Dr Prithvi Yadav
Business Intelligence (BI) refers to the use of technology to collect and effectively use information to improve business effectiveness. An ideal BI system gives the employees, partners, and suppliers of an organization easy access to all the information they need to effectively carry out their roles, and the ability to analyze and easily share this information with others. With its roots in inflexible early databases and “executive information systems,” BI has evolved to become a powerful set of technologies suitable for different types of users and information analysis needs.
Today, only 19% percent of companies say their employees have all the data they need to make informed decisions. Yet according to a 2000 International Data Corporation (IDC) study of 65 companies, the mean return on a BI investment was greater than 400% over 2.3 years. Figures like these have meant that BI continues to be an area targeted for increased IT spending in the years to come.
Six Sigma is a disciplined, data-driven approach and methodology for eliminating defects (driving towards six standard deviations between the mean and the nearest specification limit) in any process, product, or service. Pioneered by companies like GE and Motorola, Six Sigma has its roots in quality management initiatives and like them, is disciplined in its use of facts and statistical analysis to achieve no more than 3.4 defects per million opportunities. However, Six Sigma is not “just another quality initiative.” It emphasizes the need to start with processes and defects from a customer’s point of view, and outlines a management organization for effectively implementing change.
A Six Sigma initiative is typically led by an Executive Champion, in charge of ensuring that the initiative gets the support it needs—GE’s Jack Welch, for example, was known as an unwavering champion of Six Sigma. Projects are led by “Black Belts,” middle managers who leave their roles to spend one to two ears exclusively implementing Six Sigma Projects. They undergo long weeks of training, and typically receive bonuses based on the savings they generate for the organization. They are aided in their projects by a team of “Green Belts” chosen from different functional areas according to the project. Once Black Belts have successfully implemented several projects, they may become “Master Black Belts” who help choose and coach Six Sigma projects throughout the organization.
According to the Six Sigma Academy, Black Belts save companies approximately
$230,000 per project and can complete four to 6 projects per year. General Electric, one of the most successful companies implementing Six Sigma, has estimated benefits on the order of $10 billion during the first five years of implementation.
Six Sigma provides a systematic way of improving business processes based on
customer needs and factual analysis of company processes. Business Intelligence (BI) is technology devoted to accessing, analyzing and sharing business information. Real-life organizations like GE are combining these two technologies in the form of “six sigma intelligence,” a framework for using information technology to pick Six Sigma projects, get results more efficiently, and ensure their long-term success. Specifically, BI Systems from companies such as Business Objects help organization-wide implementations of Six Sigma.
“Six Sigma intelligence” is the combined use of Six Sigma and business intelligence to further the goals of the organization, by picking Six Sigma projects more effectively, achieving results faster, and ensuring their long-term success through exception reporting. The rest of this document outlines the specific benefits to organizations that use Six Sigma intelligence.
A commitment to quality and customer focus has been the linchpin of GE’s success, but several key technology projects have also helped. In 2002, GE is investing $300 million in quality training and systems that measure Six Sigma’s effectiveness by capturing metrics, including frequency and type of manufacturing defects, for an expected return of $400 million to $500 million in savings. GE’s Six Sigma quality program isn’t unique, but GE’s ability to successfully use information technology to measure its quality control progress and to tighten its ties with customers has been unparalleled. GE Chairman John F. Welch’s commitment to the quality program and his understanding of IT’s role in it have helped separate GE from the rest of the pack.
GE’s chief executive, Jeffrey Immelt, has continued the tradition. Immelt was introduced to BI systems when he ran GE’s medical instruments business, using them to monitor the cost, maintenance and performance of his X-ray, MRI and ultrasound machines. Soon after he was named to the top job in November 2000, Immelt decreed that everyone throughout GE use cockpits. And now, for example, GE Capital’s “electronic boardroom” allows executives to track asset and revenue results from their insurance and financing businesses and to scrutinize the profitability of specific customers.
In many Indian organizations, six sigma has been implemented quite effectively since last one decade or so. Successes from six sigma projects have been experienced in almost all sectors such as Manufacturing, services, finances and project management etc. At the same time, emergence of Business Intelligence (BI) particularly, in services sector has attracted attentions of decision makers in Indian industries. Although, the concept is new but many Indian companies such as AirTel, BPL, StanChart, CitiBank, ICICI, Reliance Infocom etc have tasted the success of BI and have experienced benefits out of it. Now, the time has come to follow GE’s success by integrating both of these concepts and deriving an extra benefit out of it.