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”

There seems to be a connection between enterprise software billionaires and sail racing. Larry prefers the bigger boats, while Hasso prefers getting wet:

For Plattner, sailing two man dinghies and jumping off his 505 into chest-high water to prevent it from getting racked on the beach at Crissy Field is a far cry from having a professional crew guide a Farr 40 or his MaxZ yacht into a slip at Porto Cervo or another yachting Mecca. ‘The 505 is a great boat and it offers the most competitive racing available. I love the 505,’ said Plattner.

‘Hasso Plattner and Peter Alarie (GER) Race 9, 2007 SAP 5O5 World Championships’ Sail-World.com /AUS ©

If you don’t know anything about 5O5 racing, a video is available that gives a great overview of last year’s 5O5 World sailing championship in San Francisco, including Hasso’s team:

SAP sponsors the event, and provides competitors with access to information that helps them understand their performance, and how it compares to the other teams. Here’s a interview with US 5O5 sailors earlier this year, on the impact of SAP solutions on their racing:

In particular, last year’s competitors had access to SAP BusinessObjects dashboards packed with information about the conditions of each race:

Ryan Goodman explained in a blog post last year  how they were created, using a a combination of SAP BusinessObjects Dashboard Design (formerly Xcelsius), and the Centigon Solutions GMaps Plugin:

“Based on date/time inputs and wind prediction inputs, the dashboard retrieves data from Local Knowledge software to plot ocean currents (yellow lines). The strength and direction of the current is visualized in a visual grid within the Google Map. Upwind laylines (red dots) are controlled by current, wind, and a profile based on the 5O5 boats. Local Knowledge software does all of the heavy lifting and returns laylines and currents through a custom web service.”

“Monitoring execution is the second challenge not easily achieved as conditions change. While the strategy tab relies on user input for wind conditions and a starting point, which ultimately affects the course itself, the race tab presents real-time views of this information . Real time GPS locations of all boats and marks (marks shown as red pins) are provided via Trac-Trac. On the fly, the dashboard retrieves laylines and routes based on real time information including wind conditions. Trac-Trac also provides additional information for each boat including boat direction and position.”

The video below from SAP TV explains the solution in more detail:

Business Intelligence software and sailing – two worlds apart? Not at the SAP 5O5 world championship. For the first time ever, SAP is contributing solutions from the SAP Business Objects portfolio to support sailors. An exciting demonstration of the similarities of business and sailing.

This year’s pre-worlds championships started this week in Aarhus, Denmark. There will be 120 teams from 11 different nations attending and Joe King and his crack team of BusinessObjects technology experts are already on site, working on supporting the sailors’ analytic needs.

The official championship starts on Friday the 30th, and you will be able to follow the action live on the official SAP 5O5 World Championship 2010 web site: http://www.505sapworldchampionship2010.com/, and access the dashboard using the “SAP Analysis” button on the left hand side:

One of the problems of explaining the value of business intelligence is that every layer of computing has always promised some variation on “better management” as the ultimate benefit of purchasing the system.

From 1959 mainframes (above), early “executive information systems”, the 1982 IBM PC (right), the first spreadsheets (far right), 1980s ERP systems and ”decision support systems” to today’s BI and Performance Management systems, the mantra has always been “better decisions” and “more visibility into the future” (click on the images to see the original ads).

But this time we really mean it – don’t we? :-)

Or as, in the past, will there be yet more layers that will add extra value and get closer to management nirvana? If so, what does the next one look like?

One thing that is clearly lacking in most of today’s systems is the acknowledgement that “performance” depends on a lot more than just what’s going on in any one organization — will the next layer will be about providing better management across ecosystems and industries as a whole? “Collective Performance Management”?