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11/2/2008
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BI at 50 Turns Back to the Future

Hans Peter Luhn envisioned a "business intelligence system" way back in 1958, but only recently has BI begun to serve up knowledge instead of numbers.

The 50th anniversary of Business Intelligence (BI) has passed with little notice. The lack of fanfare is in large part due to the fact that BI's nominally defining event, the October 1958 publication of Hans Peter Luhn's IBM Journal article "A Business Intelligence System," has not been widely recognized.

The reality is that BI, first described by Luhn before business operations were computerized, developed in directions he did not foresee. BI tamed information sources Luhn didn't anticipate, even if in service of goals he did articulate. Today's most commonly used BI tools and methods owe more to the 1960s' development of computerized quantitative modeling — underpinning the theory and practice of decision support systems — than to Luhn's work.

Luhn died in 1964 at the age of 68. Yet Luhn's concerns with profiles, action points, and information retrieval are concerns we are still striving to address today (and who can argue with Luhn's system objective "to supply suitable information to support specific activities carried out by individuals, groups, departments, divisions, or even larger units"?). In recent years, BI's focus has (re-)broadened from number crunching to Luhn's mid-20th-century vision of automated knowledge analytics. At 50, BI is finally poised to become the comprehensive business asset Luhn first conceptualized in 1958.

Luhn's paper cites a Webster's dictionary definition of intelligence as "'the ability to apprehend the interrelationships of presented facts in such a way as to guide action towards a desired goal,'" delivered as an intelligence system, a "communication facility serving the conduct of a business." Luhn further defined business as "a collection of activities carried on for whatever purpose, be it science, technology, commerce, industry, law, government, defense, et cetera." The net definition of BI still applies today. Luhn, in 1958, articulated his definition in fairly general terms, but his emphasis on discovering and communicating relationships (and not just data values) and on goal alignment was spot on, as were the knowledge-management questions that drove his system:

  • What is known?
  • Who knows what?
  • Who needs to know?
Further, Luhn saw importance in the "direct interchange of ideas," that is, collaboration.

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