Unit I

Introduction to Business Intelligence (BI)

The term Business Intelligence(BI) refers to technologies, applications and practices for the
collection, integration, analysis, and presentation of business information. The purpose of Business
Intelligence is to support better business decision making. Essentially, Business Intelligence
systems are data-driven Decision Support Systems (DSS). Business Intelligence is sometimes used
interchangeably with briefing books, report and query tools and executive information systems.

Generally these systems will illustrate business intelligence in the areas of customer profiling,
customer support, market research, market segmentation, product profitability, statistical analysis,
and inventory and distribution analysis to name a few leading to a good business decision.

The business environment (climate) is constantly changing, and it is becoming more and more
complex. Organizations, private and public, are under pressures that force them to respond quickly
to changing conditions and to be innovative in the way they operate. Such activities require
organizations to be agile and to make frequent and quick strategic, tactical, and operational
decisions, some of which are ve1y complex. Making complex and accurate decisions may require
considerable amounts of relevant data, information, and knowledge. Processing these, in the
framework of the needed decisions, must be done quickly, frequently in real time, and usually
requires some computerized support.

Fig. A basic understanding of BI

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Decision support concepts have been implemented incrementally, under different names, by many
vendors who have created tools and methodologies for decision support. As the enterprise-wide
systems grew, managers were able to access user-friendly reports that enabled them to make
decisions quickly. These systems, which were generally called Executive Information Systems
(EIS), then began to offer additional visualization, alerts, and performance measurement
capabilities. By 2006, the major commercial products and services appeared under the umbrella
term business intelligence (BI).
Definition of Business intelligence(Bl): Is an umbrella term that combines architectures, tools,
databases, analytical tools, applications, and methodologies. It is a content-free expression, so it
means different things to different people.

Bl's major objective is to enable interactive access (sometimes in real time) to data, to enable
manipulation of data, and to give business managers and analysts the ability to conduct appropriate
analysis. By analyzing historical and current data, situations, and performances, decision makers
get valuable insights that enable them to make more informed and better decisions. The process of
BI is based on the transformation of data to information, then to decisions, and finally to actions.

History and Evolution of Bl

The term Bl was coined by the Gartner Group in the mid-1990s. However, the concept is much
older; it has its roots in the Management Information Systems (MIS) reporting systems of the
1970s. During that period, reporting systems were static and two dimensional and had no analytical
capabilities. In the early 1980s, the concept of Executive information systems (EIS) emerged. This
concept expanded the computerized support to top-level managers and executives. Some of the
capabilities introduced were dynamic multidimensional (ad hoc or on-demand) reporting,
forecasting and prediction, trend analysis, drill down to details, status access, and critical success
factors (CSFs).

Fig: Evolution of BI
These features appeared in dozens of commercial products until the mid-1990s. Then the same
capabilities and some new ones appeared under the name BI. Today, a good BI-based enterprise
information system contains all the information executives need. So, the original concept of EIS

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was transformed into BI. By 2005, BI systems started to include artificial intelligence capabilities
as well as powerful analytical capabilities. Figure below illustrates the various tools and
techniques that may be included in a BI system. It illustrates the evolution of BI as well. The tools
shown in Figure provide the capabilities of BI. The most sophisticated BI products include most of
these capabilities; others specialize in only some of them.
THE ARCHITECTURE OF BL
A BI system has four major components: a data warehouse, with its source data; business nalytics,
a collection of tools for manipulating, mining, and analyzing the data in the data warehouse;
business performance management (BPM) for monitoring and analyzing performance; and a user
inte1face (e.g., a dashboard). The relationship among these components is illustrated in Figure
below.
Notice that the data warehousing environment is mainly the responsibility of technical staff,
whereas the analytical environment (also known as business analytics) is the realm of business
users. Any user can connect to the system via the user interface, such as a browser. Top managers
may also use the BPM component and also a dashboard.

DATA WAREHOUSING The data warehouse and its variants are the cornerstone of any medium-
to-large BI system. Originally, the data warehouse included only historical data · that were
organized and summarized, so end users could easily view or manipulate data and information.
Today, some data warehouses include current data as well, so they can provide real-time decision
support.

Figure: A High-Level Architecture of Bl

BUSINESS ANALYTICS End users can work with the data and information in a data warehouse
by using a variety of tools and techniques. These tools and techniques fit into two major categories:
1. Reports and queries. Business analytics include static and dynamic reporting, all types of
queries, discove1y of information, multidimensional view, drill down to details, and so on.
2. Data, text, and Web mining and other sophisticated mathematical and statistical tools.
Data mining is a process of searching for unknown relationships or information in large
databases or data warehouses, using intelligent tools such as neural computing, predictive

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 analytics techniques, or advanced statistical methods. Mining can be done on Web or
textual data as well.

BUSINESS PERFORMANCE MANAGEMENT(BPM) Also referred to as corporate

performance management(CPM), is an emerging portfolio of applications and methodology that
contains evolving BI architecture and tools in its core. BPM extends the monitoring, measuring,
and comparing of sales, profit, cost, profitability, and other performance indicators by introducing
the concept of management and feedback. It embraces processes such as planning and forecasting
as core tenets of a business strategy. In contrast with the traditional DSS, EIS, and BI, which
support the bottom-up extraction of information from data, BPM provides a top-clown
enforcement of corporate-wide strategy.

THE USER INTERFACE: DASHBOARDS AND OTHER INFORMATION

BROADCASTING TOOLS Dashboards (which resemble automobile dashboards) provide a
comprehensive visual view of corporate performance measures (also known as key performance
indicators), trends, and exceptions. They integrate information from multiple business areas.
Dashboards present graphs that show actual performance compared to desired metrics; thus, a
dashboard presents an at-a-glance view of the health of the organization.
Many visualization tools, ranging from multidimensional cube presentation to virtual reality, are
integral parts of BI systems. Recall that BI emerged from EIS, so many visual aids for executives
were transformed to BI software. Also, technologies such as geographical information systems
(GIS) play an increasing role in decision support.

STYLES OF BL

The architecture of BI depends on its applications. MicroStrategy Corp. distinguishes five styles of
BI and offers special tools for each. The five styles are
1. Report delivery and alerting;
2. Enterprise reporting (using dashboards and scorecards);
3. Cube analysis (also known as slice-and-dice analysis);
4. ad hoc queries; and
5. Statistics and data mining.

THE BENEFITS OF BI
The major benefit of BI to a company is the ability to provide accurate information when needed,
including a real-tin1e view of the corporate performance and its parts. Such information is a must
for all types of decisions, for strategic planning, and even for survival. Thompson (2004) also noted
that the most common application areas of BI are general reporting, sales and marketing analysis,
planning and forecasting, financial consolidation, statuto1y repo1ting, budgeting, and profitability
analysis.

Organizations are being compelled to capture, understand, and harness their data to support
decision making in order to improve business operations. Legislation and regulation (e.g., the
Sarbanes-Oxley Act of 2002) now require business leaders to document their business processes

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and to sign off on the legitimacy of the information they rely on and report to stakeholders.
Moreover, business cycle times are now extremely compressed; faster, more informed, and better
decision making is therefore a competitive imperative. Managers need the right information at the
right time and in the right place. Organizations have to work smart. It is no surprise, then, that
organizations are increasingly championing BI. The opening vignette discussed a BI success story
at Norfolk Southern.

Business intelligence usually refers to computer software and other tools that collect all sorts of
complex business data for a company and condense it into reports. The collected data may focus on
a specific department, or give an overall view of the company's status. Large corporations with
huge amounts of data to process are most likely to benefit significantly from business intelligence,
though smaller concerns use it, as well. Business intelligence may help a company identify its most
profitable customers, trouble spots within its organization, or its return on investment for certain
products. Although a companywide business intelligence system is complex, costly and time-
consuming to establish, when implemented and used correctly, its benefits can be significant.
 Fact-Based Decisions

Once a company-wide business intelligence system is in place, management is able to see detailed,
current data on all aspects of the business -- financial data, production data, customer data. They
can read reports that synthesize this information in pre-determined ways, such as current return on
investment reports for individual products or product lines. This information helps management
make fact-based decisions, such as which products to concentrate on and which ones to
discontinue.

 Improves Sales and Negotiations

A business intelligence system can be a valuable asset to a company's sales force because it
provides access to up-to-the-minute reports that identify sales trends, product improvements or
additions, current customer preferences and unexplored markets. Detailed and current data is also a
valuable backup to negotiations with suppliers or other vendors.

 Eliminates Waste

A business intelligence system can point out areas of waste or loss that may have previously gone
unnoticed in a large organization. Since a companywide business intelligence system works as a
single, unified whole, it can analyze transactions between subsidiaries and departments to identify
areas of overlap or inefficiency. According to the CIO website, in 2000 "with the help of [business
intelligence] tools, Toyota realized it had been double-paying its shippers to the tune of $812,000."

 Identifies Opportunities

Business intelligence can help a company assess its own capabilities; compare its relative strengths
and weaknesses against its competitors; identify trends and market conditions; and respond quickly
to change -- all to gain a competitive advantage, according to the Journal of Theoretical and

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Applied Information Technology. It helps decision makers act swiftly and correctly in response to
opportunities; helps the company identify its most profitable customers, as well as potentially
profitable customers; and assess the reasons for customer dissatisfaction before it begins to cost
them sales.

REAL-TIME BUSINESS INTELLIGENCE

Definition: Real-time business intelligence (RTBI) is a concept describing the process of
delivering business intelligence (BI) or information about business operations as they occur.

Although using heavy data warehousing for market analytics is not a new concept, predicting
trends to jump into the right situations and grab the right opportunities is considered an
indispensable business activity. Since the introduction of near-instant Web response time,
responding to today's rapid changes in the most immediate way possible has become necessary.

This is where making use of real-time business intelligence (BI) can help your company stand out
from the competition, where your BI system of tools allows you to react to events in real time, as
they occur, and not a minute or an hour later. After all, what use is business intelligence for you
when competitors have already acted upon it and grabbed market share hours, days, or even months
ahead of you?

Real-time BI at Work

Traditional business intelligence has helped improve strategic decisions affecting company
performance. It is, however, not enough to completely address the issues plaguing dynamic
markets. Enterprise softwarehas given businesses the power to automate many tasks and pool data
in ways that buy them more time for knowledge work.

Combining these two capabilities together provides answers needed to carry out business essentials,
as in the following examples:

1. Real-time customer engagement

An organization's ability to engage with customers in real timeimproves relationships, customer

experience, encourages loyalty, and turns leads into paying clients, even long-term customers.

An example of how real-time business intelligence not just increased profits but actually saved a
struggling airline can be exemplified by the "worst to first" transformation of Continental Airlines.
Continental invested roughly $30 million in hardware, software, and personnel for real-time
business intelligence. In a span of six years, the company realized an ROI of over 1,000 percent,
with $500+ million in increased revenues and cost savings.

Continental was able to apply real-time BI in customer engagement operations through better ticket
pricing, baggage and customer complaint handling, and more accurate booking and arrival
information.

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2. Real-time collaboration

For real-time collaboration, AstraZeneca's approximately 250 employees use real-time, business
intelligence software for reporting and analyzing sales, market share, product performance, and cost
and profit data. This aids them to make better, more effective decisions that, in turn, lead to
increased sales and improved market share gains.

3. Real-time transactions

To make better, real-time transactions, Comdata built the FleetAdvance solution. This solution
helps commercial transportation fleets determine smarter fueling sources by analyzing and
comparing one fueling transaction against other options. By utilizing real-time fueling transaction
data through real-time scorecards and dashboards, and historical performance analytics,
FleetAdvance is able to provide actionable information that "empowers fleet companies to optimize
routes, better manage fuel costs, and make smarter purchasing decisions."

In 2014, TDWI recognized Comdata as a 2014 Best Practice Award Winner in the category of
Right-Time Business Intelligence and Analytics for FleetAdvance.

4. Real-time support

In life-or-death emergency situations, getting the right information to the right people at the right
time is crucial. And when your business serves the Public Safety Answering Point (PSAP) sector,
delivering real-time business intelligence is, above revenue, a heavier responsibility.

To provide real-time support, Verint has developed Impact 360 for Public Safety to serve dispatch
centers, such as one in a Midwest U.S. state that is staffed by 52 dispatchers with communication
lines open to 12 police departments, 13 fire departments, and three ambulance services. The data
they relay in real time is essential in providing first responders the specific information they need to
get to a scene. This information is then saved into recordings for use in staff training, and as
evidence in legal proceedings.

5. Real-time reporting and business decisions

The majority of the business software solutions in the market offer real-time reporting functionality
to provide snapshots and more detailed insights into how a business is faring. This allows
companies to perform real-time decision-making processes critical to their operations.

For example, retail management software Brightpearl uses real-time business intelligence for
multichannel inventory management to ensure items that have already been sold in one store
channel --such as eBay -- aren't sold again in other channels, such as your e-commerce website.
Inventory audit trails and cash flow reports can also be generated in real time.

Google Analytics -- the company's website analytics software --provides site administrators with
real-time data aside from past performance analysis. Google Analytics Real-Time shows the
number of visitors currently on a site, their locations, the site's traffic sources, and even the top
active pages. These statistics help measure the real-time impact of social media campaigns. The

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data can be used to adjust the placement timing of specific content to reach more viewers. Further,
you see if visitors aren't spending as much time as you would like on your site, which can signal it's
time to craft more engaging content.

BUSINESS INTELLIGENCE VALUE CHAIN

BI is a group of concepts, methods and procedures for making better business decisions using
information from several sources and applying knowledge and presumptions to build up a precise
understanding of business. It gathers, manages and analyse the raw data for making good
understanding/understandable information for managers and analysts. BI integrates the core
information with related ones to perceive major procedures and clarify issues. It can observe
business activity and performance, to progress as well as adjust swiftly as situations change, to
make healthy decision on indecisive judgment and conflicting information and to identify business
opportunities. For this BI expects valuable information which can be developed from data resource.

If any organization wants to implement business intelligence then first of all they should understand
and clarify about the value of high-quality data resource that supports BI. This high-quality data
resource contains data that will be utilized for creating the information and the
information engineering process. It helps in the determination and presentation of business
information to fulfill the organisational demand. So, high-quality data resource is
directly proportional to information engineering process. Thus it can be said that data resource is
the base of business strategies. Thus, it can be said that quality of data resource will increase the
quality of the value chain to promote the business. The value chain starts from data resource to
make information that supports knowledge environment. Then this knowledge environment will act
as basics for business intelligence for making business strategies (Brackett, 1999).

A case study methodology was attempted by Brohman, 2000 to dig into the process of data
warehouse practice and how it shapes the organisation. According to the qualitative analysis from
the case study, a model was illustrated named Business Intelligence Value Chain as shown in
Figure2

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In above shown figure, business intelligence and business value are the main concepts of the
model. Business intelligence is the package for data analysis whereas business value is the outcome
from data warehouse development and practice.

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