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As corporations move rapidly toward deploying e-business systems, the lack of business intelligence facilities in these systems prevents decision-makers from exploiting the full potential of the Internet as a sales, marketing, and support channel. To solve this problem, vendors are rapidly enhancing their business intelligence offerings to capture the data flowing through e-business systems and integrate it with the information that traditional decision-making systems manage and analyze. These enhanced business intelligence—or e-intelligence—systems may provide significant business benefits to traditional brick-and-mortar companies as well as new dot-com ones as they build e-business environments. In this article, I’ll explain the “business case” for e-intelligence, examine the architecture of an e-intelligence system in detail, and discuss how you can incorporate an e-intelligence system into your existing business intelligence environment.
The Business Case for E-Intelligence
E-intelligence systems provide your internal business users, trading partners, and corporate clients rapid and easy access to the e-business information, applications, and services they need in order to compete effectively and satisfy customer needs. They offer many business benefits to organizations in exploiting the power of the Internet. For example, e-intelligence systems give your organization the ability to:
•Integrate e-business operations into the traditional business environment, giving business users a complete view of all corporate business operations and information.
•Help business users make informed decisions based on accurate and consistent e-business information that is collected and integrated from e-business applications. This business information helps business users optimize Web-based offerings (products offered, pricing and promotions, service and support, and so on) to match marketplace requirements and analyze business performance with respect to competitors and the organization’s business-performance objectives.
•Assist e-business applications in profiling and segmenting e-business customers. Based on this information, businesses can personalize their Web pages and the products and services they offer.
•Extend the business intelligence environment outside the corporate firewall, helping you share internal business information with trading partners. Sharing this information will let you optimize the product supply chain to match the demand for products sold through the Internet and minimizes the costs of maintaining inventory.
•Extend the business intelligence environment outside the corporate firewall to key corporate clients, giving them access to business information about their accounts. With this information, clients can analyze and tune their business relationships with your organization, improving client service and satisfaction.
•Link e-business applications with business intelligence and collaborative processing applications, allowing internal and external users to seamlessly move among different systems.
E-Intelligence Requirements
An e-intelligence system builds on and extends existing business intelligence tools and applications, including enterprise information portals (EIPs). Figure 1 outlines the architecture of an e-intelligence system and provides examples of the business intelligence capabilities your organization should seek in such a system, including:
•One-to-one e-marketing analysis applications that customize and personalize information, applications, services, and products offered to consumers and clients via the Internet
•Content, customer, and merchandise-analysis applications that track and analyze how users navigate your organization’s e-business sites and use applications to buy products
•Channel and cross-channel analysis and campaign applications that measure and analyze the success of the Internet as a sales, marketing, and services channel
•Supply-chain analysis applications that let your organization work with trading partners in optimizing the product supply chain to match the demand for products sold through the Internet
•A simple and integrated e-intelligence Web interface to give internal and external Web users and applications secure, managed access to the organization’s business information, applications, and services
•Demand-driven business intelligence gathering and analysis, and real-time decisions and recommendations as consumers and clients interact with e-business systems via the Internet.
Figure 1 E-intelligence processing.
Framework for E-Intelligence
Figure 2 introduces a business and technology framework for constructing an integrated e-intelligence operating environment. The framework has two key components: a business intelligence system and an EIP. First, we’ll briefly review current approaches to designing and building these components, and then look at the changes required to support e-business operations.
Figure 2 E-intelligence framework.
Business intelligence processing (see Figure 3) involves using extract-transform-load (ETL) tools or in-house developed applications to extract data from source back-office operational systems (ERP, supply-chain management, and legacy applications, for example), and then transforming and integrating the extracted data into useful business information for corporate decision-making. Usually, you would store this business information in a data warehouse.
Figure 3 Features of an enhanced business intelligence system for e-business.
With a data warehouse, decision-makers can use online analytic processing (OLAP) tools and analytic applications to analyze the information about current business operations and identify ways of reducing costs and increasing profits and revenues. This analysis typically comprises the following steps:
•Track key performance indicators (KPIs) to monitor trends and detect changes in business patterns. This process may include, for example, monitoring sales and profits or the progress of a new sales campaign.
•Analyze in detail when and why a particular KPI changed.
•Model potential business improvements to determine their impact on your business; for example, run financial business models or use a data mining tool to profile and segment customers for a new sales campaign.
•Modify business operations to incorporate the decisions and actions made as a result of business-intelligence processing.
Closing the Loop
A business intelligence system gives your users the business information they need to make informed business decisions. These decisions often result in changes to back-office operations—for example, the introduction of new products or changes to product pricing. These decisions (and associated actions) are typically made by users interacting via collaborative processing documents such as email and presentations. We’ll see later that when e-business is involved, this ad hoc, manual approach to “closing the loop” from business intelligence systems back to operational systems is too slow, and that faster, more automated methods are required to support e-business operations.
You could also use the output from a business intelligence system to drive front-office operations. One component that plays a pivotal role here is a campaign management application, which uses business information to develop and manage new marketing campaigns. These campaigns may draw on a variety of sales channels, including direct sales, direct mail, outbound call centers, email, fax, and kiosks; e-business systems offer an additional sales channel.
As a new sales campaign progresses, you can use the business intelligence system to analyze front-office data or a campaign management application to fine-tune the current campaign and provide valuable information for future campaigns. Information from external information providers may also be input into the business intelligence system to supplement existing corporate customer and marketing data in areas such as competitive and marketplace analysis.
Front-office systems are a valuable source of data for analyzing and thus improving other aspects of company operations, including product quality and the effectiveness of inbound call centers that provide customer and product support and services. But as with back-office operational systems, the loop from business intelligence systems back to the front office is currently closed manually through collaborative processing.
Role of the EIP
You could think of the information flow from back- and front-office operational applications, to business intelligence and collaborative processing systems, and back to operational systems as a closed-loop information supply chain. To obtain a complete and accurate picture of a company’s business operations, users must be able to access that complete information supply chain. EIPs are emerging as a potential solution to this problem.
An EIP (see Figure 4) gives your internal users a single Web-based interface to business information and to the applications that produce business information, regardless of where they reside. When we discuss the impact of e-business on the decision-making process, we will see that you can also enhance an EIP to link to the information systems of trading partners and key clients.
Figure 4 An enterprise information portal for e-business.
You can personalize the information and applications viewed through an EIP to match the requirements and authorization level of each business user, whether an executive, business analyst, or clerical assistant. An EIP also customizes information and application access to suit the user’s role. For example, an EIP could give a business analyst in a marketing department a view of the information required to launch a new marketing campaign. This information could include analyses of customer profitability and past campaigns stored in a business intelligence system, marketing collateral managed by a collaborative processing system, and competitive marketing data contributed by an external information provider.
Impact of E-Business
It is now somewhat a cliché to say that “the Web changes everything.” But this claim is particularly true when it comes to building systems that supply information to business users for corporate decision making: The Web is truly a valuable source of business information. Information stored on Web servers on the public Internet are a potential data source for a data warehouse, or at least can be accessed from an EIP.
Furthermore, as corporations begin using Internet commerce sites as sales and marketing channels, the associated business-to-consumer e-business systems become an additional source of information for business-intelligence processing. The source data here may be stored in conventional database and file systems, but may also come from Web server logs or even the Web clickstream as users interact with e-business applications. Thus, business intelligence systems not only need to be able to extract new types of data, but also handle the potentially huge data volumes involved.
When data in business-to-consumer systems is extracted to the data warehouse, business users can analyze it using OLAP tools and analytic applications. This analysis is a crucial step in the optimization of e-business operations and the evaluation of the Internet as a sales channel.
Using the Internet as a sales channel offers significant benefits; for example, products can be brought to market much faster and at a much lower cost. Selling through the Internet, however, is very competitive, and your organization must be able to react rapidly to consumer requirements and changing marketplace conditions. Four key success factors are involved here: You must optimize your product supply chain to match consumer demand; your business users have to make business decisions more rapidly, possibly in real time; service and support are key differentiators (see sidebar, “That’s Satisfaction”); and because of the high rate of technology change, your e-intelligence system must have an open, scalable infrastructure.
Optimizing the Product Supply Chain
The challenge in any consumer environment is to satisfy consumer demand without incurring the costs of oversupply (excess inventory). If your organization is typical, it has been using business intelligence systems and their associated data warehouses for years to analyze sales data and optimize product supply and inventory. You can apply these techniques equally well when selling products through Internet commerce servers. One obvious advantage of the Internet is that it consists of a single virtual storefront, which is easier to manage and supply than multiple physical stores.
The low entry cost of employing the Internet as a sales and marketing channel, however, is creating a more competitive environment and forcing retail prices down. This price pressure in turn forces companies to fine-tune their profit margins and product supply chains. One way to rapidly and efficiently do so is to let your business users and external trading partners tap the internal closed-loop information supply chain described here. With this approach, your company can share business information and work cooperatively to reduce costs and optimize profit margins.
The simplest approach to supplying business information to end users in trading partners is via an EIP. With an EIP, you can customize, personalize, and control the information flowing among trading organizations across corporate extranets, or even the Internet. An EIP is also useful for controlling information flow between clients in nonretail situations. An insurance company could, for example, let key clients view and analyze claims history information via an EIP, and then, if appropriate, use the EIP to switch from the business intelligence environment to the e-business environment to modify insurance coverage.
Realtime Decision-Making
As I discussed earlier, closing the loop between business intelligence and operational systems has traditionally been done manually using collaborative processing documents. However, in the e-business environment, a manual approach to decision-making can be inadequate, in which case a more dynamic and automated process is required. One example here is that you may want to dynamically control the Web pages displayed to potential e-business customers. The decisions in this situation could be based on parameters such as the buying power of each customer and the types of products in which they may be interested. Another example is where the customer expects an immediate decision when using the e-business application. This situation could occur, for example, when a customer applies for a new credit card or requests a credit upgrade. The competitive nature of the Internet requires companies to react immediately to such requests or risk losing the customer to a competitor.
This need to make rapid decisions leads to the notion that our business intelligence systems must operate in real time. This realtime requirement, however, has several “flavors.” Returning to the credit card example, let’s assume that a customer requests an upgrade to a platinum credit card, he or she has been with the financial institution for one year, and that the decision to upgrade the customer is based on a three-year return on investment (ROI). To make this decision, the e-business application will need to determine the existing one-year ROI of the customer, and predict—based on the customer’s profile—the likely remaining two-year ROI. To do so, the e-business application will need to do two things:
•Access data warehouse summarized data in real time to retrieve the one-year ROI for the customer, calculate in real time the one-year ROI from detailed warehouse data, or extract in real time the required data from operational systems
•Profile the customer and run a business model that predicts a two-year ROI in real time for a customer with that profile. In some cases, the business model itself and its associated business rules may have to be built or modified in real time.
This example may be extreme, but it demonstrates several aspects of realtime processing—including the need to make decisions, access and analyze data warehouse information, extract data from operational and e-business systems, and build business models and rules in real time. Realtime processing can also involve getting data from external systems—to obtain marketing or customer data from an external information provider, for example. The shaded areas in Figure 3 highlight the additional facilities required in a business intelligence system to support realtime decision making in e-business operations, including support for dynamic business models and rules and demand-driven data acquisition and analysis.
Thus far, I’ve compared the manual and realtime approaches to corporate decision-making. To summarize, the former involves business users employing business intelligence systems to manually analyze business information, and then manually feeding business decisions back to the operational and e-business environments using a collaborative processing system or EIP. The latter involves an event-driven e-business or analytic application that analyzes business information and makes automated business decisions in real time. There are, however, other options between these two extremes. A possible middle-of-the-road approach could be supported by an analytic application that detects a certain business event (a sudden change in stock values, for example) and then employs a business model and associated business rules to automatically analyze business information, and alert and make recommendations to business users about potential business actions.
E-Intelligence Infrastructure
I’ve discussed how the e-intelligence framework shown in Figure 2 supports the business and technology requirements for supplying business intelligence about e-business operations to business users. Given the large number of users and amount of data involved in e-business processing, this infrastructure must provide good performance, reliability, and scalability if your organization is to survive in this highly competitive approach to sales, marketing, and support. Also, given the high rate of change in this area, the framework must support industry standards where they exist and be open so that organizations can plug in different vendor products as their requirements change.
An e-intelligence system not only enables business intelligence techniques to be applied to the e-business environment, but also adds capabilities not currently available in the traditional business intelligence environment: namely, realtime analysis and decision making.
Colin White (cwhite@databaseassociates.com) is the founder of DataBase Associates. As an analyst and consultant he specializes in business intelligence and analytic applications, enterprise information portals, and intelligent e-business. With 30 years of IT experience, Colin has consulted for dozens of companies throughout the world and is a frequent speaker at leading IT events.
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