The Contribution Of Business Intelligence To Strategic Management

This dissertation’s subject deals with both my past experiences and my future expectations. With the degree of master in applied economics I have always been attracted to strategic management because of its big thinking features. Like a military general such as Sun Tzu, defining the corporate direction taking all game theories into account like a chess game is definitely one of my passions. Therefore I would like to dig into this material even more thoroughly and discover what data and information sources are needed to defining this corporate strategy. Concerning my future expectations, business intelligence is likely to boom for the next few years. When Big US business intelligence software providers such as SAS, MicroStrategy and Business Objects announced their 2004 company results, expectations on Wall Street were abundantly exceeded. Also in 2005 the turnover of this sector increased exponentially. Therefore, I am quite confident in the next few years business intelligence will even more boom in Western Europe than it does now. As you will see in chapter 3, business intelligence is not just about IT, it deals with processing of business information. Therefore, aligning business intelligence with strategic management was in my opinion a nice subject for this dissertation. The first chapter is starting very general with definitions and concepts concerning strategy and strategic management. To remain competitive, strategic decisions based upon valuable information need to be taken. The competitive intelligence cycle is a mean to define these information needs. Using this intelligence cycle throughout his many years of career, Herring defined 3 categories of intelligence needs to support strategic decisions. After discussing these categories, the use and the need for some popular strategic management techniques are discussed. Chapter 2 discovers all functional capabilities of business intelligence tools. After some definitions, business intelligence architecture is briefly discussed and the need for data warehousing will be explained. Next, the 3 main categories of business intelligence tools, namely reporting, OLAP, and data mining, are discussed. The main goal of this chapter is to discover all possible BI functionalities and their business applications. Chapter 3 deals with the business relevancy of these business intelligence functionalities. I start by figuring out to what organizational level business intelligence is contributing. At strategic level the balanced scorecard will be introduced and aligned with business intelligence provisions. Also tactical and operational levels are likely to benefit from business intelligence tools. In the rest of the chapter I will align these business intelligence functionalities with Herring’s key intelligence topics. Finally, I will also discuss the contribution of business intelligence to the 3 strategic analysis techniques of chapter 1. Obviously, not all intelligence needs could be fully covered by business intelligence, but my expectations were fulfilled. Chapter 4 illustrates the practical functionalities of BI tools in practice and aligns them with the theoretical ‘requirements’ described in chapter 2. Therefore, Microsoft SQL Server 2005 and SAS BI Enterprise BI Server are described and checked whether they fulfil to these theoretical requirements. Both of the tools definitely fulfil the requirements. In chapter 5 a real life case of an implementation of BI is discussed. I start by situating MTV Europe and discussing the problems they were facing. To remain competitive, MTV Europe chose to invest in business intelligence technology. I will discuss what components they had installed and what the benefits are for MTV Europe in strategic point of view. Finally, in chapter 6 I will express my major conclusions of this dissertation.