Eight to Late

Sensemaking and Analytics for Organizations

Archive for the ‘IT Management’ Category

On the disconnect between business intelligence and strategic decision-making

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One of the stated aims of business intelligence (BI) systems is to support better business decision making in organisations (see the Wikipedia article on BI, for example). However, as I have discussed in an earlier post, the usefulness of BI systems in making decisions regarding complex or ambiguous matters is moot. Quoting from that post:

…many decisions [in organisations] have to be made based on incomplete and/or ambiguous information that can be interpreted in a variety of ways. Examples include issues such as what an organization should do in response to increased competition or formulating a sales action plan in a rapidly changing business environment. These issues are wicked; among other things, there is a diversity of viewpoints on how they should be resolved. A business manager and a sales representative are likely to have different views on how sales action plans should be adjusted in response to a changing business environment. The shortcomings of BI systems become particularly obvious when dealing with such problems.

This brings up the question as to how is BI actually used in organisations.

Quoting again from my earlier article:

BI systems are perfectly adequate – even indispensable – for certain situations. Examples of these include, financial reporting (when done right!) and other operational reporting (inventory, logistics etc).  These generally tend to be routine situations with clear cut decision criteria and well-defined processes. Simply put, they are the kinds of decisions that can be programmed.

Typically programmed decisions are made when checking on or monitoring business activities.  I would hazard a guess that BI applications are generally used to carry out such routine monitoring of business processes (and take rule-based corrective action, if necessary) rather than in making complex decisions.  To use a phrase coined by James March, BI applications are used in surveillance mode rather than decision mode.

Unfortunately most BI vendors are yet to address this gap. Most new features that vendors come up with operate in surveillance mode rather than decision mode – that is, they help organisations track (and correct) performance rather than decide on complex/uncertain matters. Thus, despite vendor claims to the contrary, BI is still used as a means to measure and manage  operational matters rather than to make strategic decisions.

Incidentally, this is also true of over-hyped new areas such as Big Data and Predictive Analytics.

Big data refers to a set of technologies and techniques that are useful when analysing large volumes of fast-changing, unstructured data to make operational decisions. For example, commercially available big data products such as splunk can monitor  vast numbers  of unstructured server logs in real time and tell you what corrective actions need to be taken (an operational decision) but they cannot tell you what IT investments you should make over the next five years (a strategic decision).

Predictive analytics refers to a wide range of techniques that are used to identify patterns in past data in order to make predictions about the future events. However, the predictions made using such techniques can only be as good as the underlying mathematical models. Consequently, success in predictive analytics depends crucially on knowing the key variables that govern the phenomena of interest. Identifying these variables can be difficult, if not impossible, in the case of business decisions because of human factors (intentions, motivations etc.). As  Gregory Piatetski-Shapiro puts it in this article, “Predictive analytics can figure out how to land on Mars, but not who will buy a Mars bar.”

So, the question arises:  what do BI vendors need to do in order to facilitate decision-making on complex matters?

To answer this we need to take a brief look at the process of decision-making. The traditional  view is that the decisions are made by working through the following steps:

  1. Identifying available options
  2. Understanding the consequences of each option.
  3. Rating options based on preferences for those consequences
  4. Selecting an option (based on rules and ratings)

However, as I have discussed in a post on the nature of decision making in organisations, in the case of complex decisions not only is it hard to identify all options and their consequences, even preferences and/or selection rules may change as one’s knowledge of the options improves.  As a consequence, such decisions necessarily involve informal reasoning  – a deliberative process that takes into account partipants’ values and beliefs,  in addition to logic and  “hard facts”.  The important point, as Tim van Gelder notes in a brilliant post entitled, The missing “I” in BI, is that none of the BI suites in the market support informal reasoning.  The lack of support is especially strange because there are well-known techniques such as Issue Based Information System (IBIS) and Argument Mapping  that can be used to facilitate and capture such reasoning.

This gap does not matter in the case of operational decisions as the choice is made on the basis of straightforward (or programmable) rules, as in steps 1 through 4 above. However, the situation is different in case of complex or non-programmable decisions such as those that are made in the face of uncertainty. In these cases the lack of support for facilitating, capturing and storing decision rationale becomes a huge handicap.

In summary:  Currently available BI tools are good for operational rather than strategic decision-making because they do not offer any support for the deliberative process that is needed to make complex decisions in the face of ambiguity or uncertainty. The adage, “data doesn’t make decisions, people do”  is particularly true for strategic decisions, but it appears  BI vendors are yet to recognise this.

Acknowledgement:

This post was inspired by a recent comment on one of my earlier posts on business intelligence.

Written by K

March 7, 2013 at 8:58 pm

“Strategic alignment” – profundity or platitude?

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Introduction

Some time ago I wrote a post entitled, Models and messes in management, wherein I discussed how a “scientific” approach to management has resulted in a one-size-fits-all  approach to problem solving in organizations.  This is reflected in the tendency of organisations to  implement similar information technology (IT) systems, often on the  “expert” advice of carbon-copy consultancies that offer commoditized solutions.

A particularly effective marketing tactic is to advertise such “solutions” as being able to help organisations achieve  strategic alignment between IT and the business.  In this post I discuss how the concept of “strategic alignment” though seemingly sensible, makes no sense in the messy, real world of organization-land. My discussion is based on a brilliant paper by Claudio Ciborra entitled, De Profundis? Deconstructing the concept of strategic alignment.  The paper analyses the notion of alignment as it is commonly understood in the context of  IT– namely as a process by which IT objectives are brought in line with those of the organization it serves.

Background

The paper begins with a short chronology of the term strategic alignment, starting with this  highly cited paper  published by Henderson and Venkataraman  in 1993. The paper describes the need for alignment between business and IT strategies of companies.   More importantly, however, the authors detail a “Strategic Alignment Model” that purports to “guide management practice” towards achieving alignment between IT and the business. However, as Ciborra noted four years later, in 1997, it was still an open question as to what strategic alignment really meant and how it was to be achieved.

Fast forward 15 years to 2012, and it appears that the question of what strategic alignment is and how to achieve it still an open one. Here are some excerpts from recently published papers:

In the abstract to their paper entitled, Strategic Alignment of Business Processes, Morrison et. al. state:

Strategic alignment is a mechanism by which an organization can visualize the relationship between its business processes and strategies. It enables organizational decision makers to collect meaningful insights based on their current processes. Currently it is difficult to show the sustainability of an organization and to determine an optimal set of processes that are required for realizing strategies.” (italics mine)

Even worse, the question of what strategic alignment is is far from settled.  It appears that it means different things to different people. In the abstract to their paper entitled, Reconsidering the Dimensions of Business-IT Alignment, Schlosser et. al. state:

While the literature on business-IT alignment has become increasingly mature in the past 20 years, different definitions and conceptualizations have emerged. Several dimensions like strategic, intellectual, structural, social, and cultural alignment have been developed. However, no integrated and broadly accepted categorization exists and these dimensions are non-selective and do overlap…

This begs the question as to how meaningful it is for organizations to pursue “alignment” when people are still haggling over the fine print of what it means.

Ciborra dealt with this  very question 15 years ago. In the remainder of this post I summarize the central ideas of his paper,  which I think are as relevant today as the were at the time it was written.

Deconstructing  strategic alignment

The whole problem with the notion of strategic alignment is nicely summarized in a paragraph that appears in Ciborra’s introduction:

…while strategic alignment may be close to a truism conceptually, in the everyday business it is far from being implemented. Strategy ends up in “tinkering” and the IT infrastructure tends to “drift”. If alignment was supposed to be the ideal “bridge” connecting the two key variables [business and IT], it must be admitted that such a conceptual bridge faces the perils of the concrete bridge always re-designed and never built between continental Italy and Sicily, (actually, between Scylla and Charybdis) its main problem being the shores: shifting and torn by small and big earthquakes….

The question, then, is how and why do dubious concepts such as strategic alignment worm their way into mainstream management?

Ciborra places the blame for this squarely in the camp of academics who really ought to know better. As he states:

[Management Science] deploys careful empirical research, claiming to identify “naturally occurring phenomena” but in reality measures theoretical (and artificial) constructs so that the messiness of everyday reality gets virtually hidden. Or it builds models that should be basic but do not last a few years and quickly fall into oblivion.

And a few lines later:

…practitioners and academics increasingly worship simplified models that have a very short lifecycle….managers who have been exposed to such illusionary models, presented as the outcome of quasi-scientific studies, are left alone and disarmed in front of the intricacies of real business processes and behaviors, which in the meantime have become even more complicated than when these managers left for their courses. People’s existence, carefully left out of the models, waits for them at their workplaces.

Brilliantly put, I think!

Boxes, arrows and platitudes

Generally, strategic alignment is defined as a fit, or a bridge, between different domains of a business.  To be honest it seems the metaphor of a “bridge” seems to distract from reflecting on the chasm that is allegedly being crossed and the ever-shifting banks that lie on either side. Those who speak of alignment would do better to first focus on what they are trying to align. They may be surprised to find that the geometric models  that pervade their PowerPoint Presentations (e.g. organograms, boxes connected by arrows) are completely divorced from reality. Little surprise, then, that top-down, management efforts at achieving alignment invariably fail.

Why do such tragedies play out over and over again?

Once again, Ciborra offers some brilliant insights…

The messy world, he tells us, gives us the raw materials from which we build simplified representations of the organization we work in. These representations are often built in the image of models that we have learnt or read about (or have been spoon-fed to us by our expensive consultants). Unfortunately, these models are abstractions of reality – they cannot and must not be confused with the real thing.  So when we speak of alignment, we are talking of an abstraction that is not “out there in the world” but instead only resides in our heads; in textbooks and journal papers; and, of course, in business school curricula.

As he says,

…there is no pure alignment to be measured out there. It is, on the contrary, our pre-scientific understanding of and participating in the world of organizations that gives to the notion of alignment a shaky and ephemeral existence as an abstraction in our discourses and representations about the world.

This is equally true of management research programs on alignment: they are built on multiple abstractions and postulated causal connections that are simply not there.

If academics who spend their productive working lives elaborating these concepts make little headway, what hope is there for the manager who  to implement or measure strategic alignment?

Is there any hope?

Ciborra tells us that the answer to the question posed in the sub-heading is a qualified “yes”. One can pursue alignment, but one must first realize that the concept is an abstraction that exists only in an ideal world in which there are no surprises and in which things always go according to plan. Perhaps more importantly, they need to understand that implementations of technology invariably have significant unintended consequences that require improvised responses and adaptations. Moreover, these are essential aspects of the process of alignment, not things that can be wished away by better plans or improved monitoring.

So what can one do? As Ciborra states:

…we are confronted with a choice. Either we can do what management science suggests, that is “to realize these surprises in implementation as exceptions, build an ideal world of “how things should be” and to try to operate so that the messy world that in which managers operate moves towards this model….or we suspend  belief about what we think we know…and reflect on what we observe. Sticking to the latter we encounter phenomena that deeply enrich our notion of alignment… (italics mine)

Ciborra then goes on to elaborate on concepts of Care (dealing with the world as it is, but in a manner that is honest and free of preconceived notions), Cultivation (allowing systems to evolve in a way that is responsive to the needs of the organization rather than a predetermined plan) and Hospitality (the notion that the organization hosts the technology, much in the way that a host hosts a guest). It would take at least a thousand words more to elaborate on these concepts, so I’ll have to leave it here. However, if you are interested in finding out more, please see my summary and review of Ciborra’s book: The Labyrinths of Information.

…and finally, who aligns whom?

The above considerations lead us to the conclusion that, despite our best efforts, technology infrastructures tend to have lives of their own – they align us as much as we (attempt to) align them.  IT infrastructures are deeply entwined with the organizations that host them, so much so that they are invisible (until they breakdown, of course) and  even have human advocates who “protect” their (i.e. the infrastructure’s) interests! Although this point may seem surprising to business folks, it is probably familiar to those who work with information systems in corporate or other organizational environments.

A final word:  many other management buzz-phrases, though impressive sounding, are just as meaningless as the term strategic alignment.  However, I think I have rambled on enough, so I will leave you here to find and deconstruct some of these on your own.

Written by K

February 21, 2013 at 9:43 pm

A data warehousing tragedy in five limericks

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It started with a presentation,
a proforma  regurgitation:
a tired old story,
of a repository
for all data in an organization.

The business was duly seduced
by promises of costs reduced.
But the data warehouse,
so glibly espoused,
was not so simply produced.

For the team was soon in distress,
‘cos the data landscape was a mess:
data duplication,
dodgy information
in databases and files countless.

And politics had them bogged down;
in circles they went round  and round.
Logic paralysed,
totally traumatised,
in a sea of data they drowned.

In the light of the following morn,
the truth upon them did dawn.
An enterprise data store
is IT lore
as elusive as the unicorn.

Written by K

December 20, 2012 at 7:02 pm