The History of Business Intelligence

In 1958, Hans Peter Luhn published an article in the IBM Journal entitled “A Business Intelligence System.”  Decades later Mr. Luhn’s concept has spawned a host of new companies and software programs dedicated to providing business intelligence that companies can use to improve their decision making process.  The world and the market have changed since Mr. Luhn published his paper and, although some of the fundamentals have remained the same, the advent of computerization has changed how business intelligence is obtained. 

Luhn’s Business Intelligence Concepts

Luhn wanted to provide information about relationships inferred from facts about a specific business to the owners and decision makers in a company so that they could use the intelligence to further their enterprises.  He envisioned that business goals could be created using this information and that companies could know what they should realistically strive for to improve their long-term and short-term return on investment.  There were three questions that would need to be answered before a working business intelligence system could be created and they were: 1) What is known, 2) Who needs to know, and 3) Who needs to know what?  Once these questions were answered, the right information could be extracted from the system and the correct relationships drawn. 

Improving Business Intelligence

The ability to use computers to extract and analyze business intelligence data has completely changed the scope and capabilities of the concept.  The first computers with business intelligence programs were not necessarily effective, however.  It took a few talented companies to fine tune the collection and analyzation process before the software could provide useful information to companies.  Now with reporting, spreadsheets, visualization, and OLAP capabilities the business intelligence software available to companies of all sizes is not only useful, it is vital to remain competitive in a vast and ever-changing market.

Even though the concept was created before the computer capabilities existed to make it comprehensive, the intellectual groundwork was set in 1958 for the business intelligence programs that are used today.  Companies that have the ability to set realistic, measurable goals and make decisions based on hard market evidence is creating a business environment that is more competitive, but more importantly forward moving.  Because decisions can be made from a fact-based position, resources can be used appropriately and time is saved that may have otherwise been wasted.  Teams can focus on innovation instead of prevention.  From its inception in 1958, Luhn’s concept of business intelligence has become a real-world tool that can be used by companies today to improve their products, business practices, and profit margins.