When we think of humans as intelligent beings we often refer to their ability to take in data from their environment, understand the meaning and significance of the information, and then act appropriately. Can the same be said of business firms? The answer appears to be a qualified “yes.” All organizations, including business firms, do indeed take in information from their environments, attempt to understand the meaning of the information, and then attempt to act on the information. Just like human beings, some business firms do this well, and others poorly.
“Business intelligence (BI)” is a term used by hardware and software vendors and information technology consultants to describe the infrastructure for warehousing, integrating, reporting, and analyzing data that comes from the business environment, including big data. The foundation infrastructure collects, stores, cleans, and makes relevant information available to managers. Think databases, data warehouses, data marts, Hadoop, and analytic platforms, which we described in Chapter 6. “Business analytics (BA)” is also a vendordefined term that focuses more on tools and techniques for analyzing and understanding data
So, stripped to its essentials, business intelligence and analytics are about integrating all the information streams produced by a firm into a single, coherent enterprise-wide set of data, and then, using modeling, statistical analysis tools (like normal distributions, correlation and regression analysis, Chi square analysis, forecasting, and cluster analysis), and data mining tools (pattern discovery and machine learning), to make sense out of all these data so managers can make better decisions and better plans, or at least know quickly when their firms are failing to meet planned targets.
One company that uses business intelligence is Hallmark Cards. The company uses SAS Analytics software to improve its understanding of buying patterns that could lead to increased sales at more than 3,000 Hallmark Gold Crown stores in the United Sates. Hallmark wanted to strengthen its relationship with frequent buyers. Using data mining and predictive modeling, the company determined how to market to various consumer segments during holidays and special occasions as well as adjust promotions on the fly. Hallmark is able to determine which customer segments are most influenced by direct mail, which should be approached through e-mail, and what specific messages to send each group. Business intelligence has helped boost Hallmark sales to its loyalty program members by 5 to 10 percent. Another organization that has benefited from business intelligence is the Cincinnati Zoo, as described in the Interactive Session on Organizations.
Business Intelligence Vendors
It is important to remember that business intelligence and analytics are products defined by technology vendors and consulting firms. They consist of hardware and software suites sold primarily by large system vendors to very large Fortune 500 firms. The largest five providers of these products are Oracle, SAP, IBM, Microsoft, and SAS (see Table 12.4). Microsoft’s products are aimed at small to medium-sized firms, and they are based on desktop tools familiar to employees (such as Excel spreadsheet software), Microsoft SharePoint collaboration tools, and Microsoft SQL Server database software. According to the International Data Corporation, the global business intelligence and analytics market was $35.1 billion in 2012 and is expected to reach $50.7 billion by 2016 (Kern, 2012). This makes business intelligence and business analytics one of the fastest growing and largest segments in the U.S. software market.
THE BUSINESS INTELLIGENCE ENVIRONMENT There are six
elements in this business intelligence environment:
- Data from the business environment: Businesses must deal with both structured and unstructured data from many different sources, including big data. The data need to be integrated and organized so that they can be analyzed and used by human decision makers.
- Business intelligence infrastructure: The underlying foundation of business intelligence is a powerful database system that captures all the relevant data to operate the business. The data may be stored in transactional databases or combined and integrated into an enterprise-data warehouse or series of interrelated data marts.
- Business analytics toolset: A set of software tools are used to analyze data and produce reports, respond to questions posed by managers, and track the progress of the business using key indicators of performance
• Managerial users and methods: Business intelligence hardware and software are only as intelligent as the human beings who use them. Managers impose order on the analysis of data using a variety of managerial methods that define strategic business goals and specify how progress will be measured. These include business performance management and balanced scorecard approaches focusing on key performance indicators and industry strategic analyses focusing on changes in the general business environment, with special attention to competitors. Without strong senior management oversight, business analytics can produce a great deal of information, reports, and online screens that focus on the wrong matters and divert attention from the real issues. You need to remember that, so far, only humans can ask intelligent questions.
• Delivery platform—MIS, DSS, ESS: The results from business intelligence and analytics are delivered to managers and employees in a variety of ways, depending on what they need to know to perform their jobs. In the past, these systems could not share data and operated as independent systems. Today, one suite of hardware and software tools in the form of a business intelligence and analytics package is able to integrate all this information and bring it to managers’ desktop or mobile platforms.
User interface: Business people are no longer tied to their desks and desktops. They often learn quicker from a visual representation of data than from a dry report with columns and rows of information. Today’s business analytics software suites emphasize visual techniques such as dashboards and scorecards. They also are able to deliver reports on BlackBerrys, iPhones, and other mobile handhelds as well as on the firm’s Web portal. BA software is adding capabilities to post information on Twitter, Facebook, or internal social media to support decision making in an online group setting rather than in a face-to-face meeting.
• Delivery platform—MIS, DSS, ESS: The results from business intelligence and analytics are delivered to managers and employees in a variety of ways, depending on what they need to know to perform their jobs. In the past, these systems could not share data and operated as independent systems. Today, one suite of hardware and software tools in the form of a business intelligence and analytics package is able to integrate all this information and bring it to managers’ desktop or mobile platforms.
User interface: Business people are no longer tied to their desks and desktops. They often learn quicker from a visual representation of data than from a dry report with columns and rows of information. Today’s business analytics software suites emphasize visual techniques such as dashboards and scorecards. They also are able to deliver reports on BlackBerrys, iPhones, and other mobile handhelds as well as on the firm’s Web portal. BA software is adding capabilities to post information on Twitter, Facebook, or internal social media to support decision making in an online group setting rather than in a face-to-face meeting.
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