The Benefits of BI

Although an increasingly popular and accepted technology for improving business performance,
BI - like any other system - must be carefully considered before deciding to implement it.
Benefits must be clear and understood and they must justify the investments.
For the purpose of giving the most complete picture of Business Intelligence benefits I have
chosen to describe them from an expert point of view. I.e. from the perspective of a professional
who has been working with multiple BI systems at multiple organizations for the past 15 years.

3.3.1

Reduced labor costs

The most tangible benefit of BI is the time and effort saved with manually producing the
standard reports for the organization. It is rarely the largest benefit though. However, because it
is so tangible it is often part of the equation when a decision must be made about implementing
BI, and if it turns out that these savings alone can justify the BI system, then it is the easiest way
to justify it.
BI systems reduce labor costs for generating reports by:

automating data collection and aggregation

automating report generation
providing report design tools that make programming of new reports much simpler
reducing training needed for developing and maintaining reports

3.3.2 Reduce information bottlenecks

The BI system allows end-users to extract reports when they need them rather than depending on
people in the IT or financial department to prepare them. The BI system will even allow
authorized users to design new reports to match their requirements.
BI systems reduce information bottlenecks by:
providing individualized, role-based dashboards that collect the most important data for
daily operations
letting the user open and run reports autonomously
providing documentation of KPIs and other information
allowing users to analyze and validate the data without involving IT specialists
allowing users to create new views of data as needed
3.3.3

Make data actionable

Most organizations use extensive amounts of resources putting together piles of standard reports
that are delegated throughout the company. To make sure everyone has every information they
need, all kinds of reports are sent to employees - usually on a very detailed level. As a result
employees feel overwhelmed by the amounts of information that don't give a clear picture of the
overall situation. And moreover, since so much effort is required to assemble the reports they
usually arrive at the employees' desktop days or weeks after they were most relevant.
All put together this means that the potential corrective and opportunistic actions that these data
could have led to, are missed due to either being too late or because the employees overlooked or
were out of time to find the relevant trends in the myriads of information.
When employees try to find head and tail of the data they even often find that the numbers are
not comparable between different reports and end up analyzing the differences instead of
interpreting the actual numbers. And since trust in data is lost, nobody dares to make a decision
based on the numbers.
But worse yet: Many employees don't have the training and knowledge to interpret the numbers
in order to identify threats and opportunities.
BI systems make information actionable by:
providing information through unified views of data where KPIs are assembled and
calculated using a central repository of definitions - a data model - to prevent conflicting
definitions and incomparable report data
providing to-the-minute information in real-time reports that show the state of the
business in this very moment - not a historical view of how it looked days or weeks ago
allowing users to search and design reports autonomously instead of being dependent on
specialists in the IT department
showing data in a context, e.g. by benchmarking KPI values against comparable values
(e.g. averages, budgets/target and last period) to let the user interpret whether the KPI
value is acceptable or needs corrective action
using rules to highlight KPI thresholds as "good" or "bad"
providing integrated documentation to help the user understand the meaning and
definition of the KPIs
providing links back to the operational systems that make it easy for the user to carry out
corrective actions (closed loop)
making data collaborative, e.g. let the user forward and share selected data with other
users and assign targets and responsible persons to KPIs
only showing data relevant to the specific user in a role-based environment to avoid
"Information overload"
showing data on a high, aggregated level where overall trends can be easily spotted and
then let the user drill-down to detail data in a top-down manner
using intuitive visualizations that enhance on the nature of the data such as graphs/charts
and gauges

 forwarding relevant information based on the occurence of predefined events, i.e. only
sending certain reports when specific business events occur, such as too high stock levels,
customer churn etc.
shortening the analyze-decision loop to avoid losing the train of thought
3.3.4

Better decisions

Decisions need to be made every day and, as we all know, decisions have varying quality. Good
decisions can provide tremendous benefits. Bad decisions provide no benefits - they may even
cause you losses.
BI systems help make better decisions by:
providing decision makers with rich, exact and up-to-date information
letting users dive into data for further investigation
In this context the term decision maker needs to be seen in a broad perspective; it is not only
management that makes decisions. In fact, the decisions that affect an organization the most are
those made by people all over the organization, from the sales person who decides to give a
customer a discount to the procurement assistant who decides to buy certain products for
inventory.
3.3.5

Faster decisions

A decision can be made the moment you have all the relevant information at your hands. In other
words, the faster the relevant information gets into your hands the faster you can make a
decision. Fast decisions are important for two reasons:
1.It makes the organization more responsive to threats and opportunities
2.It shortens the time between thought and action. Most people will lose their train of
thought if they need to wait a long time for further information about the problem they
are dealing with.
BI systems enable fast decisions by:
combining multiple data sources in common reports, thus saving the user from manually
combining data in spreadsheets etc.
providing analytical and ad-hoc reporting capabilities that allow users to quickly retrieve
new or different combinations of data as needed instead of having to request new reports
in the IT or financial departments.
providing reduced system response times by using pre-aggregated data or other
techniques for fast data aggregation
3.3.6

Align the organization towards its business objectives

The most successful organizations are those that succeed to make every person in the
organization work towards a common goal.

BI systems help organizations align all parts of the organization towards common business
objectives by:
centralizing KPI definitions. BI reports don't calculate KPIs using autonomous queries
and scripts. They retrieve KPI values and definitions through a central repository and thus
prevent conflicting KPI definitions and values
guiding information presentation using advanced visualisations, benchmarks and KPI
thresholds thus ensuring a common interpretation of the KPIs
providing a single source of information. All reports collect their data from one source the BI system.
"pushing" selected information throughout the organization. By enabling organizations to
push KPIs and other information to the end-users the BI system helps focus employees'
attention on the most critical success factors.
assigning targets to KPI values for each organizational unit to be used for measuring the
ability to achieve the goals set forth and thus pushing the organization towards the
defined goals
These uses of BI systems are sometimes referred to as Performance Management.
A particularly well-known scheme for implementing strategy is The Balanced Scorecard
developed by Robert Kaplan and David Norton.
3.3.7

New insights

Traditional reporting systems aim to give users data according to a fixed and predefined
structure. This rigid approach gives the organization answers to exactly the questions it is able to
specify in advance. And no more. Modern business intelligence systems on the other hand
provide ad hoc query capabilities that allow users to poke randomly around in data to get
answers to any question that comes to their mind. This allows users to strengthen there
understanding of the underlying patterns of the business and thus to gain new insights into the
dynamics that lead to success or failure.
Such analysis is often referred to as OLAP: Online Analytical Processing.

OLAP (online analytical processing) is computer processing that enables a user to easily and
selectively extract and view data from different points of view.
For example, a user can request that data be analyzed to display a spreadsheet showing all of a
company's beach ball products sold in Florida in the month of July, compare revenue figures with
those for the same products in September, and then see a comparison of other product sales in
Florida in the same time period. To facilitate this kind of analysis, OLAP data is stored in
a multidimensional database. Where as a relational database can be thought of as twodimensional, a multidimensional database considers each data attribute (such as product,
geographic sales region, and time period) as a separate "dimension." OLAP software can locate
the intersection of dimensions (all products sold in the Eastern region above a certain price
during a certain time period) and display them.Attributes such as time periods can be broken
down into subattributes.
In another application, some BI systems provide special mathematical algorithms for finding
hitherto unknown patterns in data - so-called data mining. Such algorithms comprise Cluster
Analysis, Decision Trees, Neural Networks and Rule Induction.
Data mining algorithms are advanced statistical methods that attempt to uncover patterns
automatically and thus help the organization answer questions such as "which variable is most
important in determining customer churn?" and help discover rules such as "92% of all Bear
Peanutbutter is sold with Forest Bread". Most Data mining techniques require a deep
understanding of mathematics to make their results actionable and they require large amounts of
data in order to be statistically significant. Thus, data mining is not for everyone.

Fundamentally, data mining is about processing data and identifying patterns and trends in that
information so that you can decide or judge. Data mining principles have been around for many
years, but, with the advent of big data, it is even more prevalent.
Big data caused an explosion in the use of more extensive data mining techniques, partially
because the size of the information is much larger and because the information tends to be more
varied and extensive in its very nature and content. With large data sets, it is no longer enough to
get relatively simple and straightforward statistics out of the system.
With 30 or 40 million records of detailed customer information, knowing that two million of
them live in one location is not enough. You want to know whether those two million are a
particular age group and their average earnings so that you can target your customer needs better.
These business-driven needs changed simple data retrieval and statistics into more complex data
mining. The business problem drives an examination of the data that helps to build a model to
describe the information that ultimately leads to the creation of the resulting report. Figure 1.
Outline of the process

The process of data analysis, discovery, and model-building is often iterative as you target and
identify the different information that you can extract. You must also understand how to relate,
map, associate, and cluster it with other data to produce the result. Identifying the source data
and formats, and then mapping that information to our given result can change after you discover
different elements and aspects of the data.
Data mining tools
Data mining is not all about the tools or database software that you are using. You can
perform data mining with comparatively modest database systems and simple tools,
including creating and writing your own, or using off the shelf software packages.
Complex data mining benefits from the past experience and algorithms defined with

existing software and packages, with certain tools gaining a greater affinity or reputation
with different techniques.
For example, IBM SPSS, which has its roots in statistical and survey analysis, can build
effective predictive models by looking at past trends and building accurate forecasts. IBM
InfoSphere Warehouse provides data sourcing, preprocessing, mining, and analysis
information in a single package, which allows you to take information from the source
database straight to the final report output.
It is recent that the very large data sets and the cluster and large-scale data processing are
able to allow data mining to collate and report on groups and correlations of data that are
more complicated. Now an entirely new range of tools and systems available, including
combined data storage and processing systems.
You can mine data with a various different data sets, including, traditional SQL databases,
raw text data, key/value stores, and document databases. Clustered databases, such as
Hadoop, Cassandra, CouchDB, and Couchbase Server, store and provide access to data in
such a way that it does not match the traditional table structure.
In particular, the more flexible storage format of the document database causes a different
focus and complexity in terms of processing the information. SQL databases impost strict
structures and rigidity into the schema, which makes querying them and analyzing the
data straightforward from the perspective that the format and structure of the information
is known.
Document databases that have a standard such as JSON enforcing structure, or files that
have some machine-readable structure, are also easier to process, although they might
add complexities because of the differing and variable structure. For example, with
Hadoop's entirely raw data processing it can be complex to identify and extract the
content before you start to process.

Key techniques
Several core techniques that are used in data mining describe the type of mining and data
recovery operation. Unfortunately, the different companies and solutions do not always share
terms, which can add to the confusion and apparent complexity.

Let's look at some key techniques and examples of how to use different tools to build the data
mining.

Association
Association (or relation) is probably the better known and most familiar and straightforward data
mining technique. Here, you make a simple correlation between two or more items, often of the
same type to identify patterns. For example, when tracking people's buying habits, you might
identify that a customer always buys cream when they buy strawberries, and therefore suggest
that the next time that they buy strawberries they might also want to buy cream.
Building association or relation-based data mining tools can be achieved simply with different
tools. For example, within InfoSphere Warehouse a wizard provides configurations of an
information flow that is used in association by examining your database input source, decision
basis, and output information.

Classification
You can use classification to build up an idea of the type of customer, item, or object by
describing multiple attributes to identify a particular class. For example, you can easily classify
cars into different types (sedan, 4x4, convertible) by identifying different attributes (number of
seats, car shape, driven wheels). Given a new car, you might apply it into a particular class by
comparing the attributes with our known definition. You can apply the same principles to
customers, for example by classifying them by age and social group.