Drucker on Integrating Decision Support Data

“…most businesses have two information systems. One is organized around the data stream; the other, far older one, around the accounting system. The accounting system, though, is a five-hundred-year-old information system that is in terrible shape. The changes we will see in information technologies over the next twenty years are nothing compared to the changes we will see in accounting.”

Peter Drucker, Management in the Next Society

The heart of Business Intelligence is the data warehouse, with its historical record of the business events. It typically includes data about customers, products, business units, and other classes of objects that are critical to the company’s decision-making. Unfortunately, it has not included the most critical dimension of the business event—the movement of financial resources that occur during that business event.

This data, historically the most important of all business information, has been sequestered from the world of Business Intelligence by accountants. The accountants use this data to produce reports that satisfy government regulations while providing almost no strategic assistance to the company’s management. According to Peter Drucker, decision support will have to include the transactional data that is produced by the accounting department.

“At present, these two systems [data stream and accounting] are separate. They will not be separate for our grandchildren’s generation. Today’s CEOs still depend on the accounting model. I don’t know of a single business that bases its decisions on the data processing stream. Everyone bases their decisions on the accounting model, even though most of us have learned how easy this model is to manipulate.”

Peter Drucker, Management in the Next Society

Drucker is right; what we call Business Intelligence will have to be integrated with accounting data. It simply has to; the competitive advantages of doing it are too great. More importantly, the competitive disadvantages of not doing it will make it essential.