Digital Transformation vs Business Intelligence

The digitized business world today needs a lot of help in the understanding digital transformation of firms so that they can successfully sense and manage important business events that appear as opportunities and threats. The bridge between the diverging principle of the broad phrase digital transformation and the converging fundamentals of Business Intelligence is an endeavour businesses need to undertake. In layman’s terms, digital transformation is the ‘what’ part and Business Intelligence is the ‘how’ part of it culminating in the result of a real-time enterprise, an RTE. Irrespective of whether your organization is a legacy enterprise or a startup, becoming a real-time enterprise is the ask of the day for the continued sustainability of your business. 

Digital Transformation is divergent 

We have seen in the previous blogs that digital transformation is the use of digital and information technologies in transforming user experience and business processes and models to significantly improve the performance or reach of an enterprise. The methodology has been radically changing competitive dynamics in the increasingly digitized business environment. We are also seeing companies improving traditional technologies such as ERP (Enterprise Resource Planning and CRM (Customer Relationship Management) as well as adopting new digital technologies such as Business Intelligence and analytics, mobile and smart devices to change and enhance business processes, customer relationships and the ways to innovate products and services. Transformation, per se, is happening with all the competitive landscapes in all economic sectors. 

In such digitally transforming environments organizations are facing several challenges that they should overcome to survive and thrive. For example, the speed at which new opportunities emerge or new products and services are introduced is continually increasing over time in a broad range of industries, not only in high-technology industries but also in non-high-technology industries. Furthermore, organizations process the rapidly increasing amount of big data generated from the digitally connected world as and when they are generated, market information becomes obsolete quickly, and windows for strategic opportunities and threats close quickly. Thus, organizations often fail to sense and respond to critical changes in a timely fashion. The cost of failure in a sensible and timely response can become enormous like unwanted exits in the market. Therefore, in the pervasively digitized world, the organizational capabilities for timely sensing and managing important business events that turn into opportunities and threats become a key issue for organizations in sustaining competitive advantage. 

Business Intelligence is convergent 

The intelligence that defines the capability of timely sensing and managing important business events is called Business Intelligence. We would like our readers to know that there is an equivalent emphasis on the importance of a time buffer - the time organizations need to train themselves and their staff on how this intelligence can be applied starting with one task and finishing it without delaying other tasks that are dependent on it. There is also management research arguing that in highly turbulent environments, organizations need to continually reconfigure tasks and resources in a way to shorten the cycle of experiments that aim to create a series of temporary competitive advantages. 

However, they largely ignore the role of digital and information technologies in developing the acumen of Business Intelligence that enables firms to sustain competitive advantage. Business Intelligence also helps managers understand how to design and manage information technologies to transform that can successfully cope with rapidly changing environments.  

Business Intelligence Planning 

Organizations need to define their environmental factors like customers, products, competitors, suppliers, regulators, technologies, and economics which can act as the source inputs of Business Intelligence. Some of these environmental factors are more directly related to organizational tasks, while others constitute a broader contextual environment. For example, customers, technologies, and competitors are considered the task environmental factors, while economics, regulation, and sociocultural are considered environmental factors. General environments affect all industries as the global economic crisis in 2008 did. The task environments describe more specifically the characteristics of an industry. It is the latter we, as organizations, need to consider as the main source inputs when collating the Business Intelligence needed for us to decide when and how to act upon. Let’s look at those task environments which we could use as directives specific to the collection of our own Business Intelligence. 

Observe — Look out for events that can significantly influence firms’ performance. Scan, monitor, and filter events regarding customers, competition, and technologies in which opportunities and threats are manifested. 

Orient — Look out for defining opportunities that are threats to your organization. Gather, aggregate, structure, and evaluate relevant information from diverse sources to understand the implications of the captured events to organizations. 

Decide — Define your action principles (e.g., new configuration plan, new product/service plan). Make action principles to guidelines to reconfigure resources and to initiate new competitive actions to the market in a way to enhance the effects of opportunities and to minimize the effects of threats. 

Reconfigure — Chart out a new configuration of resources - new structure and process. Reconfigure organizational resources, and modify process, product, strategy, and structure based on action principles. 

Enact — The action points could be new prices, products, services, and new policies for customer and supplier relationship management. Introduce new competitive actions to the market, such as new products/services and new pricing models, and modify policies with strategic partners based on action principles. 

Business Intelligence Execution 

As mentioned earlier, Business Intelligence is the ‘how’ part of digital transformation. When this know-how part is done well, the results of it give us the ‘what’ part of digital transformation as in what to do with such intelligence. The results given below are accrued from the input sources collected from very divergent places and Business Intelligence is the converging point of those sources to act upon and be acted upon as well.

— Acting capabilities are positively related to performance in rapidly changing environments. Sensible capabilities enhance acting capabilities. Business Intelligence systems enhance both sensible and acting capabilities. These systems when in place indirectly enhance a firm’s performance through sensible and acting capabilities. 

— Communication support systems directly enhance both sense-making and acting capabilities as well as indirectly by complementing Business Intelligence. A high level of Business Intelligence, especially in slowly changing environments does not have a positive impact on a firm’s performance in short-term plans but can be perceived first and seen later in the long term.

— Superior Business Intelligence and analytics accompanied by communication technologies enable organizations to achieve a high level of sensible and acting capabilities and such real-time enterprises can achieve competitive advantages by acquiring information regarding customer preference change, new technology emergence, and potential competitive moves of rivals in a timely fashion.  

Result Orientation 

Due to the increasing ubiquity of digital transformation with information and digital technologies such as big data analytics, mobile communications, and connected devices as well as traditional enterprise systems, managers can easily access more diverse types of data, which support managers for timely sensing and responding to rapidly changing digitized environments by introducing new products and services that reflect changing customer preferences. In a slow-changing environment, firms may not need to frequently execute the experiments of sensing environmental change and reconfiguring resources, and enacting new products. It may cause a loss of competitive advantage. 

Rather, in slow environments firms may need to focus on developing efficiency-oriented structures that enable them to make cost-efficient and high-quality products that can sustain competitive advantage. It all boils down to a specific type of digital transformation into a real-time enterprise (RTE) with Business Intelligence and communication technologies. The emphasis is on the importance of transforming to achieve and sustain competitive advantage in a rapidly changing environment. Firms should change their strategies from the traditional approach to an experiment-based strategy with Business Intelligence on hand.