In the current business environment, organisations are facing a serious problem of managing dynamism of the external environmental factors. The external business environment keeps on changing, and firms are forced to master these changes and align their operations to them in order to remain competitive. This means that they have to find ways of collecting, processing, and availing information to the policymakers within the shortest time possible.
Business intelligence offers the organisation a rare opportunity to collect, analyse, store and retrieve information within the shortest time possible. Organisations have realised that using business intelligence in the only way through which they can have the right information every time they are making strategic plans. However, it is important for business units to understand the evolving nature of business intelligence initiatives. They have to understand that with the evolving business environment, business intelligence systems are changing too in order to be able to address the problem of information management.
Information in the current business environment has become an important tool that business units use in order to ensure that they operate efficiently in various industries. The increasing competition in the market has forced firms to come up with ways through which they can collect, analyse, store, and retrieve information within the shortest period possible, in what Negash (2004, p. 189)1 Refers to information management.
Various tools have been used over the years to manage information in order to ensure that different departments within an organisation can share relevant data without any restrictions. With the advancement of technology, various methods have been devised to help in the management of information. Business intelligence has become one of the most popular approaches used by various organisations to manage information.
Sauter (2011, p. 57)2 defines business intelligence as “A set of theories, methodologies, architectures, and technologies that transform raw data into meaningful and useful information for business analysis purposes.” As seen in this definition, business intelligence is not entirely about technology. It involves methodologies, theories, and architecture used in the transformation of data with the help of technology.
Technology is used when defining the appropriate methods, theories, and architecture used in transforming raw data into information that is useful for business purposes. In the process of collecting data, it is common to collect an enormous amount of information that must be analysed and interpreted in order to generate business strategies which are based on the changing trends. Analysing such large amounts of data may be complex and time-consuming. However, business intelligence helps in this by introducing the use of technology to eliminate the complexity and to reduce the time taken in the data processing. Over the years, there has been a consistent evolution of the nature of business intelligence initiatives. This research will focus on the analysis of the evolution of the nature of business intelligence.
Understanding Business Intelligence
According to Surma, Górniakowska and Gee (2011, p. 83)3, business intelligence utilises information to assist in the process of making strategic, tactical, and operational decisions. The purpose of establishing a sound business intelligence strategy is to help organisations to align themselves with the changes in their respective areas of operations, and to help managers accomplish their tactical reporting and support the daily processes of making decisions. The following diagram shows the processes taken in turning data into useful information that can be applied to generate positive results in the operation process.
Processing Raw Data into useful Information Using BI System
As shown in the diagram, the raw data is transformed into information which would then become a knowledge used in a specific area of operation. Business intelligence is primarily focused on providing organisations and the people within organisations access information they need to efficiently and effectively perform their functions. Because businesses have different needs, business intelligence strategies should integrate a wide range of solutions to help businesses meet their short and long-term goals.
Daily decisions are informed by the need to provide new solutions or render alternatives to the existing approaches. For managers, the decision-making process must make use of the available data from which inferences are made. In the view of this fact, it is clear that decision-makers, whether in profit or non-profit organisations, must always place themselves in positions in which they can understand the industry, the market and social environments in which they operate.
The new shift is large because of the need to implement predictive business strategies. Although business intelligence was largely considered a unit in information management, experts agree that it is quickly growing to become a distinct subject in the information technology sector. The role of business analytics is to facilitate transparent operations and help with the analysis of past and current business trends. However, it has become apparent that understanding the past and the present aspects cannot be sufficient in an environment that is arguably very competitive.
Therefore, business enterprises are expected to dig deeper into the future, and to understand the future trends- including buying behaviour, costs, consumption patterns, and customer service- in order to keep up with the dynamism in the market. To help business enterprises meet these important goals, leading business intelligence vendors have begun to design predictive analytics to capture critical trends in consumer behaviour. This can information can be used by firms to improve their products’ quality in the market. This is a continuous process, as shown in the diagram below.
Continuous Quality Improvement Using Current Information from BI System
Using information gathered from business intelligence, the decision-makers should be able to discover the emerging market trends and develop a model that is in line with these trends. The team should determine the appropriate simulation approach and deploy it in order to maximise on the benefits of having the information at the right time. The changing trend of the business environment has forced businesses to gather as much information as possible to provide a basis for their decisions. According to Aanderud and Hall (2012, p. 114)4, the dynamic buying behaviour, changing tact of competitors, and the market shifts have made it difficult for businesses to make decisions that can drive the business agenda of the day.
A decision made today on how to approach a given issue may become irrelevant in a short while because of the changes in the external business environment. This poses serious challenges to firms because they have to keep n developing new strategies to help them deal with changing environmental factors. To deal with these challenges, organisations are heavily investing in business intelligence systems as a strategy to collect, analyse, store, and retrieve information to support their decision making processes.
Business intelligence has been singled out as one of the innovative practices that IT-based businesses are implementing to boost their decision-making efforts. According to Ranjan (2009, p. 65)5, business intelligence is a significant component of a business management system that organisations are using to amalgamate data mining, analysis, reporting, and usability of data (Rouhani, Asgari & Mirhosseini 2011, p. 71)6. In this sense, business intelligence serves as the tool that provides businesses with the capacity to collect integrate and access data and allows for its easy transformation. This process paves the way for decision makers to gain new insights to help them understand the complex market. The diagram below shows processes involved in the decision making process when using business intelligence system.
At each of the above stages, it is important to have updated information about the environment in order to determine any changes that could have taken place over a given period of time. According to Sauter (2011, p. 53)7, businesses are concerned with making decisions that would deliver positive outcomes to both the organisation and all its stakeholders. As Ranjan (2009, p. 68)8 noted, well-implemented business intelligence strategies have the potential of increasing the quality of the decisions and allows enterprises to remain relevant in their respective industries and markets.
Industry leaders have found that traditional forms of gathering intelligence are less likely to deliver the required results in an environment which every other player is out to get everything right the first time. For this reason, leading business magnets in the world have unanimously adopted a broader vision with a primary focus of increasing the capacity of their management teams. It is interesting to note, however, that IT leaders, especially early adopters, have tactically approached the concept of business intelligence to drive their decisions.
The shift from traditional vision toward an information-based decision-making process has been instrumental in helping businesses achieve their short-and long-term goals. The diagram below shows areas where business intelligence plays an important role when making strategic decisions.
Areas of Management that Require the Use of Business Intelligence
Drivers of Business Intelligence
The research by Sauter (2011, p. 89)9 shows that various aspects of business management are becoming increasingly complex due to the changing business environment. Effective management is required to handle the ever-growing sophistication, and IT companies have been called upon to deliver business intelligence solutions to help organisations to address a host of issues surrounding their operations. The evolving macro-business aspects are significantly changing the way decision makers in organisations perceive business intelligence.
For this reason, top managers will certainly change their tact in a bid to strengthen their information management. Some of the changes that are imminent out there include application of multiple and interrelated metrics. Today, enterprises are committed to integrate multiple strategies with other important aspects such as efficiency, performance management, and customer relationship management in order to facilitate business transformation. Owing to these changes, users of the information are looking to leverage their position in the market using their new skills and knowledge in business intelligence in order to aid financial planners, marketers, supply chain managers, communication specialists, and operational managers in their daily decision-making processes (Aanderud & Hall 2012, p. 86)10.
In the modern business environment, firms are witnessing rapid changes in sales and ordering cycles, as well as changes in the modes of delivery. With the coming of third-party logistics and the need to work with other players in the supply chain, businesses are finding new deliver models increasingly important, and this is dramatically changing the way enterprises respond to these changes. Many business units are implementing these systems tactically. This has made it a bit challenging to comprehend the impact such systems will have on their performance in the future.
Increased monitoring requirements and standards have been raised, making compliance a rather difficult thing to achieve. Stakeholders are mounting pressure on managers to be more transparent and balance between cost and revenue whenever they make decisions. With these changes and the risks that these changes seek to address, organisations need to re-evaluate their analysis and reporting strategies to cushion themselves against imminent business risks. When doing this, managers will need to carefully balance between confidentiality and integrity
Users of IT services are demanding all-inclusive business solutions that can help them meet the growing demand to deliver IT-driven services by consumers. The proliferation of the Internet and the emergence of social media networks have placed a lot of pressure on IT companies to design responsive solutions that are user-friendly and customisable. These needs have meant that IT solutions must fit into their business intelligence structures as well as the industry requirements guiding the application of such IT infrastructures.
Dynamic Environmental Factors that Affect Business Intelligence Initiative
There are numerous environmental factors which have direct impact on the way business units use business intelligence initiatives. As business dynamics continue to change, businesses are expected to change their tactics too. In response to this trend, organisations have moved with speed to initiate changes in order for them to remain relevant. At this stage, it would be important to understand some of the changes that have affected application business intelligence initiatives.
According to Sauter (2011, p. 113)11, users of the information are currently looking for valuable information that can support their business processes, including improving customer service, marketing, sales forecasting, business planning and order processing. Business intelligence vendors are developing tools with robust analytical functionality to help achieve the objectives of each one of these business functions.
The big shift, according to Rouhani, Asgari and Mirhosseini (2011, p. 73)12, will include changing from generic analytics to definitive and analytic functionalities designed to aid in industry-specific tasks, thus enabling businesses to bolster their performance through process-driven analysis. Business intelligence analytics have been adopted more in supply chain planning, sales forecasting, performance management and customer service.
The research by Aanderud and Hall (2012, p. 78)13 shows that IT platform will be designed to deliver fine-grained service-centric architectures. Business intelligence applications will be shared among more businesses and departments. However, not all business operations will need business intelligence architectures, especially if the business has a narrow application of IT in running its affairs. IT leaders and the information management professionals will need to understand requisite components, their impact on operations and the ways of improving their applicability. Surveys taken on thousands of companies in 2011 showed that over half of IT adopters have incorporated business intelligence into their broader IT portfolio.
New Ideas to Solve the Current Problems
It is clear from the analysis above that there is a massive pressure for business entities to make good use of business intelligence system in order to improve their knowledge management. However, many organisations have had problems in finding the best way of using this system in their operations despite its superiority in data collection, processing, and retrieval. A number of issues have been cited as the main hindrance towards successful application of this system. It is important to find the best ways through which organisation can solve the problem in order to enjoy the superior benefits it offers. In this section, the focus will be on the new ideas that can be used to offer solution to some of the problems that organisations have when using business intelligence system.
It is a fact that the majority of service providers are constantly increasing their focus on business intelligence because it is promising to offer one-stop solutions to sector-wide problems and processes. Service providers will be using business intelligence as a platform to develop blueprints and frameworks to reengineer the existing methodologies and revamp their performance management tools. Sauter (2011, p. 97)14 notes that business organisations will need to re-evaluate their financial commitment towards business intelligence system.
Organisations will need to redefine their external sources of expertise and consider the value of service level agreements and business metrics. Business intelligence and IT vendors are expected to provide organisations with more than half their skills needs to help them implement business intelligence and performance management capabilities. The implication of this trend is that businesses will need to shift from internally driven expertise to outsourced solutions if they have to optimise and leverage the power of business intelligence. Since most businesses have other more specialised areas of operations that require much of their attention, they will need to hire professionals in the business intelligence market to allow them focus on their core business operations that determine the profitability of their businesses.
As Aanderud and Hall (2012, p. 56)15 notes, IT leaders will have to bear the responsibility of delivering efficient systems that complement their specific BI and analytics tools. They will need to understand each industry before implementing business strategies relevant to the industry. Delivering high-impact business intelligence and data analytics imply that both service providers and business enterprises themselves will need to look beyond their traditional technologies to a comprehensive IT strategy that involves the social aspects, metrics and processes that will create value from the investment.
The Future of Business Intelligence
The research by Aanderud and Hall (2012, p. 55)16 reveals that the emphasis on business intelligence and analytics is set to gain more momentum through in several years to come. In a survey conducted by Sauter (2011, p. 90)17, the advantages of business intelligence tools and systems to business enterprises are clear to the management teams running businesses today. Irrespective of the section or department, businesses are keen in ensuring that business intelligence aspects are applied across the board to help in supporting their efforts in achieving their long-term goals.
However, the challenges in the business intelligence market are pushing businesses to adopt real-time integration of data analytics to deal with the growing amounts of data. As the cost of data management- collection, storage, and management- continues to rise, businesses are considering it extremely important to implement business intelligence to deliver a low-cost data management structure. Despite the immense growth recorded over the past few years, analysts say that businesses are yet to realise the full potential of business intelligence techniques (Negash (2004, p. 192)18.
Given this, data discovery concepts will have to work to ensure that business intelligence and data analytics replaces the static reporting channels that have been in use for many years. Although IT-authored data acquisition will not wither so soon, it will be overwhelmed by a more powerful approach of handling data. Today, approximately 30 percent of businesses worldwide have actively engaged business intelligence and analytics, but pundits project that this will grow because of the shift toward data discovery (Aanderud and Hall (2012, p. 112)19. Leaders in Business intelligence will need to critically assess their position as far as data discovery and analysis-centric systems is concerned to help determine their appropriateness to their particular business needs.
Organisations are struggling to find the best ways of managing information in order to remain competitive in various industries. The business environment is rapidly changing, and policy makers find themselves in a delicate situation where they have to gather relevant data whenever they are making strategic plans. This requires managements to have efficient methods of collecting and analysing data, and making it available on demand to policy makers to ensure that their plans are strongly based on the market needs.
Business intelligence system offers business entities a perfect platform through which data can be collected, analysed, stored, and retrieved whenever this is necessary. In order to be successful when using business intelligence system, it is important to understand the evolving nature of business intelligence initiatives. The changing environmental forces mean that IT vendors must consistently remodel their business intelligence systems to meet the changing market needs. The system must be able to apply some of the emerging technologies to ensure that the process of data management is made more efficient.
List of References
Aanderud, T & Hall, A 2012, Building business intelligence using SAS: Content development examples, SAS Institute, New York.
Negash, S 2004, Business Intelligence, Communications of the Association for Information Systems, vol.13. no. 2, pp. 177-195.
Ranjan, J 2009, Business Intelligence: Concepts, Components, Techniques and Benefits, Journal of Theoretical and Applied Information Technology, vol. 9. no. 1, pp. 60-70.
Rouhani, S, Asgari, S & Mirhosseini, V 2011, Review Study: Business Intelligence Concepts and Approaches, American Journal of Scientific Research, vol. 50. no. 6, pp. 62-75.
Sauter, V 2011, Decision Support Systems for Business Intelligence, John Wiley & Sons, Hoboken.
Surma, J, Górniakowska, M & Gee, P 2011, Business intelligence: Making decisions through data analytics, Business Expert Press, New York.
- Negash, S 2004, Business Intelligence, Communications of the Association for Information Systems, vol.13. No. 2, pp. 177-195.
- Sauter, V 2011, Decision Support Systems for Business Intelligence, John Wiley & Sons, Hoboken.
- Surma, J, Górniakowska, M & Gee, P 2011, Business intelligence: Making decisions through data analytics, Business Expert Press, New York.
- Aanderud, T & Hall, A 2012, Building business intelligence using SAS: Content development examples, SAS Institute, New York.
- Ranjan, J 2009, Business Intelligence: Concepts, Components, Techniques and Benefits, Journal of Theoretical and Applied Information Technology, vol. 9. no. 1, pp. 60-70.
- Rouhani, S, Asgari, S & Mirhosseini, V 2011, Review Study: Business Intelligence Concepts and Approaches, American Journal of Scientific Research, vol. 50. no. 6, pp. 62-75.