Business Intelligence and Ethics: Can They Work Together?

“You have zero privacy anyway; get over it,” said Scott McNealy, of Sun Microsystems in 1999. Tactful, no. But is he correct? Unfortunately, yes. And privacy advocates need to understand this. As a consumer, every time you buy an item, whether it has an RFID tag or not, you give companies a wealth of information about you. But the technology used to gather information, such as RFID tags (and credit cards), is not the problem.

At a recent conference on Business Intelligence (BI), a new buzzword to describe the tools executives want that will help them predict consumer behavior, executives from Pizza Hut spoke on how they use BI tools and how these tools have significantly boosted their sales revenue. The technology used to gather these data wasn’t RFID, bar codes, or anything particularly sophisticated. Instead, the technology was the telephone.

Pizza Hut has more than 20 years worth of data on consumers; over 40 million U.S. households. You give them all kinds of information every time you order a pizza for delivery. All you have to do is give the order taker your phone number and he calls up your order history on a computer. Chances are the order taker asks if you’d like the same type of pizza you ordered last time, which means you spend less time on the phone describing your wants, and you may get your pizza faster. All of which translates into better customer service.

In fact, one of the reasons behind gathering all these data is better customer service. Stephen Brobst, chief technology officer at NCR Teradata, a company that develops data warehousing and data mining tools, mentioned a few useful outcomes of collecting information on you. Would you like to be informed of alternate routes in your travels to avoid traffic accidents and congestion? Or would you like to be notified, while you’re driving, of the lowest gas prices along your route? Probably yes to both questions. To provide these services, however, requires that companies collect data on you.

Pizza Hut knows what kind of pizza you order, how often, what coupons you use or don’t use, and how much you spend with them in a given time period. Marketing managers now take this information and run it through a BI system that predicts and forecasts the probability of your next order. They then use this information to determine marketing strategies to influence you to buy more pizza without spending more on that marketing program than they have to. They achieve a better return on their investment in direct mail, TV advertising, various magazine ads and so on. In fact, the new BI tools enabled Pizza Hut to recoup its investment in three months. The owner of Pizza Hut, Yum Brands, plans to implement these tools in its other fast-food restaurant chains, Kentucky Fried Chicken and Taco Bell.

The point is that RFID is not the enemy. Nor are other data gathering technologies, like the telephone and the electronic product codes (EPC) that Consumers Against Shopping Privacy Invasion and Numbering founder, Katherine Albrecht claims. In a recent USA Today article, she claimed that EPC systems are as dangerous to humanity as nuclear weapons. That’s a bit of an overstatement.

Said Darryl McDonald, vp, Global Consulting Services, Teradata, when you walk in other stores, merchandisers may scan those RFID and EPC tags, but they will do so to read how much a competing store is charging for the same item. Fairly soon, claimed McDonald, competing companies will develop special codes that will foil competitors’ attempts to read them when you walk into other stores. The fact that you wear an item to a gym is likely of little interest to the clothing merchant.

That may not be a comforting thought, though, because data will be collected and collated on us whether we like it or not. The recent Teradata conference confirms this. Data will be analyzed by these new business intelligence programs, because this gives executives something tangible to use to justify their decisions.

The real issue here is business ethics, a subject different from business intelligence.

Will business ethics play a part in any data analyses? Technology gives us the ability to analyze data in just about any way executives want. Should we analyze data in some ways, however? The “should we” aspect is the one that’s often ignored and the real issue that privacy groups should focus on.

One of the speakers at the conference, Dr. Hackathorn of Bolder Technology Inc., explained that there are three positions to every decision. The Ethical position results in a “yes, we should do this” answer. The Unethical position results in a “no, we should not do this” answer. The Amoral position states that, “it does not matter whether we do this.” The questions executives always need to ask are, “will this plan, strategy, or design have an effect on other persons,” and “will other persons be affected by my (the executive’s) action?” If the answer is yes to either one of these, then you have to examine your plan, strategy and design from the ethical and unethical positions. And be prepared for a “no, it is not ethical” answer and behave accordingly.

We have reached a new frontier. Businesses never had the power they will soon have to affect people. If businesses choose not to behave ethically, an angry, not always technically sophisticated and skeptical public (due to examples like Enron) will shut down legitimate uses of technology, which in the end will negatively affect the bottom line. Regulations will only be the beginning.

Leslie Langnau, Contributing Editor

[email protected]

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