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Business Intelligence and Operations Research

In the past couple of years, a field called “business intelligence” has sprung up. Based on the premise that businesses should get more out of data, business intelligence mixes data mining, algorithms, visualization and other approaches to help businesses make better decisions.

Of course, I thought that was the definition of operations research! Ever since I came across the area, I have included some of the blogs in my blogroll (see, for instance, James Taylor’s Decision Management and Smart (Enough) Systems). I find this area interesting, but I never can quite get my brain around what they are trying to say. It is like they are taking an area I know very well and translating it into a different language which I kind-of understand, but not quite well enough to grasp what they are saying.

Intelligent Enterprise (part of the group that publishes Information Week) has a short article “What BI Practitioners Can Learn from Operations Research”. It begins with the Netherlands Railway Edelman story, then continues to express confusion on the lack of interaction of the two fields:

It would be natural for BI practitioners to embrace OR, which has long focused on automating decision making, surely the goal of those who talk about closed-loop BI. “OR starts with the decision and works back to figuring out what math and data will help with devising a better solution, while BI tends to start with the data and see what can be done with it,” says James Taylor, co-author of Smart (Enough) Systems and one who believes that OR and BI are complementary but quite different. “OR folks tend to be focused on the nitty-gritty of day-to-day operations, and they use data from operational systems. BI tends to be focused on knowledge workers, data warehouses, and aggregation.”

It would be natural for the OR community to reach out to the BI world and its community of business-focused knowledge workers, who are increasingly looking to build out their analytical toolkits. “C-level decision makers are turning to analytics for help in the decision-making process,” writes Peter Horner, editor of Analytics, a new magazine published by the Institute for Operations Research and the Management Sciences (INFORMS). “When you see terms like operations research (OR), think analytics.” Many in the BI world, who are already supporting those executive decision makers, are saying close to the same things about BI and analytics.

Given the close kinship of BI and OR, one wonders why these two camps have long existed as separate communities?

SAS’s Mary Crissy (who I still think of as Major Crissy, though she left the military some years ago), has what I think is a pretty good explanation:

“Operations researchers don’t interact with the IT community as much as they ought to,” says Mary Crissey, an analytics marketing manager at SAS, a council officer of INFORMS, and, apparently, one of the few vendor executives with a foot in both the BI and OR camps.

“Academic mathematicians are not worried about what terms are buzzing about in the business world,” Crissey says. “They talk to each other in their mathematical language of equations and theory without getting entangled in terminology such as BI. Pure Intelligence for business or public service organizations all boils down to data analysis; they just don’t call it BI.”

Having gone through fights over “operations research”, “management science”, “decision engineering”, “analytical decision making” and countless others over the 50+ years of existence, the field is not particularly excited about embracing a new name for our field.

I guess I see BI’s relationship with OR to be similar to operations management’s relationship with our field. OM uses OR an awful lot, and OM would not be successful as a field without OR. But OM is not a subfield of OR: sometimes it uses approaches that are outside the range of OR (including organizational theory, case studies, or other methods). That is great! OM people are trying to solve problems, and they should be using whatever methods seem appropriate. Similarly, BI uses (or should use) OR extensively. And OR people should see the BI community as a great source of problems and inspiration (and should make an effort to learn their language). But BI will inevitably use non-OR methods for some of their issues, so is rightly not “the same as” OR. But we as a field should know more about what they are doing if we are going to be part of this business direction.

{ 4 } Comments

  1. MS | May 6, 2008 at 11:16 am | Permalink

    Michael,

    As a BI practitioner with an OR graduate degree, I have faced this dichotomy for 20 years. I had an advantage of thinking ahead due to the OR background & quietly embedded OR concepts/tools deep inside flashy BI frontends. In some ways, OR people and Cos like SAS have used OR as a hidden ‘competitive advantage’ or ‘secret sauce’.

    This article is a good start to have OR become a recognized “analytic engine” in the mainstream.

  2. major crissey | May 6, 2008 at 6:10 pm | Permalink

    Mike,
    thanks for the compliment (saying i gave a pretty good explanation.) you are a world recognized OR name and certainly are entitled to dress however you like! i thought i had left the acynomyn world behind when i left the military – boy was i mistaken! as a software vendor SAS is swarming with a lingo all its own !
    the attention seth grimes generated in is article for INTELLIGENT ENTERPRISE is FUN for me – because he carried some of OR to the audience of BI.
    now i see more comments and finding other blogs with interesting views on BI and OR and analytics. Thanks for sharing – keep it up!

  3. Jason | May 6, 2008 at 8:17 pm | Permalink

    Now you have be all confused on the difference between BI and OR, as before I thought their functions were nearly identical.

  4. Paul Vincent | May 7, 2008 at 10:29 am | Permalink

    As one who started work in OR doing Rule-based development, I have to say I have not twigged the comparison between BI and OR. Probably because BI is a synonym for “Business Reporting”, which is only part of the OR story, IMHO.
    Note that the Complex Event Processing field is beginning to overlap with “Operational Analytics” which is possibly much more related to OR than BI!

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  1. […] As I was reading the article I also noticed a response over on Michael Trick’s OR blog -Business Intelligence and Operations Research. Both Seth’s article and Michael’s response are worth a […]

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