Business Intelligence Systems Allow Managers to ‘Work Smart’

By Daniel J. Connolly, Ph.D.

“The most meaningful way to differentiate your company from your competition . . . is to do an outstanding job with information. How you gather, manage and use information will determine whether you win or lose.” -Bill Gates

Microsoft Chairman and co-founder Gates wrote that nearly a decade ago in his book, Business at the Speed of Thought: Using a Digital Nervous System. As we can clearly see today, Gates' words ring especially true for the hospitality industry.

Information is at the heart of all commerce, and knowledge is the basis of all competition. This is especially true in the hospitality industry, where information is the essential ingredient to delivering memorable, unmatched service. There is, however, a good-news/ bad-news conundrum surrounding the commercial value of information. The good news, thanks to information technology, is that we have better and timelier access to more data than we've ever had before - and technology will only improve that access. The bad news (also, ironically, thanks to IT) is that we have an overabundance of data and lack the time to wade through it all to interpret it and apply what is useful. It's easy to be overcome by the volumes of data that bombard us daily.

Managing the hotel business (or any business) today requires efficient, effective use of information - and doing that requires a sophisticated business intelligence system (BIS) that gathers, stores, analyzes, synthesizes, shares and communicates essential information throughout the organization so that managers can apply the data in effective, value-creating ways.

As the title of Gates' book suggests, a BIS operates much like the body's nervous system - that is, it provides important, timely information to management (the organization's "brain") so they can sense and respond to changing business conditions, forestall potential business problems, outpace the competition, and give customers what they need and want. An effective BIS allows managers to enhance their decision making, guide the directions they set and identify new opportunities for competitive positioning and new-product/service offerings.

Simply put, an effective BIS allows management and staff to "work smarter, not harder." It is a competitive tool that allows companies and their employees to do things better, faster, cheaper, or differently than others to build business value and competitive advantage.

Much of business success is determined by information and knowledge management - what is known, when it is known and by whom - and how that information is put to use to outfox the competition. Good business decisions are a function of timely and accurate information in the hands of decision-makers, knowledge of the context in which this information will be applied, appropriate and rigorous analysis, common sense, experience and speed. That last factor, speed, (the time it takes to gather, interpret and apply the information and execute any resulting decisions based on that process) is absolutely critical. In what appears to be an increasingly dog-eatdog business world, what will become important is how quickly companies can convert the reams of information they collect into knowledge that can then be used for better decision-making, product development, marketing/ pricing promotions, customer service delivery, employee recognition, etc.

Accessing the Right Information at the Right Time

In essence, we are talking about how quickly companies can learn - and as we all know, continuous learning is the lifeline of any organization. As managers, it is important to have access to the right information at the right time, to assist us in making informed decisions. This requires us to be constantly in the know, always have our fingers on the organization's pulse, and continually know what information is necessary to do our jobs and run our businesses. It also requires us to be inquisitive, that is, to know how and when to ask provocative questions that will lead to new information and answers. Finally, we must possess an uncanny ability to sense and respond to opportunities and competitive threats before others respond. These are some of the many traits of effective leaders in what has come to be called our "information economy."

This economy is fueled by information and intellectual capital. To some, information might be viewed as a by-product of IT applications, but in reality, it is - or should be - the primary focus, for it is this information that gives IT its value and empowers managers and employees alike to gain a competitive edge for their organization.

One must remember, though, that while information is critical to gaining a competitive advantage, it is not just the information that counts. Rather, it's how quickly you act on the information after finding meaning in it through the discovery of patterns, relationships and insights - before the competition does, so you can do things that they can't. Of course, this assumes that your organization is effectively and efficiently gathering the right information at the right time. This is why many of today's popular management theorists and consultants suggest focusing on the informational aspects of a business. When these are digitized (i.e., put in an electronic format), new things become possible. Information comes to life through graphics and multimedia, and travels faster throughout an organization. Thus, management, employees, suppliers, customers and partners can have timely access to the information they need to fulfill their roles in the service-delivery process and to make better, more informed and more proactive decisions.

The Importance of Infrastructure

In order to mine value from information, a capable, reliable and flexible technology infrastructure must be in place. Like a building's foundation, the technology infrastructure is the base upon which all technology applications are built. Simply put, the technology infrastructure includes everything - people, technology, communications architecture, business processes, organizational culture-necessary to support the flow and processing of data and information. A poor, ineffective or inappropriate infrastructure will most assuredly cause problems such as inhibited growth, unrealized potential, service-delivery failures and uninformed decisions. Therefore, management must not underestimate the importance of infrastructure - and must not skimp in this area. Such shortsightedness almost always causes heartaches and growing pains at a later point in time. Instead, pay close attention to the selection, building and ongoing maintenance and updating of the IT infrastructure. This is not to say that the entire infrastructure has to be purchased at once; in fact, it should be scaleable, adaptable and purchased as needed.

To summarize, in today's information economy, competition is based on the time it takes to acquire information, how the organization and its employees act on this information, and how soon they act. To realize information value requires alignment among an organization's people, its technology infrastructure, and its business processes. The focus must clearly be enterprise-wide; in many organizations, enterprise application integration (EAI) initiatives are under way to connect and integrate all systems so that data can be quickly shared and leveraged across the entire organization. The systems should be viewed as devices that capture, create and share knowledge gained from the information. Collectively, these data systems create a knowledge bank that can be shared by all employees throughout the company, and in effect represent the brain trust of the organization.

Whereas the formula for success in the hospitality industry once was "location, location, location," today it is "knowledge, knowledge, knowledge." It's about the smart, organized gathering and application of information to gain the upper hand when competing in a very dynamic and tumultuous business environment. Moving forward, the playing field and rules of engagement will be quite different than what we have seen in the past. New business models will emerge, especially as the Internet, intranets and wireless technologies gain in both capabilities and in presence to push information to business managers and service personnel. For these reasons and more, it is critical to have an effective BIS in place to help us use information effectively and keep that competitive advantage.

Daniel J. Connolly, Ph.D., is Assistant Professor of Information Technology and Electronic Commerce at the School of Hotel, Restaurant, and Tourism Management at the University of Denver's Daniels College of Business. Connolly is co-author, along with Peter D. Nyheim and Francis McFadden, of "Technology Strategies for the Hospitality Industry" (2005, Pearson Prentice Hall, Upper Saddle River, N.J.) from which this column is adapted.