The impact of business intelligence on organization’s effectiveness: an empirical study
| Published date | 10 August 2015 |
| Date | 10 August 2015 |
| Pages | 263-285 |
| DOI | https://doi.org/10.1108/JSIT-09-2014-0067 |
| Author | Md. Shamsul Arefin,Md Rakibul Hoque,Yukun Bao |
| Subject Matter | Information & knowledge management,Information systems |
The impact of business
intelligence on organization’s
effectiveness: an empirical study
Md. Shamsul Aren
School of Management, Huazhong University of Science and Technology,
Wuhan, China, and
Md. Rakibul Hoque and Yukun Bao
Center for Modern Information Management, School of Management,
Huazhong University of Science and Technology, Wuhan, China
Abstract
Purpose – The purpose of this study was to identify the inuence of organizational strategy, structure,
process and culture on organizational effectiveness and the possible mediating role of business
intelligence (BI) systems among them.
Design/methodology/approach – Sample data for this study were collected from 225 organizational
units in Bangladesh and analyzed using the partial least squares method, a statistical analysis technique
based on the structural equation modeling.
Findings – The results revealed that organizational factors, such as organizational strategy, structure,
process, and culture positively affect both BI systems’ effectiveness and organizational effectiveness.
Furthermore, BI systems’ effectiveness partially mediates the impact of organizational strategy,
structure, process and culture on organizational effectiveness.
Originality/value – BI systems are context-specic and can inuence organizational effectiveness.
Dearth in research on the inuence of organizational factors to BI systems motivates this study to
contribute in BI systems literature by proposing a theoretical model and investigating the mediating
role of BI systems among various organizational factors and organizational effectiveness.
Keywords Organizational structure, Organizational culture, Organizational effectiveness,
Organizational strategy, Business intelligence systems, Organizational process
Paper type Research paper
Introduction
In today’s changing business environment, business intelligence (BI) systems play
critical role in organizations to support decision-making and improve organizational
performance (Ramakrishnan et al., 2012). These systems facilitate rms to store, retrieve
and analyze large amounts of information about their operations and allow them to
improve strategic and tactical decisions, and gain competitive advantage of the industry
(Jones, 2005). Zeng et al. (2007) dened BI as “the process of collection, treatment and
diffusion of information that has an objective, and the reduction of uncertainty in the
making of all strategic decisions.” It is a set of concepts, processes and methods to
improve business decisions, which use information from multiple sources (i.e. internal
as well as externally supplied by customers, partners or third parties) to understand
business dynamics (Maria, 2005). Elbashir et al. (2008) used the term as business
intelligence (BI) to refer to a group of systems for data analysis and reporting, which
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Impact of
business
intelligence
263
Received 28 September 2014
Revised 15 February 2015
4 April 2015
Accepted 8 April 2015
Journalof Systems and
InformationTechnology
Vol.17 No. 3, 2015
pp.263-285
©Emerald Group Publishing Limited
1328-7265
DOI 10.1108/JSIT-09-2014-0067
helps top-, middle- and lower-level managers to use relevant and timely information to
make better decisions.
Over the past decades, BI has become increasingly important in both the business
communities and the academia (Chen et al., 2012). Many researchers found that BI
systems yield real business benets, and it is used by decision-makers throughout the
rm for effective decision-making across a broad range of business activities (Chau and
Xu, 2012;Ranjan, 2009;Sahay and Ranjan, 2008). It is the input to strategic and tactical
decisions at senior management level, and it helps individuals to do their day-to-day
jobs at lower management level (Negash, 2004). A recent study suggested that using a BI
system is the way of improving business performance by providing actionable
information for executive decision-makers to make better decisions (Cui et al., 2007). It
has been argued that BI is “both a process and a product”. The process is composed of
methods that rms use to develop useful information and intelligence that can help to
survive and succeed in the global economy. The product is information that will help
rms to predict the behavior of their “customers, suppliers, competitors, products and
services, markets, and the general business environment” with a degree of certainty
(Wixom and Watson, 2010;Vedder et al., 1999).
Recently, most research in BI emphasized the use of BI in organizations. The IBM
Tech Trends Report based on a survey of over 4,000 information technology (IT)
professionals from 93 countries and 25 industries, identied BI and business analytics
as one of the four major technologies in organizations (IBM, 2011). In an annual survey
of IT executives, BI topped the list of the most important applications and technology
developments (Luftman and Ben-Zvi, 2010). Businessweek (2011) revealed that 97 per
cent of rms with yearly turnover exceeding $100 million were found to use some form
of BI. Moreover, McKinsey Global Institute predicted that a 50 to 60 per cent gap
between the supply and demand of persons with business analytical skill, as well as a
shortfall of 1.5 million data-savvy managers with the know-how to analyze data to make
effective decisions by 2018 (Manyika et al., 2011).
In recent years, BI is continued to be a top priority for many rms, and the promises
of BI are rapidly attracting many more champions (Evelson et al., 2007). BI systems are
broadly adopted or in process to be adopted in organizations today, supporting
activities such as managerial decision-making, data analysis and business-performance
measurement. Currently, many organizations have been investing billions of dollars to
implement BI systems to accomplish the task (Anjariny and Zeki, 2011). BI has
permeated various industries including banking, insurance, nance, retail, health care,
telecommunications and manufacturing (Olszak and Ziemba, 2006). It has been applied
to many areas that are related to the management processes and some of them have
formed their own systems with specic characteristics (Li et al., 2008).
However, in practice, ineffectiveness of BI is common in organizations, especially in
the context of developing countries. Organizations are facing difculties in
implementing BI. Although BI has been already studied from technological
perspectives, some organizations in developing countries still fail to achieve the success
with BI applications (Jourdan et al., 2008). This may be because the relationship between
organizational factors such as organizational strategy, organizational structure,
organizational process, organizational culture and BI systems has remained largely
unexamined. It is essential to examine the relationship between organizational factors
and BI systems’ effectiveness because the primary objective of BI is to support
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