Meyer: Windows turned the conceptually difficult process of the PC into a ubiquitous and intuitive tool.  Is there a similar challenge for BI, in order for it to become a household word?  Do you think BI is pushing a tipping point to being perceived by the broader sector?

Davenport: That's an interesting question.  The fact the Microsoft is putting it in Office as of a week ago would indicate that it is happening.  SAS and Intel came to me and said research the future of BI.   I talked to 35 companies that were all doing something unusual and aggressive in Business Intelligence.   It became clear that a 1/3rd of them were really competing on that basis and were making it the core of the business strategy.  I call it competing on analytics.

Meyer: What does competing on analytics really mean?

Davenport: It means analytics and business intelligence are really driving the approach of competition in the industry.

Meyer: Where does that fit in with the marketing budget?

Davenport: Some of them are using as marketing.  For Harrah's marketing is loyalty/customer service.  For Amazon it web-based marketing and supply chain.  For sports it more about human resources, what players to choose.  So id doesn?t have to be about marketing but nit is one of the top 2 or 3 things people do with analytics in order to compete. 

Marketing is one of the primary ways people compete with analytics but it is not the only one.  Customer service is a big; supply chain is a big one; human resources will be a big one.

Marketing is clearly is becoming on a whole much more analytic, much more data based.  Analytics has helped us determine if some marketing approaches really work or not.  That is one of the primary reasons web-based marketing is taking off because it is all addressable.  You have ad agencies spending huge amounts of money finding what the lift is; something they have never been able to do before. 

Meyer: Is BI inexorably driving a fact-based evolution?  Is it BI or the dark ages?

Davenport: I believe it is the case.  I was talking with the CEO of Harrah?s about this and was thinking maybe some industries were moving the other way, airlines for instance.  Airlines were early aggressive adopters of business intelligence with yield management, crew scheduling, and operational stuff.  He used to be CIO of National Airlines and I asked him, do you think that it is true some airlines are not moving in an analytical direction?

He said they maybe focused on execution and keeping the costs down but there are still very analytical.  I would be hard pressed to name an industry that is not developing an analytical orientation. 

I am writing a book on this.  Baseball, football, and basketball are getting into metrics and analytics.   You see it in advertising.  People are analytics what are the most successful gifts men can give to women to keep the relationship going.  I have a quote by Larry Summers, who is the President of Harvard, and he said when we look back on this period of history one of the things we are going to say is that we were much more analytical than before. 

Meyer: The father of predictive modeling, Norbert Weiner, belonged to the analytic tradition, where language is thought of as a tool.  Refine the tool and you get speed and accuracy in determining the facts. Clearly this is different from intuitive-based decision-making.  Do you have any thoughts on this?

Davenport: This is very interesting.  Did you read Blink?  It is all about intuitive decision making and how successful can be with it in certain situations.  In America we are of 2 minds.  We are lazy and we come to quick judgment and at the same time we see people being really successful with analytical decision making.    Then there is another successful book called the Wisdom of Crowds witch suggests you should ask a bunch of people what they think and that?s what you should do. 

There is a lot of uncertainty in the popular mind about what the best approach is.  I do agree with you that companies are going to be more analytical over time.  But in the popular mind I am not Americans are very analytical.  I teach a lot of MBAs and they are very honest about they would rather make intuitive decisions if they can get away it.

Meyer: It seems to be a real communications challenge in helping people get beyond augury.  Like superstition, People spend huge amounts of money on advertising without really understanding the analytics of it.  They just do it because that’s the way it is done.  What are your thoughts? 

Davenport: People said for 20 years I know half my money is wasted on advertising.  Well, now they can know.   It takes a whole new generation of marketing leaders to do that well.  

Meyer: Do you think the BML forum is the right kind of forum to awaken people?

Davenport: Yes I think it is.   BetterManagement is an interesting experiment; now we got all this data, we have all these transaction systems in place; we got all the software to analyze it.  We are sort of poised on the edge o a huge transformation and I hope BetterManagement pushes it over the brink.

Over the brink, you mean that tipping point, in which the masses understand intuitively (to mix metaphors) the value of analytics.  

If you have the data and if you have the time to the analysis you are going to make a better decision.   For most business decisions you are better off with analytics. 

Meyer: Can you tell me what the world will be like if BI becomes standard business practice?

Davenport: I am going to write a book on this and I hope that will push things over the edge so everyone realizes they should be competing on analytics.  It is a long transition for companies to get their data straightened out, cleaned up, hire the right kind of people.  It is typically a 5 year transition.

Meyer: It’s BI or the Dark ages.  What will the evolved world look like?

Davenport: They will better people, they will be making more money, they will be charging higher prices that people are willing to pay – that’s called yield management.  Marriot said they get an 8% lift off of their revenue management system compared to their competitors.  Harrah’s says they get 10% to 25% lift off of their analytical systems that they use in the casinos.  So if you are an Indian tribe trying to decide who will run your casinos you are going to pick Harrah’s. 

Meyer: Do you think BI is the right term to sell BI?

Davenport: I don’t know if it is the right term.  When I talk to business oriented people it doesn’t really register.  “Knowledge” has the same problem.  There are tons of different definitions.  Nobody knows what it means.  I am casting about what should I call this book.  “Analytics” people don’t like.  Analytical marketers will be critical in tomorrow’s BIscape.