CIO Magazine recently published a great blog post called “To Hell with Business Intelligence: 40 Percent of Execs Trust Gut“.
Based on separate research published by Accenture and Aberdeen, the post says that nearly half (40%) of major corporate decisions are based on ‘gut’ and not on data.
The number one reason? Sixty-one percent of the ‘gut deciders’ do so because good data was just not available.
Recently I visited one of these businesses. Ok, maybe they weren’t part of one of these studies, but they are a ‘gut decider.’ They’d love to do something different, but they can’t get to the data.
This company has an archaic, manual data management system. Every day they write down stacks of data on pieces of paper. They file (and forget) these in a filing cabinet. Some of it makes it into a homegrown (MS Access) data system.
Normal – busy – people can’t access this data.
But that’s OK, because nobody trusts that data that are there. Even with Checkers checking the Checkers checking the people recording the data, nobody believes the data. These people have no choice but to make almost all of their decisions based on gut.
In this situation, the obvious question is “So how’s that working for you?”
It was obvious to all of us that it isn’t working at all. How can I say that? Here are a couple of reasons:
- Customer complaints torpedo new business opportunities.
- High scrap rates siphon down profitability.
- Product returns clutter a warehouse, some of it retained as “inventory” for years.
- The list goes on…
Deciding from the gut is expensive.
I’ve found that when real-time, actionable data are readily available, people use it to make decisions – good decisions.
Of course these systems require an investment. Of course people need training to make good use of data. But given the high cost of the gut, the return on these investments is phenomenal.
Having said all this, transforming into a data driven business is hard. As the CIO post states: “Losing that gut-first instinct isn’t going to be easy, and I’m not sold on whether companies can stomach the change required. ”
Lets hope they can. In this tough economy ready access to actionable real-time data may make all the difference in the world.
In the IT world what is classified as Business Intelligence may indeed be an oxymoron. But most of us need data – or more accurately knowledge – to make good decisions.
What do you think: Gut or Data? What is your experience?