How To Maintain Homeostasis Using Business Intelligence Alerts

1. How To Maintain Homeostasis Using Business Intelligence Alerts

4. What is Homeostasis? Encyclopedia Britannica defines Homeostasis as any self-regulating process by which Biological Systems tend to maintain stability while adjusting to conditions that are optimal for survival. If Homeostasis is successful, life continues; if unsuccessful, disaster or death ensues. The stability attained is actually a dynamic equilibrium, in which continuous change occurs yet relatively uniform conditions prevail. An often cited example for Homeostasis is temperature regulation in humans and warm-blooded animals in general.

5. Key Components The two important components of Homeostasis are Sensors and Effectors. Sensors monitor and detect changes in the controlled entity and provide the negative feedback for Effectors to carryout corrective measures and these corrective measures remain in motion until the deviation is reversed. The effectiveness of Homeostasis is in its ability to trigger the corrective measure in real time while the controlled entity is alive, well and able to survive the deviation and also self-correct. It is borne out of survival instincts, the need to survive and perpetuate. An organization is a controlled entity and in order to effectively monitor and regulate the various processes within it, it is worth investing in the Sensor and Effector Mechanism because they ensure its survival. Homeostasis is nothing new in the business world. Most manufacturing processes are monitored using Industrial and Engineering Control Systems that are self-regulating. In IT Services the advent of DevOps is a direction towards a seamless response system for dynamic demand on Software, Services and Infrastructure. Machine Learning, Algorithmic Processing of events and transactions and Internet of Things are good examples of embedded Homeostasis in action. In the end, a living optimal entity is a result of an ever present Homeostasis.

6. Alerts and Sensors Organizations can leverage their existing Business Intelligence Infrastructure to install Alerts. There is lot more emphasis on the need for On-demand Decentralized Reporting than demand for Auto-course Correcting Mechanisms that BI Alerts can facilitate. BI Alerts are the Sensors. Alerts trigger when certain pre-determined set points are deviated and provide the negative feedback necessary for the Effectors to kick in. These set points are commonly called KPIs but I would like to bring in measures for vitality instead of KPIs. I think Vitality and Homeostasis go together. Many organizations use Alerts and Notifications from their BI Systems, but not as Cohesive Mechanism for an Enterprise-wide Alarm System to stabilize operations and survive. Balanced Scorecards measure and monitor performance but do not help in keeping Homeostasis in the earliest available opportunity. In order to get to the deep green colour highlight on a Balanced Scorecard, Alerts are a must for course correction. What must you sustain on a daily, weekly or a monthly basis to remain vital. If the answer is based on Average Foot Fall or Customer Complaints or Sales or Margins. A very simple example of Vitals calculated from these are;

7. SALES Vitality of Sales = Inclination of Trend line of (Weighted Average YTD Actual Sales (Daily)) minus (Weighted Average YTD Actual/Budgeted Sales (Yesterday/Daily)){Trigger Alert when Vitality of Sales < 0 degrees} {Stop Alert when Vitality of Sales >= 0 degrees} Customer Complaints Vitality of Customer Satisfaction = A Trend line of (Average YTWE NPS (this week) – Average YTWB NPS (week before)){Trigger Alert when Vitality of Customer Satisfaction < 0 degrees} {Stop Alert when Vitality of Customer Satisfaction >= 0 degrees}

8. The Trends and Averages may be daily, weekly, monthly or some other period depending on how volatile your parameters are. The average chosen should iron out daily fluctuations and clearly show a trend upward, downward or steady state. Instead of a plain vanilla Average Calculation, a sophisticated Forecasting or other Statistical Models relevant to your industry may be used to calculate the trend and define the Alert set points. Predictive Analytics to forecast a set point or a trend and thereupon issue an alert can be an effective red flag. Alerts may be graded to denote the significance of the deviation. Since we are talking about Homeostasis, we may also borrow the concept of Early Warning Score (EWS) used by the Medical Community to assess the degree of illness of a patient. In BI Terminology we know it as tolerance threshold in a Balanced Scorecard. Preventive Action kicks in when the Alert goes out in response to meeting an EWS.

9. ‘The Alert System’ The Effectors are the organizational managers and their teams, who have the resources to diagnose the reasons for deviation from Vitals, take corrective measures. On-demand Reporting can be a great tool for Diagnosis. The alerts must be designed to facilitate Drill-through Action to deeper levels of data. In fact, “Project Homeostasis”, cannot be a success without a robust Data Processing and Integration Infrastructure in place for Analytics. The beauty and the effectiveness of ‘The Alert System’ is in its ability to keep blaring its horns until the fire has been doused. There are no accessible buttons to push to silence the alarms. They can only be silenced by correcting the course of the Trend Line. Knowledge about your Business, Industry in general and a Creative Imagination are the limits to how Alerts may be defined and implemented in your organization.

10. KARYA can help organizations design Enterprise-wise Alerts by leveraging your existing Business Intelligence Systems. To know more about KARYA’s Data Management Solutions please log on to http://www.karyatech.com. (About the Author- NagarajanMahadevan works as Principal Consultant- Data Management Solutions at KARYA Technologies. He is a Techno-Commercial expert and has more than 2 decades of experience in Business Intelligence, Data Warehousing Technologies, Financial Accounting and Management Consulting. His areas of interests, apart from staying abreast on latest IT Trends and Technologies, are Yoga and Indian Classical Music.)