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.

Seth Grimes, Contributor

November 2, 2008

4 Min Read

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.

Knowledge, Not Numbers

Computer engineer Richard Sumner (Spencer Tracy) and television network librarian Bunny Watson (Katherine Hepburn) discuss the merits of the "electronic brain" EMERAC.

Ironically, the BI implementation Luhn described far more closely resembles the reference-library setting of the 1957 Katharine Hepburn-Spencer Tracy movie comedy "Desk Set" than it does any system operating today. Luhn wrote of an information requestor who "telephones the librarian and states the information wanted. The librarian will then interpret the inquiry and will solicit sufficient background information... This query document is transmitted to the auto-encoding device in machine-readable form. An information pattern is then derived," and so on.

Luhn wrote about statistical analysis of text and about what we'd nowadays call "term normalization" and "metadata." Luhn did not envisage computer networks and Web browsers and dashboard displays, but he certainly did capture information retrieval, extraction, and dissemination processes, as well as knowledge management considerations, in something resembling their current-day form.

Luhn focused exclusively on documents as an information source. As I have noted elsewhere, business operations weren't computerized in 1958, so in a sense, for 45-plus years, business intelligence detoured around the estimated 80 percent of enterprise information locked inaccessibly in textual form. The reason is clear. "The bulk of information value is perceived as coming from data in relational tables," states Prabhakar Raghavan of Yahoo Research. "The reason is that data that is structured is easy to mine and analyze."

So BI thrived crunching fielded, numerical, RDBMS-managed data, structured for analyses via star schemas and the like. And BI delivered findings via tables, charts and dashboards that focus more on numbers than on knowledge.

Reporting, OLAP, spreadsheets, and visualization are central to BI, but in the last few years, BI has headed back to the future foreseen by Luhn in 1958. Text technologies have matured to the point where software can (finally) support business intelligence — information extraction and analysis and visualization — on document sources. The heretofore-empty promises of knowledge-management gurus are being realized via semantic technologies including ontologies, and the definitional objective of Luhn's BI system, to "guide action toward a desired goal," is at the center of the old-new field of enterprise decision management.

Numbers-focused BI dates to the '70s, while text- and knowledge-focused BI is of much more recent vintage. These elements — some foreseeable fifty years ago and some not — represent technology that implements Hans Peter Luhn's business intelligence system. That 1958 conceptualization of BI, with its focus on information extraction, knowledge management, communications, and collaboration, still works today.

About the Author(s)

Seth Grimes


Seth Grimes is an analytics strategy consultant with Alta Plana and organizes the Sentiment Analysis Symposium. Follow him on Twitter at @sethgrimes

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