How Business Intelligence Creates Value

Assessing IT business value has long been recognized as a major challenge, stemming largely from the considerable variability in the role and contribution of IT. This study examines the business value associated with business intelligence (BI) systems, suggesting that business value assessment is largely contingent on system type and should consider its unique contribution. The study adopts a process-oriented approach to evaluating the value contribution of BI, arguing that it stems from the improvement of business processes. The study develops and tests a research model that explains the unique mechanisms through which BI creates business value. The model draws on the resource-based view to identify key resources and capabilities that determine the impact of BI on business processes and, consequently, on organizational performance. Furthermore, the research model seeks to analyse the manner in which the organizational approach to innovation moderates the business value of BI. Analysis of data collected from 159 managers and IT/BI experts, using Structural Equations Modelling (SEM) techniques, shows that BI largely contributes to business value by improving both operational and strategic business processes. Further, it highlights the effect of the organizational approach toward exploration on transforming BI resources into capabilities and further into business