An age of intelligence

Did business intelligence help overcome the panic of 1907? Comset’s Ken Leedham seems to think so.

101 years ago, the US was rocked by a financial crisis. The New York Stock Exchange fell almost 50% from its high the previous year. There were runs on numerous banks, many fell into bankruptcy. 

There are clear parallels with the current financial situation. The US stock market had been shaky for months and banks were contending with major liquidity problems. In those distant times, there was no Federal Reserve to come to the rescue.

The man widely credited with saving the day was John Pierpont Morgan, recognised as the greatest banker of his day. Undoubtedly Morgan had sufficient knowledge and understanding both of the strength of his own bank and of the external factors shaping the crisis – what we could easily term ‘intelligence about the business’ – to give him the confidence to pump money into the market and to convince other bankers to join him.

Whilst Morgan could build such an understanding from his handwritten ledgers and observation of events, today's financial world is infinitely more complex, demanding investment in computerised business intelligence applications. A financial institution trying to do business under the current economic and market volatility, and with short-notice changes in compliance and regulatory regimes, needs a comprehensive understanding of its business performance and financial exposures, and the ability to use that information to analyse alternative courses of action.

It is important to recognise that business intelligence needs to embrace all aspects of the enterprise – it is not a case of simply speeding up the mechanics of generating ever-increasing volumes of financial reports. Jupiter Asset Management for instance, use BusinessObjects as their business intelligence tool, and it adds value throughout their organisation. "We first started using BusinessObjects for institutional client reporting," explains BI Team Leader, Adrian Yorke. "It has now spread to encompass areas such as order management, operational risk, SRI reporting, compliance and treasury."

We see an increasing trend towards this pervasive use of business intelligence. Only in this way can senior management have a clear understanding of the different forces that are driving business success, through revenue growth, cost management and mitigation of risk, and the interdependencies between them. But you have to start somewhere: finding that first application, one that is actively giving significant business pain, and then delivering a solution to it is key, and its success will drive adoption throughout the business.

Whilst business intelligence tools, technologies and techniques can bring considerable benefits to an organisation, implementation is not simple and success is not guaranteed.  Bear in mind that you will probably only get one attempt: if your first project fails, it will be difficult to justify a second. But if your first project brings real value to your business, then the use of business intelligence will undoubtedly spread and become an intrinsic part of day-to-day business processes. 

Returning to our original question – did business intelligence help overcome the Panic of 1907? This long after the event, we cannot know how much business intelligence JP Morgan had, nor how he used it before deciding to step in and risk his fortune. But we can safely assume that it was a well-considered decision, not one that was taken without a great deal of examination of the information available to him. 

What we can be sure of is that over the next few years, as we go through a recession and out the other side, the financial institutions that will thrive will be those best able to understand and manage their performance, to take new revenue generating initiatives but balance them against risk. To do that, personnel throughout the organisation will need ready access to timely, accurate and relevant information – what they need, when they need it, where they need it, and in a format they need it. And that’s business intelligence.

Ken Leedham is Business Development Director of Comset Ltd, a UK based specialist business intelligence consultancy. Comset has been delivering business intelligence, data warehousing, budgeting and performance management solutions to organisations with large and complex information requirements for nearly 20 years. 

Contact details:
Comset Ltd
T: +44 (0) 20 8831 7700
fst@comset.co.uk
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