A system theory of business intelligence

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A Systems Theory Of Business Intelligence.

Author: Jerry Kurtyka.

Name of the Review:

DM Review.

Number Of Pages: 4 pages.

Year of publication: 2005.


Introduction :

Through this article, the author has proposed a systems theory of Business Intelligence (BI) in order to guide the designers on what BI technology can do andwhat it cannot do in an environment and to detect the risks involved. In a first place, he defined the systems theory as the study of the general principles of systems functioning, so that they can be applied to all types of systems, « by viewing them as systems per se rather than an economy or a business or a machine ». Then, he defined the systems theory of BI, which is « to position the BI in thecontext of its surrounding system ». Every organization is a cognitive system that has to perform four tasks: 1-
Sense and monitor its environment; 2-
Relate the information obtained to the operating norms; 3-
Detect the deviation from these norms; 4-
Initiate corrective actions. Those tasks create an interface between the organization and its environment that is led by the BI. In order to beefficient, the BI system designed has to take into consideration many criteria, especially the environment where the firm evolves. From this, the problematic of this article appears through the following question: “What BI system design approach is right for a given environment?”


Developement :
A systems theory for BI: The firm can be approached as a Human Systems Model that interacts withthese elements: -
The larger world system : it includes the global environment in which the firm operates; -
The external environment : it regroups all the components acting externally from the firm and on which the organization has a little control (customers, regulators, competitors, etc.); -
The resource base : All the inputs over which the firm has control: labor, capital, suppliers, etc;-
Boundaries : they include : o
Business actions: goals, processes, rules and actions of the firm. o
Business model: structure, mission, values, culture, presuppositions which are specific to the firm. -
The institutional memory of the organization that puts all the knowledge in the specific context and makes it accessible to the organization’s members. -
Feedback from the changes of theenvironment conditions o
Single-loop feedback : the firm responds without changing the organization; o
Double-loop feedback: impacts and challenges the firm are deeper. On the one hand, a single-loop feedback shows how the organization is dealing with the preset objectives, processes and rules. On the other hand, the business model of the firm may change via a double-loop feedback.


In fact,BI is a component of the institutional memory that includes the results of feedback from the external environment. It represents concrete, measurable and quantifiable facts in the process of cybernetic information exchange. Unlike business actions, business model is less visible and measurable. It tells the organization’s members how to act in various situations by combining its components.

Asystems theory for BI: According to the author, so that a BI application can be powerfully built, it is crucial to design it in such a way as it fits the degree of complexity which characterizes the environment. BI application encompasses a variety of useful tools for organizing, analyzing, predicting and measuring the results of business actions. The author has examined the impact of the overallenvironment on the BI design and the results were conclusive. He identified five solutions that correspond to each type of environment that organizations are dealing with. The latter are classified in ascending order of openness, from rigid to purpose-seeking. The system environment is defined in terms of: •
Whether it is open or closed; •
Focused on limited goals or more pluralistic in its...