"Business Intelligence:" What You Don't Know Can Hurt You

As I've written before, "Business Intelligence" is  here to stay.  (And if that's an unfamiliar or unclear term to you, please refer to the earlier post on this, which serves to introduce the field; and no apologies necessary, as the term "BI" is almost perversely non-intuitive to the newcomer.  It only makes sense once one already knows what it means.)

BI 101 to launch this piece:  BI  is not to be confused with "competitive intelligence," which is all about how your firm is perceived in the marketplace vis-a-vis its competition, and about what the competition is up to—both current and potential competition.  BI, rather, is about analyzing the tremendous amounts of raw data spewed out by your firm's various systems. CIO Magazine defines it thus:

"But with Hillman Group's new BI system, curious business executives can query the system themselves and get instant answers about such critical questions as the number of unfilled customer orders, which is tracked by the system in real-time.

"There's just one problem.

"The new system hasn't made the business better—at least not yet—only better informed. That's generally the problem with BI, the umbrella term that refers to a variety of software applications used to analyze an organization's raw data (sales transactions, for example) and extract useful insights from it. Most CIOs still think of it as a reporting and decision support tool."

The CIO case study involves a computer sub-systems manufacturer and a chemical company, but the key realities of BI come through loud and clear:  (1) information is power, so your firm has to be prepared to share that; and (2) knowing that some of your partners manage things better than others cannot be seen as threatening, it must be seen as empowering. The goal is not to rap the poor manager's knuckles, but to show by example how he can emulate the good manager.

In law-firm land, BI can analyze the profitability of entire practice groups, of offices, of clients, of individual lawyers, and of individual matters. Of far greater importance than its ability to write a new gloss on historical experience is its ability to capture "best practices" and, if sensitively and astutely managed, to spread those best practices across the firm.  Who's doing BI?  Firms such as Alston & Bird, Bryan-Cave, and Goodwin-Procter, which I cite for reasons that will become clearer below, but permit me to seed your thinking by observing that all three of these firms place a noteworthy premium on "cultural" considerations.  (A&B, for one, has not landed above all other law firms on Fortune's "Best 100 Places to Work" a few years in a row by accident.)

The key to "second generation" BI is to conceive of it as more than a historical-reporting tool and begin to use it actively as a way to understand how you can do what you're already doing in better ways.  The management literature calls this "best practices" or "process management," but don't let the terms glaze your eyes over.  CIO Magazine, with its understandable CIO-centric perspective, puts it thus:

"Companies that use BI to uncover flawed business processes are in a much better position to successfully compete than those companies that use BI merely to monitor what's happening. Indeed, CIOs who don't use BI to transform business operations put their companies at a disadvantage. For CIOs who have carried out this difficult strategy successfully, there is no looking back."

Or, in plain English:  If you use BI as a rear-view mirror merely to point with delight and view with disdain, don't bother.  Instead, use BI to help you understand, at a fairly profound managerial level, why, for example, two different matters that appeared superficially similar generated remarkably different levels of revenue and profitability for the firm—and how to make the laggard look a lot more like the leader next time around.

Next point:  Does this have to do with technology?  Sure, and so does time-keeping.  The technology behind BI, in other words, should matter not to you.  BI is 1% technology and 99% culture.  BI can improve matter management, client satisfaction, and even professional development (by identifying, for example, associates whose write off rates are especially high or low).  These are things your firm must care about.  (Did I forget to mention profitability?)

As a friend of mine with no little experience in BI implementations in law firms likes to say, BI will only have an impact if your firm has "the will to act."   Do you?