Business Intelligence and Knowledge Management Differences - Essay Example

Terry Kirkpatrick explains one instance of Business Intelligence thus: “Information flowing in real-time up and down the enterprise, across organizational boundaries, and out to partners, suppliers, and customers. From the huge masses of data emerge both a snapshot of current operations and a basis for objectively defining the business in the future.” (Nagy, 2007)  This case reiterates the point made earlier about the opportunities offered by new digital connectivity that were traditionally not possible.

  In other words, BI is a product of advanced software systems like ERPs and greater interconnectivity in the form of the internet.  The ability to gather, collate and interpret large volumes of disparate data is made possible by this new combination of hardware and software technology.  This repository of data, when processed through sophisticated analytical tools, gives rise to useful strategic leads that can have a significant impact on the bottom line.  Business Intelligence systems also go to show the utility of mundane and routine pieces of transactional information.

  While these data may not be of value in and of themselves, they do act as performance indicators when considered in detail.  BI has also had an effect on the role and validity of sales forecasts.  The latter were conventionally projections of revenue and growth for the near future.  But, Business Intelligence models have revealed how inaccurate sales forecasts can be, especially when carried out on the basis of conventional macroscopic indicators. Knowledge Management, on the other hand, is defined as a “deliberate, systematic business optimization strategy that selects, distills stores, organizes, packages, and communicates information essential to the business of a company in a manner that improves employee performance and corporate competitiveness. ” (Kirkpatrick, 2002) Where it differs from BI is in that Knowledge Management is not usually domain-specific and attempts to improve core processes associated with performance optimization.