CRM Today: Executives See Business Intelligence Emerging as Crucial Competitive Advantage

One of the companies mentioned here, Harrah’s, gobbled up my client Caesar’s Entertainment in the largest acquisition in casino history.

Harrah’s BI has been written about extensively elsewhere – but in a nutshell, superior returns did give them a crucial financial performance advantage in comparison to Caesar’s, which in turn justified the takeover.

In merger related SEC filings and public discussions on record, Harrahs executives explicitly stated that their superior customer intelligence and predictive modeling (boy do they ever know how to pick a loser!) was directly assoicated with their financial performance advantage.

That competitive advantage was less than 1% on gross earnings – but against a $5.5 billion company (Caesar’s), enough to pay for a huge acquisition.

The merger will be consummated this summer – and my friends at Caesar’s hoping that the axe, when it falls will be to the left or to the right…

Executives See Business Intelligence Emerging as Crucial Competitive Advantage – CRM Today

Tuesday, 03 May 2005

Business intelligence capabilities and analytic prowess will play crucial roles in the most competitive sectors of the global economy, according to a new study by the director of research for Babson Executive Education (BEE) at Babson College in Wellesley, Mass. But an organization’s efforts to develop fact-based decision-making capabilities are likely to fail unless they are closely supported by top management, the survey showed.

“We have reached a critical juncture in the history of global competition,” said Professor Tom Davenport, president’s distinguished professor in the Information Technology Management Division of Babson. “After years of fitful progress, leading firms have begun basing their competitive strategies on the sophisticated analysis of business data.”

Davenport cited progress at organizations such as Capital One, Harrah’s Entertainment, Dreyfus, Marriott, Procter & Gamble, Verizon and the NFL’s New England Patriots as clear signs of an accelerating trend toward greater reliance on analytic processes and technologies. The research study, which polled more than 40 C-level executives and directors at 25 globally competitive organizations, was conducted by Davenport’s team over the first quarter of 2005. Each executive was asked 15 to 20 questions during a 45-minute interview.

Three conclusions emerged from the study data, Davenport said. First, leading organizations are focusing more attention on developing fact-based decision-making processes. Second, initiatives which are tightly focused on achieving key strategic objectives are the most likely to gain traction. Third, the support and involvement of champions at the C-level are absolutely critical to the success of enterprise business intelligence initiatives.

Davenport said the research study grew from his interest in learning more about how large organizations build analytic capabilities, convert data into knowledge and leverage business intelligence to create value. He said he was gratified by the level of engagement demonstrated by the executives.

“The net takeaway of the study is this: The ability to make business decisions based on tightly focused, fact-based analysis is emerging as a measurable competitive edge in the global economy,” Davenport said. “Organizations that fail to invest in the proper analytic technologies will be unable to compete in a fact-based business environment.”

The research survey was co-sponsored by SAS and Intel. The results of the survey were announced at the 30th annual SAS Users Group International (SUGI) conference.

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