Business Intelligence in

Competitive Advantage

Dr Amit Mitra
Bristol Business School
Agenda
• Role of business intelligence in decision
making
• Common tools used to develop BI
• Dashboards, metrics
• Analytics
• Evidence led decision making
• Maturity levels in decision making

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Why do we need business intelligence?
• Every organisation is trying to produce goods and
services that fit with audience expectations
• These expectations are forever changing
• As real time interviews and interaction with
customers is infeasible – dynamically updated
stored data is used to interrogate patterns
• User generated content and social media have
added to capacities of developing suitable business
intelligence
• It forms a significant input into the capacity of an
organisation’s assessment of customer preferences
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Business Intelligence/ Analytics
• Business intelligence (BI) is the term used
to describe the set of technologies and
processes that use data to understand and
analyse business performance
• Business analytics is the term used to
refer to the use of quantitative and
predictive models and fact based
management to drive decisions
• Business analytics is a subset of BI

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IT dashboard
• Provides a snapshot of metrics at any
given point in time
• Summarises key metrics for senior
managers in a manner that enables quick
identification of the status of organisation
• Useful outside the IT department and are
often found in executive offices as a tool
for keeping current critical measures of the
organisation

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Dashboard metrics
• Traffic light indicators are a common form
of dashboard metric
• A green highlight means that the project is
progressing as planned and performance
is within acceptable limits
• An amber highlight means at least one key
target has been missed
• A red highlight means the project is
significantly behind and needs attention or
resources to get back on track
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 Example of dashboard metric
• A map of the UK has been used to indicate performance by
geography, and each county was colour coded to indicate if
targets were being met
• Managers could drill down into each county by clicking on
the county, and see the next level of detail, which provided
information by region
• Further drilling down provides sales by town, village, and
ultimately by sales person
• At each level, the data was presented and colour coded to
give a visual, and therefore a quick indication of who was
making targets, and who was missing them.

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 GM’s dashboard criteria
• Performance to budget
• Performance to schedule
• Delivery of business results
• Risk
• The director of IT operations explains, ‘Red means I
need more money, people or better business buy-
in… The dashboard provides an early warning
system that allows IT managers to identify and
correct problems before they become big enough to
derail a project.’

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 Types of IT dashboards
• Portfolio dashboard
– Show senior IT leaders the status, problems, milestones, progress, expenses,
and other metrics related to specific projects
• Business-IT dashboard
– Show relevant business metrics and link them to the IT systems that support
them
• Service dashboard
– Is geared towards the internal IS department, showing important metrics
about the IS such as up-time, through-put, service tickets, progress on bug
fixes, helpdesk satisfaction, etc.
• Improvement dashboard
– Monitors three to five key improvement goals for the IT group. Like the
portfolio dashboard, the metrics to be monitored are based on the projects
undertaken, but unlike the other dashboards, this one is geared toward
monitoring progress toward important goals of the IT organisation itself

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 Example architecture of a dashboard
Dashboards Corporate Dashboards Factory Dashboard
Highly summarised Planning/ Forecasting
…. Component…. Inventory
Key Metric Driven ….
Revenue Positions ….
Line utilisation
Visualisation and Alert Inventory Positions Yield

Business
Intelligence BMIS Mitec Reporting QIS
Cross Application (Financial (Factory Performance) (Product
Query/ Data Mining Performance) Performance)
Statistical Analysis

Functional Applns
Transaction Based Point of Supplier Mfg. Marginal Failure
Standard Reporting
ERP Logistics
ERP Logistics Sale Quality Execution Monitoring Analysis
Highly Focused System System System System

Raw Data
Raw
RawData
Data
Feeds Transaction
Drive
DriveCost,
Cost,Customer
Customerorder,
order,Cust
CustPayment,
Payment,Test
TestData,
Data,Build
BuildData,
Data,etc….
etc….
System
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5 capabilities of BA of successful firms
• Hard to duplicate: A competitor may have the
same tools, but success comes from how they are
used
• Uniqueness: There are many ways to use
business analytics to compete
• Adaptability: Successful companies use analytics
across boundaries and in creative ways
• Better than the competition: Some organisations
are better at applying analytics than others
• Renewability: Agility is an important characteristic
of sustainable competitive advantage

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Components of business analytics
Component Definition Example
Data repository Servers and software Data warehouses
used to store data
Software tools Applications and Data mining process;
processes for statistical forecasting software
analysis, forecasting, package
predictive modelling, and
optimisation
Analytics Environment Organisational Reward system that
environment that creates encourages the use of
and sustains the use of the analytics tools;
analytics tools willingness to test or
experiment
Skilled workforce Workforce that has the Caesars and Capital One
training, experience, and have such workforces
capability to use the
analytics tools

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Data warehouses
• Collections of data designed to support
management decision making
• They contain a wide variety of data used
to create a coherent picture of business
conditions at a single point in time
• Data may represent a large part of a
company’s knowledge, i.e. the business’s
knowledge about its clients and their
demographics

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Data mining
• Is the process of analysing data
warehouses for ‘gems’ that can be used in
management decision making
• It identifies previously unknown
relationships among data
• It refers to the process of combing through
massive amounts of customer data to
understand buying habits and to identify
new products, features, and
enhancements
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Clubcard – a successful data mining tool

http://bobnational.net/record/185772/media_id/187581

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Software tools
• Statistical analysis – answers questions
like, ‘Why is this happening?’
• Forecasting/Extrapolation – answers
questions like, ‘What if these trends
continue?’
• Predictive modelling – answers questions
like, ‘What will happen next?’
• Optimisation – answers questions like,
‘What is the best that can happen?’

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Analytics environment
• Requires alignment of IS strategy and
organisational strategy with business
strategy
• This includes alignment of corporate
culture, the incentive system
• Metrics used to measure success of
initiatives
• Processes for using analytics with the
objective of building competitive
advantage through analytics
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Evidence based management
• Leadership plays a key role in creating a
strong analytics environment
• Proactive leadership can move the
company’s culture to an evidence based
management approach that is reliant on
evidence and facts as the first step in
decision making
• Encourages decisions based on data and
analysis rather than on experience and
intuition
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Skilled workforce
• Managers need to have enough
knowledge of analytics to use them in their
decision making
• Leaders need to set examples for the
organisation by using analytics and
requiring that decisions made by others
use analytics
• A key dimension of this could be based on
sponsorship by the top leadership of
organisations
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 Analytical capabilities maturity levels
Level Description Source of business
value
Level 1: Reporting Answers ‘What happened?’ by creating batch Reduction in costs of report
and ad hoc reports that summarize historical generation and printing
data
Level 2: Analysing Answers ‘Why did it happen?’ by using ad Value associated with
hoc, real-time reports, and business understanding root causes
intelligence tools to understand root causes
Level 3: Predicting Answers ‘What will happen?’ by using Value from being able to take
predictive models that extrapolate from data action on predictions to help the
to enable possible scenarios for the future business
Level 4: Answers ‘What is happening now?’ by linking Value from real-time
Operationalising business intelligence tools with operational understanding of action/reaction
systems to provide instantaneous views and and course correction instantly to
updated predictions improve operations
Level 5: Activating Answers ‘How should we respond?’ by Value from automated reactions
automatically linking analytics with other based on real-time data stream.
systems, creating continuous updates from Value from dynamic process that
business intelligence tools that automatically ‘learns and corrects’
are understood by operational tools and automatically.
trigger events as needed

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So what?
• Time horizons for decision making are
getting shorter on a daily basis
• Impact of poor decisions can be
devastating
• Organisations around the world need to be
closely connected to real time data
• Leadership support for evidence based
management is a growing expectation of
modern businesses

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References:
• Pearlson, K.E. and Saunders, C.S. (2013).
Strategic Management of Information
Systems, 5th edition, Wiley
• Beynon-Davies, P. (2013). Business
Information Systems, Palgrave Macmillan
• Stair, R.M. and Reynolds, G.W. (2014).
Principles of Information Systems,
International Edition, Cengage

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