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1, 2008 31
Alan D. Smith
Department of Management and Marketing,
Robert Morris University,
600th Fifth Ave.,
Pittsburgh, PA 15219-3099, USA
Fax: (412) 262-8494
E-mail: smitha@rmu.edu
1 Introduction
and its competitors, as well as triggering personal telephone calls with additional credit
products being offered. It is becoming more and more apparent that companies and
e-governmental agencies are using their BGIS in their competitive and aggressive
marketing strategies to gain increase customer base. They are able to focus their
marketing budget on what is believed to be the most profitable target segments.
recognise the value of data mining as a tool to analyse patient care and clinical outcomes,
namely as providers that deploy advanced clinical data systems, more granular, primary
data is becoming available for analysis. Rather than accepting the physician’s
interpretation of data through the use of diagnostic codes or extrapolated financial codes
(Fickenscher, 2005), providers will, for the first time, be able to objectively analyse the
actual impact of one variable on another.
2.2.2 Casinos
Another current trend underlying the importance of BI-related applications is Betdirect,
the betting subsidiary of Littlewoods (Littlewoods’ Bet Direct online available at
www.betdirect.net/). The management at Betdirect has been using analysis software to
segment its customer base by the type of casino type wager or bet, the frequency and the
spread, and based its marketing on the results. As noted by Manchester (2003), response
to marketing campaigns has risen from 15% to 60%. Harrah’s software (Anderson and
Vincze, 2004) identifies the most likely big spenders by starting with just four bits of
information: gender, age, where they live and what they play. Appropriate marketing
strategies are then designed for the big spenders – usually implemented through direct
mail in order to maximise every customer relationship.
2.2.4 Airlines
At Delta Technology, a subsidiary of Delta Air Lines, employees apply BI-related
software to graph, sort and compare data that arrive from reservation agents, unit
managers, flight crews and even marketing departments. Digesting the variables of route
structure, time and passenger loads require sophisticated IT operations. What the airlines
do routinely to keep their fuel costs below the average or standard costs clearly
demonstrates how densely technology can be woven into complex business decisions.
Delta, for example, has four development squads assigned to the airline’s business
units, namely revenue, customer, airline operations and corporate management systems.
They use the same BGIS-related approach for each (Fox, 2002). As can be seen by the
examples listed above, BGIS-related applications can be used for a myriad of functions in
countless industries.
Business and e-government intelligence 37
2.4.2 Disadvantages
One of the most prominent disadvantages of BGIS is the quality and quantity of data that
is produced by these systems. In a study done by Hall (2004), a base of 921 U.S. and
Canadian companies and e-governmental agencies, data warehouse users cited these
issues as the challenges they face most often, which include data quality, security,
availability, data standards and consistency, web-based access, and performance and
scalability. As cited by Wu (2004), poor quality of data still remains the major problem
associated with BGIS solutions, with more than 25% of critical data within Fortune
1000 enterprises remaining flawed (inaccurate or incomplete) at least through 2007. As
Levinson (2005) suggested, data are the most fundamental component of any BGIS
endeavour, since it is the building blocks for insight. Therefore, business enterprises must
get their data stores and data warehouses in good working order before they can begin
extracting and acting on these insights. Ultimately, experiencing flawed data can result in
lost time and money for a corporation; hence wasting both time and money, as King
(2005) mentions, by providing users access to data without setting concrete BGIS goals,
usually resulting in meandering through out-of-context information.
According to a study done by Ventana Research (Bannan, 2005), it is estimated that
nearly 60% of companies and e-governmental agencies have data mining or BGIS
installed. Of those, 12% stated they use their software at least once every hour, while
36% cited that they use it at least once each day. Taking these figures into consideration,
it is imperative that the information companies and e-governmental agencies are looking
at is accurate and easy to evaluate. In order to tackle the poor data quality issue, Bannan
(2005) suggested that companies and e-governmental agencies need to share data with
caution, look beyond transactional data, clean the data regularly by deleting mistakes and
duplicates, distribute data at every level, fund training and relearning, balance server
space with strong analysis, aggregate data, do not delete information, standardise
whenever possible, talk to your users often, get executive buy-in, create a continuity plan
for your data, treat your partners like employees.
Although it was listed as an advantage in the above section, it is also said that
being able to export data into spreadsheets can be a disadvantage. According to Burns
(2004) and Baer (2003), spreadsheets are inefficient and not completely reliable: errors
can slip in through re-keying or calculation mistakes. Unfortunately, the same data can be
interpolated in different ways by different departments.
Real-time BGIS was mentioned previously. While it can be an advantage for some
applications, it can be a hassle and unwarranted for other applications. For traditional
business-intelligence applications, such as analysing sales data to detect trends and/or
profile customers, investing large sums into IT resources to create real-time business-
intelligence systems may not result in profitable returns on investment. Traditional uses
have been for strategic analysis and planning carried out by top management, but these
functions relate to longer-term planning and strategies; hence, according to Whiting
(2003), there may be no compelling reason for real-time analysis.
From the standpoint of the consumer, yet another disadvantage to a company having
BGIS is the fact that all types of information are being collected on them. This is a
growing concern with the boom in identity theft and other internet scams that can be
performed with the information that companies and e-governmental agencies collect with
their BGIS (Dwivedi and Weerakkody, 2007; Kolsaker and Lee-Kelley, 2007; Smith,
40 A.D. Smith
2005d). Security needs to be a major factor in choosing a BGIS in order to avoid any
information leaks resulting in a reduction in consumer confidence in the company.
2.5.2 Benefits
There are many benefits that an entity can reap by implementing a BGIS. First, and
foremost, there are considerable profits to be made by both vendors and customers
of BGIS. When 538 technology decision-makers at North American and European
companies and e-governmental agencies were asked, according to Hall (2005), if in 2005,
will their companies and e-governmental agencies purchase BGIS-related software or
services, their overall response was no (54%), yes (33%) and unsure (12%). This
certainly illustrates that there is evidence of a large potential market, especially if the
trend in business continues to focus on data collection and interpretation. Hall also found
actual (2004, $5.3 billion; 2004, $5.6 billion) and predicted growth (2005, $6 billion;
2006, $6.5 billion; 2007, $7 billion; and in 2008, $7.3 billion) for the BGIS marketplace.
Growth expected in worldwide revenue for selected BGIS-related applications including
end-user query, reporting, and analysis of actual (2004, $3.4 billion) and predicted (2005,
$3.6 billion; 2006, $3.8 billion); data-mining applications revenues of actual (2004, $595
million) and predicted (2005, $649 million; 2006, $701 million); and packaged data mart
and/or warehousing applications revenues of actual (2004, $285 million) and predicted
(2005, $301 million; 2006, $316 million) (Hall, 2005). These figures should support the
notion that BGIS-related systems’ applications are a booming field and worthy of
considerable research in the knowledge management fields.
Companies and e-governmental agencies can also benefit by the effective use of t
he information provided by the BGIS in their marketing strategies. Fordham et al.
(2003) described how these systems can be used in the grocery store industry, through
promotions to target specifically identified customer needs. BGIS record sales by
purchaser, track individuals’ buying behaviours over time, and compare their coupon
redemption habits through an analysis of intelligence can identify patterns and signal
trends. Benefits can be seen in the healthcare industry, as well, when effective data
mining can discover patterns of care that could truly transform the delivery of care
(Fickenscher, 2005). The potential savings that will be derived from BGIS-derived
applications can deliver faster, quicker and better care that should exceed the savings
from all other sources. Hence, proper strategic leveraging of BGIS cannot only save
money, but they can also make money as well.
Companies and e-governmental agencies are becoming more open with their
comprehensive and enormous volumes of data. Although applications of intelligence
and data-mining software, the technology is still complex and can be tricky to handle,
coupled with hardware’s ability to run analytics is limited, mainly because of its small
size and low-grade processing power, there are numerous competitive advantages of BI
in knowledge management applications; certainly worthy of considerable research in the
knowledge management fields. As Negash (2004) suggested, the majority of BGIS-
related benefits are intangible and the hope is that a good BGIS will lead to a profitable
return at some time in the future. In general, most companies and e-governmental
agencies are anticipating some type of benefits if they use their BGIS correctly, whether
it is profitability, efficiency or an increase in quality. For example, although marketing
traditionally used a mass volume approach, technology can bring focus so companies and
42 A.D. Smith
e-governmental agencies can keep costs down; maximise profit, and keep customers
happy (Manchester, 2003). With these advances in technology, companies and
e-governmental agencies can utilise BGIS to perform many tasks in marketing areas, as
well as in other business functions.
Predictive analytics are going to play a large role in the future success of BGIS. Much
of this success can be achieved by using predictive analytics/methods of directed and
undirected knowledge discovery, relying on statistical algorithms, neural networks
and optimisation research to recommend and predict future actions based on applying
patterns in data to predict the behaviour of citizens to proposed regulations, customers,
products, services, market dynamics and other critical transactions (Agosta, 2004).
Predictive analytics can be used to achieve a better understanding of the customer,
segment and predict customer behaviour and forecast product demand characteristics.
According to Wu (2004), sophisticated BGIS users need predictive analytics to model
‘what if’ scenarios. Regarding predictive analytics, decision trees, neural networks
and data-mining algorithms are almost universally available. Table 5 illustrates various
differentiators among data warehousing, data mining and predictive analytics, based on
research adapted by Agosta (2004).
Table 5 Data warehousing, data mining and predictive analytics differentiators
applications of such intelligence software, the technology is still complex and can be
tricky to handle, coupled with hardware’s ability to run analytics is limited, mainly
because of its small size and low-grade processing power, there are numerous
competitive advantages of BGIS. The advances in wireless technology, even over the
past few years, have been tremendous in nature. There is no doubt that companies and
e-governmental agencies will be able to access and analyse their BGIS-related data
through a wireless device.
In conclusion, BGIS can play a large role in the success of a marketing strategy, if
utilised as a marketing tool. Many users of knowledge-based systems, such as healthcare
providers, market researchers, GIS providers, to name a few, are recognising the value of
BI systems analyse customers’ needs and behaviour patterns through more advanced and
granular primary data gathering systems available for analysis. BGIS have evolved into a
crucial part of an organisation over the years. They are continually evolving and changing
in order to meet business needs. They allow corporations not only to analyse historical
data, but also to utilise that historical data to make predictions for the future.
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