3.2 Who needs business intelligence?

Any organization, that needs to get into a better competitive position and needs to share and analyze business information between multiple interested parties, needs BI.

But of course some need it more than others and the factors that drive organizations into actual business intelligence efforts are usually those listed below. The factors can be categorized into external and internal factors. External factors are forces and circumstances outside the organization’s control, e.g. competitors, customers, environment and government. Internal factors are circumstances and processes that are under the organization’s control such as procurement, logistics, sales, employees etc.

3.2.1 External factors driving organizations towards BI

  • Competitive pressure. Some companies are under great competitive pressure. This applies especially to products and services that have high volume and low barriers for replacement. Tele-companies are known for massive campaigns that aim to grab customers from competitors and in most countries it is fairly easy to change operator.
  • Market volatility. In markets with quickly changing customer demands and/or quickly changing goods (e.g. computers and accessories) it can be a question of life or dead to be ahead of the situation and always have the right products in the right quantities at the right prices. And these factors may virtually change overnight in some businesses.
  • Legal requirements. Some companies are under restrictions by law to be able to deliver certain sorts of reports to external entities. Especially well-known is the Sarbanes-Oxley regulations that governs large companies in USA and Basle 2, which applies to the European banking sector. Such regulations force companies to have well-defined report delivery systems.

3.2.2 Internal factors driving organizations towards BI

  • Volumes of data. The more data an organization collects the more likely it is to establish formalized systems for extracting this data and utilizing it because the sheer volume of data makes it difficult to keep a detailed understanding of the dynamics of the organization’s processes. Tools are needed to quickly aggregate, dive into and analyze data to keep an overview of the business situation.
  • Single version of the truth. Too often, different report that supposedly show the same information show different results. More often than not this is caused by different definitions of the KPIs. As a result, time is wasted discussing and analyzing these differences instead of building the business. And trust in the data evaporates.
  • Information overload. Perhaps surprisingly, organizations aim for BI systems because they have too many reports. But it is no surprise actually. BI tools let organizations reduce the number of reports by:
    • Combining multiple information types in single views (dashboards)
    • Show data on a higher (more aggregated) level while giving users access to detail data through analytic capabilities such as drill-down. Thus, users need only deal with detail data when it is relevant.
  • Size of the organization. The larger the organization is the more people will need reports about the organization's operations. Larger companies can usually better justify the investment in a BI system with the time saved for creating reports and improving information quality.
  • Skilled personnel. The internal availability of skilled personnel has a big influence on whether an organization decides to implement BI systems and how much they invest in it. An organization that has people with the technical skills to build a BI system and people who have experience defining, deploying and using it is much more likely to go this way than an organization that does not hold these competences.
  • Culture. Some companies have a culture to use data pro-actively and to make detailed measurements of everything they do whereas others are not comfortable with the openness about data that is required to get the full benefits of BI. Organization culture may thus be an enabler or barrier to successful implementation of BI. One may say that being “result oriented” goes hand in hand with using BI.
  • Shrinking response time. The faster an organization can derive insights and take proper action from data, the more competitive it will be. Managers are in a constant need to get to up-to-the-minute information as fast as possible thus driving the implementation of systems that can support such requirements.


1 comment:

  1. could you highlight any practical examples of BI ??? i was always wondering how one integrates in an existing database? and which are the most popular tools and easy to use for BI ?