Outsourcing a Business Intelligence Function

Outsourcing has become a growing trend in the 21st century. It has become the strategy of companies to concentrate more and more on their core competencies and key businesses. One definition of outsourcing is that it is a contractual relationship between an external vendor and an enterprise in which the vendor assumes responsibility for one or more business functions of the enterprise. This means that these companies have sought different partners to take care of support functions. Especially, companies have outsourced their IT operations to partners in recent years. Another option for an outsourcing partner is to form a separate company for the support function which is being outsourced and transfer the relevant operations to it. In that case, the control of the support function still remains inside the prime company. Generally, business intelligence (BI) is considered a support function for the management's decision-making. The goal of BI is to improve and to speed up a company's decision-making process and therefore to pursue higher competitiveness in its business environment. In this study, the BI concept is understood as a systematic process for collecting and analyzing a company's strategic and operative information. In Finland, outsourcing the BI function has become quite common in recent years. Especially, outsourcing BI activities relating to external information is quite common. But what are the reasons that drive a company to outsource its BI function? Is it a good idea to hand out everything to an outsourcing partner, or should something be kept inside the company, and why? Also what kinds of risks are involved in outsourcing the BI function? Currently, there are not too many research papers available on outsourcing the BI function. In addition, there is quite little normative literature on how to outsource BI activities. The first aim of the paper is to discuss what kinds of reasons are found in the literature for outsourcing or maintaining the BI function. The paper also identifies which BI activities could or should be outsourced and which parts should not be. In addition, an objective of the paper is to demonstrate what risks are involved in outsourcing BI activities. The study is conducted with an overview of the literature.