To Hell with Business Intelligence: 40 Percent of Execs Trust Gut

The gut. That amazing piece of the human body’s digestive system has influenced personal and business decision-making for centuries.

And apparently, the gut is still alive and well as a business tool inside today’s corporate environments—even with the server farms’ worth of enterprisewide business intelligence (BI), CRM, ERP and supply chain data that companies have amassed over the years.

According to recent research from Accenture, nearly half (40 percent) of major corporate decisions are based on the good ‘ole gut. Accenture surveyed more than 250 executives in July 2008 about their companies’ use of and investment in business analytics to remain competitive.

So why is the gut still so in vogue? Of those respondents who said their companies still make decisions based on judgment rather than business analytics, 61 percent said it was because good data was not available, and just over half (55 percent) said their decisions relied on qualitative and subjective factors. Other reasons related to workforce challenges: 23 percent of respondents said “insufficient quantitative skills in employees” were a main impediment at their company, and 36 percent said their company “faces a shortage of analytical talent.”

That 61 percent of respondents said “no good data was available on which to make decisions” is striking, given the terabytes of internal and customer-related data available at most organizations today. It’s also, of course, indicative of the sad state of data management inside organizations. In the Accenture survey, 39 percent of respondents said that IT capabilities restrictions were a major challenge, and 27 percent said there was an inability to share information across organizations within their company.

In a previous post, “The Ugly Truth About “One Version of the Truth,” I described the disconnected and expanding back-office mess residing inside IT’s walls these days—siloed ERP applications, standalone SaaS CRM apps, a couple of marketing department data warehouses, maybe even a legacy supply chain app, all working out-of-synch with each other.

Now, business intelligence, analytic and forecasting/predictive software are being invited to the party. Surprise, IT!!

A recent report from Aberdeen Group, by research director David Hatch, examines why companies struggle with “one version of the truth” and how BI reporting and analytic tools fit into the picture. “Many organizations spend months and endure significant costs to obtain the reporting and analysis capabilities that BI promises,” Hatch writes, “only to find that different ‘versions of the truth’ still exist without any definite way of determining which one is real or accurate.”

The top reason behind the “one version of truth” quests for those surveyed by Aberdeen was wholly unsurprising: 36 percent wanted to replace “gut-feel” decisions with “fact-based” ones.

Nevertheless, nearly three-quarters (72 percent) of the Accenture survey respondents say they are striving to increase their organization’s business analytics and BI use. Two-thirds surveyed recognize their decision-making failings and want to fix them.

A real-world example of this situation can be seen at global coffee purveyor Starbucks. In a recent CIO.com profile, new CIO Stephen Gillett says that Starbucks is making progress but is nowhere near mastering BI. “[The business users] haven’t indoctrinated it into everyday business decision-making yet,” he says. “We still have a lot of decisions based on real-time data, intuition, or historical trends. I think in today’s economic climate, having strong analytic and BI-based decision making can help give a new dimension to that.”

On top of Gillett’s to-do list, he says, is ensuring that “analytics is an absolutely key driver of everything you do” at Starbucks.

Beyond the internal requirements for real BI and analytics adoption, the vendor community and industry as a whole is a technology category in tumult: market consolidation, technical complexity, nagging TCO questions and customer confusion about BI capabilities were powerful and stubborn forces that shaped the BI applications market in 2008.

So, given all these data points, companies are starting to put their “money where their mouths are,” when it comes to BI and analytics tools. But losing that gut-first instinct isn’t going to be easy, and I’m not sold on whether companies can stomach the change required.