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Business intelligence and SMEs: Bridging the gap

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Studies in Business Vol. 7, No. 1 2017

Business intelligence and SMEs: Bridging the gap

Included in this printed copy:

Ekavi Papachristodouloua, Margarita Koutsakia and

Why the social sciences should be based in
evolutionary theory: the example of
geoeconomics and intelligence studies
Klaus Solberg Søilen pp. 5-37

Efstathios Kirkosa,*
Proposal of an assessment scale in competitive
intelligence applied to the tourism sector
Gisela Casado Salguero, Pedro Carlos pp. 38-47
Resende Jr. and Ignacio Aldeanueva Fernández

Key success factors to business intelligence

solution implementation
José Manuel Villamarín García and
Beatriz Helena Díaz Pinzón
pp. 48-69
aDepartment of Accounting, ATEI of Thessaloniki, Greece;
Business intelligence and SMEs:

*[email protected]
Bridging the gap
Ekavi Papachristodoulou, Margarita pp. 70-78
Koutsaki and Efstathios Kirkos

A new model for identifying emerging technologies

Klaus Solberg Søilen pp. 79-86
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Business intelligence and SMEs: Bridging the gap. Journal of Intelligence Studies
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Business intelligence and SMEs: Bridging the gap

Ekavi Papachristodouloua, Margarita Koutsakia and Efstathios Kirkosa,*

aDepartment of Accounting, ATEI of Thessaloniki, Greece

*Corresponding author: [email protected]

Received 15 February 2017; accepted 1 March 2017

ABSTRACT According to research findings, small and medium enterprises (SMEs) are facing
problems such as an excessively large volume of data, lack of information and lack of knowledge.
Therefore, in order to make decisions on time, the managers of SMEs use mainly their
experience, which implies a high risk of failure. Business intelligence (BI) is a useful and helpful
tool, which brings many advantages and benefits to businesses. However, like any technology,
it is accompanied by some limitations that must be overcome in order to help businesses to
develop. This paper summarizes current research findings addressing the issue of the
development and application of business intelligence systems for SMEs. The issues addressed
are models for the estimation of the readiness of a SME to establish BI tools, alternative BI
solutions for SMEs, benefits and challenges of BI in SMEs, implementation methods for BI
systems in SMEs and finally, BI systems in cloud computing platforms. Research papers dealing
with these issues are analyzed and the results are presented. This paper contributes to the
understanding of problems and potentials regarding the development and application of BI
systems in SMEs.

KEYWORDS Business intelligence, competitive intelligence, SMEs

1. INTRODUCTION development and maintenance of a BI system

requires considerable funding. Moreover, the
Despite the economic size of each company,
majority of SMEs do not have a specialized IT
access to relevant and important information is
department. Many SMEs are run by the
very important to ensure the success of the
owners, who might not have advanced
acquisition of a market share. Business
technological knowledge. It is known that the
intelligence is considered a very important tool
applications of BI are not primarily accessible
to achieve such a goal. According to the
to SMEs. The available systems are expensive,
Gartner’s surveys, business intelligence (BI)
difficult to use and require excellent
and analytics systems are ranked as the top
technological training of business staff.
technological priority of companies in the last
Commonly, these applications meet the needs
years worldwide. The main objective of BI
of large enterprises, that have all the
systems is to facilitate the decision making
appropriate resources for their proper
process by providing quality information,
functioning.
based on the analysis of large amounts of
Despite these limitations, better
internal and external data. However, BI
information provision, facilitated by a BI
systems are characterized by their difficulty
system, may lead to better decisions and
and complexity to handle. Also, economic
become a consistent competitive advantage. A
factors are the ones that make many SME’s
prerequisite is the successful confrontation of
administrations fail to proceed to the
problems, stemming from the specific
acquisition of a system. Normally, the
characteristics of SMEs. With the evolution of
 71
technology, BI suppliers have designed and comparisons between pairs of criteria and
developed applications and tools to meet real alternatives were created. The comparison was
small businesses needs. Τhere are BI systems made with a rating scale of 1-9. The third and
that are available online. These systems are final step is the weight of each pair. This
affordable, easy and they belong to the category method was used to give the weight of each
of cloud systems. Such solutions are suitable factor based on specific criteria and the better
for SMEs, as they do not incur additional alternative was the one with the higher weight.
installation and maintenance cost. Tools and To be valid comparisons, the researchers
IT system applications are not considered a chose values less than 0.1 (consistency ratio
privilege of large companies, as the services <0.1). Then, they began to develop a framework
offered are designed for the needs and that would apply in a real and not virtual
requirements of SMEs, which can be just as enterprise. The target frame raised the level of
competitive and successful. The present paper readiness of BI in an SME (level 1). Criteria
addresses a wide spectrum of issues related to joined the function categories of business (level
the application of BI systems in SMEs. BI 2), while the critical success factors were
practitioners and SME managers might find considered alternatives (level 3). For the
this brief but concise summarization useful in purpose of the study, Hidayanto et al. (2012)
their attempts to apply this cutting-edge used 18 factors based on the scientific
technology in this specific business sector. literature references by Atre (2003), Williams
and Williams (2004) and Yeoh and Koronios
2. READINESS OF AN SME FOR BI
(2010).
Hidayanto et al. (2012) conducted research to For the category of organization, the
assess the readiness of a SME to establish a BI critical success factors selected were committed
tool. For the development of the framework, management support and sponsorship, clear
the researchers used as their tools the Critical vision and well-established business case,
Success Factors and the Analytical Hierarchy strategic alignment, effective business/IT
Process. They focused on three categories of partnership for BI, BI portfolio management,
functions found in an SME. The framework continuous process improvement culture,
formed by researchers primarily focuses on culture surrounding the use of information and
three main categories that are identified, analytical applications, cross-organizational
which were developed and evaluated. These collaboration and decision process engineering
categories are organization where nine culture.
relevant factors were explored, process where For the process category, the factors chosen
four factors have been analyzed and technology were balance team composition, availability of
where five factors were explored. skilled team members, business driven
In this study the researchers initially make development approach and iterative
a theoretical presentation on the development development approach and user oriented
of the model and then they proceeded to a more change management.
detailed description. Finally, the proposed For the technology category business
framework is applied to a real case of a SME. driven scalable and flexible technical
Through this research, they explored and framework, sustainable data quality and
evaluated the critical success factors, namely integrity, importance of metadata, BI and DW
the elements that are necessary to ensure the technical readiness and the silver bullet
success of such a venture in the evaluation and syndrome were selected.
acquisition of a BI system. Once the problem decomposition process
We chose the Analytical Hierarchy Process was completed, the researchers proceeded to
method for the development of the proposed create pairs of criteria and alternatives, with
framework, because this method allows the the help of four specialists in BI. Experts, using
analysis of a complex problem in a more simple the Delphi technique, gave values to results
structure and selects the most effective which arose from four comparisons: i) the inter-
solutions that lead the administration to better category pairwise comparison, ii) the pairwise
decisions (Taylor 2005, Cheng 1997). The comparison for organizational category, iii) the
researchers define the three steps of this pairwise comparison for process category and
method. iv) the pairwise comparison for technology
The first step is the decomposition of the category. Finally, the validity of comparisons of
model into three levels (objective, criteria and each class of the consistency ratio was
alternatives). In the second step, the
72
calculated (consistency ratio < 0.1) and the By applying a similar model, businesses
weight of each factor was calculated. will be able to analytically evaluate their
To give a more accurate and fair decision readiness and then they can decide whether
about the value of each factor in business, the they will be able to deploy BI software, as they
researchers used the e-GP model (electronic may be confronted with unexpected situations
government procurement) Readiness Self- that may arise during the project. Management
Assessment. Thus, they evaluated the level of should be aware of the real needs of the
readiness of each factor using a scale (0-3) enterprise and adopt corresponding services to
measuring each factor’s readiness level. manage and support them.
The results of this research reaffirm the
3. BI SOLUTIONS FOR SMES
findings of previous research, mainly
conducted by Williams and Williams (2004) Tutunea and Rus (2012) study alternative BI
and Yeoh and Koronios (2010). According to the solutions for SMEs. In their research, they
BI experts the most crucial factors in tested and evaluated the available commercial
developing BI systems are the following: BI solutions, open source solutions and IT
systems tools offered for small and medium
• Strategic alignment between business businesses. The software tested was available
and IT. Consistency is required between on the websites of companies that provide BI
business strategy, organization and solutions. For the evaluation of commercial
processes and IT strategy, solutions, they set two criteria. The first
infrastructure, organization and criterion set was the complexity that
processes. characterized the provided solutions. The
• Managements support and sponsorship. variables set for this criterion were the
The determination of the management to functionality, maintenance and system
support the project secures the support, accessibility and user interface and
availability of resources such as funding the final purchase price. The second criterion
and human skills. was characterized as the reputation of the
• Clear vision and well established company that was on the market.
business. A clear strategic business By conducting this research, they have
vision is required. Such a strategic vision concluded that, depending on company size,
is needed for the establishment of a solid the management and some specific internal
business case. Misunderstanding of the factors, there are three types of BI solutions
long-term vision and objectives may that allow companies to choose the one that
derail the BI project. best fits their requirements and needs.
As a first choice, they ranked the solutions
Other important issues are the composition developed within the company and did not
of the BI team and the quality of the data. It is involve specialized BI providers. These
critical to include business experts who solutions mainly focus on static or dynamic
understand the strategic vision in the BI team analyses of the data with the help of Excel
so they can foresee the organizational spreadsheets, Open Office Calc, Lotus 1-2-3,
challenges. computer graphics, and what-if type analysis.
After the comprehensive development of Such BI solutions are part of SaaS (System-as-
the model, the researchers applied it to a real a-Software) and have gained ground in their
SME. They randomly chose an SME in acquisition by SMEs. This is because the final
Indonesia, which did not use a BI system. purchase cost is low, it is easy to use and the
Through semi-structured interviews they installation time is very fast. Also, there is no
assessed the level of preparedness of each further staff training. The products are hosted
factor separately and then multiplied it by the in a secure online platform where the company
weight factor of the level of preparedness. has access without leaking data.
After, they added all the results to give the As a second option, the researchers ranked
final grade. The company managed to collect the commercial BI solutions. Of the software
58.05%. The result showed that although the that was tried, they found that there are two
company understood the importance of the types of providers.
factors for the implementation of BI, it had to The first category includes specialized
face some obstacles and then proceed to the software companies that provide exclusive BI
implementation of BI. tools. Businesses rely on a specialized team to
design the software according to their needs
 73
and requirements. Such providers are of businesses applying BI. For this, they used a
Information Builders, MicroStrategy, and cluster analysis, namely the k-means
QlickTeck. algorithm and the proximity measure ED. The
In the second category, they identified numbers of clusters were defined by the use of
companies that have a greater variety of a FC measure (Fusion Coefficient) (Toms et al.
interests. In this category are the BI solutions 2001).
that are aimed at a particular sector such as To collect the necessary data, the
education, banking or insurance systems. Such researchers assessed 4960 Saxon firms, where
providers include Oracle, Microsoft, SAP, and the operators responded to an on-line
SAS. questionnaire via e-mail, which covered a wide
As a third option, they ranked BI solutions range of issues focusing on BI. The
and open source solutions. The motivation that questionnaire was validated in two ways
drives companies to proceed to the acquisition (Fowler 2001): it was originally created and
of such solutions is the low cost. Therefore, the written by experts in the field of information
architecture, the functionalities and their technology and then evaluated by conducting a
environment are considered to be the main preliminary test. In this way, they managed to
criteria on which SMEs choose a BI tool. ensure that respondent companies fully
Providers of open source software are Actuate, understood the terms and the importance of
Jaspersoft, Pentaho and SpagoBI. the questions in the questionnaire.
Enterprises can choose a suitable solution, In total they collected 452 questionnaire
taking into account the quality of the responses. Of these 452 companies, 214 already
information provided, data analysis tools and had a BI tool. In these companies, they applied
visualization, cost, accessibility and the technique of cluster analysis, to find the
effectiveness of the decisions. Thus, companies kind of companies that implement BI.
depending on resources choose the best From the research conducted, they
solution that will bring advantages managed to identify three main beneficial
factors including improvements to data
4. BENEFITS AND CHALLENGES OF
support. In this factor the main benefits are
BI IN SMES
reduced effort of data analysis and reporting,
In this section two surveys aiming at reports are available faster and with better
identifying the benefits and challenges of BI quality, easy access to information and flexible
adoption in SMEs are presented. Also, through reactions to new information. The second
the research, they identified the sections of beneficial factor was improvements to the
their application. For this purpose were used decision process where the main benefits are
two research studies by Scholz et al. (2010) and that business decisions are being eased by
Nenzhelele (2014). more precise and current data analyses, risks
Scholz et al. (2010) were able to identify the and chances are supported in a higher level and
beneficial factors, challenges and types of the company’s results are improved. The last
SMEs that adopt BI tools. The authors study beneficial factor is savings and it’s
the adoption of BI by German SMEs by characterized by savings on personnel in
examining 214 firms in Saxony. different departments that can be achieved,
The method applied was based on competitive advantages can be achieved and
references of other authors and researchers. cost savings in IT that can be achieved.
The study was based on Exploratory Factor On the other hand, they were able to
Analysis (EFA), which identifies the perceived identify the main challenging factors. These
benefits and challenges of implementing BI. were the challenges depending on usage. The
Initially, to verify the suitability of the sample main challenges are that the handling of the
they used the KMO measure as proposed by solution is too complicated and reports are to
Kaiser and Rice (1974). Then, they applied the complex, data is poorly structured, capabilities
MSA measure to validate the sample and then do not cover business needs and BI staff are not
applied the PCA measure to extract relevant qualified enough.
information. A number of factors have an Challenges related to data such as
impact on businesses, including applied software errors, inadequate security function,
graphics and an Eigenvalue with EV>1 range of BI tools and functions don’t match
according to Thompson and Daniel (1996, 200). with the business needs.
After identifying the strengths and The last challenging factor is the interface
challenges, they focused on identifying the type challenges. In this factor the main challenges
74
are limited data export and also that the data and benefits identified, SMEs are trying to be
are not usually enough more competitive to be able to achieve higher
Finally through the cluster analysis, they profits and more sales. In this case, it is stated
were able to identify four categories of that SMEs choose to spend more money and
companies using BI (Rapidly growing B2C, establish BI software in market research and
lightly regulated companies with a focus on marketing departments.
collaboration, service-oriented B2B companies,
5. IMPLEMENTATION METHODS
and high-regulated product-oriented
FOR BI SYSTEMS IN SMES
companies).
The research carried out by Scholz et al. Frion and Yzquierdo-Hombrecher (2009)
(2010) showed that companies and present a new competitive intelligence model
organizations that do not have a BI tool should for the management of large amounts of data
not only focus on the positive effects that could and information entering business. Initially
generate from its use. They should study and they conducted a literature reference which
all those challenges and constraints that may focused mainly on the concept of BI. The second
arise, e.g. software errors, reduced resources, method was based on their long experience in
and unnecessary costs. Through cluster competitive intelligence systems and their
analysis, they concluded that product-oriented application mainly in small businesses. Also,
companies have better prospects in the through their experience, they managed to
application of BI. Also, through cluster develop and present a new information
analysis BI providers can identify the real management model: the Acrie Model.
needs of SMEs. From the literature, research is found that
In the second examined paper, Nenzhelele studies and research are carried out based on
and Pellissier (2014) identify which business large companies. For this reason, the authors
areas mainly applied business or competitive noticed that there are many different ways and
intelligence and whether they understand the methods to apply competitive intelligence. The
concept. According to Bernstein (2009) literature survey was completed with the
competitive or business intelligence is formed presentation of the new method and the new
by processing the data, which produce competitive intelligence information
information, processed information which management model was developed. The model
produces knowledge and processed knowledge was called the Method Acrie.
which leads to intelligence. The basic principles of this model are less
The data collection was done by using a data, more inductive reasoning tests and
questionnaire sent to a hundred SMEs in the analysis and less information, more curiosity
greater region of South Africa. Their original about the problem, focuses on human behavior
purpose was to discover whether SMEs are and on information approach through
aware of BI and then to identify the main questions.
challenges they face. Also, they tried to find the The method takes place in three steps. The
sections where companies apply BI. From the first step is a formal command formulation and
research, the researchers concluded that an informal discussion to reformulate the first
although companies understood the vague intent. The second step is a question
importance of BI, they did not apply an plan, which consists of three levels and is
equivalent tool. Businesses using a BI tool formed by ten questions. This is to help the
asked about the main challenges and manager reach his expectations in a specific
discovered that three restrictions are common field. The third step consists of ten seeking
to all businesses. The lack of time working with plans, one for each question.
the system shows that small businesses do not It takes a few weeks to prepare a small
have the needed time to manage a competitive company for the Acrie Method. When the
intelligence system, the lack of human preparation process is achieved, experts
resources and economic factors were the main implement the proposed model in the company.
problems they face. The application area is not According to Frion and Yzquierdo-Hombrecher
located in a particular part, but somewhere (2009), a small company is doing BI when the
independently. This is because SMEs have no company is running an outgoing coordination
formal organizational structure, but one very prior to the five mail skills of BI activity:
important role is the application of competitive questioning, information seeking, information
intelligence in market research and marketing treating, distribution and protection of
department. Apart from the various challenges information.
 75
The large amount of data and information questionnaire was created, which aimed to
entering business is not always a good rank the importance of success factors. The use
phenomenon. This is why the authors of cloud BI for SMEs was always a challenge
developed a new information management for researchers, as the number of enterprises
model. Through this model, the Acrie Model, applying such a system was limited.
the leader creates plans and plans with the rest In this stage, scholars gathered
of the team to help to reach a better result for information from 36 companies through a
the company's interest. This method is used by questionnaire on the issue of BI. The
small and large companies, with various tools questionnaire was created by Bryman and Bell
to suit the needs of each company individually (2011).
and to ensure the continuous coordination of The findings of the first phase were that the
the five main skills of competitive (business) main factors for the adoption of BI systems was
intelligence. The Acrie Method is a proposed that they must have reduced costs, installation
model of information management that can time and implementation and a quick response
manage data and also focus on people who are to user requests.
involved in this process. The results of the second stage showed that
the main factors to be taken by an enterprise
6. CLOUD COMPUTING AND BI
BI are the functionality of the system,
In the present section two papers, which aim to continuous data access, rapid response to user
present BI in cloud computing platforms are requirements, a large amount of data
discussed. management and implementation costs. Both
Agostino et al. (2013) identified the key stages have shown that users are looking for
success factors in their study for the adoption easy tools to use as they have the necessary
of cloud BI for SMEs and their characteristics expertise. The economic factor plays a very
based on the needs of BI users and suppliers. important role because SMEs have very
Past approaches based on Scholz et al. (2010) limited resources. Cloud software is an
and Yeoh and Koronios (2010) have discovered economic solution, which outlines additional
three categories of factors. The first category is requirements adopted by SMEs.
distinct from the organization, the second by Both stages have shown that users are
processes and third by technology. According to looking for easy tools to use as they have the
Rockart (2009), the critical success factors necessary expertise. The economic factor plays
represent a number of areas where satisfactory a very important role because SMEs have very
results will ensure a competitive position for limited resources. The cloud is an economic
the individual, the enterprise or a company’s solution, which outlines additional
section. Little has been said about the requirements adopted by SMEs.
association of SMEs with BI software in a cloud Sheshasaayee and Swetha (2015) present
level and therefore there is no framework to the challenges of BI software combined with
analyse their connection. The categories of cloud computing. The combination BI with
factors to assess the SaaS software level cloud cloud software has many important
according to Godse and Mulik (2009) are advantages.
functionality, system architecture, use, The most important advantages are the
reputation, costs and risk. speed of construction and speed of services,
Researchers’ methodology consists of two reduced costs of organization and payment of
stages. The first stage was characterized as services depending on the use (Henning and
qualitative. Researchers interviewed four Kemper 2010).
experts (BI suppliers and BI users) in cloud BI Over the years, it has been observed that
software. At this level, they tried to identify the the application of BI at the cloud level is
weaknesses and the improvements through increasingly of interest in the field of
interviews given by BI users and suppliers. information technology. The goal of cloud
Critical success factors are divided into six services is the acquisition and provision of
categories: performance-functionality, resources to meet the maximum requirements
integration, adaptability, reliability, support and needs of users.
and cost of ownership. According to scholars, cloud software
The second stage was considered to be a consists of a three level structure:
quantitative stage. At this level, researchers infrastructure, platform and software.
tried to rank the key success factors for the Cloud software is easy to use and flexible,
adoption of a BI system. For this, an electronic but has some problems. The most common
76
problems according to the scholars are the according to the type of business and their
different compatibility models, risk needs.
performance, and the variable price and cost Scholz et al. (2010) found that the main
ratios. beneficial factors from the application of BI are
According to Sheshasaayee and Swetha, BI the improvements in data support,
refers to technologies that convert users’ improvements in decision support and
available data resources and exportable economic factors, while the main challenges
information into business solutions. they face are the errors and failures of
The cloud combined with BI is considered software, the complexity of handling the failure
to be one of the most modern technologies in of appropriate data and often inadequate data
the field of information technology and this is protection.
the main reason it is facing some serious Nenzhelele and Pellissier (2014) were able
challenges. In studies, it is argued that the to identify in which sections companies applied
combination of BI and cloud software BI and what challenges the enterprises
encountered some obstacles. face. The main application areas are market
The main challenges are the introduction of research and the independent sector, since
new technologies to the general public, the businesses have no formal and specific
absence of idealized suppliers of specific organizational structure. The challenges
software systems, the lack of control over the identified in this study proved to be the lack of
cloud services as all activities are done online resources, lack of time to learn and economic
and the movement of some compatible models restraints. Decision support systems don't only
that attempt to replace the actual abilities of have benefits but they also have challenges and
cloud systems (Henning and Kemper 2010). obstacles.
This together leads to the conclusion that Frion and Yzquierdo-Hombrecher (2009)
cloud software is aimed at companies with created a new competitive intelligence model to
reduced financial resources, such as SMEs, but help companies reach better decisions by
is easy to use and functional. The functions managing a large volume of data. The proposed
that cloud BI offers have been designed model (the Acrie Model) takes a lot of time to
specifically for the needs of SMEs. implement and, according to previous studies
that have been conducted, SMEs don’t have the
7. CONCLUSIONS
necessary time to deal intensively with the
Through studies and surveys, many software learning process.
researchers have reached the conclusion that Some researchers have focused on the new
SMEs are the largest part of the market, and technology of cloud computing combined with
therefore of the economy, in most European BI. Agostino et al. (2013) identified the key
countries. They are the driving force of the success factors from adopting BI in cloud
economy as they provide the majority of jobs in software. Through questionnaires and
the private sector, so they compete with larger interviews given by businesses using similar
companies. The main tool in the development systems and BI suppliers, they concluded that
and support of competitiveness among SMEs is continuous data access, ease of use, reduced
BI. The decision support systems that are costs and quick installation time,
based on computer applications offer tools so implementation, and responsiveness are the
that businesses can process data to extract main features that lead users to purchase
information and to make better business software. But even this technology faces some
decisions challenges. According to Sheshassayee and
Many researchers have researched the Swetha (2015), the main challenges of cloud
topic of BI in SMEs as well the benefits and software are the extra costs that may arise
challenges arising from the implementation of from their use, the limited checking services
BI. and the non-establishment within the general
Hidayanto et al. (2012) shaped and public.
developed a framework so that businesses can The main tool to create and support
know in advance their level of readiness to competitiveness is considered to be BI or
adopt BI systems, as to avoid unpleasant otherwise competitive intelligence. Decision
results. support systems based on computer
Tutunea and Rus (2012), undertook more applications offer the necessary tools and the
commercial research. They focused on the right infrastructure so businesses can process
available BI tools and their capabilities the data, extract relevant information and
 77
come to appropriate conclusions and therefore Bernstein, J. H. (2009). The Data-Information-
make better business decisions. Until a few Knowledge-Wisdom Hierarchy and its
years ago, the acquisition of BI systems by Antithesis. In Proceedings of the 2009 North
SMEs was considered difficult. Also, business American Symposium on Knowledge
owners did not consider it useful to obtain such Organization, 68-75.
a system. But over time, the evolution of
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