Understanding Data Warehousing Strategically

By: Bernard (Bernie) Boar

Information Technology Consultant 

This white paper was commissioned by NCR's Communication Industry Line of Business.

Table of Contents

Executive Overview

1.0 Introduction

2.0 A Data Architecture Perspective of Data Warehousing

3.0 Data Architecture Choices

4.0 Strategy and Sustainable Competitive Advantage

5.0 Strategic Thinking

6.0 Data Warehousing and Strategic Thinking

7.0 Data Warehousing as a Rising Tide Strategy

8.0 Data Warehousing and Strategic Paradox

9.0 Data Warehousing and Manueuverability

10.0 Conclusion



Executive Overview


This white paper discusses the relationship between data warehousing, and strategy and strategic thinking. As background, business application types and data architecture are also discussed.

Topics Addressed


Our strategic analysis of data warehousing is as follows:

1.0 Introduction

When your strategy is deep and far reaching, then what you gain by your calculations is much, so you can win before you even fight. When your strategic thinking is shallow and near-sighted, then what you gain by your calculations is little, so you lose before you do battle. Much strategy prevails over little strategy, so those with no strategy can only be defeated. So it is said that victorious warriors win first and then go to war, while defeated warriors go to war first and then seek to win. (1)

It is obvious to anyone that culls through the voluminous information technology (I/T) literature, attends industry seminars, user group meetings or expositions, reads the ever accelerating new product announcements of I/T vendors, or listens to the advice of industry gurus and analysts, that there are four subjects that overwhelmingly dominate I/T industry attention as we move into the late 1990s:

The fundamental strategic logic of the first three are fairly well understood.

Table 1. Four key subjectsm dominate I/T landscape



Strategic Logic

I/T processing architecture



Electronic commerce

The Internet


Developer productivity



Knowledge and learning

Data warehousing


Data warehousing is the last of the four dominant trends but the underlying strategic logic has not been well articulated. As shown in Table 2, numerous companies in multiple industries are committing to and achieving tremendous benefits from data warehousing. Typical reasons given are faster and better decision making, push down employee empowerment, leveraging of operational data, scenario analysis, customer intimacy, analysis of anything and everything, and process control. These are certainly good reasons but are they adequate motivations to maximize the return on data warehousing? What is the underlying deep and compelling logic of data warehousing? How are we to understand data warehousing strategically so that we may fully optimize the investment?

Table 2. Various Industry Uses of Data Warehousing (sample industries).

Leading Edge Uses of Data Warehousing Representative Companies
Analysis of scanner check-out data
Tracking, analysis, and tuning of sales promotions and coupons
Inventory analysis and re-deployment
Price reduction modeling to "move" product
Negotiating leverage with suppliers
Frequent buyer program management
Profitability analysis
Product selections for granular market segmentation
Osco/Savon Drugs
Casino Supermarkets
W. H. Smith Books
Otto Versand Mail Order
Analysis of:
  • call volumes
  • equipment sales
  • customer profitability
  • costs
  • inventory

Purchasing leverage with suppliers
Frequent buyer program management

British Telecom
Telestra Australia
Telecom Ireland
Telecom Italia
Banking and Finance
Relationship banking
Cross segment marketing
Risk and credit analysis
Merger and acquisition analysis
Customer Profiles
Branch Performance
Bank of America
Merrill Lynch

This white paper will attempt to answer those questions. We will demonstrate that to understand data warehousing strategically, we must first understand strategy and strategic thinking. Once we understand those concepts, the strategic logic of data warehousing becomes clear and the path to an optimum implementation emerges. We will demonstrate that data warehousing is best appreciated as a realization of the deep and far reaching strategic idea of a rising tide strategy. The maximum return from data warehousing occurs when it is conceptualized, implemented, managed, and evolved within that context. Before doing that, however, it is beneficial to level set and review the data architecture origins of data warehousing.

2.0 A Data Architecture Perspective of Data Warehousing

The business processes of the enterprise are automated in the form of business applications that collectively compose the business systems portfolio. Companies have innumerable processes requiring I/T capability. Typical applications include order realization, customer service, contract administration, product development, benefits administration, staffing, budget development and monitoring, and information sharing (E-mail, conferencing, team support, etc.). The list is seemingly endless.

As illustrated in Figure 1, the business practices can generally be partitioned into two broad classifications:

  • The Business Applications: Those business applications that operationally "run" the business on a daily, weekly, monthly, etc. basis. When they cease to run, the business literally stops operating.
  • The About-the-Business Applications: Those applications that analyze the business. They aid both in interpreting what has occurred and deciding prudent actions for the future. When they cease to run, there is no immediate, obvious business failure but their utility is critical to the long-term competitiveness of the enterprise. Data warehousing embraces these types of applications.


"The Business Applications" are often called On-line Transaction Processing Systems (OLTP) or Operations Support Systems (OSS) and have the following general attributes:

  • "Heavy duty" production transaction record keeping systems that directly support the execution of a business practice.
  • May have to provide 24 hour by 7 day service and have carefully managed outage periods.
  • Database integrity and availability are crucial. The database must be recoverable from a failure within a guaranteed restoration period.
  • Performance is measurable in terms of transactions per (sub)second and/or user response time (x % of the transactions must respond in less than y (sub)seconds).
  • Structured applications with both pre-defined transactions and pre-defined transaction flows. The execution paths are predictable.
  • Database schemas are quite complex in terms of number of entities and number of inter-entity relationships. The inter-entity relationships impose multiple dependency, referential integrity, and validation requirements on the system.
  • Elaborate editing of input transactions is required to ensure and maintain database quality.
  • Security of access is important.
  • Sophisticated dialogue management is required.
  • User ergonomics to maximize productivity is a big concern.
  • Often large applications by the metrics of database size, total number of users, total number of concurrent users, and types of transactions.
  • Extensive off-prime time batch updating and reporting must be completed within a tight batch window.

Business Performance is the payoff advantage from these types of applications. Consequently, they will often contain exception monitoring subsystems used to advise management when an abnormal situation has occurred or an undesirable pattern is developing.

"The About-The-Business Applications" are often called Information Center Applications (decision support, modeling, information retrieval, ad-hoc reporting/analysis, what-if, data warehouses, etc.). This class of applications are retrieval/analysis/report/information sharing oriented. The data sources are often triggered extracts from OLTP or OSS applications or public information services. These applications have the following attributes:

  • Static (low update) databases.
  • Periodic refresh of the database from the source OLTP or OSS applications.
  • Extended time accumulation of data.
  • Simple restore/recovery.
  • Facilities to enable the "canning" of repetitive user requests.
  • Flexible import/export facilities.
  • They enable information sharing.
  • An analyst workbench that may include graphics tools, report writers, statistical modeling tools, spreadsheets, simulators, query languages, word processors, desktop publishing, project management software, artificial intelligent tools, data mining tools, information discovery tools, application development tools, and information exchange tools.

Better knowledge about the business and the development of superior business strategies is the payoff from this class of applications.

Applications are often continuous in capability and their functionality may not be discrete. Though an application will naturally migrate to one classification as its primary definer, it may have subsystems that are more aligned to the other type. Both "The Business Applications" and "The About-the-Business Applications" with all the endless variations are built on top of a data architecture and a processing architecture that jointly compose the I/T architecture for the business. (More and more, the emerging client/server architecture that is replacing the aging host centric processing architecture.)

Key Points
  1. Applications can be divided into those that run the business and those that analyze the business.
  2. The payoff of Business Applications (OLTP/OSS)-those that run the business-is business performance.
  3. The payoff of About-the-Business Applications (decision support, etc.) is better knowledge about the business and development of superior business strategies.

3.0 Data Architecture Choices

Business applications are performed by programs that collect, create, modify, retrieve, and delete data, and programs that use, analyze, summarize, extract, or in other ways manipulate data. Data is the common thread that ties together the extensive corporate application portfolio. Data, as it is transformed into information as it flows between users, can provide current advantage in the form of superior operational systems and future advantage in the form of superior analysis for planning. How the data asset is positioned is of vital long-term importance to the health of the enterprise.

Increasingly, corporations are recognizing that the purposeful management and leveraging of the corporate data asset must take on increased attention in the 1990s. In the 1970s, management attention was focused on hardware cost. During the 1980s, management's attention shifted to software as both a growing element of the I/T cost structure and the source of advantageous applications. In the 1990s, management will increasingly focus on data exploitation as the path to improved customer service, cooperation with suppliers, and the creation of new barriers for competitors.

Data Engineering theory (Data Engineering is the discipline that studies how to model, analyze, and design data for maximum utility) indicates that there are four generic data environments on which to build business applications. For a variety of technical and architectural reasons they are not equally advantageous. 


Dedicated File Architecture: Each application has a set of privately designed files. The data structure is tightly embedded with the application and the data files are owned by the application.

Closed Database Architecture: A database management system (DBMS) is used to provide technological advantage over file systems (exemplary advantages are views, security, atomicity, locking, recovery, etc.) but distinct, separate, and independent databases are still designed for each application. The DBMS is used as a private and powerful file system with the data remaining the proprietary property of the application. As is true with the Dedicated File Architecture, there is a high degree of data redundancy and frequently poor data administration. "Spaghetti-like" interfaces move data between the Closed Databases. Since these interfaces often have to convert, edit, and/or restructure data as it moves between proprietary definitions, they are often called "data scrubbers" or translators. "Data scrubbers" do not add value; they compensate for inadequate data administration.

Subject Database Architecture: Data is analyzed, modeled, structured, and stored, based on its own internal attributes, independent of any specific application. Data is administered as a shareable resource through a data administration function that owns the data for all potential users. Extensive sharing of data occurs through application sensitive views. Subject Databases run the day-to-day operations of the enterprise.

Decision Support Database Architecture: Databases are constructed for quick searching, retrieval, ad-hoc queries, and ease of use. The data is normally a periodic extract from a Subject Database or public information service. To minimize the number of extracts and to insure time/content consistent data, data is shared at the corporate, departmental and local levels-not extracted per user. Data definitions are kept synchronized with the source databases to insure the ability to inter-relate data from multiple subject database extracts without the need to resort to "data scrubbers." Decision Support Databases are used to analyze the enterprise.

The recommended data architecture is a mixture of the Subject Database and Decision Support Database environments. Subject Databases to support "The Business Applications" and Decision Support Databases to enable "The About The Business Applications." This dual database architecture is most advantageous for the following reasons:

  • Data quality, accessibility and sharing are maximized.
  • Unplanned data redundancy is eliminated.
  • Inter-application interaction is simplified.
  • Data standardization is assured.
  • Application life cycle productivity is maximized.
  • Development of new applications is accelerated through the reuse of in-place data resource.
  • Creation of centers of excellence in data management to protect the data asset is enabled.


Some data architects would prefer a single database environment where both OLTP and decision support needs are fulfilled concurrently against a single database and, thereby, eliminate duplication and extraction altogether. It is our assessment that the two user communities have fundamentally different and incompatible requirements that preclude this option. Table 3 summarizes the major points of conflict. These dichotomies present a formidable barrier to a single database environment.

Operational Environment Subject Databases The Business Applications

Data Warehouse Environment Decision Support Databases The About-The-Business Applications

Stores very detailed data
Stores entire subject database
Requires to the last transaction accuracy
Disciplined, highly structured, and planned transactions
Optimized for performance, efficiency and availability
Maintains rigorous data structures
Runs the business
Emphasizes needs of all potential users
Short-running and engineered transactions
Stores detailed and/or summarized data
Stores only data of interest
Requires "as of" accuracy
Unstructured and ad-hoc transactions
Optimized for flexibility and ease of use
Supports dynamic data structures
Analyzes the business
Emphasizes needs of each user
Potentially long running and dynamically defined transactions

Table 3. Subject Database and Decision Support Database Dichotomies. (Source: Implementing Client/Server Computing, Bernard H. Boar, Mc-Graw Hill, 1993)

When routine access of operational databases is given to decision support users, major problems can occur:

  • Performance: The unpredictable nature of the ad-hoc queries disrupts the requirement of predictable response time for operational systems. Predictable and guaranteed performance cannot be engineered into the system design if the transactions are not predictable.
  • Data Retention: The decision support applications often require longer retention of data for cumulative analysis than the operational systems, which only need it for the active business practice cycle. The growth in the size of the database can negatively impact performance, integrity, and the ability to meet any recoverability time constraints.
  • Logical Reasoning: Since the database is dynamically changing with each transaction, information queries are non-repeatable and chained queries do not necessarily operate on the same set of data. Deductive reasoning against a stable data store is not feasible. A temporal database that maintains a time view of the data could resolve this problem but creates a new set of issues unrelated to the pressing operational needs.

We may summarize our views on data architecture as follows:

  • There are four generic ways to design and organize the corporation's data asset.
  • They are not equal.
  • A combination of the Subject Database and Decision Support Database environments is most advantageous. This is called the Dual Database Environment.
  • A single database environment from which both operational and decision support requirements are met is desirable but plagued by many practical problems that make it infeasable.

Data warehousing is the modern term used to describe a mature and robust decision support database environment consistent with the model in Figure 3. It implies that decision support databases have been carefully selected and designed to provide maximum utility and that a powerful set of tools have been provided to users to maximize their ability to leverage and exploit the captured operational data.

While data warehouses today are primarily single, physical databases with staged replication to departmental and personal databases, it should be anticipated that with the emergence of industrial grade distributed database management technology, data warehouses will become logical databases that transcend physically distributed decision support databases.

Key Points
  1. There are four generic data environments:
    • File-Data Architecture
    • Close Database Architecture
    • Subject Database Architecture
    • Decision-Support Database Architecture
  2. Major problems occur when routine access to operational database is given to decision support users.
  3. The recommended data architecture-the Dual Database Environment-is a mixture of the Subject Database and Decision Support Database environments.

4.0 Strategy and Sustainable Competitive Advantage

From an academic perspective, the purpose of strategic planning is to provide direction, concentration of effort (focus), constancy of purpose (perseverance) and flexibility (adaptability) as a business relentlessly strives to improve its position in all strategic areas.

Strategy is mathematics and is equal to direction plus focus plus perseverance plus adaptability. At a very pragmatic level, strategy can be understood as finding a way short (the shorter the better) of brute force to accomplish one's ends. Strategy should be comprehended as the movement from a current position to a more desirable future position but with economies of time, effort, cost, or resource utilization. There is neither elegance nor insight in brute force but there must be both in strategy.

The eternal struggle of business is the struggle for advantage. The one with more advantage wins, the one with less advantage loses. The purpose of strategy is the building, compounding, and sustaining of advantage. Consequently, business strategy must focus on:

  • Building new advantages, which increase customer satisfaction and create distance from competitors.
  • Maintaining existing advantages, which increase customer satisfaction and create distance from competitors, and
  • Compressing or eliminating the advantages of competitors.

The lone purpose of business strategy is the nurturing of advantage. Advantage can be realized through infinite combinations of strategic moves.

While there are many ways to build advantage, all advantages can be classified into five generic categories:

  • Cost advantage: the advantage results in being able to provide products/services more cheaply.
  • Value-added advantage: the advantage creates a product/service that offers some highly desirable feature/functionality.
  • Focus advantage: the advantage more tightly meets the explicit needs of a particular customer.
  • Speed advantage: the advantage permits you to service customer needs quicker than others.
  • Maneuverability advantage: the advantage permits you to adapt to changing requirements more quickly than others. Being maneuverable permits you to constantly refresh the other types of advantage. It is the only advantage that your competitors can't take from you.

So you win by being cheaper, more unique, more focused, faster, or more adaptable than your competitors in serving your customers. At a minimum, your advantages must satisfy your customers and, at best, delight or excite them. Sun Tzu said:
"The one with many strategic factors on his side wins . . . The one with few strategic factors on his side loses. In this way, I can tell who will win and who will lose." (2)

If an action does not lead to the development of an advantage, it is of no strategic interest. The struggle always has been, and remains, the perpetual struggle for competitive advantage.

The culmination of advantage is the building of a set of sustainable competitive advantages (SCA) for the business. An SCA is a resource, capability, asset, process, etc. that provides the enterprise with a distinct attraction to its customers and a unique advantage over its competitors.

An SCA has seven attributes that are itemized in Table 4. Without a well designed set of sustainable competitive advantages, a business engages in a frantic life and death struggle for marketplace survival; after all, there is no compelling reason for consumers to choose that company's products or services.

SCA Attribute
Customer perception
SCA linkage
Customer perceives a consistent difference in one or more key buying factors
Difference in customer perception is directly attributable to the SCA
Both customer's perception and the SCA linkage are durable over an extended time period
Mechanics/details of the SCA are difficult to understand by competitors
Competitor has unequal access to the required resources to mimic the SCA
Competitor would have extreme difficulty reproducing the SCA
SCA requires difficult and subtle coordination of multiple resources

Table 4: Sustainable Competitive Advantage (SCA).

The basic problem, of course, is to determine from where advantages emanate? How do we discover that which will be elegant and insightful so that we may win without using mindless brute force? The answer is that we postulate, analyze, and select strategic actions through strategic thinking.

Key Points
  1. The purpose of strategy is to build advantage.
  2. The culmination of advantage is the creation of sustainable competitive advantage (SCA).
  3. Those with more advantage win; those with less advantage lose.
  4. Through strategic thinking, we postulate, analyze and select strategic action.

5.0 Strategic Thinking

Figure 4 illustrates three dimensions to thinking:

  • Time: we think across time in the past, the present, and the future.
  • Substance: we think between the concrete and the abstract.
  • Cardinality: we may think about one or more issues concurrently.

Most of the time, most of us, as illustrated in Figure 4, engage in mundane thinking to solve our daily problems. All we need to do, to meet our needs, is to think about one issue, in the present, and in the concrete, at a time. Anything more sophisticated would be overkill. This thinking pattern that we use to solve our daily problems is also referred to as point thinking because all our problem solving efforts converge on one point.

Figure 5 illustrates strategic thinking. A strategist uses the same dimensions as the mundane thinker but thinks dynamically within the thought bubble defined by those three dimensions. A strategist concurrently thinks about many issues in multiple dimensions at many levels of abstraction and detail over time (past, present, and future). Strategic thinking is a creative and dynamic synthesis that is the exact opposite of point thinking.

When looking at a problem, a strategist thinks about it in terms of certain established strategic ideas or themes. While new perspectives can always be developed, time and experience have demonstrated the power of looking at problems through certain enduring and tested strategic lenses. The following is a partial and representative list of powerful strategic ideas (see appendix for definitions):

  • Assessment
  • Alliances
  • Structure
  • Indirection
  • Speed
  • Strategic conflict
  • Self invincibility
  • Prescience
  • Formlessness
  • Positioning
  • Commitment
  • Maneuver
  • Leadership
  • Efficiency
  • Coordination
  • Discipline
  • Psychological conflict
  • Foreknowledge
  • Love of the people
  • Learning

All these themes, not surprisingly, converge on one grand strategic idea-the building, sustaining, and extending of advantage.

So a strategic thinker:

  • Chooses a problem (or set of problems).
  • Samples strategic ideas (singularly and simultaneously).
  • Thinks about solving the problem(s) by applying the strategic ideas within the Figure 5 bubble. This demands intuitive, holistic, dynamic and abstract thinking.

Since the combinations of strategic ideas is inexhaustible, strategic thinking is a very powerful way to develop insight about problems and solve them in novel, unanticipated, and creative ways. It is from this kind of thinking that advantage is born and nourished.

Key Points
  1. There are three dimensions to thinking:
    • Time
    • Substance
    • Cardinality
  2. Most of the time we engage in mundane thinking. We need to process issues one at a time.
  3. Strategic thinking requires us to think dynamically across all dimensions.
  4. All strategic ideas encourage one grand strategic idea-the building, sustaining, and extending of advantage.

6.0 Data Warehousing and Strategic Thinking

To understand data warehousing strategically, we should now appreciate that it is the consequence of strategic thinking, which means that it is the product (result) of some combination of strategic ideas. In this case, we must reverse-engineer strategic thinking. We know the result of the strategic thinking process, data warehousing, but what are the strategic ideas from which it emanated?

Data warehousing is an unusually rich strategic action. A strong case can be made that it is the product of numerous strategic ideas. If we argue, however, that data warehousing is the product of everything, we cloud our analysis. What are the key ideas that it realizes?

In Miyamoto Musashi's classical book on strategy, The Five Rings, he teaches that all weapons have a distinctive spirit. It is the challenge of a warrior to understand that spirit, master it, and become in harmony with it. In that way, there is perfect integration between the warrior and his weapon.

When I think about data warehousing's distinctive spirit, I think about time. More than any other strategic theme, I believe that what data warehousing does is permit one to compete across time. One competes across time as follows:

  • Past: One must learn from the past so that the best lessons can be learned and deployed, and mistakes not repeated.
  • Present: One must be able to quickly analyze current events so that one can maneuver in real-time to adapt to them.
  • Future: One must have prescience about the future so that opportunistic investments and actions can be taken now to position for an even better tomorrow. Foreknowledge is the source of extraordinary success.

So the strategic ideas from which data warehousing emanates are the time-oriented ones:

  • Learning: One must continually learn and adapt based on that learning. All progress includes making mistakes but the same mistakes should not be made twice.
  • Maneuverability: This skill requires finding the best way to go. Forces must be able to maneuver to exploit gaps.
  • Prescience: The leadership must have deep and far-reaching foresight. Leaders must see and know what others do not. The height of prescience is to see the formless and act on it.
  • Foreknowledge: All matters require competitive intelligence. Nothing is more important than understanding the plans of your opponents and the needs of your customers.

These four strategic ideas are not just any set of strategic ideas; they are uniquely important. They are uniquely important because they overlay the time dimension of strategic thinking (Figures 4 and 5, lateral axis). Time is one of the three fundamental dimensions of strategic thought and data warehousing enables one to directly think in that dimension. Data warehousing is, therefore, not just another good result of strategic thinking, it is a very special result because it provides the tools to permit an organization, through the action of building data warehouses, to compete in the primary strategic dimension of time.

By giving your employees robust access to information about customers, markets, suppliers, financial results et al., you enable them to strategically learn from the past, adapt in the present, and position for the future. To the non-strategist, the mundane thinker, data warehousing is about spending (wasting?) money to let employees play with data. To the strategist, data warehousing is about winning the endless battle against time.

Key Points
  1. Data warehousing enables one to directly think in the dimension of time-one of the three fundamental dimensions of strategic thought.
  2. Data warehousing emanates from the time-oriented strategic ideas of learning, manueverability, prescience, and foreknowledge.
  3. Data warehousing permits one to compete across time. It allows one to learn from the past, adapt to the present, and position for the future.

7.0 Data Warehousing as a Rising-Tide Strategy

There is a special name given to certain strategic actions. This name is a rising-tide strategy. As the tide comes in, it raises all the ships in the harbor. The tide does not discriminate; it raises the dingy, the canoe, the yacht, the warship, and the ocean liner. The single action of the incoming tide raises all ships. All of them, by no action of their own, enjoy the effect of the rising tide.

A rising tide symbolizes the strategic notion of leverage. Leverage is what gives strategy muscle. Leverage means that you do one thing but multiple benefits derive from it. Typical words used to describe leveraged events are reuse, sharing, economies of scale, economies of scope, cascading, cloning, duplicating, layering, amplifying, and multiplying. Mathematically, the value of leverage equals individual payoff times instances of payoff.

Data warehousing supports a rising-tide strategy. By the single action of making information readily available to employees, we can bring benefits to all the employees as they go about their daily work. Hundreds of times everyday, employees solve problems, make decisions, control processes, develop insights, share information, relate to others, and attempt to influence others. All of these actions can be made more efficient and effective if better information is made available in a timely manner at the point of need. This is called informating your business. Data warehousing informates the business.

Rising tide strategies are cherished strategies. They are cherished because of the multiplier effect. So while it is excellent that data warehousing permits you to compete in time, what is remarkable about data warehousing is that it can permit all of your employees to compete across time. The single act of making information available creates distinct strategic leverage for the business. You have the ability to further increase your leverage by increasing the amount of data available and the number of employees to whom it is made accessible. Data warehousing is an awesomely powerful rising tide strategy. A strategy that is most effective when the tide is kept as high as possible and raises as many ships as possible.

Key Points
  1. Data warehousing, a "rising-tide" strategy, gives you leverage by elevating the acumen of all employees.
  2. You get leverage by doing one thing (making information available to employees through data warehousing), and deriving multiple benefits from it (everyday, every employee solves problems, makes decisions, etc.).

8.0 Data Warehousing and Strategic Paradox

In conducting our daily lives, purposeful opposition to our routine efforts does not exist. No one has the goal to deliberately and continually thwart our actions. We use what is called linear logic to solve our problems. Linear logic consists of using common sense, deductive/inductive reasoning, and concern for economies of time, cost, and effort to problem solve. One is commonly criticized, for taking a circuitous route when a more direct one is available. Daily life applauds the logical, the economic, and the application of common sense.

Business strategy, to the contrary, is executed against a background of hyper-conflict and intelligent counter-measures. Able and motivated competitors purposefully and energetically attempt to foil your ambition. Because of this excessive state of conflict, many strategic actions demonstrate a surprising paradoxical logic.

There are two types of strategic paradox:

  • Coming together of opposites: A linear logic action or state evolves into a reversal of itself ("A" becomes "not A") or "you can have too much of a good thing". An example of this is that an advantage, unrefreshed, becomes a disadvantage. This paradox occurs because conflict causes an inevitable reversal due to the complacency of the winner and the hunger of the loser. While the current winner gloats in their success, this same success lulls them into a false sense of permanent security while it paradoxically stimulates the current losers to tax their ingenuity to overcome it.
  • Reversal of opposites: To accomplish your objectives, do the reverse of what linear logic would dictate. So, "If you wish peace, prepare for war", to accomplish "A", do the set of actions to accomplish "not A", or your primary competitor should be yourself. This occurs because the nature of conflict reverses normal linear logic. While taking a long, dangerous, and circuitous route is bad logic under daily circumstances, in a state of conflict (i.e. war), this bad logic is good logic exactly because it is bad logic (it is less likely to be defended). The logic of conflict is often in total opposition to the logic of daily life.

Conflict causes strategic paradox to occur, bad logic becomes good logic exactly because it is bad logic, and the able strategist must learn to think and act paradoxically. Figure 6 updates our illustration of strategic thinking to extend the thought bubble to a fourth dimension of linear logic and paradoxical thinking. Paradoxically, strategists often have to recommend, to an unbelieving and astonished audience, that they should take actions that are directly contrary to routine business sense.

An example of reversal of opposites thinking is illustrated by the Kano Methodology: the Kano Methodology is an analytical method used to stimulate strategic thinking. The logic of Kano suggests that candidate strategic actions be divided into three types:

  • Threshold actions: for every dollar invested in this type of action, customer satisfaction increases but gradually reaches a point where less than a dollar of satisfaction is achieved for each dollar of investment. It therefore doesn't make sense to invest beyond the break even point.
  • Performance actions: for every dollar invested in this type of action, there is a constant positive increase in customer satisfaction in excess of your investment. It pays to continue to invest in these actions.
  • Excitement actions: for every additional dollar invested in this type of action, there is an exponential increase in customer satisfaction. These are prized actions and are the best actions to invest in.

While this is solid linear thinking, the true brilliance of the methodology occurs next through paradoxical thinking. What is suggested is that after one has developed the excitement capability, that it be presented to the customer as a threshold attribute, i.e., paradoxically, the truly exceptional is most exceptional when it is the ordinary. What this does is position your capability as minimum ante to play the game. A customer may be willing to forgo the exceptional but will minimally expect and demand the ordinary. Since you can do it and your competitors can't, you create strategic distance between yourself and your competitors. While they struggle to do the exceptional as the norm, you raise the tempo of the game and work on converting another excitement attribute to a threshold attribute and ad infinitum. So the great insight of the Kano Methodology is not the linear thinking of excitement attributes, where most people would have stopped, but the recognition that maximum value and market disruption occurs when excitement capabilities are presented, paradoxically, as the ordinary (reversal of opposites).

Data warehousing also needs to be understood in terms of reversal of opposites. As shown in Figure 8 and characterized in Table 5, we are moving from the industrial society to the knowledge society (3). Knowledge becomes the premier weapon of advantage and business-to-business conflict migrates from competing on industrial age economies of scale to information technology fighting (I/T fighting). Key strategic information technologies such as client/server computing (4) and data warehousing, therefore, become subject to strategic paradox in their implementations.




  Nomadic Society Agrarian Society Mercantile Society Industrial Society Knowledge Society
Dominant Technology Crude Hunting Tools Manual Farm Equipment Sailing Ships Machines The Computer
Icon The Hunting Club The Plow The Great Sailing Boat The Gasoline Engine The Microprocessor
Science Superstition Civil Engineering Marine Engineering Mechanical Engineering Computer Science
Output Slaughtered Animals Farm Food Trade Mass Consumer Goods Knowledge
Energy Source Fire Animals Wind Fossil Fuels The Mind
Basis of Wealth Hunting Ability of Tribe Farm Land Sailing Ships Land, Labor, and Capital Information
What Makes The Difference Courage Muscle Fleets Economies of Scale Intelligence
Defining Work Hunter Farmer Merchant Laborer Knowledge Worker
What Are You Doing? Surviving Eating Trading Automating Informating
Organizational Form Tribe Feudalism Trading House Hierarchical Corporation Networks
Means of Logistics People Animals Ships Airlines, Trains, Ships, & Trucks Network
Where is the Marketplace? Person-to-Person Village Square Town Stores Shopping Malls Cyberspace (The Marketspace)

Table 5. Comparative Ages. Knowledge is becoming the premier weapon of advantage and information technology is its basis.

The strategic paradox of data warehousing is that the strategist concerned about cost does not seek to use just enough means but an excess (5)of means to accomplish her end. Data warehousing achieves, paradoxically, its greatest value for the business when it is used in excess.

It is typical to observe customer teams engage in extensive and exhaustive cost justifications exercises (net present value, return on investment, cost/benefit justification, payback period, etc.) to convince cost conscious decision makers to approve data warehousing expenditures for a predetermined fixed set of uses. Their actions are linear logic, understandable but inappropriate because of reversal of opposites. When the weaponry shifts to I/T fighting, data warehousing becomes subject to strategic paradox and must be managed as such to achieve optimum results.

Consider a military commander who needs to engage his enemy. If he uses linear logic and deploys just enough resources, he will win but it will be an expensive (Pyrrhic) victory. If he applies a force far in excess of his opponent, he will achieve his ends with minor causalities. All the downstream costs of battle will be avoided (damaged weapons, confusion, wounded/killed soldiers, etc.) So at the point of conflict, the efficient commander does not seek to use just enough, but applies far in excess. He does not use accounting logic that holds in non-conflict situations but applies paradoxical logic, which rules at the point of battle.

In the information age, data warehousing is a key strategic weapon. As we have discussed, not only does it let you compete across time, it is a rising tide strategy that can elevate the strategic acumen of all employees. The attempt to cost justify such powerful weaponry in terms of net present value misses the whole point. When one invests in a national highway infrastructure, one does not cost justify or attempt to anticipate each event of commerce that will transverse the highway. Rather one has the strategic vision to understand that the strategic action is putting in place the enabling infrastructure and then you permit the marketplace to take care of the rest.

I believe the same is true with data warehousing. Once the infrastructure is in place, you have raised the tide for all employees. Your initial justifications are constrained by the limits of your imagination. How the data warehouse will ultimately be beneficial will emerge as your employees use it to respond to the dynamics of the marketplace and is exploited by their creativity. As they respond by using the excessive data warehouse, they will experience the same phenomena as the military commander. Though they will be spending in excess at the point of conflict, it will ultimately prove to be much cheaper because all the downstream business processes will be more efficient and effective. So while cost consciousness is always in vogue and a specific set of business needs to be addressed is welcomed, the absence of a priori adequate tactical savings should not dissuade you from the deep and far reaching strategic merits of an encompassing data warehousing initiative.

Unquestionably, it is easier to accept this paradox with regard to the military commander than data warehousing. This is because of the differences between cause and effect in the two situations. In the military situation, the cause and effect are tightly coupled in time and space. One can immediately see the results of the excess and correlate the success to that excess. In the data warehousing situation, the cause and effect are often dispersed across wide gaps of time and space. The use of excess data warehousing will have the desired effect but it will occur, perhaps, months later at a remote branch office.

The strategist must take solace in that she is engaged in deep and far reaching strategy, not tactical, short-term decisions. Things that are readily cost justifiable are things that are obvious and known to all. Strategic thinking is involved in seeing victory before it exists. How can anyone cost-justify the formless? (6) While cost conscious accounting methods are appropriate for sustaining wealth, strategic vision has always been the required ingredient to create it. (7)

So while it stretches and strains your business common sense, I believe that strategic paradox is an important dimension of the spirit of data warehousing. Ultimately, experience will prove that those who use it in excess, will achieve greater benefits then those who attempt to rigorously cost justify and constrain its deployment. They will learn that their approach is mathematically correct but strategically sterile. You do not want a rising tide, you want a permanent high tide of information with which you can win the battles for the past, the present, and the future.

Use data warehousing to position yourself so that you will surely win, prevailing over those who have already lost. Win through intelligence, not brute force. Cost justification is supposed to be a tool of strategy; not the reverse. Strategic paradox alters the rules; understand and justify data warehousing strategically.

Key Points
  1. Linear logic can be used to solve problems in an environment where purposeful opposition to one's efforts doesn't exist.
  2. Business strategy is executed against a background of hyper-conflict and intelligent counter measures. Conflict causes strategic paradox to occur.
  3. Linear logic and paradoxical thinking are the fourth dimension of strategic thinking.
  4. Key strategic information technologies, such as data warehousing, are subject to strategic paradox in their implementations.
  5. Data warehousing, should be used in excess, not rigorously cost justified and constrained in its deployment.

9.0 Data Warehousing and Maneuverability

Businesses must always be prepared to respond creatively to marketplace dynamics. The normal marketplace state is constant upheaval. It is, therefore, obvious that those companies that can navigate with greater alacrity, speed, and dexterity have a distinct advantage. In fact, with speed, dexterity, and alacrity as your allies, you can further exaggerate your advantage by deliberately promoting marketplace mayhem to the benefit of your customers and the detriment of your competitors.

Companies take two basic roles in engaging the marketplace:

  1. Attrition Fighter: Marketplace supremacy is achieved by taking a strong but fixed position and "slugging it out" for marketplace dominance. Through confrontational marketplace battles and by concentrating superior assets against inferior foes, you win by exhausting the opponent's will and ability to compete. The optimum situation is to win in a few decisive battles and, by virtue of your proven superior power, deter prospective competitors from stepping into your marketplace and challenging you. An attrition fighter, like a classical heavy-weight boxer, wins by brute superiority of assets and the ability to deliver a crushing and decisive knockout blow.
  2. Maneuver Fighter: Marketplace superiority is achieved by staying in a state of perpetual motion. A maneuver fighter continually looks for opportunistic gaps in the marketplace and swiftly moves assets to maximize the opportunity. The maneuver fighter attempts to continually disrupt the marketplace by changing the rules of competition. It is through the actions of movement that advantage is gained. Advantage is best understood as a succession of overlapping temporary advantages rather than a set of sustainable competitive advantages. The maneuver fighter expects that the maneuver process will cause friction and disruption in the ability of opponents to respond. At best, this will eventually lead to a collapse in opponent's business systems. A maneuver fighter uses speed, flexibility, opportunism, and dexterity to chip away at the edges of the marketplace until the entire marketplace has been taken. In doing so, unlike the attrition fighter, a deliberate attempt is made to avoid expensive, time consuming, and exhausting confrontations with competitors. You win by artfulness and indirection-not by brute force. The great heavy-weight fighter, Mohammed Ali, summed up the defining style of the maneuver fighter when he said "Float like a butterfly, sting like a bee."

There is now a global and fundamental marketplace transition occurring from national wars of attrition to global wars of maneuver and successful companies must adapt to this shift.

Sun Tzu described the eternal character of maneuver warfare when he said:
"Go forth where they do not expect it; attack where they are unprepared." (8)

As advantageous as this is, it is not easy to do. It demands intelligence. Intelligence is both the sense of being smart and having knowledge about your competitors and customers. A maneuver fighter must continually zig and zag. The problem is to decide where and when to zig and zag. Done well, the maneuver fighter will delight customers and drive competitors crazy. Done poorly, the maneuver fighter will inadvertently zig or zag directly into the attrition fighter who will crush her.

Data warehousing is a prerequisite to a maneuver strategy. An infrastructure of knowledge must be available to engage in maneuver fighting. With a solid infrastructure of accessible information that can be manipulated as demanded by swirling times and circumstances, the maneuver fighter can make calculated judgments as to where and when to move. Without such knowledge, a maneuver fighter will make one guess too many and be cornered by the behemoth attrition competitor.

An instructive example of maneuver is happening in the retail industry. Historically, retailers engaged in push marketing where they purchased large volumes of an item from a supplier and then attempted to convince their customers to buy it. Retailers are now moving to pull marketing wherein they attempt to understand exactly what customers want to buy and provide a desired product assortment at ideal value points. The former doesn't require much knowledge about one's customers while the latter requires a great deal. The push retailer stands still and doesn't need much data while the pull retailer needs precise information to support continuous moving (zigging) and maneuvering (zagging) slightly ahead of customers.

So the final way to understand data warehousing strategically is to understand it as the necessary foundation for changing your business from being a slow and ponderous attrition fighter to an agile and quick maneuver fighter. Attrition fighters stand still. If you're going to stand still, of what value is knowledge to you? To the contrary, and as illustrated in Figure 9, a maneuver fighter is a business in constant motion. Maneuver fighters win through intelligence; not brute force. In this way, by virtue of knowledge-enabled maneuvering, you act sooner rather than later, you learn rather than repeat, you anticipate rather than react, you know rather than guess, you change rather than atrophy, you exceed rather than satisfy, and ultimately, through the accumulation of rathers, you win rather than lose.

Key Points
  1. Companies take two basic approaches to engaging the marketplace: the "attrition fighter" and the "maneuver fighter" approach.
  2. A global and fundamental marketplace transition from national wars of attrition to global wars of maneuver is occuring.
  3. In a constantly changing marketplace, a company with greater alacrity, speed and dexterity have a distinct advantage.
  4. Data warehousing is a prerequisite to maneuver strategy.

10.0 Conclusion

Our strategic analysis of data warehousing is as follows:

  • Strategy is about, and only about, building advantage. The business need to build, compound, and sustain advantage is the most fundamental and dominant business need and it is insatiable.
  • Advantage is built through deep and far reaching strategic thinking.
  • The strategic ideas that support data warehousing as a strategic initiative are learning, maneuverability, prescience, and foreknowledge. Data warehousing meets the fundamental business needs to compete in a superior manner across the elementary strategic dimension of time.
  • Data warehousing is a rare instance of a rising tide strategy. A rising tide strategy occurs when an action yields tremendous leverage. Data warehousing raises the ability of all employees to serve their customers and out-think their competitors.
  • Data warehousing achieves optimal results when one understands strategic paradox. When used as a weapon of conflict in the information age, data warehousing, paradoxically, achieves the greatest economies when it is applied in excess. One always wants the tide to be at high tide.
  • Data warehousing is a mandatory prerequisite to engage in a maneuver market style, which will be the dominant form of marketplace warfare as we begin the next millennium. To continually and abruptly change business direction requires both judgment and knowledge. Hard won experience provides the former and data warehousing provides the latter.

Companies enter markets to win profits, not to engage in expensive and endless pitched battles with competitors. Data warehousing is of strategic value because it enables us to achieve the former while deftly avoiding the latter. This is the strategic spirit in which we should understand, implement, and manage data warehousing.

A very powerful introduction to a data warehousing business case said the following:

"The strategic intent of our data warehousing strategy is to enable the business to win in the marketplace every day, with every customer, and with every purchase. By repositioning our operational data and combining it with selected foreign data, we will empower our employees so that they can routinely delight and excite our customers. Through our unique appreciation of the value of our data assets, we will elevate our data warehouses to the point where they become a compelling and durable contributor to the sustainable competitive advantage of the business. In this way, data warehousing will enable the business to impress its attitude on the marketplace and prevail over its competitors who have already lost."

Have you implemented data warehousing with such a cogent strategic intent? Sun Tzu said:

"Strategy is important to the nation-it is the ground of death and life, the path of survival and destruction, so it is imperative to examine it. There is a way of survival which helps and strengthens you; there is a way of destruction which pushes you into oblivion." (9)

Data warehousing is a path to survival that helps and strengthens you. Our strategic understanding of data warehousing is complete.


1 The Art of War, Sun Tzu, Translated by Thomas Cleary, Shambhala Publications, 1988. The Art of War is generally recognized as the greatest treatise ever written on strategy. There are at least seven current English translations available; all with variant translations of the original Chinese. My strategic thinking is strongly influenced by Sun Tzu's teachings.

2 Ibid.

3 There are a growing number of popular synonyms for labeling the new era. As far as I can tell, if you take any of the following adjectives (cyber, information, knowledge, digital, networked, or virtual) and associate them with any of the following nouns (society, era, age, corporation, enterprise, or economy), you derive 36 alternative names. While they all yield a slightly different spin, they are all redundant attempts to name the newest era illustrated in Figure 8 and defined in Table 5. 36 names are sufficient and the gurus will cease to differentiate themselves by creating the same thing. Reuse is a virtue.

4 The strategic paradox of client/server computing is "To concentrate computing power, you must disperse it." See Cost Effective Strategies for Client/Server Systems by Bernard H. Boar, John-Wiley and Sons, 1996, for a complete analysis.

5 Excess means much more than analytically justified by circumstances; it does not, however, mean wasteful or prodigious.

6 Sun Tzu said "Vision is seeing victory before it exists. This is the strategists path to strategic triumph."

7 In a recent magazine interview (Industry Week: 11/20/95), Bill Gates, CEO of Microsoft, described the qualities of leadership as "vision, innovation, long-term thinking, and risk-taking." Maximizing your return on data warehousing requires these qualities. Blind adherence to net present value or any other economic justification method was not mentioned by Mr. Gates in the article.

8 The Art of War, Sun Tzu

9 Ibid.

Appendix - Definitions of Strategic Ideas and Themes

Alliances It is necessary to develop a community of allies. The strength of the alliance is stronger than the simple additive strength of the individual members.
Assessment It is the responsibility of the leadership to fully assess the situation before committing its forces to conflict. Based on the assessment, an overarching strategy is adopted. Tactical maneuvers and adaptation take place within this strategy.
Commitment All must share the same commitment to the objectives. Forces that do not share the same aims lack the will and resolve to overcome the endless barriers to victory.
Coordination The problem of coordination is the problem of managing the many as though they were one. The few can defeat the many if they act with one purpose. When perfect coordination is achieved, one cannot distinguish the will of the individual from the will of the many nor the will of the many from the will of the individual.
Discipline There must be an impartial system of reward and punishment. Good leadership rewards the worthy.
Efficiency Extended confrontations drain the community of wealth. The best victories are swift and at the absolute minimum cost.
Foreknowledge All matters require competitive intelligence. Nothing is more important than understanding the plans of your opponents and the needs of your customers.
Formlessness The architecture of your advantages must be inscrutable. In this way, they do not know what to attack and what to defend.
Indirection Opponents should not be confronted directly. The maximum gain at the minimum expense is achieved by deception, surprise, and chipping away at the edges of the opponent. Exhaust them before you confront them.
Leadership The leadership is responsible for the well being of the community. Leaders must lay deep plans for what others do not foresee.
Learning One must continually learn and adapt based on that learning. All progress includes making mistakes but the same mistakes should not be made twice.
Love of the people True leadership is not a function of title but a function of the love of the people. Leaders must share the struggle of their forces. We must win the affection of our employees so that they will extend themselves for us.
Maneuver Maneuver means finding the best way to go. Forces must be able to maneuver to exploit gaps.
Positioning Forces must be pre-placed in winning positions by design. In this way, the actual confrontation is anti-climatic as you have already won by your superior positions.
Prescience The leadership must have deep and far reaching foresight. Leaders must see and know what others do not. The height of prescience is to see the formless and act on it.
Psychological conflict Victory and defeat first occur in the mind. Defeat your opponent psychologically so that even if they are intact, they lack the will to contest you.
Self invincibility The first order of business is to make oneself invincible. Before engaging in expansionist activities, be sure that you cannot be defeated at home.
Speed All matters require speed. Speed, alone, can compensate for numerous other shortcomings.
Strategic conflict The opponent is to be contested strategically. Attack and ruin their strategy, do not engage their advantages.
Structure Structure depends on strategy. Forces are to be structured in a manner that enables the realization of the strategy.

Bernard H. Boar Biography

Mr. Bernard (Bernie) Boar is an accomplished author in the field of information technology. He has four published books on the critical topics of I/T strategy and architecture entitled "Cost Effective Strategies for Client/Server Systems," "Practical Steps to Aligning Information Technology with Business Strategy," "The Art of Strategic Planning for Information Technology: Crafting Strategy for the 90s" and "Implementing Client/Server Computing: A Strategic Perspective." His book "Application Prototyping: A Requirements Definition Strategy for the 80s" is now recognized as the seminal work on the subject.

Bernie has been published in CIO Journal, Computerworld, Journal of Systems Management, Journal of Business Strategy, Auerbach and Systems Development. He is a frequent speaker at leading industry conferences on I/T strategy, I/T management and client/server computing. He holds an MBA from the Baruch Graduate School of Business and a B.Sc. in Computer Science from the City College of NY. Bernie is a member of both the Strategic Planning Society and the Strategic Management Society. He has provided guest lectures at American Graduate School for International Business and Cornell University.

Bernie serves as an information technology strategist, architect, and consultant for NCR Corporation in Lincroft, New Jersey.


1. Cost Effective Strategies for Client/Server Computing, John Wiley & Sons, 1995

2. The Art of Strategic Planning for Information Technology: Crafting Strategy for the 90s, Chinese Mandarin Edition, 1995

3. Practical Steps to Aligning Information Technology with Business Strategy: How to Build a Competitive Advantage, John Wiley & Sons, 1994

4. The Art of Strategic Planning for Information Technology: Crafting Strategy for the 90s, John Wiley & Sons, 1993

5. Implementing Client/Server Computing: A Strategic Perspective, McGraw Hill, 1993


1. Understanding Object Oriented Technology Strategically, The Enterprise Systems Journal, 8/95

2. The Origins of Strategy: The Teachings of Sun Tzu and Machiavelli, The Journal of Business Strategy, 2/95

3. Application Prototyping, Managing Systems Development, 1/95

4. I/T - Business Alignment: A Strategic Perspective, The Handbook of Business Strategy, 12/94

5. Logic and Information Technology: Separating Good Sense from Nonsense, The Journal of Systems Management, 5/94