MSc dissertation - João Clara Silva

Universidade Católica Portuguesa
Faculdade de Ciências Económicas e Empresarias

When Business Intelligence meets Web 2.0
Can Web 2.0 tools improve Business Intelligence gathering?

Student: João Clara Silva
Advisor: Paulo Cardoso do Amaral

Dissertation submitted in partial fulfillment of the requirements for the degree of
Masters of Science in Business Administration, at Universidade Católica Portuguesa,
May, 2010.

Can new Web 2.0 tools improve Business Intelligence gathering?

Acknowledgements

I am grateful to all who accompanied me while I wrote this and particularly to:

 Professor Paulo Amaral for the effort, commitment and patience dedicated to my
investigation and dissertation development.

 My friends for pushing me forward with this endeavor and also for letting me lay
back and relax in the appropriate times, whether they are in Portugal or any other
part in the World.

 My family for pulling my ears and constantly reminding me how important this work
is.

 My colleagues who have taken time to help me and have shown their interest in and
concern for my work.

Just over night all things have arisen new.


Abstract

This MSc dissertation proposes a framework model that assesses how Web 2.0
principles can improve Business Intelligence gathering as well as contribute to improving
corporate access to information and develop better Business Intelligence services that
fit employees’ particular needs in aggregating, generating, and facilitating access to
information.

The framework model results from aggregating the knowledge and theories
obtained by researching existing frameworks and it defines the following Web 2.0
principles: contribution to data generation, openness to collective intelligence, ability to
use as a platform, technological accessibility, openness to user contribution and
experience, and portability promotion. The answer to the research question is
developed through an evaluation of these principles' impact in Business Intelligence
gathering.

Web 2.0 matters for Business Intelligence since it meets the challenges of its
current limitations. Web 2.0 provides access to an alternative market of cheaper sources
to obtain intelligence from online analytical data providers. It brings new tools that can
be easily programmed, saving the time and effort spent on gathering intelligence. It
facilitates information diffusion to multiple targets with the help of tools such as RSS
(Real Simple Syndication). It limits the information output of systems to what is essential
through innovative ways of filtering information, such as tagging and folksonomies. It
incorporates tacit knowledge from users and promotes user contributions to and
participation with intelligence tools, which enhances the overall user experience with
Business Intelligence software.

The dissertation's conclusion is that Web 2.0 can improve Business Intelligence
gathering and should therefore be considered by companies for investment.


Resumo

Esta dissertação propõe um modelo que define como os princípios da Web 2.0
podem melhorar a recolha de Business Intelligence e, simultaneamente, contribuir para
o aperfeiçoamento da informação empresarial e dos serviços que agregam, criam e
facilitam o acesso a essa informação aos colaboradores.

Este modelo resulta da agregação de conhecimento e teorias obtidas de modelos
já existentes e define os seguintes princípios da Web 2.0: contribuição para a criação de
dados, abertura para a collective intelligence, capacidade de uso como plataforma,
acessibilidade tecnológica, abertura à contribuição e experimentação do utilizador e
promoção da portabilidade. A resposta à pergunta de investigação deriva da avaliação
do impacto destes princípios na recolha de Business Intelligence.

A Web 2.0 é um tema relevante para a evolução de Business Intelligence uma vez
que alcança os desafios das suas limitações. A Web 2.0 gera fontes de informação
alternativas baratas através de online analytical data providers. Traz novas ferramentas
que podem ser facilmente programadas, poupando o tempo e o esforço investidos na
recolha de inteligência. Facilitam a difusão de informação a diversas pessoas com a
ajuda de ferramentas como o RSS. Limitam a quantidade de informação gerada pelos
sistemas de BI através de ferramentas inovadoras que filtram informação, como o
tagging e folksonomies. Incorporam conhecimento tácito dos utilizadores e promovem
o envolvimento, contribuição e participação dos utilizadores com as ferramentas de
Business Intelligence.

Como conclusão, esta dissertação indica que a Web 2.0 pode melhorar a recolha
de Business Intelligence e, assim sendo, deve ser considerada como uma oportunidade
de investimento.


List of Abbreviations

AJAX: Asynchronous Javascript and XML

API: Application Programming Interface

BI: Business Intelligence

CI: Competitive Intelligence

DSS: Decision Support Systems

INE: Instituto Nacional de Estatística

MMORPG: Massive Multiplayer Online Role-Playing Game

MP3: Mpeg - 1/2 Audio Layer 3

OLAP: Online Analytical Processing

P2P: Peer-to-peer

REST: Representational State Transfer

RIA: Rich Internet Application

ROI: Return on Investment

RSS: Real Simple Syndication

SaaS: Software as a Service

SME: Small and Medium sized Enterprises

SOA: Service Oriented Architecture

SOAP: Simple Object Access Protocol

SS: Social Software - "Any website or application which connects users with similar
interests and ideas together, via the internet, can be described as social software"
(Perks, 2003).

URL: Uniform Resource Locator

XML: eXtensible Markup Language


Table of Contents

I. Introduction ................................................................................................................. 1

1.1. State of the Question ............................................................................................ 1

1.2. Purpose ................................................................................................................. 2

1.3. Methodology ........................................................................................................ 5

1.4. Structure ............................................................................................................... 6

II. State-of-the-art ........................................................................................................... 7

2.1. Web 2.0 ................................................................................................................ 7

2.1.1. Concepts and definitions ................................................................................ 7

2.1.1.1. Web 2.0 as the result of Internet's evolution ............................................... 8

2.1.1.2. Web 2.0 as a buildup word or momentary hype .......................................... 9

2.1.1.3. Web 2.0 as a new set of tools or services ..................................................... 9

2.1.1.4. Web 2.0 as a philosophy ............................................................................ 10

2.1.2. Tools and applications in the Web 2.0 world ................................................ 11

2.1.2.1. Blogs .......................................................................................................... 12

2.1.2.2. Microblogging ............................................................................................ 14

2.1.2.3. Wikis .......................................................................................................... 14

2.1.2.4. Tags, Folksonomy and Social Bookmarking ................................................ 15

2.1.2.5. RSS (Real Simple Syndication) .................................................................... 17

2.1.2.6. Multimedia sharing .................................................................................... 18

2.1.2.7. Audio blogging and podcasting .................................................................. 19

2.1.2.8. Video blogging ........................................................................................... 19

2.1.2.9. Mash-up .................................................................................................... 20

2.1.2.10. Social networking .................................................................................... 20


2.1.2.11. MMORPGs (Massive Multiplayer Online Role-Playing Games) ................. 20

2.1.2.12. Newer services and applications .............................................................. 22

2.1.3. Technologies Supporting Web 2.0 ................................................................ 22

2.1.3.1. AJAX .......................................................................................................... 23

2.1.3.2. Rich Internet Applications (RIA) ................................................................. 24

2.1.3.3. Service Oriented Architecture (SOA) .......................................................... 25

2.1.3.4. Application Programming Interfaces (APIs) ................................................ 25

2.1.3.5. Microformats ............................................................................................. 26

2.1.3.6. Simple Object Access Protocol (SOAP) ....................................................... 26

2.2. Business Intelligence ........................................................................................... 26

2.2.1. Business (Intelligence) .................................................................................. 27

2.2.1.1. Why BI? ..................................................................................................... 27

2.2.1.2. Who uses BI? ............................................................................................. 28

2.2.1.3. How is BI being used? ................................................................................ 29

2.2.2. Concepts and definitions .............................................................................. 30

2.2.2.1. BI as a support for decision-making ........................................................... 31

2.2.2.2. BI as a technology ...................................................................................... 31

2.2.2.3. BI as a systematic approach to information and data finding ..................... 32

2.2.2.4. BI in general terms ..................................................................................... 32

2.2.2.5. Competitive Intelligence (CI) ...................................................................... 33

2.2.3. Purpose of BI ................................................................................................ 33

2.2.4. Advantages of BI ........................................................................................... 35

2.2.5. Potential drawbacks and risks of BI ............................................................... 36

2.2.6. BI tools ......................................................................................................... 38


III. Model development ................................................................................................. 40

3.1. Procedure conducted .......................................................................................... 40

3.2. Assessing Business Intelligence as a measurable concept .................................... 41

3.3. Building the new framework for Web 2.0 ............................................................ 43

3.3.1. Contribution to data generation ................................................................... 45

3.3.2. Openness to collective intelligence ............................................................... 46

3.3.3. Ability to use as a platform ........................................................................... 49

3.3.4. Technological accessibility ............................................................................ 50

3.3.5. Openness to user contribution and experience............................................. 51

3.3.6. Portability promotion ................................................................................... 53

IV. Discussion ................................................................................................................ 55

4.1. Contribution to data generation .......................................................................... 55

4.2. Openness to collective intelligence ..................................................................... 56

4.3. Ability to use as a platform .................................................................................. 59

4.4. Technological accessibility................................................................................... 60

4.5. Openness to user contribution and experience ................................................... 62

4.6. Portability promotion .......................................................................................... 64

V. Conclusion ................................................................................................................. 68

5.1. Concerns for future research............................................................................... 71

VI. References ............................................................................................................... 72


I. Introduction

1.1. State of the Question

The Internet has been gaining new applications given that more people
recognize the advantages driven by its social networking capabilities (Bernal, 2009;
Snee, 2008; Mechant, 2009; Mason, 2008), and the internet's role as a new worldwide
database for untreated data (O'Reilly, 2005; Anderson, 2007; Musser, 2007), whose
contributors are Businesses and, more recently, private users (Gillmor, 2004; Downes,
2004; Anderson, 2007).

The Internet is "formed by the global interconnection of (...) computers,
communications entities and information systems through the use of (...) communication
standards, procedures and formats (...) called protocols. It was not until 1994 that the
general public began to be aware of the Internet by way of the World Wide Web
application. The Internet is the global information system that includes communication
capabilities and many high level applications. The Web is one such application" (Kahn,
1999).

The term "Web 2.0" made its first appearance in an article written by Darcy
DiNucci in 1999 (Smith, 2009). At this time, while the Internet was in early development,
DiNucci foresaw that the capability of displaying texts and graphics could be exported to
devices other than desktop computers. (such as TVs and cell phones). Today, we take
most of these technological advancements for granted. While she did not expound the
actual definition of Web 2.0, DiNucci did trigger an important fact about it - we no
longer depend only on a computer to access the Internet. Today's Web-ready portable
devices allow steady social connection regardless of time and location.

It was only in 2004 that Web 2.0 became a common term throughout the Web
community. The reason behind all the excitement was its official presentation by Dale
Dougherty at a conference between O'Reilly Media and MediaLive International
(O'Reilly, 2005a). Dougherty noted that "far from having "crashed", the Web still had

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exciting new applications and sites popping up with surprising regularity". From then on,
"Web 2.0" has been a term widely used and a concept more fully explored and there is
still no common agreement on what it stands for. Some agree (Madden & Fox, 2006;
Mechant, 2009; Snee, 2008; Shawn, 2005) that it is nothing but a meaningless marketing
buzzword, and others accept it as the new conventional wisdom (O'Reilly, 2005a).

From a user perspective, early Web users were treated solely as consumers;
recipients of static information, without place for comment. Users were encouraged to
listen, to receive, and become subservient (Mason, 2008). Today, even "the mass media
is being challenged by user-generated content" (Musser, 2007).

1.2. Purpose

According to the data available at "Internet World Stats" (IWS, 2009), from 2000
to 2009, Web usage in Europe grew by 297% and today more than 52% of Europeans
surf the Web. Additionally, in Portugal, the existing penetration rate goes over 41.8%
and recorded a growth of 79% since 2000. Even though these results do not refer to the
extent nor the ways which people use the Web, its evolution to a commonly accessible
asset is becoming undeniable. As announced by INE (Instituto Nacional de Estatística), in
2002 only 15.1% of all Portuguese households had Internet access, but more recent data
(INE, 2007) show that "in the first quarter of 2007, 48,3% of Portuguese households had
access to a computer at home and 39,6% to the Internet", which means that almost 82%
of households with a computer have access to the Internet.

Within a World population of almost 7 billion (UN World population prospects,
2009), 22.86% are internet users. According to the website Worldometers (WOM,
2010), these users generate over 170 billion emails, 710 thousand blog posts and about
1 billion Google searches a day.

These figures reflect the growth of Internet awareness among users. Thus user
acquaintance with the Web becomes imperative for businesses, particularly for those

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who aim for a Web-way of practice and assessing how the Web can benefit businesses
becomes more urgent.

Currently researchers foresee two ways for companies to use the Web. Some
researchers focus on the use of its technologies, tools and applications by the company
as a way to improve customer-company relations (O'Reilly, 2005; Musser, 2007; Hoegg
et al., 2006; ); while others (Tredinnick, 2006; Hoegg et al., 2006; Bernal, 2009; McGee,
2008; Marshall, 2008; Lamb, 2004; McAfee, 2006) share a view on how Web 2.0 can
generate benefits inside the firewall (i.e. as part of the company's internal activities and
processes), namely in providing actionable information for decision-making in an effort-
less and intuitive way.

These two tasks have, so far, been Business Intelligence's responsibility. BI
systems have been in existence since 1958, when Hans Peter Luhn first defined BI as
"the ability to apprehend the interrelationships of present facts in such a way as to guide
actions towards a desired goal" (Luhn, 1958). Today, the purpose of BI is to "improve the
timeliness and quality of the input to the decision process" (Negash et al., 2003) with the
help of "applications and technologies for gathering, storing, analyzing, reporting on
and providing access to data" (Power, 2005).

Golfarelli has defined BI as "the process of turning data into information and
then into knowledge" (Golfarelli et al., 2004) thus implying that data collection is
performed by other mechanisms. Furthermore, BI as a term "replaced decision support,
executive information systems, and management information systems" (Thomsen, 2003)
for the purpose of "facilitating managerial work" (Negash et al., 2003), which means
that BI mainly functions as an asset for internal decision-making. Hence, its modus
operandi falls under the "inside the firewall" perspective mentioned previously for Web
2.0.

BI services are "big businesses" (Power, 2001), and are only affordable by
powerful companies. The small and medium enterprises (SME) "face additional hurdles,
such as tighter budgets, less sophistication and organizational knowledge, technology

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hurdles and fewer people, meaning less time to spend on planning and analysis" (Canes,
2009). Additionally, "many companies that purchase powerful analysis and business
intelligence tools don't use them effectively" (Foody, 2009). In contrast, Web 2.0 tools
constitute a cheaper (while not free) approach to BI, dependent only on user
acquaintance with the Web, to deliver information and knowledge. Furthermore, Web
2.0, in contrast with BI, allows the integration of tacit knowledge into its tools
(Rodrigues, 2002).

Thus, Web 2.0 presents itself as an opportunity for these small and medium
companies to improve their current access to information and develop better BI services
that fit their particular needs in aggregating, generating and facilitating access to
information for their employees.

For the abovementioned reasons, investigating the current states of Web
development and Businesses Intelligence are primary in answering the research
question of this dissertation:

 Can new Web 2.0 tools improve Business Intelligence gathering?

In order to answer this question, the following questions are also addressed in
this work, as they present particular assessments on how Web 2.0 tools can help
improve BI gathering:

 Can new Web 2.0 tools help organizations to perform better Business Intelligence?
 Can these new tools contribute to better decision making? (In other words, do they
constitute an update of current decision support systems?)
 Are Web 2.0 tools only applicable for Web-knowledgeable workers?

Accordingly, this MSc dissertation intends to demonstrate the Web's impact on
doing business and more specifically to explore the benefits of using the latest Web 2.0
tools to improve and provide BI collection and delivery systems throughout
corporations. Additionally, this paper also aims to provide the reader with some insight
on how to facilitate Web 2.0 implementation in an organization.

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1.3. Methodology

Developing an answer to this dissertation’s research question will be achieved in
two steps. The first step is a review of the literature, mostly ranging from 1999 to 2010,
which refers to Web 2.0 and BI sources. This review is the result of exploratory research
to identify noteworthy articles through cross-reference analysis. The majority of the
references found are academic, while others are based on professional reports and
experiences written by qualified personnel in the fields of Web 2.0 and BI.

The second step is the development of a new framework model for understanding
Web 2.0’s importance for BI. The new framework model will be developed according to
the following structure:
1. Developing a list of the most common Web 2.0 tools;
2. Constructing a new framework of features that categorize Web 2.0 that is based on
definitions and characteristics offered by researched articles;
3. Applying those features so as to understand their impact on Business Intelligence
and then identifying the Web 2.0 tools that would be of a more appropriate use to
improve BI.

While the dissertation’s new framework model for understanding Web 2.0 and
its implications for BI is developed by extensive research, the framework model is not
complete and thus has the capacity for future development through even more
extensive research of the current literature. Nevertheless, more than enough evidence
has been gathered into the new framework model to provide a positive answer to the
dissertation's research question.

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1.4. Structure

This dissertation will now be developed in five sections. The first of these will be
a presentation of the main concepts, definitions and ideas behind Web 2.0 and Business
Intelligence. These are treated separately in order to build a sound state-of-the-art of
their limitations, applicability and evolution. The next session creates a new framework
model to explain the main Web 2.0 principles followed by a discussion which evaluates
the extent to which Web 2.0 can contribute to the task of Business Intelligence. Finally,
a conclusion is made followed by a presentation of suggestions on what future
developments might need to be further scrutinized.

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II. State-of-the-art

This chapter scrutinizes Web 2.0 regarding its concepts and definitions and seeks
to explore in further detail the current tools and applications existent and their
associated technologies. The background research accomplished on Business
Intelligence will also be addressed as an attempt to review the current concepts and
definitions, tools and applications to businesses, as well as current advantages and
potential drawbacks.

2.1. Web 2.0

2.1.1. Concepts and definitions

Although the internet has existed for many decades, the platform for exchanging
documents, also known as “Web”, was not conceived until 1989. The Web is a
conceptual framework of information exchange utilizing globally interconnected
networks (internet). Over time it underwent several mutations, firstly being dominated
by large multinational corporations to target new and existing markets, but in mid-2004
it assumed a new position as a new age of Web users and developers began to emerge
(Mason, 2008).

In "What is Web 2.0 - Design Patterns and Business Models for the Next
Generation of Software" Tim O'Reilly (O'Reilly, 2005a) mentions that the concept of the
Web 2.0 began with a conference brainstorming session between O'Reilly and Medialive
International, when Dale Dougherty 1 noted that new applications and sites were
popping up with surprising regularity, revealing what appeared to be a new turning
point for the Web. Nevertheless, no commonly agreed definition of Web 2.0 yet exists
among Web 2.0 instigators, since some still think of it as a "meaningless marketing
buzzword" while others accept it as "the new conventional wisdom" (O'Reilly, 2005).

1
General manager of Maker Media division at O'Reilly Media, an American media company that publishes books and Web sites and
produces conferences on computer technology topics.

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In fact, regardless of O'Reilly's effort to elucidate on its definition, "Web 2.0
remains a problematic concept" (Mechant, 2008) as some authors argue that "it was, at
that time, too early to rely on them exclusively" (Depauw, 2008) and that O'Reilly's
"delineation of Web 2.0 is in many ways quite nebulous, outlining the characteristics
themes of Web 2.0 approaches to information services, rather than specific technologies
(...) creating a picture that is frustratingly short on detail" (Tredinnick, 2006). Other
authors believe that "Web 2.0" is a mere buzz term created to market social Web-
applications, which "resulted in many considering it a commodity interest" (Mason,
2008). In his book "The Cult of the Amateur" Andrew Keen (Keen, 2007) suggests that
what "the Web 2.0 revolution is really delivering is superficial observations of the world
around us rather than deep analysis". Keen's vision of the Web emphasizes the poor
quality of content delivered to the user "when ignorance meets egoism meets bad taste
meets mob rule".

Summarizing the literature examined, it is possible to identify at least five ways
to view Web 2.0. Some relate it to the natural evolution of the Internet, others
understand it as a recent hype or marketing buzzword, a third group associates Web 2.0
to a new set of internet tools and services, a minority consider it to be a new
philosophy, and lastly, some share a more skeptical view about its real utility. These
views are briefly sketched below.

2.1.1.1. Web 2.0 as the result of Internet's evolution

Identifying Web 2.0 as the result of internet's evolution is John Musser (Musser,
2007) in "Web 2.0 - Principles and Best Practices". He defined it as "a set of economic,
social, and technology trends that collectively form the basis for the next generation of
the internet - a more mature, distinctive medium characterized by user participation,
openness, and network effects". Later on, his colleague Tim O'Reilly (O'Reilly, 2006)
suggested in "Web 2.0 Compact Definition: Trying Again" that "Web 2.0 is the business
revolution in the computer industry caused by the move to the internet as platform".
Indeed, much of the Web 2.0 research is associated with this new platform that allows

8


"a paradigm shift (from delivering products) to delivering services that can be used and
combined with other services in new ways and harnessing growth of interactivity with
end users in new ways" (Bernal, 2009). In the same line of reasoning, "Web 2.0 has
therefore been used largely metaphorically to suggest a major software upgrade to the
world wide Web" (Tredinnick, 2006) and "although it sounds like a new generation of
technical development, it is in fact a phenomenal change of the Web" (Chan et al.,
2007).

2.1.1.2. Web 2.0 as a buildup word or momentary hype

Describing Web 2.0 as a buildup word or momentary hype is to accept the term
as a "conceptual umbrella under which analysts, marketers and other stakeholders in the
tech field could huddle the new generation of internet applications and businesses that
were emerging to form the "participatory Web" as we know it today" (Madden & Fox,
2006). It has been more recently asserted that the term "Web 2.0" has became too
popular to be useful as a research concept, and some authors, like Peter Mechant
(2009), author of "A Patchwork of Online Community-based Systems", prefer to
consider the concept of "social software" to be a more appropriate term when referring
to the discourse of innovators and researchers. Helene Snee (Snee, 2008), in "Web 2.0
as a Social Science Research Tool", also agrees with Mechant's perspective and even
states that "Web 2.0 is a social medium which creates and facilitates interactions
between people, in a way that the Web was supposed to be in the early days". Russell
Shawn (Shawn, 2005) writes in “Web 2.0 Does Not Exist” that "Web 2.0 is a marketing
slogan" since the changes occurring to the Web are incremental and therefore cannot
be classified as a pre-defined package that was meant to improve the existing Web.

2.1.1.3. Web 2.0 as a new set of tools or services

Viewing Web 2.0 as a new set of tools or services, Macaskill and Owen
(Macaskill and Owen, 2006) in "Web 2.0 To Go" state that Web 2.0 "describes a range of
increasingly popular Web services that offer users dynamic interactive models of

9


communication combined with the ability to create and share content". "The Web of
documents has morphed into a Web of data. Now we're looking to a new set of tools to
aggregate and remix microcontent in new and useful ways" (Macmanus and Porter,
2005). James McGee (McGee, 2008) supports the same view. In “Email is for Old
People” he asserts that Web 2.0 "describes a collection of Web-based technologies
which share a user-focused approach to design and functionality, where users
participate in content creation and editing through open collaboration between
members of communities of practice". User control is one of the foundations of Web 2.0,
which then enables "users to extract information and data and reuse that information
and data in a flexible way, and enabling them in the process perhaps even to change the
structure of the information system itself" (Tredinnick, 2006). Associated with user
control is users' collaboration since "Web 2.0 represents an environment where
communities of participants with common interests contribute to a collective intelligence
(...) where dynamic, hardware-independent applications can be developed with the help
of customers" (Connolly, 2007). Therefore it is common to think that collaboration in the
development of interfaces with the help of customers allows "end users to view data
quicker" (Bernal, 2009). "Web 2.0 can be seen as triggering a set of recursive social and
technical advances (...) fuelled by a desire for increased openness in the information
economy" (Mason, 2008).

2.1.1.4. Web 2.0 as a philosophy

Web 2.0 as a philosophy is closely related to the view presented above, being
"defined as the philosophy of mutually maximizing collective intelligence and added
value for each participant by formalized and dynamic information sharing and creation"
(Hoegg et al., 2006). This dissertation does not develop the concept of Web 2.0 as a
philosophy but more as a new set of tools and services since this provides the best
measurable way of analysis and is closely related to the outcome of the Web as an
evolution of the Internet. Moreover, this new set of tools can be examined and
evaluated according to their appropriateness for Business Intelligence.

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2.1.2. Tools and applications in the Web 2.0 world

The first step towards defining Web 2.0 as a source for new tools and
applications came from Tim O'Reilly's (O'Reilly, 2005b) allusion to the concept of Web
2.0 as a platform. In his blog post "Web 2.0: Compact Definition", O'Reilly states that
"Web 2.0 is the network as platform, spanning all connected devices; Web 2.0
applications are those that make the most of the intrinsic advantages of that platform:
delivering software as a continually-updated service that gets better the more people
use it, consuming and remixing data from multiple sources, including individual users,
while providing their own data and services in a form that allows remixing by others,
creating network effects through an "architecture of participation", and going beyond
the page metaphor of Web 1.0 to deliver rich user experiences". In a later post, he added
the following statement to his vision: "Web 2.0 is (...) an attempt to understand the rules
for success on that new platform. Chief among those rules is this: Build applications that
harness network effects to get better the more people use them - harnessing collective
intelligence." (O'Reilly, 2006).

Some authors, such as Wendy Macaskill and Dylan Owen (Macaskill and Owen,
2006), even believe that the Web may become the (free) operating platform of choice in
the future over paid platforms, such as Microsoft Windows or Mac OS X. Bearing this
idea in mind, there is an obvious interest for businesses to exploit the cost and
operational advantages of such a platform.

In his paper "Enterprise 2.0", Andrew McAfee (McAfee, 2006) calls Web 2.0
technologies the "new digital platforms for generating, sharing and refining information
(...) popular on the internet". However, he prefers the label "enterprise 2.0" in order "to
focus only on those platforms that companies can buy or build in order to make visible
the practices and outputs of their knowledge workers". In a similar manner, the concept
of "intranet 2.0" is born, defined as "a paradigm shift that's been building in recent years
where collaboration and free speech reign and users are encouraged to network and
form the content of the intranet site" (Scarf, 2006).

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Conversely, in "What is Web 2.0?" Paul Anderson (Anderson, 2007) states that
new Web 2.0 tools and applications "are not really technologies as such, but services (or
user processes) built using the building blocks of the technologies and open standards
that underpin the internet and the Web. He calls them concatenations, which means
they make use of existing services.

Despite the variety of interpretations, these new tools have their origins in the
Internet. The Internet has evolved in such a way that new "Web 2.0 services allow users
to increasingly treat the Web, not their pc, as their preferred platform of use" and this is
possible because "Web 2.0 sites and services now provide a range of increasingly
sophisticated and often (free applications) that are beginning to resemble (and
challenge) desktop programs in terms of functionality" (Macaskill and Owen, 2006).

The most relevant of the new Web 2.0 tools and applications presented and
analyzed below:

2.1.2.1. Blogs

Blogs first appeared in the mid-1990s as a simplified way of publishing to the
Web and they represent "an individual's serial journal-like informal postings, typically,
but not necessarily, written by a relative expert and solicits comments from readers"
(McGee, 2008).

Blogs can be characterized by their "greater ease of Web publishing (...) allowing
almost everyone with only a little technological savvy to participate in the discursive
space of the internet" and are viewed as a "cheap way of publishing and became a way
of aggregating Web content for particular ends" (Tredinnick, 2006). Blogs are also used
"as a way for experts to quickly publish their opinions on a plethora of topics for readers
to read and respond to. The collaborative power of blogs usually comes in the form of
reader comments that most blogging technology allows for" (Marshall, 2008). The
collaboration element of blogs, also highlighted in several other Web 2.0 tools, gave

12


birth to the blogosphere, i.e. "a "world" of bloggers operating in their own environment"
(Anderson, 2007).

Blogs are commonly recognized for being "personal, opinionated, unfiltered and
often abandoned after six months", although "subject specialists blogs offer a rich mine
of information for those wanting current updates in their area of interest or expertise. A
blog though, is also an interactive tool. It allows and invites feedback and commentary
on what is posted as well as providing extensive linking to content from other blogs and
sites" (Macaskill and Owen, 2006). Moreover, "bloggers have begun to incorporate
multimedia into their blogs" (Anderson, 2007), such as music, photos, videos (video
blogs, or vlogs) and, "increasingly, bloggers can upload material directly from their
mobile phones (mob-blogging)" (Anderson, 2007).

Although Blogging has existed for over 20 years, it is taking its first steps in a
business environment. Their business application is important since, for instance, "they
may be written by one or two knowledge-area specialists or can be used to generate
input from everyone (...) often used within the corporate website or an extranet
environment to demonstrate expertise to prospective clients, create an environment of
inclusiveness and even to support a work-life balance" (Scarff, 2006).

Information in a blog is mainly structured with the help of links, i.e. "hyperlink, a
reference to a document that the reader can directly follow, or that is followed
automatically" (Wikipedia, 2010). Paul Anderson (Anderson, 2007) aggregated some
examples of linking used within a blog:

 Permalink: permanent URL which is generated by the blogging system and is applied
to a particular post. If the item is moved within the database, the permalink stays the
same;
 Trackback (or pingback): allows a blogger (A) to notify another blogger (B) that they
have referenced or commented on one of blogger B's posts;
 Blogroll: list of links to other blogs that a particular blogger likes or finds useful.

13


2.1.2.2. Microblogging

“Microblogging is a new form of communications in which users can describe
their current status in short posts distributed by instant messages, mobile phones, email
or the Web” (Java et al., 2007). Microblogging is provided by several services including
Twitter, Jaiku and more recently Pownce, which provide a light-weight and easy form of
communication that enables users to broadcast and share information about their
activities, opinions and status, either to the general public or within a social network
(Java et al., 2007). Twitter, for example, allows a user to provide “followers” with
regular updates within 140 characters at time, bringing the concept of quick and cheap
publishing to the internet (Bushey, 2010).

Companies of all shapes and sizes are seizing the opportunities of this digital
word-of-mouth. For big companies, Twitter represents a way to offer special discounts
and opportunities, and for small businesses it presents a free and efficient alternative to
promote goods and services directly to customers. Hence, Twitter has become a new
way to deal with customer relationship management (Ankeny, 2009). Most importantly,
it has become a quick and free way for information to be distributed throughout
companies, regardless of employee location, as long as an internet access is provided.
Businesses that rely on contact lists or are event-driven are positioned to maximize this
social media opportunity (Ankeny, 2009).

2.1.2.3. Wikis

Wikis are a "means of publishing to the Web. Wiki supports the creation of full-
scale websites with its combination of templates, authoring tools and audit trails"
(Tredinnick, 2006). One of the best known examples is Wikipedia, an online
encyclopedia accessible and edited online by anyone. "The wiki is a tool to enable
collaborative authoring" and "the power to edit and update information goes to the
users" (Tredinnick, 2006). This power is also its major drawback since wikis can
misinform or even disseminate false material in the fact that "most reference materials

14


are developed by a small minority of a community, organization, or society" and "the
amount of content included in a wiki will often greatly overshadow most official
reference documents" (Marshall, 2008). Therefore, only so much can be said about the
quality and reliability of its content, or about its community of contributors since "the
experiment of Wikipedia may be a revolutionary experiment in trust, but the number of
users simply perusing Web content far outweighs those that edit it" (Mason, 2008). As a
matter of fact, only 1.37% of Wikipedia's registered users are active contributors to its
content (Wikipedia, 2010). And this raises the question of whether this collaboration
tool really works for environments with less than a couple of hundred users, like small
to medium sized businesses.

Undoubtedly, a wiki "allows multiple authors and editors to contribute
simultaneously and on an ongoing basis to a document" (McGee, 2008) and this is the
main reason why wikis constitute a revolutionary Web 2.0 tool. Paul Anderson (2007)
calls it a "collaborative tool that facilitates the production of a group work" that "unlike
blogs (...) allows previous versions to be examined, and a rollback function, which
restores previous versions". Its major advantage is that they are "free, simple to use and
set up", which makes them "ideal for specific projects and collaborative knowledge
sharing, especially if your group members are in more than one location. For some wikis,
"levels of access and content security can be set" (Macaskill and Owen, 2006). In
businesses wikis "can be used to create a knowledge base or reference for staff,
researchers, sales teams or customer service representatives" (Scarff, 2006).

2.1.2.4. Tags, Folksonomy and Social Bookmarking

The desire to find and share information among small groups, teams and
communities of practice has, not surprisingly, led to the development of a number of
shared bookmarking systems (Millen et al., 2005).

"One of the first large-scale applications of tagging was seen with the
introduction of Joshua Schacter's del.icio.us website, which launched the "social

15


bookmarking" phenomenon" (Anderson, 2007). "This bookmarking service allows users
to store their bookmarks online" and to have them "described, tagged, collaboratively
shared, and searched for by others" (Macaskill and Owen, 2006).

The free tagging of information and objects (anything with a URL) led to the
appearance of the term "folksonomy", officially coined by Thomas Vander Wal (Wal,
2005). Folksonomy is usually characterized by "end users of a website tagging or adding
keywords to content. Some of the first applications of folksonomy were photos and
internet bookmarks" (Marshall, 2008).

"Folksonomy describes the emergent classification structures that arise as users
"tag" information for their own ends (...) to aid in the classification of information and
knowledge (Tredinnick, 2006). "A folksonomy (a categorization system developed over
time by folks) is in some ways the opposite of a taxonomy, which is an up-front
categorization scheme developed by an expert" (McAfee, 2006). Hence, "folksonomies
rely on the similarities between the ways in which people describe disparate pieces of
information" (Tredinnick, 2006). "Web 2.0 is the interactive Web, where end users can
help define how they might categorize the data. This helped facilitate a change from the
traditional "taxonomy" to the more interactive "folksonomy", where common folks
helped drive the categorization of information in a more meaningful manner" (Bernal,
2009).

Academics, such as Paul Anderson (Anderson, 2007) used a similar tool in the
research of his report, CiteULike, a website that allows its users to add papers to their
personal library and automatically extracts the citation details. It recommends other
articles based on each user's library and fosters information sharing between users.

Particularly, a tag is a keyword that is added to a digital object (e.g. a website,
picture or video clip) to describe it, but not as part of a normal classification system"
(Anderson, 2007).

16


Eventually a new monitoring and
indexing tool for tags was born, the tag
clouds. Tag clouds "are groups of tags from a
number of different users of a tagging
service, which collates information about the
frequency with which particular tags are
used. This frequency information is often
displayed graphically as a "cloud" in which From: http://en.wikipedia.org/wiki/Tag_cloud

tags with higher frequency of use are
displayed in larger text" (Anderson, 2007).

Tagging is also associated to picture sharing websites, such as Flickr or
Photobucket, where users usually “tag” someone else’s picture to identify a person. By
using multiple tags on a picture, it is possible to see photos, not only chronologically but
sorted by the people who are in them, who posted them, their locations, the events
they record, etc. (Weinberger, 2005). Recent developments in tagging are related to
tagging video content, by embedding time stamps in a video and referring each mark to
however the author wants to describe that particular timing. An example of this is
"http://redlasso.com/".

2.1.2.5. RSS (Real Simple Syndication)

RSS (or Real Simple Syndication) is a "way of syndicating Web content through
the use of content feeds, that usually combine either a lead paragraph, or a summary of
an article published on the Web or on a blog, and have a hyperlink back to its source"
(Tredinnick, 2006).

"Bloggers use RSS to generate a short notice (i.e. headline) each time they add
new content. (...) That is also a link back to the full content. With RSS, users (...) simply
consult their aggregators, click on headlines of interest and are taken to the new
content" (McAfee, 2006) of "RSS-enabled websites, blogs or podcasts without actually

17


having to go and visit the site. Instead, information from the website is collected within a
feed and "piped" to the user in a process known as syndication" (Anderson, 2007). "To
subscribe to these information feeds (...) you need to download a content aggregator.
You can also customize your RSS to locate content that's appropriate to your needs"
(Macaskill and Owen, 2006) or, alternatively, subscribe to a website, such as Netvibes,
which "provides an interface to aggregated RSS content" (Mason, 2008).

According to Craig Mason (Mason, 2008) RSS "provides a structured and logical
process for distributing content without requiring users to literally engage with a
traditional centralized interface". An example of this would be to use RSS along with
tags, by requesting headlines that contain a collection of keywords, and return this
information as an RSS feed.

Another relevant aspect of RSS is that it "allows websites to constantly display
new updated content as it flows in from different sources across the Web automatically"
(Marshall, 2008), or by "aggregating from many different websites into a single user-
space" (Tredinnick, 2006).

For companies worried about opening up their systems to the internet under the
excuse that they would rather not waste work-time with site exploration, this tool is
particularly useful, since it "allows people and organizations to subscribe to external
content in XML format" (Scarff, 2006), and receive updated relevant information
through their browser or by e-mail.

2.1.2.6. Multimedia sharing

"Popular services take the idea of the "writeable" Web (where users are not just
consumers but contribute actively to the production of Web content) and enable it on a
massive scale (Youtube, Flickr and Odeo)" (Aderson, 2007).

Additionally, "BitTorrent, like other pioneers in the P2P (peer-to-peer) movement,
takes a radical approach to internet decentralization. Every client is also a server; files

18


are broken up into fragments that can be served from multiple locations, transparently
harnessing the network of downloaders to provide both bandwidth and data to other
users" (O'Reilly, 2005).

For businesses, this means having a file sharing system relying on their
employees to act as a fragmented data base; the more users exist, the faster the files
are shared among them. This also facilitates the geographical location of each person
within the same company.

2.1.2.7. Audio blogging and podcasting

"Podcast is simply making audio files available online so that users can then
download them to their desktop" (Macaskill and Owen, 2006). "Interviews and lectures
(...) can be played either on a desktop computer or on a handheld MP3 device. (...)
Podcast listeners subscribe to RSS feeds and receive information about new podcasts as
they become available" (Anderson, 2007). More recently, video files can also reside "on
a website and can be easily downloaded to a handheld device or personal computer"
(McGee, 2008).

This technology is not new and its application to a business environment is
mostly related to e-learning systems, where the users exploit a pre-bought application
or access a website and listen (and/or watch) the education material selected by their
management.

2.1.2.8. Video blogging

As bandwidth capacity increases and server space becomes available, users
became capable of uploading their own content to the Web. A clear success is the case
of You Tube. This website lets users upload, tag, watch, rate, review, and blog video
footage, and even creates playlists. You Tube is one of the fastest growing websites
today. One of its enhancements is letting content creators create and customize their
own broadcast channel (Macaskill and Owen, 2006). Similar to You Tube, users can

19


access Vimeo (http://vimeo.com/) an online community for video content creators to
share their videos among themselves and other users.

2.1.2.9. Mash-up

A mash-up is defined as "Web pages or applications that take data from more
than one (often unrelated) online source and combine it to create new hybrid services
unintended by the original content owners" (Macaskill and Owen, 2006), "to create a
unique view of interpretation" (McGee, 2008). A common example of a mash-up is the
use of Google maps to show business locations within a certain region. An example is
"The rentables" (http://www.therentables.com/), a website to locate houses for rent; it
works its platform under Google maps to show its users where the houses are located.

2.1.2.10. Social networking

Websites such as Facebook or MySpace allow users to set up interactive and
personalized Web profiles detailing personal information such as: education, age,
interests, and hobbies. Users are able to edit and customize their profile page, to display
friends, upload photographs, videos, music, create a blog, post comments on other user
profile pages, and send messages to other users (Macaskill and Owen, 2006).
Furthermore, websites like Linkedin take this personalization to the professional level,
where users can create their professional profiles that include their academic
background and corporate experience and where links are made available to past and
current co-workers and colleagues.

2.1.2.11. MMORPGs (Massive Multiplayer Online Role-Playing Games)

Virtual worlds are understood as immersive, three-dimensional, multi-media,
multi-person simulation environments, where each participant adopts an alter ego and
interacts with other participants in real time (Wagner, 2008). There are well over a
hundred widely used virtual world applications available today, operating on several
different platforms (Wagner, 2008). Christian Wagner differentiates them in two groups:

20


purposeful and general purpose virtual worlds. Purposeful worlds are represented by
games such as “World of Warcraft” (or more recently, “Aion”), that require a user to
fulfill a set of quests (i.e. objectives) usually rising in difficulty and complexity. Most of
these objectives are meant to be played online in collaboration with several other users
(hence the acronym MMO). Although these objectives are apart from reality, the author
suggests that the learning experience can be very practical, “such as the impact on
altruistic behavior or the benefits of separation of duties and team work”.

On the other hand, through the use of general purpose virtual worlds, some
authors have suggested that the concept of virtual worlds could be applied to education
(Wagner, 2008; J. King, 2008). Brian King (J. King, 2008) suggests the creation of a
MMORPG dedicated to foster students learning about business in an engaging and
educational simulation game. His point is that current educational strategies do not
prepare graduates for the modern business world and they do not motivate students to
learn.

Another example being used in education (Wagner, 2008) is a virtual world
closely related to the concept of social networking sites called Second Life, “a
subscription based virtual world where registered users interact by building, playing,
working, and flying along side other virtual characters” (Mascaskill and Owen, 2006).
Here, people assume their own life in a game, or prefer to act as someone else in their
interactivity with others. Second Life currently has over 11.2 million registered avatars
and monthly growth rates are in excess of 20%. From a business resources perspective,
virtual worlds such as Second Life provide environments and tools that facilitate
creating online laboratories that can automatically recruit potentially thousands of
research subjects at a low cost (Chesney et al., 2007). Moreover, managers are starting
to realize that a great part of their young workforce are accustomed to playing online
games, and thus are more comfortable with new technological advancements (King,
2008).

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2.1.2.12. Newer services and applications

"There is such a deluge of new services that it is often difficult to keep track of
what's "out there" or to make sense of what each provides" (Anderson, 2007). Anderson
suggests a way to categorize new services based on what they attempt to do. He
identified seven ways to categorize new services:

 Social networking: professional and social networking sites that facilitate meeting
people, finding like minds, sharing content;
 Aggregation services: information gathering from diverse sources across the Web
and publish in one place. Includes news and RSS feed aggregators and tools that
create a single webpage with all your feeds and email in one place. Collect and
aggregate user data, user "attention" and intentions;
 Data "mash-ups": Web services that pull together data from different sources to
create a new service (i.e. aggregation and recombination);
 Tracking and filtering content: services that keep track of, filter, analyze and allow
search of the growing amounts of Web 2.0 content from blogs, multimedia sharing
services, etc;
 Collaborating: collaborative reference works (like Wikipedia) that are built using
wiki-like software tools. Collaborative, Web-based project and work group
productivity tools;
 Replicate office-style software in the browser: Web-based desktop
application/document tools;
 Source ideas or work from the crowd: seek ideas, solutions to problems or get tasks
completed by outsourcing to users of the Web. Uses the idea of power of the crowd.

2.1.3. Technologies Supporting Web 2.0

Several new technologies and concepts supporting the Web 2.0 environment
have become widely noticed. The research conducted for this study revealed some of
the most important ones, namely: Software-as-a-Service (SaaS), Simple Object Access

22


Protocol (SOAP), Microformats, Social software, Service Oriented Architecture (SOA),
Application Programming Interfaces (APIs), Rich Internet Applications (RIAs) and AJAX.

"Web 2.0 is about improving the user interface and enabling end users to view
data quicker" by taking "advantage of the browser as the universal client and provide a
richer interactive experience" (Bernal, 2009). The browser thus becomes the main
platform of use for these new technologies. This is made possible with the use of "key
open standards, flexible, and ever changing technologies" (Marshall, 2008) such as AJAX,
PHP (Hypertext Preprocessor), SOAP (Simple Object Access Protocol) and APIs
(Application Programming Interfaces). These tools "significantly improved one element
of the Web that before was not as powerful: two-way communication and social
networking" (Marshall, 2008), empowering users to be active agents in creating, editing
and managing their own and others' content. Furthermore "there is less emphasis on the
software (as a package: licensed and distributed) and far more on an application
providing a service" (Anderson, 2007), hence the concept of Software as a Service
(SaaS). Most of the world of software is moving to the browser and SaaS – and therefore
to the Web and your local internet (Hinchcliffe (b), 2006).

2.1.3.1. AJAX

"Early Web browsing followed a very structured 3-stage pattern; click, load and
wait" (Mason, 2008). AJAX is a term first coined by Jesse James Garret (Garret, 2005)
and is used to describe a "set of technologies that allow browsers to provide users with a
more natural browsing experience" (Teare, 2005) "with the kind of responsive interfaces
that are commonly found in desktop applications" (Anderson, 2007).

"The key in AJAX is the term asynchronous, (...) a new paradigm for interacting
with the browser, with no need for full-page refreshes" (Bernal, 2009). Information
keeps being updated behind the scenes while the user can focus on something else on
the page. This "improves the dynamism of Web pages through individual techniques
such as Javascript, etc." (Anderson, 2007) and allows "(near) real-time updates of

23


individual elements on-screen" which "brings the user closer to the content provider or
receiver" (Mason, 2008).

Some authors find problems with the safety measurements around the use of
AJAX. Jordan Wiens (Wiens, 2007) states that AJAX "leaves users vulnerable to cross-site
request forgery attacks". As a result, without an update on an AJAX application, it is
possible that someone or something else can act on its own, pretending to be the user.

2.1.3.2. Rich Internet Applications (RIA)

"Browser technology has moved on to a new stage in its development with the
introduction of what are known as RIAs" (Anderson, 2007). A RIA "is a type of Web
application that can run independently of browsers, can run on any operating system
and, in many ways, works like a traditional desktop application" (Rapoza, 2008). The
most common RIA platform is the Flash plug-in, found in 99% of all computers in the
world" (Hinchcliffe, 2005).

The appearance of RIA is not without some controversy. According to Dion
Hinchcliffe (2005), "while the technique getting the most press by far these days is still
AJAX, there are a number of new approaches that are intent on dislocating this (...)
browser software model. The new upcoming RIAs are not only easy, but far more cost-
effective and with features that AJAX might never be able to match (Hinchcliffe, 2005).
However, Hinchcliffe (2005) agrees that many of these new application models are
breaking the model of the Web that requires the use of add-ons to the browser, and
thus these new applications have, according to him "considerably less ability to trigger
network effects". For this researcher "the right combination of features is still being
sought" for the perfect RIA.

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2.1.3.3. Service Oriented Architecture (SOA)

According to Arnon Rotem-Gal-Oz (Rotem-Gal-Oz, 2007), looking beyond the
hype and misconceptions related to SOA, this technology can be examined from two
main points of view, from a business perspective and a technical one.

From a business point of view, SOA analyzes a business to indentify its discrete
areas of interest and its business processes in order to suggest services for these areas
through message interfaces. The services can be choreographed or orchestrated to
realize the business processes. The goal of SOA is to increase the alignment between
business and IT and achieve business agility – the ability to respond to changes quickly
and efficiently (Rotem-Gal-Oz, 2007).

From a technical perspective, SOA is commonly thought of as architecture or an
architectural style that builds on loosely coupled, interoperable and compositional
components of software agents called services. Services have well-defined interfaces
based on standard protocols as well as policies that govern how these interfaces can be
used by service customers (Rotem-Gal-Oz, 2007; Anderson, 2007).

Web services for simple functions and tasks are being developed and integrated
together in the form of SOAs to provide advanced functions to the users. The increasing
use of SOA, interoperable Web services, and public APIs has helped the communication
between applications to applications, in a loosely coupled way (Chan et al., 2007).

2.1.3.4. Application Programming Interfaces (APIs)

At the foundation of Web 2.0 technologies are APIs. An API is "a system whereby
third party applications can query, display and even update content of other websites
autonomously" (Mason, 2008). In the Web 2.0 context, "an open API doesn't require the
programmer to license or pay royalties. Such "open" APIs have helped Web 2.0 services
develop rapidly and have facilitated the creation of mash-ups of data from various
sources" (Anderson, 2007). Nevertheless, although APIs and other similar tools "are

25


appearing fairly steadily (...) capable tools for creating new mashups still seem lacking.
(...)The advantage of in-browser mashups is the complete portability and mobility they
offer (Hinchcliffe, 2006).

2.1.3.5. Microformats

Microformats are widely used by Web developers to embed semi-structured
semantic information (i.e. some level of “meaning”) with an XHTML webpage (Khare et
al., 2006). Microformats allow bloggers or website owners to embed information that
services and applications can make use of without the need to visit the application’s
website and add the data (Anderson, 2007).

2.1.3.6. Simple Object Access Protocol (SOAP)

Simple Object Access Protocol (SOAP) is an XML-based protocol that defines a
framework for passing messages between systems over the internet (Loshin, 2000). In
other words, SOAP is a protocol (hence, containing several instructions) to facilitate
communication between programs over http – another protocol that is supported by all
internet browsers and servers and is thus readable in any computer. Therefore, SOAP
makes use of current widely available standards (for internet browsers) to facilitate
communication between programs.

Similar to SOAP, Representational State Transfer (REST) is an architectural idea
and set of principles that uses the Web and which provides a simple communications
interface using XML and http. According to Anderson the difference between them is
that the use of SOAP is heavyweight and REST is lightweight (Anderson, 2007).

2.2. Business Intelligence

In 1958, Hans Peter Luhn gave birth to the term Business Intelligence (BI) in his
article "A Business Intelligence System". For him, intelligence represents "the ability to
apprehend the interrelationships of presented facts in such a way as to guide action
towards a desired goal" and in order to make that happen, he suggests that "an

26


automatic system is needed which can accept information in its original form,
disseminate the data promptly to the proper places and furnish information on
demand". In this sense, he fashioned the Business Intelligence System, which can be
represented by "data processing machines" that working "together with proper
communication facilities and input-output equipment" allow the accommodation of "all
information problems of an organization" (Luhn, 1958).

Later on, BI became a popularized umbrella term coined and promoted by
Howard Dresner of the Gartner Group in 1989 (Power, 2007). At the time, Dresner "was
seeking a term that would elevate the debate and better define the analysis of
quantitative information by a wide variety of users (Martens, 2006). In a more recent
interview for Computer World, Dresner states that despite the fact that BI might have
evolved differently from what he expected "it's all about ways to deliver information to
end users without needing them to be experts in operational research" (Martens, 2006).

Indeed, today "the integration of (...) information systems architecture, human
resources, and selection and use of information is still not enough". BI is about "putting
together human resources that collaborate and share knowledge with a good
information technology system that distributes useful information, enabling the
generation of individual and group capacities" (Rodrigues, 2002).

2.2.1. Business (Intelligence)

The evaluation of the applicability of business intelligence in a business context
can be addressed by answering three questions: Why is it important? To whom is it
being targeted? How is it being used?

2.2.1.1. Why BI?

"With the help of BI, companies learn to anticipate the actions of their customers
and competitors as well as different phenomena and trends of their market areas and
fields of activity. Companies then use the information and knowledge generated to
support their operative and strategic decision-making" (Hannula, 2003). Additionally,

27


"When effectively integrated into processes, BI can help an organization meet many
mission-critical goals" (Felix, 2009). These decisions may eventually lead to compulsory
adjustments within the company. According to Richard Hackathorn, "information can
only benefit the business when some action changes the course of some business
process" and to have value, it "must improve your products, enhance interactions with
customers or have similar impacts" (Hackathorn, 2001).

Alternatively, BI deployment may be triggered because management requires
the translation of the company's strategy into a "detailed set of indicators that are closer
to the operational tasks" that allow employees to better understand a company's needs
(Golfarelli, 2004). The need to accommodate data into simpler indicators can be
explained by the rise of available data. In effect, "according to Gartner Group, by 2012,
global companies will have to handle 30 times more data than they do in 2004" and for
this reason, control over key data is becoming a key success factor for businesses
(O'Connell, 2004).

Lastly, "High on the list of factors feeding the burgeoning growth rate of BI is an
increasingly regulatory environment for businesses. Government regulations, primarily in
the form of the Sarbanes-Oxley Act in the US and the Combined Code on Corporate
Governance in the UK, are fueling the drive to make companies more honest and open
with their corporate information and in their external reporting" (O'Connell, 2004).

In a nutshell, individuals and businesses invest in BI systems because they want
to achieve corporate goals, they need a better grasp on the universe of data available in
the market, or because they feel the necessity of adapting to marketplace changes.

2.2.1.2. Who uses BI?

Several authors state that the key to improving the quality and timeliness of
information is to implement a holistic, user-centered analytical framework that is
designed to enhance decision-making across the entire value chain and at all levels of
the organization - staff-level workers and executive decision-makers (O'Connell, 2004;

28


Foody, 2009). "At senior managerial levels, it is the input to strategic and tactical
decisions. At lower managerial levels, it helps individuals to do their day-to-day job"
(Negash et al., 2003).

In fact, research estimates that "an increasing number of firms will target more
of their budgets toward technology initiatives that deliver information to line- and staff-
level workers and less for strategic decision making" (O'Connell, 2004).

Patrick Foody makes an important point when he states that "analysts need
applications that are user-driven, not application-driven" (Foody, 2009). The concept of
the "business power user", introduced by Rick Sherman, reflects the veracity of this
statement, since it refers to the business employee as a user that is comfortable with
technology, enjoys using cool tools and is savvy about IT processes (Sherman, 2009). In
this sense, "the BI industry needs to turn its approach inside out and start with the user
than being bound by what the technology can do" (Foody, 2009).

"In next-generation companies, however, innovation is pushed beyond the
boundaries of the company. Customers, suppliers and strategic partners are all involved
in making the company an innovative leader" (Rodrigues, 2002).

2.2.1.3. How is BI being used?

"Companies should not expect a full-scale implementation from the start, as this
may be counterproductive" (Thompson, 2009).

The third subject tackles a recommended process with which companies can
follow to implement a Business Intelligence system.

The first step is to define information sources. Companies consider their own
personnel as their most important source of information. As for external sources, they
frequently use customers, market research institutes and competitors (Hannula, 2003).

Knowing the fonts of information allow a business to deploy its BI gathering
strategy. Richard Hackathorn suggests an approach to evaluate BI that incorporates the

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following steps: observation (looking inside the business); understanding (the dynamics
of the business); predicting (the future state of key business variables); reacting
(executing a course of action); and reorganization (improving business processes by
refining best practices) (Hackathorn, 2001).

Finally, companies may recruit internal power users to persuade other
colleagues to embrace and adopt new BI tools. "Because the power user is typically
involved from the earliest stage of the project, he or she will likely become the most
ardent advocate for the new system" (Sherman, 2009).

Providing managers and staff with accurate, intuitive, and easily interpretable
data is one-third of the recipe for improvement. However, information is only as strong
as how it is interpreted, and data brings two problems to the table: interpretation itself
is subjective and people may only see from one point-of-view; and then, too much focus
on small bits of information may deter one from seeing the bigger picture and thus
focusing attention on too narrow BI system outcomes can bring disaster. For these
reasons it is imperative, beyond providing employees with "accurate, intuitive, and
easily interpretable data", to assure the alignment with strategic objectives and a
system for accountability (Wadsworth et al., 2009).

2.2.2. Concepts and definitions

BI is generally knowledge, "typically obtained about customer needs, customer
decision-making process, the competition, conditions in the industry, and general
economic, technological, and cultural trends. BI was born within the industrial world in
the early 90's to satisfy the managers' request for efficiently and effectively analyzing
the enterprise data in order to better understand the situation of their business and
improving the decision process" (Golfarelli, 2004).

Nevertheless, "current literature on BI has proved to be fairly sketchy and
theoretical" since "there is no generally agreed conception of BI but, rather, each author
has promoted his or her own idea of its connotations" (Hannula, 2003).

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Defining BI can be classified under different categories: as a system to support
decision making (Negash et al., 2003, Power, 2005, Rouibah et al., 2002, Canes, 2009,
Felix, 2009), as a set of technologies (Power, 2005, Foody, 2009), as a systematic
approach to search data and information (Hannula, 2003, Cody et al., 2002) or, for some
authors, as a illustration of all categories before mentioned (Adelman et al., 2002,
Negash et al., 2003).

2.2.2.1. BI as a support for decision-making

Behind the idea of BI as a support for decision-making is Solomon Negash and
Paul Gray, who assert that BI is "a natural outgrowth of a series of previous systems
designed to support decision making" (Negash et al, 2003), and as "a set of concepts and
methods to improve business decision making by using fact-based support systems"
(Power, 2005). Moreover, BI can be viewed as "a strategic approach for systematically
targeting, tracking, communicating and transforming relevant weak signs into
actionable information on which strategic decision-making is based". In other words, BI
is "a systematic approach by which a company keeps itself vigilant and aware of
developments and early warning signs in its external environment in order to anticipate
business opportunities or threats" (Rouibah et al., 2002). More recently, the focus on
knowledge gathering has shifted from outside the organization to the inside. Thus, BI is
defined today as "the ability to extract actionable insight from data available to the
organization, both internal and external, for the purposes of supporting decision-making
and improving corporate performance" (Canes, 2009), and more importantly, "to
improve information and enable employees to take action" (Felix, 2009).

2.2.2.2. BI as a technology

To refer to BI as a technology is to say that it is "a term that some financial
analysts and commentators use for categorizing a small group of software vendors and
their products" (Power, 2005). Additionally, "BI is often described as a technology that

31


helps users visualize their business. It must be easy to understand, simple to use, and
relatively intuitive" (Foody, 2009).

John K. Thompson explores the idea of BI being delivered via Software-as-a-
Service (SaaS): "BI SaaS goes much further, allowing companies to outsource the analysis
of multiple terabytes of information as part of an overall business intelligence strategy".
The motivation behind this new solution is that "BI SaaS enables firms to implement
data analytics initiatives in a fraction of the time and capital expenditure required by
traditional installations" (Thompson, 2009).

2.2.2.3. BI as a systematic approach to information and data finding

BI, as a systematic approach to information and data finding, is "defined as
organized and systematic processes, which are used to acquire, analyze and disseminate
information significant to business activities" (Hannula, 2003). This information has its
origin in databases. "Business intelligence has applied the functionality, scalability, and
reliability of modern database management systems to build ever-larger data
warehouses, and to utilize data mining techniques to extract business advantage from
the vast amount of available enterprise data" (Cody et al., 2002).

Data warehousing is "a systematic approach to collecting relevant business data
into a single repository, where it is organized and validated so that it can be analyzed
and presented in a form that is useful for business decision-making" (Cody et al., 2002).

2.2.2.4. BI in general terms

In more general terms, BI "combines data gathering, data storage, and
knowledge management with analytical tools to present complex and competitive
information to planners and decision makers" (Negash et al., 2003).

Business Intelligence normally describes the result of in-depth analysis of
detailed business data. It includes database and application technologies, as well as
analysis practices. BI is sometimes used synonymously with "decision support", though

32


business intelligence is technically much broader, potentially encompassing knowledge
management, enterprise resource planning, and data mining, among other practices
(Adelman et al., 2002).

2.2.2.5. Competitive Intelligence (CI)

Related to the concept of BI is Competitive Intelligence (CI). CI can be defined as
"a systematic and ethical program for gathering, analyzing and managing external
information that can affect your company's plans, decisions and operations" (Negash et
al., 2003). CI can also provide information about the present and future behavior of
competitors, suppliers, customers, technologies, acquisitions, markets, and the general
business environment (Vedder et al., 2002).

The purpose of CI is to gather actionable information about competitors and,
ideally, apply it to a business' short and long term strategic planning. CI can be simple –
scanning a company’s annual report and other public documents – or more elaborate –
hiring a security specialist to penetrate a competitor’s defenses (Ettorre, 1995).

For the purposes of this dissertation the analysis of BI presented here is
sufficient to understanding the general applications of what is meant by the term
Competitive Intelligence.

2.2.3. Purpose of BI

"Business intelligence is used to understand: the capabilities available in the firm;
the state of the art, trends, and future directions in the markets, the technologies, and
the regulatory environment in which the firm competes; and the actions of competitors
and the implications of these actions" (Negash et al., 2003).

Despite the several views about the meaning of BI, there appears to be a certain
agreement towards its purpose. Solomon Negash and Paul Gray (Negash et al., 2003)
present the following statement which generally describes BI's purpose:

33


"Business intelligence systems provide actionable information delivered at the
right time, at the right location, and in the right form to assist decision makers" (Negash
et al., 2003).

Time, in reference to BI, is related to "shrinking the information time window so
that the intelligence is still useful to the decision maker when the decision time comes"
(Negash et al., 2003), which means seeking to shorten the time between data gathering
and information clearance to decision makers. Additionally, because BI systems "present
complex corporate and competitive information", there is a need "to improve the
timeliness and quality of the input to the decision process" (Negash et al., 2003). Overall,
several other authors support that information must be promptly available to decision-
makers (Hannula, 2003, Luhn, 1958, Foody, 2009).

Location refers to the destiny of the information, and it can assume many forms.
For instance, Hans Peter Luhn (Luhn, 1958) states that "the objective of the system is to
supply suitable information to support specific activities carried out by individuals,
groups, departments, divisions, or even larger units. The admission or acquisition of new
information, its dissemination, storage retrieval and transmittal to the action points it
serves". Another author assumes that the "purpose of BI is to gather and provide
information to help managers make more "intelligent" decisions" (Power, 2005). "For
most companies the driving force behind starting BI activities has been a need to obtain
knowledge about the business environment and its development to support operative
actions" (Hannula, 2003). In the end, the place for information to be is near the decision
maker, whether he or she is at the top or bottom-level of the organization.

Form is an important trait of BI, that is, how information is presented to
decision-makers. Nevertheless, "many BI professionals believe that the BI job is finished
when the right information is delivered to the right person at the right time"
(Hackathorn, 2001). Although a "Business Intelligence System provides means for
selective dissemination to each of its action points in accordance with their current

34


requirements or desires" (Luhn, 1958), sometimes "the technology (...) interferes and
confuses rather than helps the user" (Foody, 2009).

2.2.4. Advantages of BI

"As the cost dropped, the number of users seeking to take advantage of a BI/DW
implementation grew" (Thompson, 2009). Costs in this area are still too high for
companies to benefit. Many analysts judge that BI solutions are out of reach for small
and medium companies who can't afford them (Negash et al., 2003; Thompson, 2009;
Canes, 2009; Wagsworth, 2009).

However, for those who can afford it, BI can bring several advantages, among
which are the following:
 Gaining insight from data that improves decision-making and risk mitigation (Canes,
2009);
 Deploying analytic databases and software across multiple locations (Thompson,
2009);
 Providing the analytical edge that sustains innovative programs for success over the
long term (Felix, 2009);
 Sparking creative adaption designed to counter issues that could show down
ongoing campaigns (Felix, 2009).

According to the empirical study conducted by Dr. Mika Hannula (Hannula, 2003)
on the top 50 Finnish Companies, the following benefits of BI were rated as important:
 Harmonizing the ways of thinking of company personnel;
 Broadening understanding of business in general;
 Strengthening strategic planning;
 Increasing professionalism in acquisition and analysis of information;
 Understanding the meaning of information.

Even though several benefits can be found to support BI practice within an
entrepreneurial context, the truth is that "most BI benefits are soft" (Negash et al.,

35


2003), as they often have "constraints that (...) seem to prevent them from taking
advantage of analytics" (Thompson, 2009). For this reason, John K. Thompson
(Thompson, 2009) states some advantages of using BI through Software as a Service
(SaaS), as an alternative to current solutions:
 Value-based proofs-of-concept can be created in a matter of days;
 Attractive to midsize companies as well as departments and divisions of large
corporations that seek to implement cost-effective, quick, and dynamic data
analytics projects;
 Costs are reduced, performance is guaranteed, and full business insight is enjoyed;
 The client may specify a service-level agreement.

2.2.5. Potential drawbacks and risks of BI

"Traditionally, data warehousing and analytic implementations cost too much"
(Thompson, 2009). One of the major drawbacks of BI is the difficulty in determining its
return on investment (ROI). This is mainly driven by BI's high up-front and upkeep costs
(Negash et al., 2003; Thompson, 2009; Canes, 2009; Wadsworth et al., 2009).
"Unfortunately, although reductions in information systems cost from efficiencies (e.g.
time saved in creating and distributing reports, operating efficiencies, ability to retain
customers) can be forecast, the IT savings are only a small portion of the payoff. It would
be rare for a BI system to pay for itself through cost reductions" (Negash et al., 2003).
"Too many firms have concluded that the level of work required to implement a
traditional data warehouse and make it a success will not produce the required return on
investment" (Thompson, 2009).

Furthermore, even though "costs of deployment (...) still continue to be the most
obvious limiting factor", some "companies must still move existing data into the new
systems themselves". In other cases "IT professionals, already strained to the hilt, are
loath to assume greater responsibilities, especially projects that often deliver benefits
only to a particular department instead of the entire enterprise". One the other hand, in
some cases "Dedicated data warehouse for individual departments may be overkill"

36


(Thompson, 2009). However, whenever a company wants to shift to a less expensive BI
solution, it has to face what John K. Thompson (Thompson, 2009) calls an "unwanted
trade-off: lower technology costs were being replaced by the higher costs the IT staff
needed to maintain a system, along with the cost of frequent technology updates".

"Tapping the power of business intelligence is not simple, and the investment in
personnel and infrastructure can be significant" (Wadsworth et al., 2009). Besides
implementation costs, "putting a BI system in place includes: hardware costs, software
costs (...) and personnel costs" (Negash et al., 2003; Canes, 2009). Other typical barriers
to the deployment of BI systems are their complexity, and associated time and effort
spent by people to support those same systems (Canes, 2009).

The cost of workforce time and effort with the deployment and exploitation of
such systems cannot easily be estimated and its benefits are in some cases doubtful.
Actually, "Business analysts are drowning in a sea of data but unable to obtain the
knowledge they need to address the more difficult business problems" (Foody, 2009) and
"The sheer mass of the possibly relevant content can make analysis a daunting task"
(Felix, 2009). Analysts thus continue to sustain negative judgments about BI. On one
hand, "traditional business intelligence tools (...) appear to offer little insight" (Foody,
2009). On the other hand, the offered tools "require complex queries that can be written
only by experts, and information is often delivered several days or weeks after it was first
requested" (Foody, 2009; Thompson, 2009).

Another limiting factor related to BI systems is their inability to account for
knowledge gained from experience, i.e. tacit knowledge, in contrast to explicit
knowledge, "the one incorporated in manuals, handbooks, databases and procedures".
"Up to recently, companies have overlooked the first one (tacit) and emphasized the
latter one (explicit)" (Rodrigues, 2002).

"Business Intelligence terms and practices in companies have not yet become
very well established. Most firms think of BI activities as a process focusing on
monitoring the competitive environment around them" (Hannula, 2003).

37


Lastly, another problem identified with BI implementation is expectations.
"When evaluating a BI project's benefits you risk setting user expectations too high"
which given the problems abovementioned, "the tools to be used for client-based
analytics and reporting may not be what users expect" (Thompson, 2009).

2.2.6. BI tools

Business Intelligence software extends from software sold for querying a
database and creating a report (Power, 2005), to complex and expensive BI services. BI
platforms in 2001 were a $5.5 billion market. By the end of 2010, business intelligence
services are estimated to amount to at least $15 billion annually (Power, 2001).

Today, companies and managers are beginning to ask IT vendors for new
development tools capable of handling the changed business scenario. On the
technological side, companies are seeking to outsource information systems to cut fixed
costs. On the organizational side, in order to reduce costs they are adopting an end-to-
end strategy that involves both customers and suppliers to synchronize all business
activities (Golfarelli, 2004).

In their study to classify Business Intelligence in healthcare organizations, Ton Spil,
Robert Sterwee and Christian Teitink used a functional classification of BI tools that
utilized criteria based on the work of Alter (1977) (Spil et al., 2002):

 Data oriented tools: may require the end-user to have knowledge of both the
relational structure of the databases and tables and SQL language.
o File drawer systems: in most cases queries are made by specialists. End-
users use these queries by defining variables;
o Database query tools: give more possibilities to the end-user in asking
questions at the database management system (the database).

 Decision oriented tools: decision support tools (DSS) allow end-users to turn data
into information.

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MSc dissertation - João Clara Silva

MSc dissertation - João Clara Silva

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