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Title: a systems theory of business intelligence Authors: Jerry Kurtyka Type : research paper Date of publication: December 2005 Publication: DM Review; vol.15 Issue 12, P30. Pages: 5 Editor: DMreview.com

Systems theory of business intelligence

Summary
The systems theory is one of the most important movements in the world. The main idea behind this theory is to find the common properties of organisations and describe them as systems. The author Jerry Kurtyka has already described the organization as cognitive systems because all the companies can interact with their environment by sharing information with all the actors of their market that means that they learn much more by trying and experiencing in their own environment. The objective is to share information and to learn about the markets specifics. If the firm realizes its cognitive tasks well, then a process of cybernetic information exchange is created between the organization and the whole environment. The systems theory offers the managers a tool that guides them on the competences of business intelligence, in relation with the environment and the risks involved. The business intelligence offers the users the opportunity to understand the environment in a significant way by using keys of performance for example. The major problem is that even by using the process of business intelligence the firm cant figure out all the possibilities that can happen in the environment that means that you have to predict all the unique situations that occurs in the world which is impossible in the majority of the cases. Moreover, the business intelligence is focused on an accurate design, but the more the design is accurate the more the company can be vulnerable to the environment disturbances. This article that appeared in the DM review offers an analyse of the right design approach of business intelligence following the environment changes. So the author proposes to see the company as general systems, connected with their context. So Kurtyka sees the organisation as a:

Human systems Model:

This vision put the firm as an entity which is in relation with its environment and its internal resources. In other words, there is an interaction between all the components of the environment and the company, and each problem cannot be taken in isolation. So the firm is seen as human system in terms of relationship between the firm and: The larger world system or the environment: in which the firm competitors suppliers and customers are -interweaved. The external environment:: everything that the firm encounter in its world and have a little control over : customers, suppliers.. The resource base: its what the firm owns, like capital employees The boundaries: that include business actions (rules, procedures) and the business model (distribution, organization). Institutional memory: that hold all of these actions and keep it accessible for the members. Feedback from the environment: the single- loop feedback requires actions friom the organisation following its framework without any revision to the mission or the vision. The double-loop feedback means to go further and to make a feedback between the business model and the external environment in order to change the bad values or structures.

In the larger system the business intelligence is a part of the business actions it is represented as the single-loop feedback that means that there is an interaction between the external environment and the firm, in order to take decisions or to change some preconceived actions, goals or processes. So the business intelligence does not influence directly the business model but it show when the values of the firm are out of the step with the environment. The double loop feedback is here to make the organization react and correct its own business model.

A systems theory of business intelligence:

since the business intelligence is situated in the institutional memory of the firm, it has to be designed with a view of the dynamics of the environment, in order to be robust and to serve efficiently the community user. The model of business intelligence has to take in consideration the environment of the firm and its complexity .the Author made a figure in which there is the relation between the type of environment that the firm deals with and the appropriate business intelligence that should be designed in this particular system of the market. for example a rigid system in which there is limited and well guarded interactions with the environment impact the business intelligence by making it very structured with stable data model and known metrics. The level of risk in this system is very low. Another example is the purposive system where the goals are set externally but more open in the choose of the operational means, this type of system make the business intelligence designed as dashboard in support of known goals, here the risk can be medium but challenging for the firm. Since the author talks about the risks he gave another figurer that makes in relation the implementation of the risk with the complexity of the environment. Kurtyka determines the lower level of the risk which is found in the rigid and deterministic organisation, but on the other hand the higher risk can be present in the purposive organisations due to the attempts of manager to follow the plurality of goals for each unit in the organization. Within this article, Kurtyka gives his own point of view of the business intelligence as a part of the institutional memory of the firm. According to the author, The business intelligence technology is connected with the external environment and its limits are found on the environment and did not depend on the smartness of the manager, the most important thing for each company is to foresee the coming changes.