Strategic Approach to Business Intelligence and Its Impacts on Organizational Performance

Strategic Approach to Business Intelligence and Its Impacts on Organizational Performance

Zafer Adiguzel (Istanbul Medipol University, Turkey)
DOI: 10.4018/978-1-7998-1125-1.ch012

Abstract

Organizational structures have changed as a result of the widespread use of information technology, as well as the development of software programs and its daily use in all departments. When such technologies became more widespread throughout every sector, enterprises began to understand its effectiveness and have established information technology department requirements in their organizations. With time, these requirements have become integrated into whole organizations, thereby increasing the importance of business intelligence. Competitors, increasing uncertainties, and risks of the sector have resulted in the further development of the concept of business intelligence to support organizations and senior management wishing to achieve a competitive advantage and make strategic decisions. In other words, analyzing data and sharing it among the departments within the organization became significantly important as senior management use this information to make strategic decisions.
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Introduction

In order to be successful in an intensely competitive environment, organizations should be able to establish coordination between departments effectively and efficiently. Therefore, functional units, such as production, human resources, and management, require an accurate data flow for decision-making (Gangadharan & Swami, 2004). In order to handle the challenges of intense competition, information management should be ensured at all times. In addition to obtaining timely information, it is also necessary to implement decisions with an effective and efficient management approach. Business intelligence systems need to be established in order to analyze the large number of organizational data and to provide accurate information for the success of the decision-making process (Yeoh & Popovic, 2016). Especially, since 2000, several significant developments have arisen in the field of information technologies, making it increasingly important in business operations. In the early days, organizations were getting information technology support from consultancy services due to the limited number of qualified specialist staff and the use of information technologies in relatively narrow areas. However, in today's environment, organizations have to use information technologies to monitor their activities and offer differentiated services or products. Strategic moves are very important in a competitive environment and therefore business intelligence plays an important role in the development of beneficial strategic steps. The competition, in a dynamic and volatile environment, can affect the performance of organisational decisions in a positive or negative direction. Each organization implements strategies to challenge their competitors, but also to have clear and significant paths in the competitive environment (Foster et al., 2015).

The concept of business intelligence first emerged in the 1980s in France, and the purpose of the idea was to the increase the literacy of companies regarding information technology in order to monitor competitors, enrich strategic thinking processes, and provide faster and easier decision-making mechanisms. At first, business intelligence was used to access to the resources. However, its use has increased with new strategies as business intelligence helps organizations to analyse data more efficiently and transfer it to departments within the organization. At the same time that incredible changes were happening within the competitive environment, large companies were leaving, new firms emerged in the market, and new strategies were developed increasing the importance of global competition and technology for business intelligence (Nasri, 2012). Increasing uncertainty in the strategic decision-making process also resulted in increased information processing and analysis activities of organizations (Dishman & Calof, 2008). If these activities are not intensively carried out, the survival of organizations in a competitive environment will be at great risk (Shollo & Galliers, 2016). In the field of management, the terms of business intelligence and information technology can additionally be used to highlight the importance of monitoring environmental factors (Tej Adidam et al., 2012; Gudfinnsson et al., 2015). Clearly, business intelligence is important for analyzing competition strategies, determining their strengths and weaknesses, and examining technological dynamics (Nenzhelele & Pellissier, 2013).

A competitive advantage can be achieved by analyzing a wide range of data and responding promptly to customers or other parties (Muñoz Castellanos & Salinero Martín, 2011). Business intelligence can always help organizations to remain competitive by providing an overview of critical information for strategic management, and in fact, Howson (2008) explains that if organisations adopt business intelligence, they can gain a competitive advantage. In their study in 2004, Phillips-Wren and his colleagues revealed the strategic benefits of business intelligence systems for the organizations Furthermore, in general terms, if business intelligence is used by organizations in a highly competitive environment, it is likely that a competitive advantage will be achieved in their sector (Kiron & Shockley, 2011).

Key Terms in this Chapter

Consumption: Explained as the expenditure made to obtain the Benefit of individuals. It is an important concept for institutions and economics, but also an important topic studied in many social sciences.

Data Quality: Data quality is an important feature that determines how reliable data is to make decisions. Expresses the value of qualitative or quantitative variables.

Data Mining: The term used in computer science. It is the process of accumulating a large amount of information and screening useful information. It is also called knowledge discovery in databases (KDD).

Procedure: These are all the ways and methods that must be followed by the attitudes and behaviors of the employees in the organizations. A procedure is designed to describe who, what, where, when, and why by means of.

Software: A set of coded commands, also called programs, that manage a computer to perform certain functions, telling the computer what to do.

Data Analysis: As a result of data analysis, cleaning, transformation and modeling, It is an important process that supports obtaining useful information, making information and making decisions.

Operational Data (or “OD”): It is recognized as an important data source for enterprise data warehouse (EDW) and operational reporting. OD is a database designed for processing and integrating data from multiple sources for operational decision support, reporting, and controller.

Organizational Strategy: Strategies in which an organization should be located and in which areas to operate in order to achieve its goals and objectives.

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