Empowering SMEs through Business Intelligence

The information revolution is a fact that significantly affects competition, as it changes the structure of the industry and by extension affects the rules of competition. Furthermore, the exploitation of information can create a competitive advantage in a firm, as it enables it to stand out from its competitors. In this work, the benefits obtained by a small and medium-sized enterprise by joining the strategy that uses Business Intelligence systems are combined with the creation and maintenance of a competitive advantage.

The advancement of technology contributes to the storage of large volumes of data compared to the past. Thus, businesses can collect data from both customers and competing businesses, which helps them differentiate themselves. This data is considered as an asset, which depending on the capabilities of each company, can be exploited to create a competitive advantage. Information systems, including Business Intelligence, facilitate the execution of a company's strategy and strengthen it in such a way that it stands out in the industry in which it operates. In the modern business environment, knowledge management through systems that collect, and process information help them businesses to develop a competitive advantage.

Generally, information technology is fundamentally changing the way businesses operate. It affects the process by which firms produce their products and reshapes the product itself: the set of physical goods, services and information that firms provide to create value for buyers. Information technology has for several years facilitated the submission of past information and provides information that can be used for decision making in the present as well as for future planning. Business Intelligence systems help an organization by enabling the dissemination of real-time information in a user-friendly manner. This includes providing users with a single point of access to important information, using a dynamic classification system. Business Intelligence systems also contribute to the creation of new knowledge based on past information.

In any business, information technology plays an important role in creating competitive advantage, whether through cost leadership or differentiation. Technology affects the activities that create value for the firm or enable firms to gain a competitive advantage by exploiting changes in the competitive environment.

Business Intelligence can be the difference between a company with an average performance and a company with a higher performance. A business can gain a competitive advantage by using Business Intelligence systems to align its strategic goals with its business initiatives. Gaining a competitive advantage is crucial for a business. Competitive advantage has been defined as a product or service that a firm's customers value more highly than comparable products or services of competitors. In short, a business has a competitive advantage when it provides something useful (a product, service, or skill) that other businesses do not. Competitive advantages are usually temporary, as competitors are constantly looking for ways to copy them. For a company to stand out from its competitors, it should continuously develop new competitive advantages.

Business Intelligence gives the business the information it needs to perceive and assess changes in the market, competitors, and other regulatory or legal issues. The better the information one has at his disposal to process and exploit, the easier it is for him to utilize human and material resources. The quality of Business Intelligence depends on the ability of the business itself to manage the information. A way to gain and maintain a competitive advantage can be considered the application of Business Intelligence systems by the company. The data available to the business is a valuable, intangible asset, while information is often considered the second most important resource of a business, with the most important resource being human resources. Business Intelligence is characterized by the fact that it provides the right information, to the right user, at the right time and offers the ability for businesses to make quick and effective decisions. Specifically, below is how businesses can take advantage of Business Intelligence to gain a competitive advantage.

Business intelligence and value chain

Competitive advantage can be emerged or created within a company's value chain. An organization's cost position reflects the total cost of performing value activities, relative to the corresponding total cost of competitors. Similarly, a firm's ability to differentiate reflects the contribution of each value activity to satisfying buyers' needs. Many of the company's activities - not just the products and services produced - contribute to differentiation. Buyers' needs, in turn, depend not only on the products and services of the companies, but also on their other activities, such as after-sales services or logistics. Every value activity includes physical and information processing elements. Physical inputs refer to all the manual tasks required to perform the activity. The elements of information processing include the processes required to record, manage, and channel the necessary data to perform each activity. Also, every value activity creates and uses information. Information technology is spreading throughout the value chain and so, using Business Intelligence systems, operations are optimized and controlled. Also, close links are created between the different activities within the firm, and companies can now coordinate their actions more closely with those of their buyers and suppliers.

Ultimately, the value chain helps an organization determine the "value" its business activities have for its customers. This model emphasizes those activities where business strategies can best be implemented and where information systems such as Business Intelligence are most likely to have a strategic impact. By adding value and thereby creating competitive advantage, Business Intelligence could contribute to every activity in the value chain. Each company, to utilize Business Intelligence systems to obtain a competitive advantage, should identify through the value chain which are those points that need investment in information systems and will make it stand out from the competition through the provision of valuable knowledge.

Business intelligence and cost and differentiation business strategies

Regards the cost reduction, information technology can change business costs in any activity in the value chain. In the past, technology's impact on cost reduction was limited to repetitive information processing activities. Today these constraints do not exist and very often information technology changes the cost of activities in such a way that the relative cost position of the firm can be affected. Organizations can use Business Intelligence systems to radically change the cost of their business activities by reducing them.

However, as for the enhancement of the differentiation, by using information technology, the personalization of manufactured products is achieved. By using Business Intelligence systems, it is possible to collect data on a company's customers such as demographic and psychographic data, on their preferences, their purchasing habits, the amount they consume, data which if exploited by the company can create differentiated products that are difficult for competing firms to copy. This information enables companies to make strategic decisions that will result in maximizing their profits. Customer intelligence, or customer analysis, is not only an integral part of maintaining a company's competitive advantage, but also contributes decisively to the company's survival. Customer intelligence enables the marketing team to design and implement "smart" offers and programs for the most appropriate customers, using the right distribution channel at the right time every time. This tactic can help the business optimize its interaction with the customer and improve customer satisfaction.