My hypothesis is that the more efficient and simple the analytical framework between the data and the decision, the more valuable the intelligence becomes. Said another way, if intelligence is what connects data to decisions, then the value of the intelligence increases as the analytical framework that supports and generates the intelligence is simplified. A related research question would be whether decision-makers who do their own analytical work make better decisions than those who rely on intermediaries. If I ever test the theory, I suppose the results could have implications for existing and emerging enterprise resource and risk management regimes, as well as management science in general. If you are contemplating a future research topic, this might provide you with a starting point.

1 comment:

Yechiel said...

I fully agree that simplicity of analytical framework is key. My opinion on why this is so is twofold:
First, as models get more complex you have diminishing returns on accuracy vs. work invested - pareto rule.
Second, which I think is usually overlooked, is due to transparency; Any framework contains inherent assumptions, and in a complex framework thes are difficult to communicate and stay by default. A simple model enables a clear discussion of the assumptions and challenges to them if necessary, which is the key to ending up with good decisions (GIGO).

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