Business Intelligence in the Digital Economy

The digital economy is producing so much data and information that the metaphor 'trying to drink from a fire hose,' has become a commonplace. The problem is no longer finding data, it is correctly interpreting it. In a thoughtful article from eGov Monitor, Ian Marshall assesses the opportunity and the challenge:

"The UK and the world at large are undoubtedly in the midst of a fundamental digital revolution which is reshaping our attitudes, ambitions, responses and demands. But how does this contribute to developing and utilising business intelligence?

It is a revolution in which individuals, consumers, and others driven by specific needs or interests can almost organically form and re-form into borderless digital groups, societies and political movements, digitally connected and supported by infrastructure providers, information content markets and digital savvy organisations.

It is of course particularly relevant at this time to reflect that on a daily basis we are witnesses as to how the widespread availability of digital connectivity and mobility has connected people across countries and regions. It has enabled a collective ‘awareness’ to develop which in many ways has energised the so-called ‘Jasmine Revolution’ and led to the political upheavals unfolding in many Arab countries.

However, in a more prosaic context, the digital revolution in the business world has enabled companies, public sector agencies, diverse demographic groups and individuals to connect and communicate. Through digital connectivity, choice can be exercised, products advertised, goods and services purchased and sold, and individuals as well as all types of groupings being able to inform, interact and access vast repositories of information - in other words participate in and contribute to Business Intelligence (BI).

One of the key aspects of the digital revolution is the rapid development of the ‘digital economy’. Its speed of growth and the extent to which it is re-shaping markets and business sectors has been astonishing. (For example, in January this year, on-line books and hard-backs had an almost equal share of the market for the first time). Essentially, the emergence of the digital economy has been driven forward by the availability of reliable and economic network infrastructures and the ubiquity of mobile technologies supported by highly consumer-oriented software and increasingly sophisticated hardware technologies.

It is evident therefore, that the development of the UK digital economy is well underway with millions of users actively participating in its growth and development. Online sales now account for almost 10% of total retail sales in the UK and web-based sales have been increasing at their fastest rate since prior to the 2008 recession. The result is that web-based shopping has grown sharply during 2010 pushing the total of value of online sales to more than £42bn.

This shift in purchasing behaviour has been recognised by marketing agencies and major brands alike. It is now estimated that digital marketing expenditure is increasing by 17% year-on-year with the result that companies are now prepared to invest around 24% of their overall marketing budget in order to sustain their digital channels.

So, as the digital economy gathers pace and consumers, suppliers and intermediaries alike actively participate in its growth, the need for accurate, informative and timely information becomes ever more important. It is acknowledged that the global nature of the digital economy requires increasing amounts of information to be collected, collated, analysed and interpreted. There is a need therefore, to harness the power of this information so that a more holistic business and economic intelligence can be created.

However, as Professor Feng Li (Chair of e-Business Development at Newcastle University Business School) has emphasised in his foreword to the report ‘Effective Business Intelligence’:

‘We have entered the digital age, but despite significant investment in digital technologies and services, our ability to make effective use of business intelligence from the rapidly growing digital resources remains surprisingly inadequate.’
Thus, it appears that organisations operating in both the digital economy and the ‘physical’ retail economy are struggling to create a meaningful strategy for their Business Intelligence. For those unable to respond to this information challenge, the outcome is increasingly bleak with potentially limited prospects for survival in the medium to long-term.
So why is it that previously successful organisations now find themselves in this position?

Many have found inherent weaknesses exposed by the demands of the digital marketplace with arthritic organisational structures and aged technologies unable to intelligently manage the volume of information generated by digital channels. Others, despite being surrounded by and having access to vast amounts of data, appear to suffer from a scarcity of skilled analytic resources and lack structural, operational and management flexibility (i.e. organisational responsiveness, process improvisation and ‘political’ will).

Thus with the combination of in-built organisational inertia, a distinct lack of pace in terms of adopting new technologies, minimal new investment, a grid-locked management structure and rigid ‘legacy’ operating environments, a company’s ability to respond to the pressures exerted by the digital revolution can be severely impacted. Companies in this situation find themselves unable to intelligently appraise their business operations’ performance or indeed effectively use any Business Intelligence they may have and increasingly operate with only limited vision.

However, even for companies that apparently operate successfully in the digital economy, there are significant challenges to overcome if Business Intelligence is to be used as part of a long-term, sustainable strategic drive into delivering products and services through selected and emerging digital channels. For some of them, organisational culture and operational bias for example, can exert fundamental and negative influences on the degree to which Business Intelligence can be integrated into the fabric of an organisation.

There is no doubt that many of our existing large and well-known business brands will continue to exist and adapt in the medium term as the digital economy becomes an everyday feature of our lives. But there will be others that will not survive and will inevitably disappear from the market over time. Only those that are adaptable and responsive, that rise to meet the challenges and understand the fundamental shifts taking place, that in fact really understand the power of Business Intelligence will survive, albeit in a very different form.