Impact of Business Intelligence on Company Performance: A System Dynamics Approach

Abstract

Abstract Research background Businesses struggle with operational optimisation and seek a solution by implementing Business Intelligence (BI) to boost sales. But, due to the lack of research that use actual data from real-world situations; the impetus of this research is to exploit BI parameters to enhance company performance. Purpose This research aims to develop a System Dynamics (SD) based model to assess whether a Japanese company which manufactures Printed Circuit Boards (PCB) should invest in BI to improve its operations based on the rate of information processing, thereby leading to increased financial performance. Research methodology The authors requested financial statements for three years (2019 to 2021) from the management of the PCB company, followed by validation based on subject experts’ assessments. The model was developed and simulated step-by-step with consideration of the SD approach involving problem identification, model prototyping, trouble shooting and error analysis. Results If BI was used to process data at a rate of 40%, the endogenous factors considered in this study would increase the company’s net profit and accumulated earnings by 25.77% and 48.28%, respectively. Novelty The research is unique in the sense that the model was developed based on inter-relationships between the variables, and the data is based on a real-life situation. Furthermore, the methodology could be applied with the necessary modifications to industries such as service, media, and education.