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MARCH 2011

Operational
Business
IntelligenceDeep
Dive

The Promise and Pitfalls

of Operational BI
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i Operational Business Intelligence Deep Dive 2

The promise and pitfalls

of operational BI
Tune processes and make better decisions with a window on up-to-date
business performance indicators

i By David S. Linthicum data -- and often includes unstructured data, system

OPERATIONAL BI OFFERS A NEW WEAPON FOR
LOB (line-of-business) managers, serving up fresh, accurate
data to optimize business processes from the supply chain
to customer service. Whereas conventional BI tends to
report on the past, operational BI helps businesses stay on
top of what’s happening now, so they can respond quickly
and make adjustments that have immediate impact.
Instead of relying on a data warehouse that contains
vast historical records of transactions, operational BI
revolves around ODSes (operational data stores) that
replicate current transactional data on sales, inventory,
logistics, and so on. The objective is to enable business
processes at the LOB level to become more efficient
and effective. As data fluctuates, either human interven-
tion or automated routines take corrective action and
adjust those processes. In focusing on specific lines of
business, operational BI also typically draws on a wider
variety of data sources -- not restricted to transaction
logs, Web clickstream data, and so on.
The audience for operational BI is typically much
smaller than for traditional BI -- often fewer than 25
users per deployment. In the enterprise, this means
that operational BI frequently works at the division or
department levels, out of sight of corporate IT in many
instances. Recently, however, some larger businesses
have seen the wisdom of broad operational BI deploy-
ments that support thousands of users.
Of course, the cloud changes everything, and opera-
tional BI is no exception. With the arrival of new cloud-
based BI players, the path to operational BI is much
shorter, with lower cost of ownership over the long
haul. It’s an easy sell within most organizations.
So is operational BI in your future? It all depends
on your requirements, the type of business you run,
and the type of data that has operational value in your
enterprise. Let’s walk through the value of operational
BI and look specifically at the promises and trade-offs.

Table 1: A snapshot of the differences between operational BI and traditional BI

Feature Operational BI Traditional BI

Database Operational data store (ODS) Data warehouse/mart
Users LOB managers Analysts
Data Unstructured and structured Structured
Location Distributed Centralized
Latency Near time & real time Day to a month old
Analytics Simple Complex
Integration None or simple Complex
Cost Low High
Leveraging cloud Easy migration Complex migration

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i Operational Business Intelligence Deep Dive
THE PROMISE: A POWER TOOL FOR
LOB MANAGERS
The core reason for rising interest in operational BI is
obvious: Those on the operational front often have little
or no visibility into the health of their departments, other
than reports that may trickle their way. There is no way
for them to gain insight into daily operations such as the
productivity of the sales staff or the efficiency of carrying
specific types of inventory.
Traditional BI is too expensive to allow everyone to
leverage it. Plus, it typically offers indicators about the
overall business, such as revenue related to macroeco-
nomic drivers, not tactical data such as inventory levels
related to sales (see Table 1). The need for a window
into just data that’s meaningful to the LOB manager
drove the development of operational BI technology.
Operational BI cuts across departments and focuses on
the business processes relevant to the LOB, rather than
trying to derive analytical value from particular data sets.
For example, consider an LOB manager who is
charged with distributing parts to various manufacturing
facilities. The availability of these parts is critical, so the
manager is provided with an operational BI view of all
ODSes related to parts distribution. The BI system serves
up a dashboard of critical data points, such as depletion
levels or logistics issues. Moreover, rules-based notifica-
tions ping the manager when any data point falls into an
alert status, such as missed deliveries. Automation can
take this a step further, so that when inventory drops
below a certain level, for instance, the system actually
generates a purchase order and follows up with an e-mail
or a text message to the manager.
The better you are at visualizing your LOB’s perfor-
mance and responding to issues, the better customer
service you can provide. If you can find an issue with a
customer order and correct it before the customer notices,
that’s just the kind of proactive behavior that allows even
the most commoditized business to rise to the top. And if
the same issues crop up again and again, you have a firm
basis on which to develop new business requirements,
change core business processes, or replace various systems.
WHAT’S NEEDED?
Building an operational BI system is as much about plan-
ning as it is about selecting technology. Here’s a typical
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agenda for those charged with preparation and deploy-
ment :
• Collect and integrate data from operational systems
• Generate reports appropriate to business processes
• Create alerts based on thresholds
• Create dashboards to monitor processes
• Embed BI info into process applications
• Implement rules-based systems to self-optimize
Collecting and integrating the right data from the
right systems is core to creating an operational BI sys-
tem. After all, the system is only as valuable as the data.
There are two basic approaches: Tap into a physical
database (or ODS) for operational data or use a data-
base abstraction.
The most popular approach is to create a real-time
or near-time ODS that’s linked directly with operational
or transactional data. ODSes allow you to integrate data
from disparate source systems into a single structure that
shows how the operational BI clients will view the data.
The data is copied, checked, and transformed using data
integration technologies.
Keep in mind that an ODS is not a data warehouse.
ODSs should be designed for relatively simple queries
on small amounts of data, rather than complex queries
on large amounts of data.
Operational BI systems that employ data abstraction
technology (also called data virtualization or data fed-
eration) enable you to avoid maintaining another data-
base. When you use this technology there is no physical
ODS. The data structure resides only in middleware and
links back to physical data stores that represent the data
within a virtual structure. That structure may appear to
be an ODS containing customer or sales data, but it’s
actually a real-time abstraction of various, sometimes
many, transactional databases.
Operational BI systems tend to draw upon more
diverse data sources than traditional BI systems. This
includes access to unstructured data such as spread-
sheets, web sites, and PDF files. Ventana Research found
that ODSes, data warehouses, and data marts are no lon-
ger the dominant sources of data; spreadsheets and even
flat files are becoming more common as data sources.
The ability to generate reports appropriate to business
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i Operational Business Intelligence Deep Dive
processes means that we can align data available in the
ODS with core business processes and generate mean-
ingful reports for the right LOB managers. There are no
hard and fast rules in how you approach this, other than
to define the core requirements around the core busi-
ness processes, and where and when the information
should be presented to the operational BI client.
Creating alerts based on thresholds means defining
parameters around core ODS data. If the data falls out
of the predefined threshold, then someone is notified
to correct the issue. Most operational BI tools provide
mechanisms to define thresholds and subsequent events
that need to trigger a response.
Creating dashboards to monitor processes, including
changing data points and analytical abstractions (such as
moving averages and trends), provide the operational BI
user with the ability to monitor the health of the LOB, or
even the business holistically, using a single meaningful
view of the data known as the dashboard.
Operational BI dashboards contain key performance
indicators displayed in graphical, easily digestible form. This
information is used to provide visibility, measurement, and
assurance of LOB activities. Moreover, this technology can
correlate events to detect and warn of impending prob-
lems, perhaps reacting to those problems automatically.
Dashboards leveraged by operational BI systems are
very similar to BAM (business activity monitoring) that
also leverages dashboards, although the underlying tech-
nology differs. With BAM, events are processed in real
time or near time and pushed to the BAM systems;
operational BI dashboards refresh at predetermined
intervals by polling the ODS. Ultimately, the two are
functionally quite similar.
The ability to embed operational BI information into
core business processes allows other process and applica-
tion engines to consume the operational BI data points
as inputs. For example, on-demand planning applica-
tions can see the current state of the LOB by access-
ing key data points, real or calculated, provided by the
operational BI application. This means the on-demand
planning application will have better, more current infor-
mation from which to predict future demand.
Finally, the ability to implement rules-based systems
to self-optimize the existing business processes is perhaps
one of the most valuable aspects of operational BI. Here
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you can establish rules that monitor the real-time state
of the data in the ODS. These rules react to the data as
it changes over time by invoking preprogrammed pro-
cedures that may correct issues, or perhaps just smooth
out or optimize core business processes.
An example might be the ability to monitor produc-
tion’s response to sales levels over time and to create
rules that are optimized to specific processes within pro-
duction. This creates better alignment with fluctuating
sales. These rules would apply to load-balancing orders
between different suppliers that provide better prices
for high and low quantities, depending on the volume
of sales for that particular month.
CHALLENGES AND PITFALLS OF
OPERATIONAL BI
If operational BI seems like a slam dunk, you’re far from
reality. There are many challenges to overcome and
downsides to consider. Before starting an operational
BI project, a company needs to address the following
prerequisites:
• Develop an understanding of business processes
up front.
• Find out if the system can capture diverse data
quickly without inhibiting processes.
• Determine whether to use existing data warehouses.
• Evaluate the risks of data overload and/or poor
data quality.
• Make operational BI understandable to
non-specialists.
• Root out the causes of bad analysis.
Understanding business processes is initially a huge
ordeal for many enterprises. Many of these processes
are so complex that few people in the organization
completely understand them. Unless that expertise and
comprehension is there, the odds of creating a functional
operational BI system of value are fairly slim.
The effort to identify all aspects and properties of the
business processes is absolutely essential, even if it means
hiring outside consultants. The enterprise will need to exam-
ine data elements, dependencies, sequencing, core analyt-
ics, decision trees, etc. The idea is to create a foundational
framework as a starting point for the operational BI system.
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Quickly capturing very dispersed and diverse data
without inhibiting processes continues to be a challenge
in the world of operational BI. The amount of data that
needs to be continuously gathered could actually hurt
the existing applications and processes that support the
LOB, or even hurt the core business. Thus, you need
to consider what’s possible and practical, versus what’s
desirable. Many who implement operational BI have to
settle for useful subsets of information to ensure that the
data-gathering process is not disruptive.
Many who implement operational BI systems do so in
enterprises with existing data warehouses, but this does
not mean that those data warehouses should always be
used. Keep in mind that data warehouses are created
around a different type of data analytics. Operational
BI systems and the ODSes that support them deal with
short-term data, like short-term memory. Data ware-
houses have long-term data, like long-term memory.
Mixing and matching data from data warehouses and
ODSes within operational BI dashboards requires care-
ful consideration regarding the proper use of the data in
the context of operating a business.
Of course there is always too much data, which raises
the risk of data overload and/or poor data quality. Data
overload means that there is just too much information
for the LOB manager to consider at any given time.
Much like the overwhelming nature of a cockpit instru-
ment panel to non-pilots, operational BI systems may
be a hindrance to LOB managers if they can’t easily
be understood.
Just as bad as too much data is poor-quality data that
can’t be trusted. Those who make important decisions
around business operations need to trust that the dashboard
data is current and correct. Otherwise, huge errors will be
made and the operational BI system will lose credibility.
The process of making operational BI understand-
able to laymen is a huge challenge. Most LOB manag-
ers are not data analytics or computer experts, so an
operational BI system must provide easy-to-understand,
turnkey features. Many who implement operational BI
systems have a tendency to overdo the flexibility and
power of the interfaces. A user can “drill down” on spe-
cific data elements in reports and dashboards, but this
is generally too complex for the layman LOB manager
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and therefore unproductive.
Finding the causes of bad analysis can be as difficult as
finding a bug in a program. When creating operational BI
systems, the core analysis needs to be simple enough for
both those who create the operational BI systems and
those who leverage it to understand how the analytics
and data points function in the context of the LOB. Data
analysis that produces erroneous or unhelpful informa-
tion must be tracked down and eliminated.
IS IT WORTH IT?
The value of an operational BI system is easy to determine:
It’s directly proportional to the ability of the system to assist
in optimizing the LOB -- and to save money doing so.
Some LOBs will benefit very little from understanding
the real-time state of their business because they work just
fine with much older data. Plus, even if the savings are
real, they may not be enough to justify the multi-million-
dollar cost of the people and technology required to build
a robust operational BI system (although that’s typically a
fraction of the running tab for most enterprisewide data
warehousing projects).
On the other hand, many LOBs will benefit greatly from
having dashboard visibility into critical operational data.
Managers who understand the state of business operations
can correct any issues and even automate adjustments and
corrections. Or perhaps they will utilize the automatic opti-
mization of core business processes that support the LOB.
Indeed, for many LOBs, operational BI could pay for itself
in just a few weeks.
The best way to approach operational BI is to create
an overall strategy for the enterprise, in terms of expecta-
tions and approaches. Then define how the data will be
understood by the operational BI system, perhaps within
the ODS, and determine how those ODSes relate back
to the existing transactional data. The coexistence of the
operational BI system and the data warehouse, if one exists,
also needs to be addressed.
If examining data on a more-frequent basis can adjust a
company’s course or allow managers to optimize their core
business processes, operational BI may be just the ticket.
With a little due diligence beforehand to determine what
operational BI can and can’t do, LOB managers may be a
dashboard away from greater efficiencies. i
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