Information technology​ (​IT​) is the application of ​computers​ and ​telecommunications

equipment​ to store, retrieve, transmit and manipulate data​,​ often in the context of a business or
other enterprise.

The term is commonly used as a synonym for computers and computer networks, but it also
encompasses other ​information​ distribution technologies such as television and telephones.
Several ​industries​ are associated with information
technology,including ​computerhardware​, ​software​, ​electronics​, ​semiconductors​, ​internet​, ​telecom
munications equipment​, ​engineering​, ​healthcare​, ​e-commerce​ and computer services.
the Harvard Business Review; authors Harold J. Leavitt and Thomas L. Whisler commented
that "the new technology does not yet have a single established name. We shall call it
information technology (IT)." Their definition consists of three categories: techniques for
processing, the application of statistical and mathematical methods to decision-making, and
the simulation of higher-order thinking through computer programs.

Business intelligence (BI)

Business intelligence (BI) is a technology-driven process for analyzing data and presenting
actionable information which helps executives, managers and other corporate end users make
informed business decisions. BI encompasses a wide variety of tools, applications and
methodologies that enable organizations to collect data from internal systems and external
sources, prepare it for analysis, develop and run queries against that data and create reports,
dashboards and data visualizations to make the analytical results available to corporate
decision-makers, as well as operational workers.

Importance of business intelligence

Overall, the role of business intelligence is to improve all parts of a company by improving
access to the firm's data and then using that data to increase profitability. Companies that employ
BI practices can translate their collected data into insights of their business processes. The
insights can then be used to create strategic business decisions that improve productivity,
increase revenue and accelerate growth.

Other potential benefits of business intelligence tools include:

● accelerating and improving decision-making;

● optimizing internal business processes;
● increasing operational efficiency;
● driving new revenues;
● gaining competitive advantage over business rivals;
● assisting companies in the identification of market trends; and
● spotting business problems that need to be addressed.
BI data can include historical information stored in a data warehouse, as well as new data
gathered from source systems as it is generated, enabling BI tools to support both strategic and
tactical decision-making processes.

Initially, BI tools were primarily used by data analysts and other IT professionals who ran
analyses and produced reports with query results for business users. Increasingly, however,
business executives and workers are using business intelligence platforms themselves, thanks
partly to the development of self-service BI and data discovery tools and dashboards. The BI
market is expected to experience continuous growth as tools increasingly incorporates both
artificial intelligence (AI) and machine learning (ML).

Business intelligence combines a broad set of data analysis applications, including:

● Ad hoc analytics
● Online analytical processing (OLAP)
● Mobile BI
● Real time BI
● Operational BI
● Software-as-a-service BI (SaaS BI)
● Open source BI (OSBI)
● Collaborative BI
● Location intelligence (LI)

In addition, BI technology includes:

● data visualization software for designing charts and other infographics;

● key performance indicators in an easy-to-grasp way;
● tools for building BI dashboards and performance scorecards that display visualized data
on business metrics.

Data visualization tools have become the standard of modern BI in recent years. A couple
leading vendors defined the technology early on, but more traditional BI vendors have followed
in their path. Now, virtually every major BI tool incorporates features of visual data discovery.

BI programs typically incorporate forms of advanced analytics, such as data mining, predictive
analytics, text mining, statistical analysis and big data analytics. In many cases, though,
advanced analytics projects are conducted and managed by separate teams of data scientists,
statisticians, predictive modelers and other skilled analytics professionals, while BI teams
oversee more straightforward querying and analysis of business data.

Business intelligence data is typically stored in a data warehouse or in smaller data marts that
hold subsets of a company's information. In addition, Hadoop systems are used within BI
architectures as repositories or landing pads for BI and analytics data; especially for unstructured
data, log files, sensor data and other types of big data.

Before it is used in BI applications, raw data from different source systems must be integrated,
consolidated and cleansed using data integration and data quality tools to ensure that users are
analyzing accurate and consistent information.

Business intelligence for big data

BI platforms are increasingly being used as front-end interfaces for big data systems. Modern BI
software typically offers flexible back ends, enabling them to connect to a range of data sources.
This, along with simple user interfaces (UI), makes the tools a good fit for big data architectures.
Users can connect to a range of data sources, including Hadoop systems, NoSQL databases,
cloud platforms and more conventional data warehouses, and can develop a unified view of their
diverse data.

Because the tools are typically fairly simple, using BI as a big data front end enables a broad
number of potential users to get involved rather than the typical approach of highly specialized
data architects being the only ones with visibility into data.

Business intelligence trends

In addition to BI managers, business intelligence teams generally include a mix of BI architects,

BI developers, business analysts and data management professionals. Business users are also
often included to represent the business side and make sure its needs are met in the BI
development process.

To help with that, a growing number of organizations are replacing traditional waterfall
development with Agile BI and data warehousing approaches that use Agile software
development techniques to break up BI projects into small chunks and deliver new functionality
to business analysts on an incremental and iterative basis. Doing so can enable companies to put
BI features into use more quickly and to refine or modify development plans as business needs
change or as new requirements emerge and take priority over earlier ones.

Business intelligence vs. data analytics

Sporadic use of the term business intelligence dates back to at least the 1860s, but consultant
Howard Dresner is credited with first proposing it in 1989 as an umbrella phrase for applying
data analysis techniques to support business decision-making processes. What came to be known
as BI tools evolved from earlier, often mainframe-based analytical systems, such as decision
support systems and executive information systems.
Business intelligence is sometimes used interchangeably with business analytics. In other cases,
business analytics is used either more narrowly to refer to advanced data analytics or more
broadly to include both BI and advanced analytics.

Porter's Five Forces

Understanding Competitive Forces to Maximize Profitability:

Porter's Five Forces is a simple but powerful tool for understanding the competitiveness of your
business environment, and for identifying your strategy's potential profitability.

This is useful, because, when you understand the forces in your environment or industry that can
affect your profitability, you'll be able to adjust your strategy accordingly. For example, you
could take fair advantage of a strong position or improve a weak one, and avoid taking wrong
steps in future.

In this article and video, we explore each of Porter's Five Forces. We look at how they can help
you to analyze the strengths and weaknesses of your position, and how they can impact your
long-term profitability.

Understanding Porter's Five Forces

The tool was created by Harvard Business School professor Michael Porter, to analyze an
industry's attractiveness and likely profitability. Since its publication in 1979, it has become one
of the most popular and highly regarded business strategy tools.

Porter recognized that organizations likely keep a close watch on their rivals, but he encouraged
them to look beyond the actions of their competitors and examine what other factors could
impact the business environment. He identified five forces that make up the competitive
environment, and which can erode your profitability. These are:

Competitive Rivalry. This looks at the number and strength of your competitors. How many
rivals do you have? Who are they, and how does the quality of their products and services
compare with yours?

Where rivalry is intense, companies can attract customers with aggressive price cuts and
high-impact marketing campaigns. Also, in markets with lots of rivals, your suppliers and buyers
can go elsewhere if they feel that they're not getting a good deal from you.

On the other hand, where competitive rivalry is minimal, and no one else is doing what you do,
then you'll likely have tremendous strength and healthy profits.
Supplier Power. This is determined by how easy it is for your suppliers to increase their prices.
How many potential suppliers do you have? How unique is the product or service that they
provide, and how expensive would it be to switch from one supplier to another?

The more you have to choose from, the easier it will be to switch to a cheaper alternative. But the
fewer suppliers there are, and the more you need their help, the stronger their position and their
ability to charge you more. That can impact your profit.

Buyer Power. Here, you ask yourself how easy it is for buyers to drive your prices down. How
many buyers are there, and how big are their orders? How much would it cost them to switch
from your products and services to those of a rival? Are your buyers strong enough to dictate
terms to you?

When you deal with only a few savvy customers, they have more power, but your power
increases if you have many customers.

Threat of Substitution.​ This refers to the likelihood of your customers finding a different way
of doing what you do. For example, if you supply a unique software product that automates an
important process, people may substitute it by doing the process manually or by outsourcing it. A
substitution that is easy and cheap to make can weaken your position and threaten your
profitability.

Threat of New Entry​. Your position can be affected by people's ability to enter your market. So,
think about how easily this could be done. How easy is it to get a foothold in your industry or
market? How much would it cost, and how tightly is your sector regulated?

If it takes little money and effort to enter your market and compete effectively, or if you have
little protection for your key technologies, then rivals can quickly enter your market and weaken
your position. If you have strong and durable barriers to entry, then you can preserve a favorable
position and take fair advantage of it.

The Five Forces are brought together in Figure 1, below​.

 Porter's Value Chain

Understanding How Value Is Created Within Organizations:

How does your organization create value?

How do you change business inputs into business outputs in such a way that they have a greater
value than the original cost of creating those outputs?

This isn't just a dry question: it's a matter of fundamental importance to companies, because it
addresses the economic logic of why the organization exists in the first place.

Manufacturing companies create value by acquiring raw materials and using them to produce
something useful. Retailers bring together a range of products and present them in a way that's
convenient to customers, sometimes supported by services such as fitting rooms or personal
shopper advice. And insurance companies offer policies to customers that are underwritten by
larger re-insurance policies. Here, they're packaging these larger policies in a customer-friendly
way, and distributing them to a mass audience.

The value that's created and captured by a company is the profit margin:

Value Created and Captured – Cost of Creating that Value = Margin

The more value an organization creates, the more profitable it is likely to be. And when you
provide more value to your customers, you build competitive advantage.

Understanding how your company creates value, and looking for ways to add more value, are
critical elements in developing a competitive strategy. Michael Porter discussed this in his
influential 1985 book "Competitive Advantage," in which he first introduced the concept of the
value chain.
A value chain is a set of activities that an organization carries out to create value for its
customers. Porter proposed a general-purpose value chain that companies can use to examine all
of their activities, and see how they're connected. The way in which value chain activities are
performed determines costs and affects profits, so this tool can help you understand the sources
of value for your organization.

Elements in Porter's Value Chain

Rather than looking at departments or accounting cost types, Porter's Value Chain focuses on
systems, and how inputs are changed into the outputs purchased by consumers. Using this
viewpoint, Porter described a chain of activities common to all businesses, and he divided them
into primary and support activities, as shown below.

Porter's Value Chain Diagram

Primary Activities

Primary activities relate directly to the physical creation, sale, maintenance and support of a
product or service. They consist of the following:

Inbound logistics – These are all the processes related to receiving, storing, and distributing
inputs internally. Your supplier relationships are a key factor in creating value here.

Operations – These are the transformation activities that change inputs into outputs that are sold
to customers. Here, your operational systems create value.
Outbound logistics – These activities deliver your product or service to your customer. These are
things like collection, storage, and distribution systems, and they may be internal or external to
your organization.

Marketing and sales – These are the processes you use to persuade clients to purchase from you
instead of your competitors. The benefits you offer, and how well you communicate them, are
sources of value here.

Service – These are the activities related to maintaining the value of your product or service to
your customers, once it's been purchased.

Support Activities

These activities support the primary functions above. In our diagram, the dotted lines show that
each support, or secondary, activity can play a role in each primary activity. For example,
procurement supports operations with certain activities, but it also supports marketing and sales
with other activities.

Procurement (purchasing) – This is what the organization does to get the resources it needs to
operate. This includes finding vendors and negotiating best prices.

Human resource management – This is how well a company recruits, hires, trains, motivates,
rewards, and retains its workers. People are a significant source of value, so businesses can
create a clear advantage with good HR practices.

Technological development – These activities relate to managing and processing information, as

well as protecting a company's knowledge base. Minimizing information technology costs,
staying current with technological advances, and maintaining technical excellence are sources of
value creation.

Infrastructure – These are a company's support systems, and the functions that allow it to
maintain daily operations. Accounting, legal, administrative, and general management are
examples of necessary infrastructure that businesses can use to their advantage.

Companies use these primary and support activities as "building blocks" to create a valuable
product or service.

Using Porter's Value Chain

To identify and understand your company's value chain, follow these steps.

Step 1 – Identify sub-activities for each primary activity

For each primary activity, determine which specific sub-activities create value. There are three
different types of sub-activities:

Direct activities​ create value by themselves. For example, in a book publisher's marketing and
sales activity, direct sub-activities include making sales calls to bookstores, advertising, and
selling online.

Indirect activities​ allow direct activities to run smoothly. For the book publisher's sales and
marketing activity, indirect sub-activities include managing the sales force and keeping customer
records.

Quality assurance activities​ ensure that direct and indirect activities meet the necessary
standards. For the book publisher's sales and marketing activity, this might include proofreading
and editing advertisements.

Step 2 – Identify sub-activities for each support activity.

For each of the Human Resource Management, Technology Development and Procurement
support activities, determine the sub-activities that create value within each primary activity. For
example, consider how human resource management adds value to inbound logistics, operations,
outbound logistics, and so on. As in Step 1, look for direct, indirect, and quality assurance
sub-activities.

Then identify the various value-creating sub-activities in your company's infrastructure. These
will generally be cross-functional in nature, rather than specific to each primary activity. Again,
look for direct, indirect, and quality assurance activities.

Step 3 – Identify links

Find the connections between all of the value activities you've identified. This will take time, but
the links are key to increasing competitive advantage from the value chain framework. For
example, there's a link between developing the sales force (an HR investment) and sales
volumes. There's another link between order turnaround times, and service phone calls from
frustrated customers waiting for deliveries.

Step 4 – Look for opportunities to increase value

Review each of the sub-activities and links that you've identified, and think about how you can
change or enhance it to maximize the value you offer to customers (customers of support
activities can be internal as well as external).

Value Chain vs. Supply Chain: An Overview

The term value chain refers to the process in which businesses receive raw materials, add value
to them through production, manufacturing, and other processes to create a finished product, and
then sell the finished product to consumers. A supply chain represents the steps it takes to get the
product or service to the customer, often dealing with OEM and aftermarket parts.

While a supply chain involves all parties in fulfilling a customer request and leading to customer
satisfaction, a value chain is a set of interrelated activities a company uses to create a competitive
advantage.

Value Chain

The idea of a value chain was pioneered by American academic Michael Porter in his 1985 book
"Competitive Advantage: Creating and Sustaining Superior Performance."1​ He used the idea to
show how companies add value to their raw materials to produce products that are eventually
sold to the public.

The concept of the value chain comes from a business management perspective. Value chain
managers look for opportunities to add value to the business. They may look for ways to cut back
on shortages, prepare product plans, and work with others in the chain to add value to the
customer.

There are five steps in the value chain process. They give a company the ability to create value
exceeding the cost of providing its goods or service to customers. Maximizing the activities in
any one of the five steps allows a company to have a competitive advantage over competitors in
its industry. The five steps or activities are:

Inbound Logistics:​ Receiving, warehousing, and inventory control.

Operations:​ Value-creating activities that transform inputs into products, such as assembly and
manufacturing.

Outbound Logistics:​ Activities required to get a finished product to a customer. These include
warehousing, inventory management, order fulfillment, and shipping.

Marketing and Sales:​ Activities associated with getting a buyer to purchase a product.

Service:​ Activities that maintain and enhance a product's value, such as customer support and
warranty service.

In order to help streamline the five primary steps, Porter says the value chain also requires a
series of support activities. These include procurement, technology development, human
resource management, and infrastructure.

A profitable value chain requires connections between what consumers demand and what a
company produces. Simply put, the connection or sequence in the value chain originates from the
customer's request, moves through the value chain process, and finally ends at the finished
product. Value chains place a great amount of focus on things such as product testing,
innovation, research and development, and marketing.

Supply Chain

The supply chain comprises the flow of all information, products, materials, and funds between
different stages of creating and selling a product to the end-user.2​ The concept of the supply
chain comes from an operational management perspective. Every step in the process—including
creating a good or service, manufacturing it, transporting it to a place of sale, and selling it—is
part of a company's supply chain.

The supply chain includes all functions involved in receiving and filling a customer request.
These functions include:

● Product development
● Marketing
● Operations
● Distribution
● Finance
● Customer service

Supply chain management is an important process for most companies and involves many links
at large corporations. For this reason, supply chain management requires a lot of skill and
expertise to maintain.

While many people believe logistics—or the transportation of goods—to be synonymous with
the supply chain, it is only one part of the equation. The supply chain involves the coordination
of how and when products are manufactured along with how they are transported.

The primary concerns of supply chain management are the cost of materials and effective
product delivery. Proper supply chain management can reduce consumer costs and increase
profits for the manufacturer.

KEY TAKEAWAYS

The value chain is a process in which a company adds value to its raw materials to produce
products eventually sold to consumers.

The supply chain represents all the steps required to get the product to the customer.

The value chain gives companies a competitive advantage in the industry, while the supply chain
leads to overall customer satisfaction.

References:
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