Business Intelligence in Organizational Decision-Making

Introduction

Background

This study concerns the role of business intelligence (BI) output in the process of making decisions in modern organizations. Information Technology enthusiasts and specialists in the modern context state that data and facts lead to better decisions in organizations. Undeniably, the data revolution has evolved significantly over the last two decades. In fact, it is one of the most significant characteristics of modern organizations. Today, most practitioners and scholars in organizational management believe that organizational and managerial decision-making procedures are central to the gradual transformation of managerial practice from the traditional “instinct-driven system or art” to the more modernized and progressively data-driven method (Berstein, Grosof and Provost 234).

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Several factors have played a significant role in the development of the modern data-driven practice of organizational management. Among these factors, Information Technology and the emergence of the organization’s information systems are exceptional. The two factors have transformed organizational functions in all aspects, including customer relationship management (CRM), enterprise resource planning (ERP), transaction and accounting systems, and others.

Consequently, organizations in the modern context have access to unlimited volumes of data of various types, including demographics, sales, customer expectations and behavior, competition, market and economic trends, and measures of the market and industrial efficiencies. Arguably, Information Technology is almost ubiquitous in all organizations in the modern world.

Central to this kind of transformation is the idea of Business Intelligence. Through the development of systems, methods, and tools for enabling the processes of data collection, storage, retrieval, analysis, and dissemination of the vast quantity of data, Business Intelligence has played a significant role in the transformation of organizations. It has contributed to the shift from the traditional concept of intuition-driven art to the modern concept of data-driven science of management. The scientific method of management is supported by business intelligence by enabling managers and organizational leaders to gather, store, and analyze data.

Currently, Business Intelligence systems and applications have enabled managers and leaders to involve an easy and systematic way of gathering empirical data over time with an aim of analyzing and the testing hypothesis that lead to effective and strategic organizational decisions. This is a scientific approach to organizational management. It has contributed to the increasing popularity of Business Intelligence in modern organizational management.

Statement of the problem

Backed by the increased tendency towards applying business intelligence at all levels of decision making in organizations, the organizational spending on BI has increased significantly over the last two decades. For instance, statistics indicate that worldwide expenditure on BI increased relative to all IT budgets in 2011 to hit $10 billion (Kursan and Mihic 70). Consequently, business intelligence has been categorized as the most influential technology in 21st-century organizations and the top strategic technology of modern times.

However, the outcomes of investing in BI, applying, and using the BI applications and systems are not the same across all organizations. Although many organizations invest heavily in the new platform, some are able to achieve their goals with great levels of success while others fail. In fact, BI gives some organizations a competitive advantage over others in the same or different industries, even in cases where almost all organizations involve the system.

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While various studies have been conducted in the last two decades to examine the use, applications, and outcomes of BI in organizational decision-making procedures, there is still a scarcity of information needed to explain how some organizations achieve more than others in the same industry. In fact, this observation is evident even when the level of investing in BI and applying its applications and systems is similar across the reference organizations in a given industry. Therefore, this observation reveals a gap in the existing knowledge that should be filled with empirical studies.

Objectives of the study

The study determines why some organizations are able to apply BI in decision making with excellent outcomes that give them a competitive advantage over their rival companies that also apply BI in their decision-making practices. In particular, the research aims at describing the role of BI output in organizational decision-making processes. In addition, the research examines how decision-makers within some organizations use these outputs to reach organizational goals with success, while others fail to meet their targets using BI.

In addition, it is the objective of this research paper to address the need for investigating the role of BI output after the system has been fused in the decision-making processes and practices of an organization. It aims at using documentation of the different uses and purposes of the BI outputs in the decision-making processes of organizations. Moreover, it is the objective of this research paper to address the need for describing how BI outputs are used in relation to other inputs that an organization employs in its decision-making processes. The research paper holds that the relationship between BI and the other inputs has a significant role in the organizational application of the BI output to achieve its decisions and goals.

Study hypothesis

The research paper argues that the ability of successful organizations to make BI work in their decision-making processes is based on the identification of the devices that shape the collective judgment, the interplay between the outputs of BI, and the aspects that shape the decision-makers’ ability to use these devices.

Scope and limitations of the study

The field of Business Intelligence concerns the development and application of Business Intelligence systems and applications in organizations. In general, the development and application of business intelligence in the business decision-making processes represent two different areas of research that can be distinguished in empirical studies.

The general aim of this study is to contribute to the existing body of information about business intelligence and the associated body of knowledge concerning the use of the system in decision-making procedures in organizational management. Therefore, it is worth mentioning that the study examines the topic from the perspective of an organizational decision-making body, which means that the study does not consider the perspective of the BI systems analysts or developers.

Importance and significance of the study

The focus of the study is to understand how organizations use BI in their decision-making processes to achieve their goals. The study aims at gaining a comprehensive understanding of the practice as the basic step in achieving effective and strategic decisions for organizational management.

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Definition of terms

Because the aim of the study is to carry out comprehensive research on how BI is used to enhance decision-making processes in organizations, it is important to consider a number of technical terms and their respective definitions. Indeed, the terms to be defined related to the main issues of Business Intelligence and decision-making in organizations.

Business intelligence

Currently, a universally accepted definition of this term is lacking. Instead, several definitions have been formulated to explain what BI entails. These definitions consider BI as a set of processes, technologies, or applications that make use of information technologies to ensure that organizational decisions are based on the information, knowledge, and data relating to the organization, the industry, market, and other aspects.

BI output

This term is used in reference to the outcomes of the data-driven or information-driven process of making decisions at the organizational level. It can be considered as a table, report, indicator, graph, a measure, or even a spreadsheet or collection of all these aspects in a manner that ensures that data is obtained, stored, retrieved, disseminated, and applied to make the appropriate, quality and effective decisions in an organization.

Device

In this study, the term ‘device’ is used in reference to the methods that decision-makers use in the process of managing ambiguities or uncertainties while also influencing the collective judgment with the capacity to enhance the process of achievement of the organizational goals and objectives.

Review of literature

In a recent study, Wieder, Ossimitz, and Chamoni (13) attempted to examine the impact that business intelligence tools have on organizational performance. In particular, the researchers wanted to examine the worthiness of investing heavily in BI in terms of the benefits that the concept has on the actual practices of making decisions in organizations.

Using an exploratory and cross-sectional field study, Wieder, Ossimitz and Chamoni (13) attempted to examine and investigate the factors that control and define the benefits of business intelligence outputs in a corporate setting. The results of the study indicated that BI-based decision-making in managerial work benefits from the BI tools, especially in ensuring that the decisions made are “real-time”, explicit and in line with the market trends (Wieder, Ossimitz and Chamoni 18).

Watson, Wixom, Hoffer, Anderson-Lehman and Reynolds (7) carried out a study to examine the role of real-time BI in contemporary organizations. Using the Continental Airlines as a case study, the researchers found that organizations that employ “real-time” business intelligence obtain a competitive advantage because their decision-making is based on the current issues and knowledge in the company and industry in general. In addition, the study revealed that organizations should determine a clear need of their business when making decisions based on real-time data.

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This requirement has the potential to reduce the costs and revenues because it alters gates and reroutes baggage, which makes it possible to modify operations in the company. Similarly, other organizations can use the Continental Airlines strategies to ensure that they reduce costs and expenses through alteration of the non-dynamic practices in the decision-making processes.

According to an article by Berstein, Grosof and Provost (237), business intelligence provides organizations with the “next frontier” for research in information systems. The article uses a comprehensive review of literature to examine the importance of BI in modern business organizations, especially in terms of the examples obtained through observation of organizational performance between 1990s and the late 2000s.

The study shows that the benefits obtained from the integration of BI in organizational management are primarily based on the methods of making strategic decisions. However, the article reports that a number of issues should be considered and addressed using contemporary studies in order to support the shift towards the BI-based decision-making processes. As such, the article proposed that discussion and research panels comprising of senior members of IT and management should be involved in examining how organizations should employ BI in order to achieve their objectives.

An empirical study by Kursan and Mihic (69) has shown that BI heavily relies on the internet marketing research and decision-making procedures. It indicates that organizations that succeed in developing quality BI programs and achieving effective BI outputs involve the internet-based research in their decision-making procedures (Kursan and Mihic 69).

Synthesis

The review of literature indicates that organizations that succeed more than the others in BI make it by ensuring that their managerial decisions are made based on the available data. In fact, the studies show that organizations must use “real-time” BI based on the most recent data or information in order to succeed. It is clear that organizations that use BI but fail to achieve a competitive advantage are the institutions that do not consider BI as a major platform for making decisions based on the updated data.

Secondly, the above literature review shows that the internet is a major component of BI in decision-making. In particular, it shows that organizations that employ intensive application of the internet in obtaining information for decision-making obtain a competitive advantage in the market.

Methodology

Research design

The study is a qualitative research that attempts to examine why and how organizations succeed by using BI in their decision-making procedures while others fail. In particular, the study was based on a comprehensive review of literature as the study method. It examined the studies carried out between 2000 and 2013, focusing mainly on those that attempted to examine the relationship between the use of BI in decision-making and organizational success. The studies were obtained from Google Scholar and the school library in both print and electronic formats.

Respondents of the study

Since the study was a qualitative research based on a review of the existing literature, there were no human participants in the process. However, the materials obtained from the online and school libraries were treated as the study samples. The study worked with 8 articles that were peer-reviewed and published within the last 12 years.

Research instruments

To obtain information from the identified materials, a set of survey questions was developed and used to examine how each article reported the findings (see appendix 1). The questions attempted to examine why organizations that employ BI in their decision-making procedures succeeded more than others.

Data gathering procedure

The questions focused on the managerial aspects and the ability to employ strategic use of BI to achieve the desired outcomes. The articles were read thoroughly to understand the concept. Keywords were identified and used to develop information from the materials. The findings were examined for clarity and conciseness. Information was developed through statements and representations.

Reliability and validity

The survey questions were brief and directed the researcher to the main points of the topic. They were based on the keywords obtained from the review of literature, which means that they prevented the study from going beyond its scope.

Statistical tool analysis

As a qualitative research design, statistical approach was not considered in the study.

Appendices

Data gathering survey questions to guide the review of literature

  1. What is BI? Can do the article define BI?
  2. How was BI introduced and how has it evolved during the years?
  3. What kind of products does the article extract from BI systems?
  4. What does the article say BI is used in decision-making?
  5. Who uses the tools?
  6. Which professionals extract the information from the BI tools?
  7. For what purposes does the article say the BI tools are used?
  8. How does the article describe a normal working day? Where and how does the organization use data tools?
  9. Does the information in the reports support many decisions? Does every report have as a target a specific decision?
  10. How does the article categorize the reports?
  11. How much do the researcher/authors believe BI influences your decisions?
  12. Do they base their decisions on the numbers from the reports?
  13. Does the article state other channels, methods, connections, or tools for supporting their corporate decisions?
  14. What exactly happens during this phase according to the articles?
  15. Do the decisions made using the BI tools have an effect on other departments?

Works Cited

Berstein, Abrahan, Benjamin Grosof and Foster Provost. “Business Intelligence: The Next Frontier for Information Systems Research?.” American Journal of management 3.2 (2011) 234-239. Print.

Kursan, Ivana and Mirela Mihić. “Business intelligence: The role of the internet in marketing research and business decision-making.” Management: Journal of Contemporary Management Issues 15.1 (2012): 69-86. Print.

Watson, Hugh, Barbara Wixom, Jeffrey Hoffer, Ron Anderson-Lehman and Anne Marie Reynolds. “Real-time business intelligence: Best practices at Continental Airlines.” Information Systems Management 23.1 (2006): 7-9. Print.

Wieder, Bernhard, Peter Chamoni and Maria-Luise Ossimitz. “The Impact of Business Intelligence Tools on Performance: A User Satisfaction Paradox?.” International Journal of Economic Sciences and Applied Research 3 (2012): 7-32. Print.

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