Business intelligence (BI) systems provide the ability to analyse business information in order to support and improve management decision making across a broad range of business activities. They leverage the large data infrastructure investments (e.g. ERP systems) made by firms, and have the potential to realise the substantial value locked up in a firm's data resources. While substantial business investment in BI systems is continuing to accelerate, there is a complete absence of a specific and rigorous method to measure the realised business value, if any. By exploiting the lessons learned from prior attempts to measure business value of IT-intensive systems, we develop a new measure that is based on an understanding of the characteristics of BI systems in a process-oriented framework. We then employ the measure in an examination of the relationship between the business process performance and organizational performance, finding significant differences in the strength of the relationship between industry sectors. This study reinforces the need to consider the specific context of use when designing performance measurement for IT-intensive systems, and highlights the need for further research examining contextual moderators to the realisation of such performance benefits.
Measuring the bottom-line contribution of information technology (IT) has long been seen as a major challenge for researchers and professionals (Kohli and Devaraj, 2003, Chan, 2000, Barua and Mukhopadhyay, 2000 and Dehning and Richardson, 2002). Part of the challenge lies in the unique nature of different information technologies, their heterogeneous applications, and their subsequent qualitative as well as quantitative impacts. These characteristics require the use of performance measures that are specific to the technologies in question and consistent with management objectives and business plans regarding IT (Mooney et al., 1995). For instance, it may not be appropriate to use accounting measures such as firm profitability and return on investment (ROI) when measuring the business performance of a transactional IT tool such as transaction processing systems (TPS), or a typical decision support system (DSS) (Anderson and Lanen, 2002, Lucas, 1993, Liang and Tang, 1992 and Weill and Olson, 1989). This is because such measures are often neither consistent with the firm's strategic intention regarding the technology, nor sufficiently close to the immediate influence of such systems.
In this study we develop a measure of business process performance and explore its relationship to an organisational performance measure, in the context of Business Intelligence (BI) systems. BI systems refer to an important class of systems for data analysis and reporting that provide managers at various levels of the organization with timely, relevant, and easy to use information, which enable them to make better decisions (Hannula and Pirttimaki, 2003). Examples of BI tools include those software and solutions which are provided by vendors such as COGNOS, Business Objects and SAS. Such BI systems typically require specialized IT infrastructure in order to function effectively, including query, analysis, and reporting tools (such as online analytical processing “OLAP”, data mining tools, statistical analysis, forecasting, and dashboards), and the underlying specialized databases (such as data warehouses and data marts). BI systems are often implemented as enhancements to widely adopted ERP systems. IDC estimates that global spending on BI systems and related products is expected to reach $US6.1 billion by 2008 (Elbashir and Williams, 2007). The scale of investment in BI systems is reflective of their growing strategic importance and highlights the need for more attention in research studies.
In their early days, BI systems were viewed as tools that were used exclusively to support strategic decision-making. However, organizations have recently begun to further exploit the capabilities of BI systems through deploying these technologies to support wider business activities (Rogge, 2005). Organizations now use BI systems for tactical and operational process improvements, supply chain, production and customer service (Williams and Williams, 2003 and Elbashir and Williams, 2007). These new developments have allowed line managers to access relevant and timely information (such as daily customer and product updates) and make better and instantaneous decisions. The dimensions of the business process benefits reported in this study demonstrate the current move in the deployment of BI systems at the operational level. The results suggest that organizations are now able to create a broad range of operational benefits along their value chain activities.
With the ever-increasing investment in BI systems, it is essential to provide a valid and reliable measure to capture the business value that arises from their deployment. The development of the measurement is timely, being prior to the commencement of a substantial amount of research about BI systems. The development of the instrument is based on sound theories, established method, and extensive collection of appropriate data. We argue that the rigorous process followed provides a high degree of confidence in the validity of the measure (Moore and Benbasat, 1991). Consistent with the recommendation in prior literature, the measure has multiple evaluative perspectives that consider both the diversity of stakeholders in BI systems as well as the candidate business processes served by BI systems (Banker et al., 1993).
