Business Transformation in Action

Joe McKendrick

BPM in Action 2011: Good Analytics Lead to Good Decisions

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What, exactly, is analytics? James Taylor, leading consultant on decision management solutions, puts it very succinctly: "'Analytics' is a powerful term, one that has a lot of buzz and energy at the moment. It has  tremendous range of meanings, from data warehousing to data analytics to optimization. Ultimately, however, it's about simplifying your data so you get more value out of data."

Taylor explored the convergence of analytics and decision management at ebizQ's latest BPM in Action Web conference. Taylor, who is CEO and consultant with Decision Management Solutions, and co-author with Neil Raden of Smart (Enough) Systems: How to Deliver Competitive Advantage by Automating Hidden Decisions, explored how the use of analytics can drive operational effectiveness and the efficiencies seen in business process management. "But to do that, you need to think about business decisions," he advises.

Taylor points to a pervasive "insight-to-actions gap" that dampens smart decision making. "What we see is companies have actions, and that creates data, and they come up with insights. But then there are two gaps. that prevent this insight from being applied. First, managers don't really understand what decisions they're going to make - and would make differently because of analytics. Secondly, once a decision is made, what they can't do is change their behavior, the behavior of their operational systems, or change the behavior of their operational processes."

Taylor - also a regular contributor to ebizQ - said the first step toward smarter and more effective decision making is simple: "Begin with the decision in mind, and work backwards."

This requires figuring out what kind of decisions are made within the company, he says. And, importantly, many of the most important decisions in organizations aren't just those made out of the CEO's office. Rather, the repeatable decisions that are made every day in customer contact centers, on sales trips, and on production floors are the ones that can set the company in a new direction. "While these decisions don't individually contribute a great deal to your bottom line, they make a huge cumulative impact," he points out. "They may have relatively low value, but you do thousands, or hundreds of thousands per day, and they have a cumulative impact."

In a separate interview, Taylor also spoke with ebizQ colleague Peter Schooff, explaining the key role analytics plays in automated decision management. "What happens when your business process needs to make those decisions?" Taylor asks. "If you could run straight through, you want it to run without intervention. You want it to support an automated environment. At that point, your system needs to make those decisions. That's another opportunity to use analytics--analytics about your customers, analytics about their behavior, analytics about the transactions you have--and inject that analytic insight into the business process to make a better decision."

In this blog (formerly known as "SOA in Action"), Joe McKendrick examines how BPM and related business and IT approaches can promote business transformation.

Joe McKendrick

Joe McKendrick is an author and independent analyst who tracks the impact of information technology on management and markets. View more

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