Introduction to Business Intelligence
Business Intelligence and Business Intelligence System
Rapid advances in computer technology allow business intelligence (BI) systems to provide managers with access to a tremendous amount of data. To function these systems combine complex front-end software with ETL capabilities that extract enormous amounts of data. At the heart of these systems are huge enterprise data warehouses that can populate a possible infinite combination of advanced reports, OLAP cubes, and datasets for data mining. The underlying belief is that technically advanced systems are the most important drivers of effective decision making. Based on this belief BI vendors focus on technologically advanced systems while paying relatively little attention to whether these systems meet the needs of decision makers.
The drive towards technological sophistication and away from improving decision making is one of the reasons for the low success rates (50%), high costs, and time overruns associated with BI projects. While vendors and information technology departments get the technology right they often fail to deliver a product that is useful to management. Executives and managers will reject BI systems that do not facilitate efforts to evaluate and improve strategic and operational effectiveness. What practitioners fail to understand is that technologically advanced software, by itself, does not allow management to perform these vital functions.
Effective business intelligence systems must account for the goal oriented behavior of decision makers. One way to incorporate the purposive behavior of decision makers in BI systems is the use of the frame as the basic building block of a pervasive BI system architecture. It does this since a frame is a "scheme of interpretation" in which the particulars of events and activities are organized and made sensible. The frame organizes the world according to the goal oriented behavior of the frame owner. Specifically, the frame captures the two parts of decision makers' goal oriented behavior. The first are the objectives disseminated from the ESM in the form of scorecards. These provide the goals that guide the activities of the business unit. The other part is the experience of the business unit leader. It is their experience that provides the guidance for how to achieve the objectives. The goal oriented behavior of the frame owner is codified in a business unit strategy map based on the objectives that the unit must achieve along with the means of achieving those objectives.
At the heart of this system are strategy maps and scorecards. We propose strategy maps can be used to organize the company as a system since each scorecard contains the necessary elements to create a control system. A control system requires a measuring unit, norm, comparator, and correction unit. The analogs in a scorecard are the measures, budgets, reports, and initiatives. The importance of the control system is that it allows the business unit leader to evaluate and correct issues that impede operational effectiveness. Once management is certain they are operating effectively they can report to executives.
An important aspect of this system is that each BI subsystem can operate independently of all other subsystem. As a system each BI subsystem is both unique and complete. For this reason the creation of a pervasive BI system begins with the creation of BI subsystems at all levels of the organization. Each one can function as a distinct unit prior to the creation of the system. Further, it is possible to fix problems in any one subsystem without interfering with the operations of the whole system.
Upon completion of the subsystems these frames are then combined into a framework. A framework stacks frames horizontally and vertically. Executives can use the framework to determine if all business units are operationally effective. Each executive can have a BI system that allows him/her to access information from any subsystem. This is because they have a system built based on their frame. They use this subsystem to control other subsystems.
This pervasive business intelligence system provides two important contributions. First, it significantly increases the likelihood that they system will not only be deployed but will be accepted by users. The system is design for decision makers based on their needs as outlined in their business unit strategy map. They outline the reports that are necessary based on the combination of objectives from their superiors' strategy map and their experiences.
The other important contribution is the ability to evaluate both strategic and operational effectiveness. As Porter argues operational and strategic effectiveness are both necessary for success. However, it is first necessary to achieve operational effectiveness. Each subsystem facilitates the analysis and reporting of business unit operational effectiveness. After ensuring operational effectiveness executives can then examine strategy effectiveness.
Finally, it is easy to make changes to the system if it is not effective. For instance, if a business unit is not achieving operational effectiveness then executives can determine why it is not successful. Remedies can be taken, such as allocating further resources or attempting to align frames in the case that operations does not share the same beliefs as management. If the organization is operationally effective but strategically ineffective then executives need to reformulate the strategy. Once they make the necessary strategic changes they then disseminate a new strategy map and cascade scorecards. This allows the system to change.
Most definitions agree that BI "refers to skills, technologies, applications, and practices used to help a business acquire a better understanding of its commercial context. Business intelligence may also refer to the collected information itself".
In addition, "Common functions of business intelligence technologies are reporting, OLAP, analytics, data mining, business performance management, benchmarks, text mining, and predictive analytics". Finally, "Business intelligence often aims to support better business decision-making. Thus a BI system can be called a decision support system (DSS)".
These definitions focus on the skills and functions. However, prior to engaging in the activities involved in BI or using the technologies there must be a system in place. There is a difference between BI activities and BI systems. We take the comprehensive view that building and maintaining a BI system are closely tied with using the system.