Introduction
to Business Intelligence
Business intelligence is believed to have begun with
the evolution of decision support systems (DSS) that began in the 1960s and
developed throughout the mid-1980s. “DSS originated in the computer-aided
models created to assist with decision making and planning. From DSS, data
warehouses, Executive Information Systems, OLAP and business intelligence came
into focus beginning in the late 1980s” (Business Intelligence, http://en.wikipedia.org/wiki/Business_intelligence,
retrieved 6/18/14). Usage of the term
became widespread in the 1990s. Business
intelligence (BI) is a broad term used to refer to applications and
technologies for gathering, storing, analyzing, and providing access to data to
assist with better decision making. BI
applications include the activities of decision support systems, query and
reporting, online analytical processing (OLAP), statistical analysis,
forecasting and data mining. Although
the terms business intelligence and business analytics are often used
interchangeably, the chart below differentiated the two.
BI vs BA
|
Business Intelligence
|
Business Analytics
|
Answers the questions:
|
What happened?
When?
Who?
How many?
|
Why did it happen?
Will it happen again?
What will happen if we change x?
What else does the data tell us
that never thought to ask?
|
Includes:
|
Reporting (KPIs, metrics)
Automated Monitoring/Alerting
(thresholds)
Dashboards
Scorecards
OLAP (Cubes, Slice & Dice,
Drilling)
Ad hoc query
|
Statistical/Quantitative Analysis
Data Mining
Predictive Modeling
Multivariate
|
Implementation
of Business Intelligence Systems
The use of BI systems cuts across industries and sizes
of organizations. However, when deciding
to implement BI systems, all organizations must evaluate costs, benefits,
cultural issues, implementation issues.
Each of these will be evaluated below.
Costs
Actual out of pocket costs for BI tools can be quite
high. In terms of tangible costs
considerations include, “…the data warehouse; information delivery; data
gathering and management; and all the associated infrastructures, software,
tools and support resources. In addition, the BI project development,
management and delivery costs, including the infrastructure, are part of the
cost equation” (http://www.itbusinessedge.com/cm/community/features/guestopinions/blog/measuring-the-return-on-investment-for-business-intelligence/?cs=30674,
retrieved, 6/18/14).
In 2012, a principal analyst with Forrester estimated
that, “A typical business intelligence deal in a large enterprise with a large
vendor is somewhere from $150,000 to $300,000” (King). Furthermore, the analyst stated that, “For
every dollar you spend on business intelligence software, you better expect to
spend five to seven times as much on services” (King, 2012). Given this, there is often a big cost for
“big data.”
In addition to the direct cost of the software and
services, the major costs of BI systems include getting prepared and implementing
the system. The business has to consider:
• The correctness and integrity of the
data
• The translation of the data into
usable information
• The speed and format of the delivery
• How well the information meets the
design criteria and business requirements in the preliminary design
http://www.itbusinessedge.com/cm/community/features/guestopinions/blog/measuring-the-return-on-investment-for-business-intelligence/?cs=30674,
retrieved, 6/18/14).
Benefits
The benefits to implementing a BI system can be numerous. However, calculating the financial impacts
returns of a BI investment is sometimes not simple and therefore some companies
choose not to do so. An example of this
can be seen at Pittsburgh clothing manufacturer Little Earth Productions Inc. (LEP). LEP uses BI to track the sales that each
salesperson has brought in and then display that data publicly (Ante, 2006). In this case, although they have obviously
improved real time accountability and/or peer pressure, LEP has not taken the
step to attempt to determine how this may have increased sales. However, in other cases, companies benchmark
year over year results (pre/post implementation) in order to estimate the
impact of a BI tool. For example,
Anderson Regional Medical Center (ARMC) uses a BI tool with the main benefit of
being able to quickly and accurately aggregate data. This in turn can increase the speed of
decision making and yield significant cost savings. ARMC is a 400 bed, 1,700 employee hospital in
Mississippi. By implementing a BI tool
which integrates data from their staffing and scheduling, human resources, and
time and attendance systems; ARMC was able to make real time decisions about
the most cost effective way to staff (API Healthcare, 2014)). “The [BI tool] provides timely, relevant
information so executives, managers and clinicians have the tools they need to
staff the hospital based on patient need while effectively controlling labor
costs” (API Healthcare, 2014). Over an 8
month period, this resulted in savings of $2.5 million for ARMC (API Healthcare,
2014).
The video below outlines how MediaCom uses a BI solution from Microsoft to integrate data and provide real time feed back to it's internal teams and clients.
The video below outlines how MediaCom uses a BI solution from Microsoft to integrate data and provide real time feed back to it's internal teams and clients.
Cultural
Issues
When implementing a BI system consideration must be
given to how workers and managers will embrace and use the technology. An example of a cultural impact can also be
seen using our previous example of Little Earth Productions Inc. (LEP). There,
real time data can often lead to a feeling of being micromanaged. Additionally, if the BI outputs are widely
visible, workers may feel an inordinate amount of peer pressure. Employees state, “You do feel bummed out
sometimes if you are low on the list,” and “It's frightening” (Ante,
2006). These type of morale issues can
significantly disrupt productivity and may cause BI implementation to have the
opposite than desired effect. Given
this, companies should pay close attention to the use of, and messaging about,
BI implementations.
Implementation
Issues
As mentioned in the cost section, one of the main
implementation issues is data preparation.
In addition to the significant cost, this can often be an arduous
process of manipulation and mapping. In
an extreme example, this could be manual entry for historical data that is kept
in hard copy.
In addition to the data manipulation, there are
often obstacles with preparing the organization for the implementation of a BI
solution. This includes the cultural
issues mentioned above, but also includes business processes. Portland State University (PSU) had some
setbacks in their BI implementation for just this reason. After attempting to implement a BI solution
for over two years, the project team had to reset expectations. One lesson learned was that “it represented a
significant change in our processes and thus required substantive changes in
practice and behavior to succeed” (Blanton, 2012). Furthermore, identified the following
obstacles in implementation:
1.
Business intelligence projects run by IT tend to fail.
2.
Project sponsorship can’t just be in name only.
3.
Project management must adjust to the customers involved.
4.
No matter how much customers dislike a legacy system, they will dislike change
more.
5.
Appropriate governance has everything to do with project success.
6.
Overwhelming process can lead to underwhelming results.
7.
A business intelligence project can foster amazing cross-campus collaboration
and knowledge transfer.
8.
A mission-critical project should be managed by someone with deep and broad
institutional knowledge and relationships.
9.
When creating a new unit to manage and deliver a new service, be sure to build
in time for team cohesion, institutional knowledge transfer, and cultural
intelligence as part of the project plan.
10.
New tools expose the need for new policy.
We
believe that each of these lessons learned are universal truths that should be
considered anytime a BI implementation is being done.
References
Ante, S. (2006, February 12). Giving
the boss the big picture. Bloomberg Businessweek. http://www.businessweek.com/stories/2006-02-12/giving-the-boss-the-big-picture,
retrieved 6/18/2014.
API Healthcare. (2014). Anderson Regional Medical
Center Case Study. http://www.apihealthcare.com/sites/all/themes/wonderwheel/pdf/API_Healthcare_AndersonRegional_CS_0314_FINAL.pdf, retrieved
6/18/14.
Blanton, S. (2012, July 18). DataMASTER: Success and Failure on a Journey to Business Intelligence.
http://www.educause.edu/ero/article/datamaster-success-and-failure-journey-business-intelligence, retrieved
6/18/14.
King, R. (2012, January 27). Business Intelligence Software’s Time Is Now. http://www.passionned.com/business-intelligence-softwares-time-is-now/, retrieved
6/18/14.
Miller, D., (2009). Measuring the return on investment for business intelligence. http://www.itbusinessedge.com/cm/community/features/guestopinions/blog/measuring-the-return-on-investment-for-business-intelligence/?cs=30674, retrieved, 6/18/14.
Rouse, M. Business
Intelligence (BI).http://searchdatamanagement.techtarget.com/definition/business-intelligence, retrieved,
6/18/14.
Wikipedia. Business
Intelligence. http://en.wikipedia.org/wiki/Business_intelligence,
retrieved 6/18/14.
Very interesting post on BI. I can relate to alot of the topics discussed herein in terms of my work as an auditor for a retail business. At Pepboys we use BI to gain a comprehensive overview of all the data we have. As with any new application, employees have to get use to it. They must be educated on how the system works and the benefits of using it. I think alot of resistance stems from organizations not being open to change. At Pepboys, alot of the employees have been there for over 20-30 years. It is difficult to have them "change with the times" when they are so use to doing business "the old way."
ReplyDeleteBusinesses will incur costs with implementing a new BI application and the costs and benefits should be measured. I also think it is important for organizations to examine different products across several suppliers to have them make an informed decision about the product that works best for them. Overall, I think BI is a great tool for organizations to utilize, especially when it is implemented and executed correctly.
Posted by group 1
DeleteGroup 8 Response
ReplyDeleteThis was an excellent overview of BI systems, with a particular focus in the challenges involved with the costs of acquiring and implementing business intelligence systems and the difficulties sometimes faced with integrating previously collected data from numerous sources. The productivity power that can be harnessed through BI systems seems limitless, but on the surface, it seems the costs can only be incurred by large enterprises and are too exorbitant for small businesses. In your post, you cited an example of BI systems running upwards of $150k to $300k for large enterprises. Those kinds of initial cost estimates would generally scare away small business owners looking to make business intelligence software a part of their operation. However, upon further investigation, it seems that BI software developers have made huge leaps in providing effective BI tools that are both cost-efficient and user friendly. For example, iDashboards is a business intelligence visualization and dashboard tool, which costs about $10k for acquisition and is suitable for small work groups or departments. There are other options that help small business tailor BI software to fit their needs and avoid overpaying for all the “bells and whistles” that are available. One major cost reduction factor is that many BI programs are managed over a cloud network and eliminate the need for large-scale IT intervention. Also, some programs can be delivered in a mobile format for tablets and smartphones, eliminating the need for traditional computers for a highly mobile work environment.
While large businesses may invest heavily into a comprehensive set of BI tools and continue to spend over many years to support that system, BI software is available to small businesses and there are many options that make it feasible and affordable to implement.
Desmarais, Christina. "Can Small Business Benefit From Business Intelligence Software?." Inc.com. N.p., 7 Sept. 2011. Web. 23 June 2014. .
I wish more folks would have read this before the exam. Excellent job.
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