The Value of Business Intelligence in the Context of Developing Countries
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1 The Value of Business Intelligence in the Context of Developing Countries Maira Petrini Fundação Getulio Vargas Av. Nove de Julho Bela Vista - CEP: São Paulo - SP Tel.: (11) Fax: (11) maira.petrini@fgvsp.br Marlei Pozzebon HEC Montreal and McGill University 3000, chemin de la Côte-Sainte-Catherine - H2X 2L3 - Montreal Quebec Tel: (514) , Fax: (514) marlei.pozzebon@hec.ca Abstract In the corporate context, a combination of constant technological innovation and increasing competitiveness makes the management of information a huge challenge and requires decision-making processes built on reliable and opportune information, gathered from internal and external sources. Although the volume of information available is increasing, this does not mean that people are able to derive value from it. Regarding IT, after years of important investments in order to put in place a technological platform that supports all business processes and that strengthens the efficiency of the operational structure, most organizations are supposed to have reached a level where the implementation of IT solutions for strategic levels becomes possible and necessary. This context explains the emergence of the domain generally known as business intelligence (BI), seen as an answer to the current needs in terms of information for decision-making with the intensive utilization of information technology. The objective of this research project is to examine the meaning and role of BI in a particular context, one of developing countries, more specifically, in Brazil. If the management of IT is a challenge even to companies in developed countries, what can we say about organizations struggling in unstable contexts such as developing ones? Keywords Business Intelligence, developing countries. 1. Introduction In the corporate context, a combination of constant technological innovation and increasing competitiveness makes the management of information a huge challenge and requires decision making processes built on reliable and opportune information, gathered from internal and external sources. Although the volume of information available is increasing, Page 1
2 this does not mean that people are able to derive value from it (Burn and Loch, 2001). Regarding IT, after years of important investments enabling a technological platform that supports all business processes (processes that are reengineered and integrated) and that strengthens the efficiency of the operational structure (all submitted to quality programs), organizations are supposed to have reached a level where the implementation of IT solutions for strategic levels becomes possible and necessary. This context explains the emergence of the area generally known as business intelligence (BI), seen as an answer to the current needs in terms of information for strategic decision making with the intensive use of information technology (IT). This perception of IT as strategic is not exclusive to developed countries. IT is expected to play a key developmental role in developing countries as well. The possibility of technology transfer is seen as an opportunity for organizations in developing countries to bypass stages of growth in their programs for industrialization and advancement (Steinmueller, 2001). However, very often the resulting IT-based solutions these companies deploy have shown little impact on the goals they intended to reach (Sahay and Avgerou, 2002). Among the reasons for this situation, one can argue that IT solutions developed from some contexts (the developed world, for instance) are not necessarily beneficially translated into other contexts. Such considerations have instigated us to put forward a research program aiming to investigate the status and role, if any, of BI projects in the context of developing countries, more specifically, in Brazil. Two research questions are being explored. First, what kind of models or frameworks has been adopted to implement BI projects in Brazilian companies? Are they adherent to the particular and contextually situated company s business strategy or are they standard and imported from developed contexts? Second, what type of information is being considered to integrate their BI systems? Is it formal or informal? Is it gathered from internal and external sources? Is there a trend that privileges some areas, like finance or marketing, over others or there is a concern about maintaining multiple perspectives? Exploring these questions and discussing them with Brazilian entrepreneurs, our purpose is to produce two main results. First, to draw a picture in terms of what types of BI projects were already implemented by Brazilian companies and what is their perceived value in terms of gaining competitive advantage regarding companies in developed countries. Second, to provide one or more frameworks for BI implementation that take into account the particularities of the context of companies in developing countries, including what kind of information is suitable to be included and the ways to gather it. 2. Literature Review 2.1. IT and Developing Countries It is often assumed that the impact and implementation of IT will, or should be, the same in all situations with little regard to the particular social or cultural context. In fact, it does not occur. Avgerou (2002), drawing on experience and research in different societies (Europe, Latin America etc), explains the nature of organizational diversity in which IT innovation takes place, and also develops a conceptual approach to account for it. From institutionalized concepts of organizations, the sociology of technology, current debates on globalization and critiques of the rationality of modernity, the author shows how the processes of IS innovation Page 2
3 and organizational change reflect local aspirations, concerns and action, as well as the multiple institutional influences of globalization. Several differences in contextual factors raise issues about whether IT implementation really is the same in developing countries as in industrialized countries. Mursu et al (2000) suggest that there are special requirements that should be taken into consideration in systems development methodology in Africa. The special requirements are mainly based on the socioeconomic as well as the wider socio-political context, such as sustainability, affordability, socio-economic justification and community. They emphasize that these issues are relevant in industrialized countries also, but more critical in developing countries, and not sufficiently addressed by existing ISD methodologies. Several estimations suggest that a significant majority of IS projects in developing countries fail in some way. Why should this be? The central to developing countries information system success and failure is the amount of change between where we are now and where the information system wants to get us. The former will be represented by the current realities of the particular context (part of which may encompass subjective perceptions of reality). The latter will be represented by the model or conceptions, requirements and assumptions that have been incorporated into the new information system s design. Design conceptions derive largely from the worldview of the stakeholders who dominate the IS design process. Putting this a little more precisely, it can be said that success and failure depend on the size of gap that exists between current realities and design conceptions of the information system (Heeks, 2002). Gaps will arise especially when designs and dominant design stakeholders are remote (physically or psychologically) from the context of IS implementation and use. This can happen in a number of ways, but the domain of developing country information systems is particularly dominated by the transfer of Northern designs to Southern realities (Heeks, 2002). An example of country context gaps can be drawn from the Philippines. There, an aidfunded project to introduce a field health information system was designed according to a Northern model that assumed the presence of skilled programmers, skilled project managers, a sound technological infrastructure, and a need for information outputs like those used in an American health care organization (Jayasuriya 1995 apud Heeks 2002). In reality, none of these was present in the Philippine context and the information system failed. Globalization can be seen as a contradictory process, which may imply increased interconnectedness of local actors but also "globalism" in the form of increased transnational uniformity (Beck, 2000). It is believed that there is an emergent and important role in IT researches: to study particular individuals, groups, organizations, or societies in detail, and in context. In this way, studies of organizational information systems from all parts of the world form the basis for comparisons and inferences from a global viewpoint. 2.2 Business Intelligence The literature review on BI reveals few empirical studies. Most of the articles are conceptual. In addition, we recognize the traditional separation between technical and managerial aspects, outlining two broad patterns (Table 1). Page 3
4 Managerial Approach Focus on the process of gathering data from internal and external sources and of analyzing them in order to generate relevant information (Liautaud, 2000; Schonberg et al., 2000; Kalakota & Robinson, 2001) Table 1: Two approaches to BI Technological Approach Focus on the technological tools that support the process (Kudyba & Hoptroff, 2001; Scoggins, 1999; Hackathorn, 1999; Dhar & Stein, 1996; Giovinazzo, 2002) From the managerial approach, BI is seen as a process in which data from inside and outside the company are integrated in order to generate information relevant to the decision making process. The role of BI here is to create an informational environment and process by which operational data gathered from transactional systems and external sources can be analyzed and to reveal the strategic business dimensions. From this perspective emerge concepts such as intelligent company : one that uses BI to make faster and smarter decisions than its competitors (Liautaud, 2000). Intelligence means reducing a huge volume of data into knowledge through a process of filtering, analyzing and reporting information. The technological approach presents BI as a set of tools that supports the storage and analysis of information. The focus is not on the process itself, but on the technologies that allow the recording, recovering, manipulation and analysis of information. For instance, Kudyba and Hoptroff (2001) understand BI as data warehousing (DW); Scoggins (1999) classifies data mining (DM) as a BI technique; Hackathorn (1999) includes all resources (DW, DM, hypertext analysis and web information) in the creation of a BI system; and finally, linking BI and the Internet, Giovinazzo (2002) posit the integration of DW and customer relationship management (CRM) applications. Whether managerial or technological, there is one shared idea among all these studies: (1) the core of BI is information gathering, analysis and use and (2) the goal is to support the decision making process, helping the company s strategy. Taking into account the scarce literature, we looked for other areas that could help us reach a more comprehensive understanding of BI. We find contributions in three distinct topics: information planning, balanced score card and competitive intelligence. Authors writing about information planning emphasize the importance of identifying few but strategic information (Reich and Benbasat, 2000), which posits a kind of paradox regarding the overload of information we have today: the problem of BI is exactly to reduce quantity into quality. In addition, information relevant to decision making is likely to exist inside the company already or to be clearly defined in the managers minds (Connely et al., 1997). In a similar vein we have the well-known critical factors of success (CFS) method by which executive objectives, indicators, measures and reports are identified and selected by means of a sequence of interviews with top management (Rockart, 1979). Both areas information planning and CFS - promote a realist ontology that denies the socially constructed and political process of information producing in any organization. The concept of balanced scorecard (BSC) also offers some contribution to our study of BI as it associates indicators and measures (information) to the monitoring of strategic objectives of the company (Van Der Zee & De Jong, 1999). BSC can be seen as a set of measures that provide a fast and understandable view of the business to high-level executives (Kaplan and Norton, 1992). Its development was motivated by the dissatisfaction with the traditional Page 4
5 performance measures that were only concerned with financial metrics and focused in the past and not the future. As a result, the financial measures are complemented with operational, internal process and innovative and organizational learning measures. The main contribution of BSC to our study is this idea of multiple perspectives. Regarding the context of developing countries, such as of Brazilian companies, what alternative and particular perspectives could we aggregate? Finally, we borrowed insights from a neighboring area, competitive intelligence (Miller, 2002). It is about how intelligence, not simply information, can flow through your company for the benefit of everyone. It is about beating your competitors both here and abroad and never being surprised and blindsided by their actions or other outside events (Kahaner, 1998). We found here the same concern with the process of data collection and analysis and with the distinction between information and intelligence we have found in BI definitions. Information is factual, intelligence is something that can be acted upon; both are contextual. After analyzing all the ideas described above (clearly dominated by a positivistic standpoint) and trying to develop a more critical appreciation, we put forward a distinct definition of BI: a collective and socially constructed process of information gathering, analysis and dissemination where the information is few but strategic, belongs to multiple perspectives, originates internally and externally, and is contextualized. In addition, we believe that such a process should be reflexive, i.e., organizational members should be critical regarding their role, the role of their company in their context and critical regarding the information they help to produce. 3. Research Methods The present research has been conceived as a qualitative study. It aims to describe and understand complex phenomena, whose contextual factors must be deeply analyzed. The first part of the research investigates the implementation and use of BI projects in Brazil, i.e., what approaches of BI implementation are being applied by Brazilian companies, what kind of information and sources do they use and what are the perceived values or benefits of these projects. In order to cover a large number of Brazilian companies and to assure a comprehensive view, structured telephone interviews seems the best strategy. We adopt criterion sampling (Miles and Huberman, 1990), i.e., all selected cases should meet the same criterion: companies that have implemented and are current using a BI project. From the analysis of these interviews we will draw a first portray of patterns of BI projects in practice in Brazil. The second part of our research aims to discuss and validate the models and frameworks identified in the first phase. We are going to use focus group, defined as group interviews where a moderator guides the meeting while a group discusses the topics that the interviewer raises (Morgan, 1998). Focus group meetings will be conducted with eight to ten participants of the different patterns identified from the collection of interviews (Greenbaum, 1998).. We believe that the focus groups will provide useful discussion about how the context of developing countries is represented in the patterns of BI projects and about the perceived added value of each pattern. Table 2 shows the actual status and next steps: Period: 2002/2003 Dec-Mar Apr-May Jun-Jul Aug-Sep Oct-Dec Page 5
6 Phase I Literature Review Data Collection#1: Semistructured interviews by phone Data Analysis#1: Identification of patterns of BI projects Phase II Data Collection#2: Focus group Data Analysis#2: Validation of BI projects patterns Writing Up the Results: BI framework for companies in developing countries Table 2: The research chronology 4. Expected Contributions This research proposes to revisit existing views of BI. We believe that a collective, contextualized and critical process of information management may help companies in developing countries find value in their BI projects. IT can be a powerful tool to help countries promote their own development (Meier, 2000) and recent IT studies suggest the importance of the local context when IT-based solutions are implemented in developing countries (O Bada, 2002). However, the nature of these adaptations and the factors that influence them are poorly understood. We translate this problem to the BI domain: how should developing countries use IT according to their social, economical and cultural contexts? Our main contribution is to shed some light on this issue. References Avgerou, C (2002), Information Systems and Global Diversity, Oxford University Press, London. Beck, U. (2000). What is globalization?, Polity Press, Cambridge, UK. Benamati, J, & Lederer, A (2001), Rapid Information Technology Change, Coping Mechanisms, and the Emerging Technologies Group, Journal of Management Information Systems, 17(4), Burn, J, & Loch, K, (2001), The Societal Impact of the World Wide Web Key Challenges for the 21 st Century, Information Resources and Management Journal, 14(4),4-14. Connely, R, et al (1997), The Muldimensional Manager: 24 ways to impact your bottom line in 90 days, Cognos Incorporeted, ON, Canada. Dhar, V, & Stein, R (1996), Seven Methods for Transforming Corporate Data into Business Intelligence, Prentice Hall. Page 6
7 Giovinazzo, W (2002), Internet-Enabled Business Intelligence, Prentice Hall. Greenbaum, T (1998), The Handbook for Focus Group Research. London, Sage Publications, London. Hackathorn, R (1999), Farming the Web for Systematic Business Intelligence, Proceedings of the Fifth ACM SIGKDD, San Diego, CA. Heeks, R (2002), Information Systems and Developing Countries: Failure, Success and Local Improvisation, Information Society, 18(2) Kahaner, L (1998), Competitive Intelligence: How to Gather, Analyze and Use Information to Move your Business to the Top, Touchstone Books. Kalakota, R & Robinson, M (2001), E-business 2.0 Roadmap for success, Addison- Wesley, NY. Kaplan, R & Norton, D (1992), The Balanced Scorecard measures that drive performance, Harvard Business Review, 70(1) Kudyba, S, & Hoptroff, R (2001), Data Mining and Business Intelligence: A Guide to Productivity, Idea Group Publishing. Liautaud, B (2000), E-Business Intelligence: Turning Information into Knowledge into Profit, McGraw-Hill. Meier, R (2000), Late-blooming Societies Can Be Stimulated by Information Technology, Futures, 32(2),163. Miles, M, & Huberman, A (1990), Qualitative Data Analysis, Sage Publications, London. Miller, J (2002), O Milênio da Inteligência Competitiva, Bookman, Brazil. Morgan, D (1998), The Focus Group Guidebook, Sage Publications, CA. Mursu, A et al (2000), Information Systems Development in a Developing Country: Theoretical Analysis of Special Requirements in Nigeria and Africa, Proceedings of the 33rd Hawaii International Conference on System Sciences. O Bada, A (2002), Local Adaptations to Global Trends: a Study of an IT-based Organizational Change Program in a Nigerian Bank, Information Society, 18(2),77. Reich, B & Benbasat, I (2000), Factors that Influence the Social Dimension of Alignment between Business and Information Technology Objectives, MIS Quartely, 24(1), Rockart, J (1979), Chief Executives Define their own Data Needs, Harvard Business Review, 57(2),81. Sahay, S & Avgerou, C (2002), Information and Communication Technologies in Developing Countries, Information Society, 18(2),1-5. Scoggins, J (1999), A Practitioner s View of Techniques Used in Data Warehousing for Sifting through Data to Provide Information, Proceedings Of The Eight International Conference On Information and Knowledge Management, Kansas City, MI. Schonberg, E et al (2000), Measuring Success, Communications oh the ACM, 43(8), Steinmueller, W (2001), ICTs and the Possibilities for Leapfrogging by Developing Countries, International Labour Review, 140(2), Page 7
8 Van Der Zee, J & De Jong, B (1999), Alignment is not Enough: Integrating Business and Information Technology Management with the Balanced Score Card, Journal of Management Information System, 16(2), Page 8
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