Move Beyond BI, Towards Optimization

by Amit Tripathi    Jun 24, 2005

H. L. Mancken’s thought that ‘there is always a well known solution to every human problem - neat, plausible, and wrong,’ applies to today’s corporate environment.

Corporates today are faced with myriad of factors and decisions that call for chalking out strategies that produce the best results. In such a scenario, can the approach of optimization can provide answers to critical queries on current and future actions, decisions, and their outcomes?

Speaking to CXOtoday, at the sidelines of SAS (business intelligence major) organized conference on ‘Optimization - the secret to enterprise decision making’ Dr. Hirji E. Nagarwalla, director- Nagarwalla Consultants Pvt. Ltd. said, “Just having a business intelligence (BI) infrastructure does not ensure appropriate decision making. While BI provides the necessary information for tactical decision making, it cannot help you sort through the complex Web of strategies that can lead to best results for the enterprise.”

So, what actually is optimization?

Dr. Radhika Kulkarni, director - management, science, and numerical optimization, analytical solution division, SAS Institute Inc. USA, said, “Optimization is the process choosing the actions that help in achieving the objectives within the limits established by the constraints in which the business functions.”

Nagarwalla added, “A well defined approach to optimization aids in describing the three key elements of any optimization problem, namely decision variables (for e.g. production level, resource allocation etc.), an objective to achieve (for instance maximizing profit, minimizing distance traveled etc.), and constraints (such as customer demands, material available etc.)

“Optimization problems can be tackled in four steps. The first step is to build a model of the situation that the business is in and how those factors interact with each other,” Kulkarni suggested. She stated, “The next step is to solve the model and identify a set of decisions that optimizes the objective. At the third step the solution needs to be implemented in the situation in which it is modeled.”

Adding a caveat she affirmed, “It must be ensured that the model can allow accommodation of constraints as and when they are needed and also it must respond to change.”

Showcasing the offering that SAS has towards optimization, George Varghese, head - marketing & alliances / pharma & ITES, said, “SAS/OR software can solve numerous optimization problems with its six optimization oriented procedures namely PROC LP, NETFLOW, INTPOINT, NLP, TRANS, ASSIGN.”

With BI yet to gain its foothold in the Indian corporate psyche, it remains to be seen how the concept of optimization is received among the CXOs.