Role of Business Intelligence in Decision-Making for SMEs

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1 Role of Business Intelligence in Decision-Making for SMEs Prof. Swati Kirange* Abstract : In current economical state, managers and decision-makers in the Small and Medium Enterprises requires a new set of methodologies, which can them help to start their economic and competitive growth. Managers need to examine past information and current actual information to take the right decision at the right time for future improvement. Indian small-andmedium enterprises are facing challenge in taking faster strategic decisions based on real-time analysis of large volume of data. They are increasingly turning towards BI solutions that comprise a set of tools and techniques to provide simple interpretation of this diversified data. This enables decision-makers to find new market opportunities that help in making intelligent and correct data driven business decisions. Various web based BI tools are available with analysis and reporting features with low investment options. The purpose of this study is to investigate how BI technologies are chosen and implemented by SMEs for decisions making. Keywords: Business Intelligence, decision-making, market opportunities, economic growth * Prof. Swati Kirange, Asst. professor-mca, Pratibha Institute of Business Management, Pune-19. Mo swatikn16@gmail.com Page 41

2 MIT- SOM PGRC KJIMRP National Research Conference (Special Issue) ISSN : Introduction Small and medium-sized enterprises (SMEs) have been described as stimulant for the future economy. In today s uncertain economic conditions there competitive growth has to be accelerated. Compared to large organizations SMEs suffers from scarcity of resources and lack of skilled staff, limited knowledge, lack of money, dependency on a small number of customers and limited negotiation power. So they are more vulnerable to today s changing market needs and competitive pressure. Such organizations seek new and smarter ways to improve business performance and to build stronger customer relationships. To cater with these needs such organizations are mostly turning towards the use of various information systems. Implementation and deployment of BI solutions will definitely play a crucial role in the management of Business processes. This study intends to find critical success factors of implementing BI for SMEs. The implementation of a BI system is not the easy task; it involves the purchase of a combination of software and hardware. It also requires complex infrastructure and consumes resources over a lengthy period. BI system implementation is viewed as a crude cycle that evolves over time. In today s era of internet, due to the development of computerization and the availability of large volume of data, various analytics and adequate reporting became vital for SMEs. Small and medium enterprises need BI for fast and accurate assessment of market needs, effective discovering of market niches and avoidance of unnecessary costs.to be able to carry on in such competition, SMEs need a set of patterns, tools or technologies that changes the raw data into meaningful information and knowledge, which are used for decision making. The growing use of cloud computing and open source technologies gives the opportunities for SMEs to implement Business Intelligence solutions. Information shall be made available timely in order to facilitate assist the process of decision making, either for choosing the best solution, either for the implementation of actions for solving problems at the appropriate time. Research Methodology This research is based on secondary data that has been collected by referring various research articles, books and web-sites. The collective data has been analyzed, compiled and then the outcome of all these are presented in this research article. Business Intelligence According to Gartner s the definition BI is an umbrella term that covers the applications, infrastructure and tools, and best practices that enable access to required information and analysis to improve and optimize decisions and performance of business. BI allows for the extraction and aggregation of any type of data coming from technologically different and heterogeneous sources. These tools also provide analytical data processing(olap), data mining analysis and ability to make flexible reports and dashboards. Three main approaches of BI use are found as Managerial approach with concentrate on improving management decision making; Technical approach by focusing on tools that supports the business processes enabling approach by focusing on valueadded capabilities in existing systems These approaches are consistent with the Gartner Business Analytics Framework, which suggests that elements such as people, processes and platforms need to be integrated and aligned to take a more strategic approach to BI for data analytics and corporate performance management initiatives. Page 42

3 The accessibility of data has been increasing rapidly due to low-cost data storages and connectivity. It also provides easy access to data coming from different sources like day to day operations, market, financial reports, customers, and suppliers. This development has opened certain challenges in the enterprises in arrangements of interconnections among application domain, data storages, technology available, and analytical methodologies with the aim to optimize business performance. Business Intelligence combines data, analytical tools, methodologies, and new information obtained from data, with business knowledge that can be used for decision making process. The purpose of the BI systems is to combine different data resources into information about processes in the enterprise and provide this information in appropriate way and timely to the managers. The information is usually based on analysis of enterprise operational data and serves as a source for tactical and strategic decisions. Components of BI: Data transformation tools referred as ETL (Extract-Transform-Load)are used for data extraction from various sources and transmission of these data into specialized databases. Advanced ETL tools also handle data quality control mechanisms and metadata management. Transformed data are loaded to data warehouse or to the data mart for substantial analysis. Data staging area or operational data stores are used for temporary data storage during transformation. Fundamental business data analyses are based on reporting of key performance indicators, or on multidimensional modelling of business data. Enterprise reports contain several useful indicators to help manage the business efficiency and performance. Information conveyed by data cubes is enabled by OLAP (On-line Analytical Processing). Statistical methods and data mining are also exploited for data analyses purpose. Now a day s BI software developers offer extensive product scale and services. Such solutions require proper implementation and integration with enterprise s legacy systems. Implementation often takes long time, requires significant cost, and usually assumes continuous service and upgrades with additional maintenance spending. Usage BI in small and medium enterprises is definitely going to increase in the future as software vendors start to focus on this market segment and current technological trends are also ready to be used in small business environment. Business Performance Management: Dashboard provides an interface that aids managers and executives in getting data immediately from various departments in a similar format and makes it more accessible. An enterprise dashboard provides a condensed visualization of a company s performance. If designed correctly, it is an easy-to-use application where any kind of qualitative or quantitative data is represented graphically and it becomes easy to understand. In today s competitive global market the success of any enterprise depends on its ability to make quick intelligent decisions related to any problems. Different departments in an organization use a dashboards and scoreboards differently to serve their exclusive needs. Key Performance Indicators The major part of creating a successful action plan for an organization is to identify the area in which a business needs to improve upon and then setting advantageous Key Performance Indicators. By using Business Intelligence solutions the organization can Page 43

4 MIT- SOM PGRC KJIMRP National Research Conference (Special Issue) ISSN : review vast data from a wide array of areas. Then using this information they can decide upon what goals need to be met in order to achieve the desired level of success. After an organization has decided what areas of its business need enhancement they must then move on to desired levels of improvement set as measurements. Business Intelligence systems gather data relating to profit, productivity, marketing trends and customer response. With the help of this real-time information, managers and executives can review the data and put in place indicators as needed, and then using the software on a regular basis they are able to assess the success rate of the action plans. These business issues are mainly categorized as external factors or internal performance. External factors deal with changes in the economy, political or environmental factors and customer behaviors. Internal performance factors directly affect business, financial and operational functionalities. This is a way to monitor the success and the feasibility of an enterprise. It also helps in determining whether certain business ventures will be costeffective or not. KPIs help to extend BI deployments beyond a single department and build a performance-oriented culture in an organization. BI Purpose and Contributions BI solutions are advantageous for businesses in the aspects of easy access to data; information availability in real time, flexibility and adaptability to the real situation of the company and is useful in the process of decision making. BI tools help in providing an environment that facilitates access of diverse information in real time, it also increases the interaction between uses and this allows organization to analyze business performance. BI helps in decisionmaking process by consolidating and Page 44 integrating information from various sectors, also stores this information is structures which are easy to access and analyze. Some intangible benefits of BI solutions are identified as; better information, better strategies, improved decisions, and it leads to efficient business process. BI can drive organizations to attain certain tangible benefits like cost savings, long term profit and ROI. SMEs can improve key performance indicators and become more successful and competitive in the current market. These tools ensure that important and crucial information will not be overlooked while taking decisions. Implementation of BI tools usually creates an asset that is used to create incremental cash flows within the enterprise. The operational impact of a BI is directly related to the business value of BI. Capturing BI value requires organizations to employ in effective processes of engineering and change management to ensure that BI is integrated in management and operational processes to achieve the business performance. Organizations today wants BI to be userdriven and collaborative rather than it being restricted to decision making at the top level. Information mobility with the ability for fact based decision making is becoming essential. Leading BI vendors have already started development and commercialization of mobile versions of their BI tools. Indian enterprises are taking on Mobile BI at an increasingly fast speed. In last few years, the use of BI has witnessed a sea change with the advent of sophisticated smart phones. This has led to a necessary move in the way BI is being leveraged to gain business value, points out Jaydeep Deshpande, Marketing Manager, Qlik Tech India. With the help of BI solutions organizations can understand systematic sales information and guide trade policies to the specific needs

5 of customers in the market, while still be able to attract new customers and retain old customers by providing value-added products to them. Watson and Wixom (2007)] point out the main effects resulting from BI implementation in enterprises: Cost savings on obtaining data due to data consolidation Time savings on delivering/exploitation data Higher quality of information is made available for analysis Better support for decision making Business process reengineering Support for achievement of strategic business goals CRITICAL SUCCESS FACTORS OF BI IMPLEMENTATION Critical success factors are necessary for an organization or project to achieve its mission. It is required for ensuring the success of a company or an organization in terms of Business Intelligence. Referring to literatures some critical factors identified that have significant impacts on BI implementation, which are: Dedicated management support and sponsorship: Dedicated support and sponsorship from business executives make it easier to secure the necessary operating resources such as funding, human skills, and other. Clear vision and well-established business case The business case must be associated to the strategic vision, business objectives and needs. If the business vision is not understood properly, it would ultimately impact the adoption and outcome of the BI system. Business strategy and processes should be aligned with IT strategy, IT infrastructure and IT organization and processes BI Portfolio Management: Organizations that have undertaken a complete review of the major BI opportunities for sales, marketing, manufacturing, distribution, customer service, data quality to manage BI as a portfolio of investments. Continuous Process Improvement: If business users do not change the business processes to leverage BI, then the investment in BI will not found the necessary impact in profit and productivity of the organization. These business process changes are required to capture the business value of a BI. Cross Organizational Collaboration: It requires integration of knowledge about customers, market conditions, vendors, products and staff at all levels not only within departments but also within organizations. To succeed at BI, an enterprise must nurture a crossorganizational collaborative culture in which everyone could works toward the single goal. Balanced team composition: The composition and skills of a BI team have a major control on the success of the BI implementation. The BI team should be cross-functional and composed of both technical and business personnel. Business-driven Development Approach: Adequate project scoping enables the project team to focus on critical milestones and significant issues while defending them from becoming trapped in unnecessary actions. Many experts stated that it is advisable to start Page 45

6 MIT- SOM PGRC KJIMRP National Research Conference (Special Issue) ISSN : with small changes and developments and then to adopt an incremental delivery. User-participation in change management: Improved user participation in the process of change can lead to better communication of their needs and requirements. TechologyFactors: Technical readiness of an organization such as network infrastruc ture, adequate technology for the implementatio n of data warehouse, various ETL applications and analytical tools, is also greatly influence the success or failure of the application of business intelligence in organizations. Data quality and integrity: Maintaining the quality of data, mainly in the source systems, is crucial for successful BI system implementation. Most analysts agree that the main reason of erroneous reporting is the operational data which is used for analysis as the data is filled with errors, duplications and inconsistencies. Data quality management plays an important role in BI success.bi processes have to incorporate steps for dealing with data quality issues originating from various source systems. Next-Generation BI Agile Business Intelligence Initially BI vendors and developers focused on business and operational functionality and architectural sturdiness. But now they need to focus on technologies that are categorized as agile. Agility refers to the characteristics like automated, pervasive, unified and limitless. Each of these new technologies stands on its own and is independent of each others. Enterprises need to automate BI processes fully to eliminate manual work and free up the Page 46 human resources for analysis and other valueadded tasks. Make enterprise BI applications available wherever and whenever strategic, tactical, and operational decision-makers need to analyze information, make decisions and act. This category includes technologies such as cloud, mobile and embedded BI. Cloud BI market The cloud is where all the innovation is today and will occur in the future. SMEs are turning towards use of cloud BI solutions because it s far more economical for them and it s easier for them to get things up and running much more quickly. Cloud BI has a leveling effect; they can do things that their larger competitors can do, but at a little cost. Clearly smaller organizations are the most aggressive and ambitious when it comes to cloud-based deployment today. IT organizations of SMEs should sort their needs into conventional Cloud services like Infrastructure as a Service (IaaS), Platform as a Service (PaaS), Software as a Service (SaaS), and Communication as a Service (CaaS). In principle, every aspect of an SME s IT needs may want to be consumed as a service and the IT and telecommunications industries are working meticulously at putting these Everything as a Service offerings into the market. Open source BI Open source BI is software that can be distributed for free and permits users to modify the source code. Open source software is available in all BI tools, from data modeling to reporting tasks and from to OLAP to ETL process. Because open source software is community driven, it relies on the community for improvement. Implementation cost of open source BI in less because of its low startup

7 cost and the typically lower ongoing maintenance cost. Conclusion A BI solution helps in efficient data delivery which saves time and enables managers to make decisions faster. Effective decisionmaking is needed at all the levels of an enterprise. This article explores Business Intelligence critical success factors for SMEs and understands how Business Intelligence can help to create value in today s competitive environment. With the implementation of suitable BI system, SMEs would spend less time addressing emergencies and more time planning growth. With the support of good business environment, the right expertise and the right level of technology SMEs would become more competitive. Cloud computing BI provides several advantages for smaller companies like lower implementation cost and ease of use. Another option to decrease BI systems cost is to use open source tools and applications. References: Arisa Shollo(2013). The Role of Business Intelligence in Organizational Decisionmaking, Copenhagen Business school, Phd series Celina M. Olszak and EwaZiemba Critical Success Factors for Implementing Business Intelligence Systems in Small and Medium Enterprises on the Example of Upper Silesia, Poland, Interdisciplinary Journal of Information, Knowledge, and Management Volume 7, 2012 Marketa Horakova, Hana Skalska(2013)Business Intelligence and Implementation in a Small Enterprise,JOURNAL OF SYSTEMS INTEGRATION 2013/2 Sara ChambelPinheiro, 2014,The Influence of Business Intelligence in SMEs, Business Information Systems,Dissertation Samuel Tousgaard, Andrea Carugati ( 2012) Organizational impacts of Business Intelligence Systems,An interpretive cross case analysis, Department of Business Administration, Business and Social Sciences, Aarhus University Kowalczyk, Martin, Investigating Business intelligence and Analytics from a decision process perspective :a structured literature review, Proceedings of the 21st European Conference on Information Systems ******************** Page 47