Week Two Topic Note
Welcome to Week 2
In our first week, we looked at the definition of Business Intelligence (BI) and contrasted BI with other related technologies. We also looked at how data differs from information and knowledge, and why this is important to BI. This week we will look at Business Intelligence Capabilities. Specifically we are interested in the four key capabilities of BI solutions; organizational memory, information integration, insight creation, and presentation capability.
The Organizational Memory capability is the ability to store information and knowledge. This capability supplies data which is used by other BI capabilities. This data consists of accumulated information and explicit knowledge about the past. Sabherwal’s (2011) definition of organizational memory fits his vision for the four capabilities of business intelligence, so we will keep our focus here. A Google search of the words “organizational memory” will come up with different results. There are entire courses built around the other definitions of organizational memory, so we do not want to get too far off topic in our discussion.
Information Integration is the ability to link structured and unstructured data from a variety of sources. This data is supplied by the organizational memory of the entity. There are many factors that necessitate information integrity capability. One factor is the fact that an organization’ structured data and information often exist in multiple, mutually disconnected and often incompatible transactional systems. Disparate data is difficult and time consuming to access and often requires manual transformation. A second factor results from the explosion of information and recent technology advances. Considerable amounts of data, information, and explicit knowledge exists outside traditional operational systems and data warehouses. These can include email messages, presentations, internal company documents, and audio or video files. This data is often a valuable resource to the organization and completes information taken from structured sources.
Insight creation is the ability to develop new insights and use them in the short-term or long-term to make better decisions. Insight creation uses raw materials from organizational memory and information integration to produce outputs. These outputs may include a description of what happened, an understanding of what happened, and a prediction of what future behaviors may come of all this. This capability uses integrated data, information, and knowledge to enable pattern and trend identification. An example would be identifying buying patterns of life insurance customers. Insight creation would focus on identifying the causes for these patterns based on correlations over tome. It would enable the organization to identify relationships, cause and effect, and predict future life insurance buying patterns of differing groups.
Presentation Capability is the ability to use appropriate reporting and balanced scorecard tools, and thereby make business intelligence more valuable to users. This is the interface or point of contact between the BI solution and the user. It focuses on providing appropriate information in a user-friendly fashion based on user’s inputs regarding the nature of the presentation. The goal is to deliver the results to the user so that they can make the best possible use of insight creation output in terms of learning and decision making.
Putting it All Together
In Chapter 1 of the Sabherwal (2011) text we saw that benefits of BI include improvement in operational performance, improvement in customer services, and the identification of new opportunities. The organizational memory capability allows organizations to retain detailed and diverse data about the organization’s performance and customers. Information integration capability allows the organization to better integrate this information. Insight creation capability enables decision makers to make decisions quickly using information from diverse areas. In short, BI allows effective management and better deployment of intellectual capital for competitive advantage.
Each of the capabilities described above have technologies that enable them. These technologies will be reviewed in the coming weeks, as we dive deeper into each capability.
Let’s look at how a familiar organization can benefit from the four BI capabilities:
One organization familiar to all is the university. Business Intelligence tools provide capabilities to compile and analyze stored data to produce detailed reports, queries, data analysis, and visualization models. Vast amounts of institutional information are generated each year. BI and data warehousing can be put to good use. There is a need to focus on the critical analysis of each area’s data and reporting needs to find better solutions to navigate through the vast amount of institutional information generated each year. Questions to be answered arise around where the data is, what data has been stored, and what data is needed.
Aggregate data from different sources and obtained real-time, including consolidated views of HR, finance and academic information, could provide more insight into budget, student and school operations. Combined with the need for academic and administrative reports, continuous access to key data, and the ability to run reports without the IT department would all be potential benefits. Using BI solutions, the university could create a whole variety of data presentations, from student assessment reports to financial models with drill down capabilities for department heads.
Additionally, the university could benefit from the ability to look at new perspectives and business intelligence capabilities that could facilitate keeping pace with changes in student, administrative and budget data. This would require access to data at a far quicker pace than before, providing the ability to see pertinent information in reports as needed, when needed, with potential for instantaneous reporting directly to the computer screen.
Traditional information systems of data records and activities that process the information are manual and automated, and work with historical information, often spread out over disparate databases or source systems. These systems show more information than knowledge, and in general do not show relationships. Business Intelligence solutions greatly facilitate better decision making. In the case of a university, the needs of BI can be clearly seen. This will hold true for most, if not all, organizations that we encounter.
Every modern, data-driven organization needs BI. While organizations have become masters of collecting data, they seem to be forgetting that data is not the same as information. Information is data that has been converted into a meaningful and useful context ready for onlookers to harvest insights. If the organization is lacking information, it will need help aggregating and analyzing data into actionable information. This is where the ‘intelligence’ of BI enters the picture. The power of business intelligence is that it increases the ability to identify trends and issues, uncover new insights, and fine-tune operations to meet business goals—the value everyone’s been looking for by collecting the data in the first place (Wachstock, 2014).
Sabherwal, L. (2011). Business Intelligence: Practices, Technologies, and Management, NY: Wiley and Sons.
Wachstock, M (2014). Five Signs Your Business Needs Business Intelligence. Retrieved from http://www.sisense.com/blog/5-signs-your-business-needs-business-intelligence/
Business intelligence is defined as a group of approaches for storing, gathering, providing and analyzing access to data that enables users to make better business decisions that are fact based, and that allow an organization to gain insights that are helpful. It’s a term that refers to technologies, competencies, processes, practices, and processes that are used to support decisions that are based on evidence in organizations (Davenport, 2010). It is employed to gain insights that are data driven concerning anything that is related to business performance. It is also used to improve performance and understand related business ideas as well as identify business opportunities and cut costs. Analyzing customer behavior, measuring, predicting and tracking financial and sales performance, risk and strategic value driver analysis as well as budgeting and optimizing processes and operational performance are amongst the other uses of business intelligence.
The essential components of business intelligence include gathering data, providing access to data, storing data and analyzing data. Gathering information involves assessing or collecting data that can be used to make informed decisions (Dymarsky, 2011). It comes in many formats, but it referred to the collection of performance data and automated measurement of data. The greatest challenge of data collection is ensuring that he data is relevant and that it is collected at the right time and way. It data collection is not quality controlled then it can jeopardize the entire business intelligence process. The second component is storing data which is concerned with enduring the collected data filed and stored appropriately in ways that make it easy to be located quickly and used for reporting and analysis. The advantage of modern day data bases is that they allow multi-dimensional format whereby the same data can be stored under different categories (Foley &Guillemette, 2010).
The third component entails analysis of data. Here the data that has been collected is inspected and transformed for new insights to be gained which support or assist in decision making. There are different procedures for data analysis; the method can be quantitative or qualitative depending on the kind of data that is being analyzed. Analysis techniques entail the use of statistical tools data mining approaches and visual analytics. The third method involves providing access to the data that has been gathered, stored and analyzed. Access is needed for decision makers to make a choice that is informed and that will be sufficient for the given organization. Therefore, the results the analysis or the stored data need to be made accessible which is typically enabled by the latest software tools that the company uses to allow users to perform data analysis. The results of the analysis are provided through dashboards, scorecard applications and through reporting (Miller, 2010).
Business intelligence should be an approach that is used by any organization to improve the performance. Five major steps have been identified to help organizations become more intelligent. The first step is to determine strategic priorities and information needs. The second is creating meaningful and creative performance indicators. Thirdly creating intelligence insights by using evidence to prove and test ideas by analyzing the data collected to gain insights. The fourth one is, creating informative dashboards and packs that provide essential information that is presented in a format that is easy to understand. Lastly making more intelligent decisions by fostering a culture that is evidence based (Stefik, 1986).
In conclusion, business intelligence increases a company’s performance by increasing the insights and the quality of decisions made in the organization. Organizations that adopt it benefit widely from understandable and actionable data that can be used to optimize the performance of its businesses. It’s a robust and dependable solution that has many advantages which can enable an organization to have a competitive edge in fast changing environment.
Davenport, T. (2010).Business Intelligence and Organizational Decisions. International Journal Of Business Intelligence Research, 1(1), 1-12. http://dx.doi.org/10.4018/jbir.2010071701
Dymarsky, I. (2011). Champion for Business Intelligence. International Journal Of Business Intelligence Research, 2(2), 22-36. http://dx.doi.org/10.4018/jbir.2011040102
Foley, É. &Guillemette, M. (2010). What is Business Intelligence?. International Journal Of Business Intelligence Research, 1(4), 1-28. http://dx.doi.org/10.4018/jbir.2010100101
Miller, D. (2010). Improving Business Intelligence. International Journal Of Business Intelligence Research, 1(4), 47-62. http://dx.doi.org/10.4018/jbir.2010100103
Stefik, M. (1986).Artificial intelligence applications for business management. Artificial Intelligence,28(3), 345-348. http://dx.doi.org/10.1016/0004-3702(86)90055-x