But the real world is a place where sheer randomness has big effects, and is especially prevalent hanything to do with the actions of fickle human beings. Some recent news provides an instructive insight about the role of randomness in various fields of human performance:

The US government has recently cracked down on online poker sites, on the grounds that they provide US residents with the ability to gamble illegally.

But is poker “gambling” or is it a pastime or sport where participants pay an entry fee, and the winners get prizes? After all, there are big winners in some chess competitions – is that gambling?

Part of the definition of gambling is how much skill is involved. A new study, “The Role of Skills Versus Luck in Poker: Evidence From the World Series of Poker” by “Freakonomics” author Steve Levitt and Chicago University colleague Thomas Miles shows a high correlation between expected winnings and “skill”, as measured by previous records in competitions: skilled players made a return on investment of over 30%, and skilled players win almost 55% of matches against the less skilled.

Is that enough to treat poker as a game of skill rather than gambling? The authors point out that studies of the (perfectly legal, non-”gambling”) activities of mutual fund managers show no evidence of such consistent returns, and that in baseball, playoff-bound teams win, on average, 55.7% of their games against teams that failed to make the playoffs the previous year…

The summary of the report:

In determining the legality of online poker – a multibillion dollar industry – courts have relied heavily on the issue of whether or not poker is a game of skill. Using newly available data, we analyze that question by examining the performance in the 2010 World Series of Poker of a group of poker players identified as being highly skilled prior to the start of the events. Those players identified a priori as being highly skilled achieved an average return on investment of over 30 percent, compared to a -15 percent for all other players. This large gap in returns is strong evidence in support of the idea that poker is a game of skill.

And another quote:

“To the extent that baseball would unquestionably be judged a game of skill, the same conclusion might reasonably be applied to poker in light of the data”

“Although every enterprise is definitely unique, they all share the common challenge of keeping up-to-date with the ever-increasing speed of business. Today, most companies must operate on tight budgets, improved efficiencies, and an ever-changing marketplace. An enterprise’s ability to compete is directly linked to its ability to respond. With the above in mind, Operational Intelligence is a new type of real-time, dynamic business analytics, delivering visibility and insight into business operations. Using an OI solution, enterprise’s can visualize the environment, analyze the information, and act in real-time on operational data originating from a wide variety of information sources.” [link to vendor]

I marked it as spam because it was a generic comment with no reference to the post, and was just trying to get another link to the vendor site that might raise up the list of Google searches (marking it as spam will have had the opposite effect).

But beyond that, it just annoyed me. In theory there’s nothing wrong with it – this is the sort of material that product marketing people around the world churn out on a daily basis.

But it just comes across as “marketing mush”. It’s not original. It’s not insightful. It’s not differentiating.

In a social media world, it’s very cheap to share your thoughts with the market – and so there’s a deluge of information available. The result is that the bar has risen on what people pay attention to.

Content that stands out will be copied and passed on to others. Marketing mush will vanish without a trace.

Marketing is NOT about throwing as many good-sounding adjectives at people in the hope that some stick – it’s about saying something INTERESTING.

Duh!

Evolution has apparently hard-wired us to LIKE superstition. We don’t want to live in a world without magic cures and horoscopes that guide our destiny. And it clearly applies to the business world, too. What is each trendy business fad but a “PowerBalance” promise of painless performance gains?

We all know that good business is a painful process of getting lots of little things right, day after day – but when it works (and when it doesn’t), we love simplifying that complexity and declaring that some aspect of it was “truly pivotal” and the rest didn’t matter.

Last year, I participated in a very successful customer meeting. It had been arranged by a very talented sales team, which had built a great relationship over the years, by delivering on promises and understanding the business. They were planning to demonstrate some business intelligence software running on an iPad to a large meeting of the customer’s senior employees – who had just received a talk from their CFO outlining the importance of better access to information to the performance of the organization. At the last minute, I was asked to help out with some of the presentation. The short, lively demonstration held people’s attention, and iPads were handed out (temporarily!) to attendees to try out the software themselves during the break after the session.

It was clear that this was the kind of event that should be repeated elsewhere. But as news spread of the event, the details were ruthlessly simplified – all mention of executive sponsorship, the great relationship, the seniority of the group being addressed, and the clear customer recognition of the need vanished, and all the success was ascribed to “the iPad demo”. Senior executives and marketing people rushed to arrange customer meetings elsewhere, and I was frequently called on to “do the same demo” – but to very different audiences, in very different circumstances.

When I attempted to explain the context, and talk about what else was needed for success, I had exactly the same impression I get when I try to point out to people that miracle cures and superstitions are unlikely to work – people didn’t really want to know. Because it’s hard. Because we have other things to do. Because it really would be much easier if we didn’t have to do those things, and so we would rather ignore them.

Conclusion: fact-based decision making isn’t just about having facts in the first place – it’s about not deliberately ignoring the facts you do have, while hoping for a miracle cure!

It’s that time of year again, and I just happened to stumble across this wonderful post by Dave Kellogg from a year ago, and it’s still the best post on corporate budgeting I’ve think I’ve read:

The Great Dysfunctional Corporate Budgeting Process

Here are some tools to help you do it better (but the problem is never technology).

And yes, I’m “Joe”  :-)

• Executive KPIs: What is top of mind for the executives? Often this may fall into some type of dashboarding and process like six sigma or balanced scorecard
• Extranet Initiative: Is there a need to share information with customers or collaborate with partners or suppliers?
• Operational BI: Is there a department that has a need for operational dashboards or embedded analytics?

Office of Finance: Is there an opportunity to improve budgeting, planning, or financial reporting?

• Departmental BI Project: Is there a motivated department with an identified need and desire for a BI project?

Including information about the new chat function:

The brand-new Enterprise functionality:

And new options for Administrators:

And now Microsoft have launched their “Dallas” project, a variation on the same theme:

“Microsoft’s Information Services business, enabling developers and information workers to instantly find, purchase, and manage datasets to power the next set of applications—powered by premium content”

In today’s increasingly mashed-up world of analytics, let’s all hope that standards will emerge that will allow purchase and use of information from any data provider – so that any organization can choose to sell subsets of its information assets on the open market.

This will inevitably require big changes to data governance and authorization. How long before the copying and piracy problems that have beset the music industry start doing damage to business data sets?

Just for fun, here are the results in a flash animation below (click on the words to see them “swoop” towards you), and as a PowerPoint Slide you can download and annoy your audiences with…

Here’s an interview he did with me last week covering trends in predictive analytics, cloud computing, social network analysis, etc.

Timo- I studied economics with statistics in the UK, but I had always been a closet geek and had dabbled with computers ever since I was a kid, starting with Z80 assembler code. I started my career doing low-level computer consulting in Hong Kong, and worked on a series of basic business intelligence projects at Shell in New Zealand, cobbling together a solution based on a mainframe HR system, floppy-disk transfers, and Lotus 1-2-3 macros. When I returned to Europe, I stumbled across a small French startup that provided exactly the “decision support systems” that I had been looking for, and enthusiastically joined the company.

Over the last eighteen years, I’ve worked with hundreds of companies around the world on their BI strategy and my job today is to help evangelize what works and what doesn’t, to help organizations avoid the mistakes that others have made.

When it comes to BI initiatives, I see the results of one fundamental problem almost on a daily basis: 75% of project success depends on people, process, organization, culture, and leadership, but we typically spend 92% of our time on data and technology.

BI is NOT about technology – it’s about helping people do their jobs. So when it comes to education, we need to teach our technologists more about people, not science!

Ajay- You were the 8th employee of SAP Business Objects. What are the key turning points or transition stages in the BI industry that you remember seeing in the past 18 years, and how has SAP Business objects responded to them.

Timo- Executive information systems and multidimensional databases have been around since at least the 1970s, but modern business intelligence dates from the early 1990s, driven by the widespread use of relational databases, graphical user interfaces, and the invention of the “semantic layer”, pioneered by BusinessObjects, that separated business terms from technical logic. For the first time, non-expert business people had self-service access to data.

This was followed by a period of rapid expansion, as leading vendors combined reporting, multidimensional, and dashboard approaches into fully-fledged suites. During this period, BusinessObjects acquired a series of related technology companies to complete the existing offer (such as the leader in operational reporting, Crystal Reports) and extend into enterprise information management and financial performance management.

Finally, the theme of the last few years has clearly been consolidation – according to Gartner, the top four “megavendors” (SAP, IBM, Microsoft, and Oracle) now make up almost two-thirds of the market, and accounted for fully 83% of the growth since last year. Perhaps as a result, user deployments are accelerating, with usage growth rates doubling last year.

Ajay- How do you think Business Intelligence would be affected by the following

a) Predictive Analytics.

Timo- Predictive analytics has been the “next big thing in BI” for at least a decade. It has been extremely important in some key areas, such as fraud detection, but the dream of “no longer managing by looking out of the rear-view mirror” has proved hard to achieve, notably because business conditions are forever changing.

We offer predictive analytics with our Predictive Workbench product – but I think the real opportunity for this technology in the future is “power analytics”, rather than “prediction”. For example, helping business people automatically cluster similar values, spot outliers, determine causal factors, and detect trend inflection points, using the data that they already have access to with traditional BI.

b) Cloud Computing.

Timo- In terms of architecture, it’s clearly not about on-demand OR on-premise: it’s about having a flexible approach that combines both approaches. You can compare information to money: today, we tend to keep our money in the bank rather than under our own mattress, because it’s safer, more convenient, and more cost-efficient. At the same time, there are situations where the convenience of cash is still essential.

Companies should be able to choose a BI strategy, and decide how to deploy it later. This is what we offer with our BI on-demand solutions, which use the same technology as on-premise. You can start to build on-premise and move it to on-demand, or vice-versa, or have a mix of both.

In terms of data, “cloud intelligence” is still a work in progress. As with modern financial instruments, we can expect to see the growth of new information services, such as our “information on-demand” product that provide data feeds from Reuters, Thompson Financial, and other providers to augment internal information systems. Looking further into the future, we can imagine new information marketplaces that would pay us “interest” to store our data in the cloud, where it can be adapted, aggregated and sold to others.

c) Social Media.

Timo- Conversations and collaboration are an essential part of effective business intelligence. We often talk about the notion of a “single view of the truth” in this industry, but that’s like saying we can have “a single view of politics” – while it’s vital to try to give everybody access to the same data, there will always be plenty of room for interpretation and discussion. BI platforms need to support this collaborative decision-making.

In particular, there are many, many studies that show up our all-too-human limitations when it comes to analyzing data. For example, did you know that children with bigger feet have better handwriting?

It’s absolutely true — because the children are older! Mixing up correlation and causality is a common issue in business intelligence, and one answer to the problem is to add more people: the more reviewers there are of the decision-making process, the better the decisions will be.

Analysis is also critical to the development of social media, such as analyzing sentiment trends in Twitter — a functionality we offer with SAP CRM — or tracking social communities. For example, Jive, the leader in Enterprise 2.0 platforms, offers our BI products as part of their solution, to help their customers analyze and optimize use of the system. Administrators can track if usage is trailing off in a particular department, for example.

d) Social Network Analysis.

Timo- Over the last twenty years, partly as a result of extensive automation of operational tasks with systems such as SAP, there’s has been a huge shift from “routine” to “non-routine” work. Today, fully 90% of business users say that their work involves decision making, problem solving, and the creation of new analysis and insight.

To help support this new creativity, organizations are becoming more porous as we work closer with our ecosystem of customers, partners, and suppliers, and we work in ever-more matrixed environments and cross-functional teams.

We’ve developed a Social Network Analyzer prototype that combines BI and social networking to create a “single view of relationships”. It can gather information from multiple different systems, such as HR, CRM, email distribution lists, project teams, Twitter, etc., to create a multi-layered view of how people are connected, across and beyond the enterprise. For more information, see the SAP Web 2.0 blog post, and you can try it yourself on our ondemand.com web site.

Ajay- What is the area that SAP BusinessObjects is very good at (strength). What are the key areas that you are currently seeking to improve ( opportunities)

Timo- Companies evaluating BI solutions should look at four things: product functionality for their users’ needs, fit with the overall IT architecture, the vendor’s reputation and ecosystem, and (of course) price. SAP BusinessObjects is the clear leader in the BI industry, and I’d say that SAP BusinessObjects has the best overall solution if you’re a large organization (or looking to become one) with a variety of user needs, multiple data sources, and a heterogeneous IT infrastructure.

In terms of opportunities, we have high expectations for new interfaces for casual users, and in-memory processing, which we have combined in our SAP BusinessObjects Explorer product. Initial customer feedback has been excellent, with quotes such as “finding information is as easy as using the internet” and “if you can use a computer, you can use Explorer”.

In terms of future directions, we’re taking a very transparent, Web 2.0 approach. The SAP BusinessObjects innovation center is modeled on Google Labs and we share our prototypes (including the Social Network Analyzer mentioned above) with anybody who’s interested, and let our customers give us early feedback on what directions we should go.

Ajay- What does Timo Elliott do for work life balance when not writing, talking, and evangelizing about Business Intelligence?

Timo- I’m a keen amateur photographer – seetimoelliott.com/personal for more!