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Table of contents
Title page 1
Business Intelligence Information Systems (BI) & Business Performance 3
1. Introduction 3
1.1 Research background and significance 3
1.2 Definitions 3
1.2.1 Business Intelligence Information Systems (BI) 3
1.2.2 Business Performance 3
2. Contributions of business intelligence information systems (BI) to business performance 4
2.1 Enables faster and fact-based decision making 4
2.2 Combines multiple sources of data for decision making 5
2.3 Align the employees performance to the business performance and objectives 5
2.4 Facilitate the apprehension of the sophisticated data and hidden correlations 6
2.5 Enable the perception of big pictures among the employees 7
3. Conclusion 7
Reference list 9
Business Intelligence Information Systems (BI) & Business Performance
1.1 Research background and significance
It is believed that business intelligence is a phenomenon of considerable importance to all business professionals (Sabherwal & Becerra-Fernandez 2011). With the increasing complexity of data and changing business environments, more and more companies now upgrading their decision making mode to a Business Intelligence based decision making process and at the very beginning let us review some of the key definitions.
1.2.1 Business Intelligence Information Systems (BI)
According to Deborah Morley and Charles S. Parker (2010, p. 538), an information system is a system used to generate information to support users in an organization. And business intelligence (BI) refers to the use of company data to facilitate decision-making by decision-makers, thereby helping to understand current functioning whilst anticipating actions for the well-informed steering of an enterprise (casewise.com 2010).
1.2.2 Business Performance
Business performance refers to the measurement not only in the financial scale but also on other any scale deemed appropriate by the business firms, it not only involves the whole company but also involves any subdivision for which a given decision maker is held accountable (Kleinaltenkamp & Ehret 2006, p. 111). And it is known to us that business performance of a company is highly relating to the profitability of the business which concerns the shareholders and owners a lot, therefore it is important to study the factors that contribute to the business performance of a company.
2. Contributions of business intelligence information systems (BI) to business performance
2.1 Enables faster and fact-based decision making
In the nowadays, external environmental factors such as economic conditions and industrial competition are changing in a faster speed and any changes in a single factor will result in a series of market responses that possibly provide significant impacts over the business operation and market environment that the business is operating in. Therefore, fast and quick but yet reliable decision making capabilities are essential to a company. In the past, quick decision making is usually made by managers and executives who are familiar with the market and the industry based largely on their experiences and instincts perceiving the trend of the market changes. But not it is increasingly ineffective and inefficient to rely solely on the managers’ experiences because there are new situations which the most senior manager may not have experienced before and also the increasingly complex and fast changing market conditions have also reduce the effectiveness of the traditional decision mode. One of the key elements of business intelligence system is the utilization of the relevant software to collect data, information and knowledge to develop quick and fast conclusions and findings (Thierauf 2001, p. 21) based on which the management of a company would be enabled to make faster and fact-based decision making.
2.2 Combines multiple sources of data for decision making
Often in the past, the major source of data include the well prepared reports such as various market surveys and periodic financial performance reports, but there is a critical disadvantage of these well prepared traditional reports: they are all based on the past facts rather than real time situations. This defect is more fatal with the increasingly fast changing business environments as we mentioned above. The business intelligence information systems usually have different access to the aged and/or real time data, information, knowledge and findings, in particular the operational database which is internet based and updated on a real time base have largely helped expanded the sources of the data available for the more reliable and fact based decision making.
2.3 Align the employees performance to the business performance and objectives
When we talk about business performance, actually there are different standards to be applied in different industries and companies based on the strategic objectives adopted. And usually certain organizational objectives will come with a set of key performance index (KPIs) that are essential measurement of the business performance. The adoption of the Business Intelligence Information Systems will help align the employee performance, key performance index (KPIs) with the business performance. For example, in a typical customer service outsourcing company that mainly involves the call center business from its contractual clients, the individual performance of all the call center agents together make up the project and overall performance of the company. The usage of business intelligent in term of using the computer based software that are installed in every computer to monitor the particular key performance index (KPIs) of each agent is essential for ensuring the overall performance the of business. The advantages of monitoring the achieving the key performance index (KPIs) are obvious for a company that is engaging in the business like the customer service sector. If the management of the company waits for the result of the customer survey in term of periodic reports, then the problems should be identified at least several days later if there should be any problems. But if this happens, serious complaints from the clients and also the customers that the agents are supposed to attend to will be already caused. Therefore the real time monitoring of the agents’ performance by the key performance index (KPIs) using the Business Intelligence Information Systems (BI) will enable the managers to motivate the agents for better performance using rewards or punishments to align the employees performance to the business performance and objectives.
2.4 Facilitate the apprehension of the sophisticated data and hidden correlations
While most company tend to have similar access to the external information and market data, it is advantageous that a company could get access to the information and data that is not yet well known by the market in order to outperform the competitors. This target could be possibly achieved by data mining which is a key component of business intelligence. Data Mining is the process of running data through sophisticated algorithms to uncover meaningful patterns and correlations that may otherwise be hidden (bizcubed.com.au 2011). The data mining utilizes methods at the intersection of artificial intelligence, machine learning, statistics, and database systems to scientifically analyze the possible correlations between the market behaviors and the company strategies. And usually some conclusion coming out of the data mining processes will be helpful though sometimes they are in contradiction with our general understanding. For example, a very typical data mining example is the story of the finding of the relationship between beer and diapers as data shows that there is a quite closely relations between the purchasing of beer and the purchasing of diapers which may not be quite obvious relationship that people may think of. But data mining manages to locate such relationship and it is later explained in this way: fathers are usually the ones who are assigned the tasks of purchasing diapers who are also general customers of beers, and therefore the data mining is very useful to finding out these information and relationships which are beyond our own imagination though we are the ones who do these shopping on the daily basis. Also, the usage of data mining also helps facilitate the data collection and analysis process for the generation of the useful conclusions to guide the business practices and strategies making.
2.5 Enable the perception of big pictures among the employees
In the traditional thinking, we have well known that with the enhanced division of labors in term of differential functional departments and divisions and complex hierarchical structure, employees are less motivated to work with their full potential, and one of the non-finance related reasons is employees’ lack of big picture over the company and also the jobs they have done. For example, the sale departments in a company may only use sale techniques in different sale platforms to promote and push sale of their products, but they may not know the customer reactions after the closing of the sale deals because the after sale issues are handled by the maintenance and customer service departments. With the use of the Business Intelligence Information Systems (BI), now the sale team employees like many other employees in other functional departments could get to know and analyze the buying behaviors and patterns, such as what customers are buying and where they are buying it from (microsoft.com 2011). These easy information sharing across the different departments will enable the employees at any level to have a big picture over the whole business and the role that they play in the business process.
In conclusion, Business Intelligence provides a clear and comprehensive guide to negotiating the complexities inherent in the development of valuable business intelligence decision-support applications (Moss & Atre 2002). With the analyzed benefits of business intelligence in enhancing the business performance, it is recommended that more companies with sufficient conditions should have their own Business Intelligence Information Systems (BI) well built.
bizcubed.com.au 2011. Data Mining. Accessed on 26 Jun 2012 [online] available: http://www.bizcubed.com.au/pentaho-pillars/data-mining
Casewise.com 2010. Casewise Modeler Intelligence (CMI). Accessed on 26 Jun 2012 [online] available: http://www.casewise.com/products/cmi
Kleinaltenkamp, M. & Ehret, M. 2006, Relationship Theory and Business Markets. Journal of business & Industrial marketing. Volume 21, Number 2, 2006, p. 111
Loshin, D. 2003, Business Intelligence: The Savvy Manager’s Guide, Getting Onboard with Emerging IT. San Francisco, CA: Elsevier Science.
Microsoft.com 2011. News & Blogs. Accessed on 26 Jun 2012 [online] available: http://www.microsoft.com/australia/thebigpicture/Default.aspx
Morley, D. & Parker, C. S. 2010, Understanding Computers: Today and Tomorrow, Comprehensive. Boston: Course Technology, Cengage Learning. p. 538
Moss, L. T. & Atre, S. 2002. Business Intelligence Roadmap: The Complete Project Lifecycle for Decision Support Applications. New York: Pearson Education, Inc.
Sabherwal, R. & Becerra-Fernandez, B. 2011. Business Intelligence. New Jersey: John Wiley & Sons.
Thierauf, R. J. 2001, Effective Business Intelligence Systems. Westport, CT: Greenwood Publishing Group. p. 21
Vercellis, C. 2011. Business Intelligence: Data Mining and Optimization for Decision Making. New Jersey: John Wiley & Sons.