Business Intelligence Maturity Models Based on Analytical Capabilities

Tlie literature points to the fact that the success of implementing BI systems is largely determined by analytical capabilities of an organization. BI capability means IT-enabled, analytical dynamic capability for improving decision-making and firm’s performance (Chae, & Olson, 2013). It is a specific and important type of IS capabilities. Different organizational characteristics and strategic goals may also require the use of different BI capabilities. According to Gartner Group BI, these capabilities relate to information access and analysis of decision-making style within an organization (Isik, Jones, & Sidorova, 2011). Isik, Jones, and Sidorova (2011) delineate information access and analysis capabilities and relate them to the overall BI success. Davenport and Harris (2007) state that analytical capability is a key element of strategy for the business. Wixom, Watson, and Werner (2011) argue that BI capability is “a journey over long periods of time during which foundational competencies are developed.”

According to Teece et al. (1997), dynamic capabilities can be divided into three classes of activities, including sensing, seizing, and transformation. In the context of business process management (Ortbach et al., 2012) and also of BI, sensing refers mainly to identification of the need to change organizations business processes, relations with customers and suppliers. Seizing means the exploration and selection of opportunities for change. Transformation involves sociotechnical implementation of redesigned business processes in an organization. Some authors argue that BI capabilities are critical functionalities of BI that aid an organization to improve its adoption to change and its performance (Isik, Jones, 8c Sidorova, 2011; Wixom, Watson, & Werner, 2011).

It is asserted that organizations may develop two activities to build BI capability. Tlie former activity concerns the widely understood data exploration, whereas the latter refers to data exploitation (Lavie, Stettner, & Tushman, 2010). Data exploration enables an organization to overcome the burden of actual knowledge and its capabilities. This may refer to new technical capabilities, market experience, and new relations with the environment. Furthermore, the exploration is a conscious searching of new knowledge sources, enrichment of existing resources, adoption of new behavioral orientations, and acquisition of new competencies. This all can be achieved through advanced data mining, text mining, web mining, intelligent agents, and search-based application. In turn, data exploitation concerns the utilization of existing knowledge bases. It is limited to actual resources and refers to their detailed analysis.

Model Proposed by Davenport and Harris

The model proposed by Davenport and Harris (2007) is an example of a model in which BI assessment is made mainly from the perspective of BI capabilities. The authors have distinguished in their model five stages of analytical capability called analytically impaired, localized analytics, analytical aspiration, analytical companies, and analytical competitors. The first stage means that “organizations have some desire to become more analytical, but thus far they lack both the will and the skill to do so.” They face some substantial barriers — both human and technical. They may also lack the hardware, software, or skills to carry out extensive analysis. The second stage localized analytics is characterized by reporting with pockets of analytical activity. Organizations undertake the first analytical activities, but they have no intention of competing on them. BI activities produce economic benefits but not enough to affect a firm’s competitive strategy. The third stage called analytical aspirations is triggered when BI activities gain management support. Organizations build a plan of utilizing BI. The primary focus in analytical companies stage is building word- class analytical capabilities at the enterprise level. Organizations implement the plan developed in a previous stage, making considerable progress toward building the support, culture, skills, strategic insights, data, and technology needed for analytical competition. At the last stage, analytics moves from being a very important capability for an organization to the key to its strategy and competitive advantage. Executive managers trust in BI, and all users are highly educated in BI.

Model Based on Dynamic Capabilities Business Intelligence

The model proposed by Olszak (2014) is a dynamic BI capabilities framework that is strongly combined with the idea of Davenport’s and Harris’s model. It reflects six capabilities areas, such as governance, culture, technology, people, processes, and change and creativity management that can be used to assess BI use in organizations. Each capability area is described by various detailed BI capabilities (Table 5-3) and mapped on the scale: analytically impaired, localized analytics, analytical aspiration, analytical companies, and analytical competitors.

The first BI capabilities area - governance - is “the mechanism for managing the utilization of BI resources within an organization and for embedding BI initiatives within organizational objectives. It also involves continuous renewal of BI resources and organizational capabilities to respond to changes in dynamic environments and mitigating resistance to change” (Cosic, Shankes, & Maynard, 2012).

Table 5.3 Dynamic Capabilities Bl Framework

Bl Capabilities Area

Detailed Bl Capabilities

Governance

Business vision and plan Business analysis planning and monitoring Strategic alignment of Bl and business strategy Decision-making rights (operational, tactical, strategic)

Bl solution assessment and validation

Culture

Executive leadership and support Flexibility and agility

Establishing a fact-based and learning culture

Technology

Data management

Systems integration and interaction with other systems Flexibility

Reporting and visualization technology Advanced Bl technology (OLAP, data warehousing, data mining, predictive analysis)

People

Securing and building technology skills Mathematical and statistical skills Organizational skills Organizational knowledge, knowledge sharing

Managing analytical people Business interpersonal communication Entrepreneurship and innovation Trustworthiness

Process

Holistic overview of a business process/ knowledge processes

Business process/knowledge-modeling and orchestration

Process redesign and integration

Change & Creativity

Monitoring of competitors, customers, and current trends in the marketplace Introducing new change-oriented business management models, knowledge management, and customer relationship management

Generation of new and useful products, services, ideas, procedures, and processes

Source: (Olszak, 2014).

The governance area is described by various detailed capabilities, such as business vision and plan, business analysis planning and monitoring, strategic alignment of BI and business strategy, decision-making rights (operational, tactical, strategic), and BI solution assessment and validation.

The second BI capabilities area refers to a culture of an organization. A culture is described as “personality of an organization” and comprises the assumptions, values, norms, and behavioral signs of organization/s members. They form over time and lead to systematic ways of gathering, analyzing, and disseminating data. Organization’s culture influences the way decisions are made and mainly reflects executive leadership and support, flexibility, and agility as well as establishing a fact-based and learning culture.

The next important area in the mentioned model concerns people. People are “all those individuals within an organization who use BI as part of their job function. BI initiatives are considered to be knowledge intensive and require technical, business, managerial, and entrepreneurial skills and knowledge” (Cosic et al., 2012). The model assesses different skills of people, e.g., mathematical and statistical skills, organizational skills, and communication skills.

Technology area refers “to the development and use of hardware, software, and data within BI activities. It includes the management of integrated and high-quality data resources, the seamless integration of BI systems with other organizational information systems, the conversion of data into information through reporting and visualization systems and use of more advanced statistical analysis tools to discover patterns, predict trends, and optimize business process” (Cosic et al., 2012).

The process area consists of activities devoted to gathering, selecting, aggregating, analyzing, and distributing information. Some of these activities are the responsibility of the BI staff, whereas others are the joint responsibility of the BI staff and business units. Processes may be divided into categories of internal and external processes. The first group mainly relates to accounting, finance, manufacturing, and human resources. The second group concerns managing and responding to customer demand and supplier relationships (Davenport & Harris, 2007).

The last area of the proposed model refers to change and creativity management in organizations. Organizations face rapid change like never before. Therefore, the ability to manage and adapt to organizational change is an essential ability required in the workplace today. Change management is an approach to transitioning individuals, teams, and organizations to a desired future state. BI requires permanent development and adaptation to new challenges and expectations of an organization, whereas an organizational creativity is the firm’s ability to generate new and useful ideas to address rapidly changing opportunities and threats by making timely and market-oriented decisions and to frame breakthrough changes in its resource base.

The proposed model based on BI capabilities areas was mapped onto the Davenport and Harris model. As a result, a BI capabilities maturity matrix was created (Table 5-4). Such a matrix can be used to assess BI capabilities and competences in selected organizations.

Bl Capabilities Area

Analytically

Impaired

Localized

Analytics

Analytical

Aspiration

Analytical

Companies

Analytical

Competitors

Governance

Lack of vision and plan

Businesses plans for limited departments

Integrated business strategy

Have an enterprise Bl strategy

ВI strategy oriented on customers, suppliers, etc.

Culture

No flexibility and agility

Low support from senior executives

Users are encouraged to collect, process analyze, and share

information

Establishing a fact-based and learning culture, skill training in Bl

Learning from customers, suppliers, communities of practice, social media

Technology

Missing/poor data Unintegrated systems

Missing important data, isolated Bl efforts

Proliferation of Bl tools

High quality of data, integrated knowledge repositories

Enterprise-wide Bl architecture largely

implemented

(Continued)

Bl Capabilities Area

Analytically

Impaired

Localized

Analytics

Analytical

Aspiration

Analytical

Companies

Analytical

Competitors

People

Users do not know their own data requirements or how to use them

The users take the first Bl initiatives

Users try to optimize the efficiency of individual departments by Bl

Users have high Bl capabilities but often not aligned with right role

Users have capabilities and time to use Bl

Processes

Users do not know business processes

Identification of basic business processes

Standardization of business processes, and building best practices in Bl

Business process management based on facts

Broadly supported, process-oriented culture based on facts

Change and Creativity

Fear of change, no creativity

Risk management for selected business process, poor and limited creativity

Building the best practices for change management, individual and team creativity

Integrated risk management, team and organizational creativity

Cooperation with competition, organizational creativity, creative environment

Source: (Olszak, 2014).

 
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