BUSINESS INTELLIGENCE

A Framework for Business Intelligence (BI)

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
userfriendly 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).

What is Business Intelligence?

Business Ingelligence (BI) - technology infrastructure for gaining maximum information
from available data for the purpose of improving business processes. Typical BI
infrastructure components are as follows: software solution for gathering, cleansing,
integrating, analyzing and sharing data. Business Intelligence produces analysis and
provides believable information to help making effective and high quality business
decisions. 

The most common kinds of Business Intelligence systems are: 

 EIS - Executive Information Systems

 DSS - Decision Support Systems
 MIS - Management Information Systems
 GIS - Geographic Information Systems
 OLAP - Online Analytical Processing and multidimensional analysis
 CRM - Customer Relationship Management

Business Intelligence systems based on Data Warehouse technology. A Data

Warehouse(DW) gathers information from a wide range of company's operational
systems, Business Intelligence systems based on it. Data loaded to DW is usually good
integrated and cleaned that allows to produce credible information which reflected so
called 'one version of the true'.

BI(Business Intelligence) is a set of processes, architectures, and technologies that

convert raw data into meaningful information that drives profitable business actions. It
is a suite of software and services to transform data into actionable intelligence and
knowledge.
BI has a direct impact on organization's strategic, tactical and operational business
decisions. BI supports fact-based decision making using historical data rather than
assumptions and gut feeling.

BI tools perform data analysis and create reports, summaries, dashboards, maps,
graphs, and charts to provide users with detailed intelligence about the nature of the
business.

Why is BI important?
 Measurement: creating KPI (Key Performance Indicators) based on historic
data
 Identify and set benchmarks for varied processes.
 With BI systems organizations can identify market trends and spot business
problems that need to be addressed.
 BI helps on data visualization that enhances the data quality and thereby the
quality of decision making.
 BI systems can be used not just by enterprises but SME (Small and Medium
Enterprises)

How Business Intelligence systems are implemented?

Here are the steps:

Step 1) Raw Data from corporate databases is extracted. The data could be spread
across multiple systems heterogeneous systems.

Step 2) The data is cleaned and transformed into the data warehouse. The table can be
linked, and data cubes are formed.

Step 3) Using BI system the user can ask quires, request ad-hoc reports or conduct
any other analysis.

Examples of Business Intelligence System used in

Practice
Example 1:
In an Online Transaction Processing (OLTP) system information that could be fed
into product database could be

 add a product line

 change a product price

Correspondingly, in a Business Intelligence system query that would beexecuted for

the product subject area could be did the addition of new product line or change in
product price increase revenues

In an advertising database of OLTP system query that could be executed

 Changed in advertisement options

 Increase radio budget

Correspondigly, in BI system query that could be executed would be how many new
clients added due to change in radio budget

In OLTP system dealing with customer demographic data bases data that could be fed
would be

 increase customer credit limit

 change in customer salary level

Correspondingly in the OLAP system query that could be executed would be can
customer profile changes support support higher product price
Example 2:

A hotel owner uses BI analytical applications to gather statistical information

regarding average occupancy and room rate. It helps to find aggregate revenue
generated per room.

It also collects statistics on market share and data from customer surveys from each
hotel to decides its competitive position in various markets.

By analyzing these trends year by year, month by month and day by day helps
management to offer discounts on room rentals.

Example 3:

A bank gives branch managers access to BI applications. It helps branch manager to

determine who are the most profitable customers and which customers they should
work on.

The use of BI tools frees information technology staff from the task of generating
analytical reports for the departments. It also gives department personnel access to a
richer data source.

Four types of BI users

Following given are the four key players who are used Business Intelligence System:

1. The Professional Data Analyst:

The data analyst is a statistician who always needs to drill deep down into data. BI
system helps them to get fresh insights to develop unique business strategies.

2. The IT users:

The IT user also plays a dominant role in maintaining the BI infrastructure.

3. The head of the company:

CEO or CXO can increase the profit of their business by improving operational
efficiency in their business.

4. The Business Users"

Business intelligence users can be found from across the organization. There are
mainly two types of business users

1. Casual business intelligence user

2. The power user.

The difference between both of them is that a power user has the capability of
working with complex data sets, while the casual user need will make him use
dashboards to evaluate predefined sets of data.

Advantages of Business Intelligence

Here are some of the advantages of using Business Intelligence System:

1. Boost productivity

With a BI program, It is possible for businesses to create reports with a single click
thus saves lots of time and resources. It also allows employees to be more productive
on their tasks.

2. To improve visibility

BI also helps to improve the visibility of these processes and make it possible to
identify any areas which need attention.

3. Fix Accountability

BI system assigns accountability in the organization as there must be someone who

should own accountability and ownership for the organization's performance against
its set goals.

4. It gives a bird's eye view:

BI system also helps organizations as decision makers get an overall bird's eye view
through typical BI features like dashboards and scorecards.

5. It streamlines business processes:

BI takes out all complexity associated with business processes. It also automates
analytics by offering predictive analysis, computer modeling, benchmarking and other
methodologies.
6. It allows for easy analytics.

BI software has democratized its usage, allowing even nontechnical or non-analysts

users to collect and process data quickly. This also allows putting the power of
analytics from the hand's many people.

BI System Disadvantages
1. Cost:

Business intelligence can prove costly for small as well as for medium-sized
enterprises. The use of such type of system may be expensive for routine business
transactions.

2. Complexity:

Another drawback of BI is its complexity in implementation of datawarehouse. It can

be so complex that it can make business techniques rigid to deal with.

3. Limited use

Like all improved technologies, BI was first established keeping in consideration the
buying competence of rich firms. Therefore, BI system is yet not affordable for many
small and medium size companies.

4. Time Consuming Implementation

It takes almost one and half year for data warehousing system to be completely
implemented. Therefore, it is a time-consuming process.

Trends in Business Intelligence

The following are some business intelligence and analytics trends that you should be
aware of.

Artificial Intelligence: Gartner' report indicates that AI and machine learning now

take on complex tasks done by human intelligence. This capability is being leveraged
to come up with real-time data analysis and dashboard reporting.

Collaborative BI: BI software combined with collaboration tools, including social

media, and other latest technologies enhance the working and sharing by teams for
collaborative decision making.
Embedded BI: Embedded BI allows the integration of BI software or some of its
features into another business application for enhancing and extending it's reporting
functionality.

Cloud Analytics: BI applications will be soon offered in the cloud, and more
businesses will be shifting to this technology. As per their predictions within a couple
of years, the spending on cloud-based analytics will grow 4.5 times faster.

Summary:
 BI is a set of processes, architectures, and technologies that convert raw data
into meaningful information that drives profitable business actions.
 BI systems help businesses to identify market trends and spot business
problems that need to be addressed.
 BI technology can be used by Data analyst, IT people, business users and head
of the company.
 BI system helps organization to improve visibility, productivity and fix
accountability

The draw-backs of BI is that it is time-consuming costly and very complex

process.

Intelligence Creation, Use and BI Governance

Data warehouse and BI initiatives typically follow a process similar to that used in military
intelligence initiatives. In fact, BI practitioners often follow the national security model depicted
in Figure 1.5. The process is cyclical with a series of interrelated steps. Analysis is the main step
for converting raw data to decision supporting information. However, accurate and/or reliable
analysis isn’t possible unless other steps along the way have been properly addressed.
Once a data warehouse is in place, the general process of intelligence creation starts by
identifying and prioritizing specific BI projects. For each potential BI project in the portfolio, it
is important to use return on investments (ROI) and total cost of ownership measures to estimate
the cost-benefit ratio. This means that each project must be examined through costing associated
with the general process phases as well as costs of maintaining the application for the business
user. Additionally, the benefits estimations need to involve end-user examinations of decision-
making impacts, including measures reflecting benefits like cashflow acceleration. Some
organizations refer to the project prioritization process as a form of BI governance (Matney and
Larson, 2004). A major governance issue is who should serve as decision makers involved in
prioritizing BI projects. The two critical partnerships required for BI governance are: (1) a
partnership between functional area heads and/or product/service area leaders (Middles), and (2)
a partnership between potential Customers and Providers (representatives of the business
side and representatives from the IT side).

Middles can look across an organization to ensure that project priorities reflect the
needs of the entire business; they make sure a project does not just serve to
suboptimize one area over others. Customers can offer insight into the potential
usefulness of the intelligence generated in a project, and providers are important
from the standpoint of reflecting delivery realities. A typical set of issues for the BI
governance team is to address:
(1) creating categories of projects (investment, business opportunity, strategic,
mandatory, etc.);
(2) defining criteria for project selection;
(3) determining and setting a framework for managing project risk;
(4) managing and leveraging project interdependencies; and
(5) continually monitoring and adjusting the composition of the portfolio.
Intelligence and Espionage
Although many believe the very term intelligence sounds like a cloak-and-dagger
acronym for clandestine operations dedicated to stealing corporate secrets, or the
government’s CIA, this couldn’t be further from the truth. While such espionage
does of course occur, we are interested in how modern companies ethically and
legally organize themselves to glean as much as they can from their customers,
their business environment, their stakeholders, their business processes, their
competitors, and other such sources of potentially valuable information. But
collecting data is just the beginning. Vast amounts of that data need to be
cataloged, tagged, analyzed, sorted, filtered, and must undergo a host of other
operations to yield usable information that can impact decision making and
improve the bottom line. The importance of these topics increases every day as
companies track and accumulate more and more data. For example, exacerbating
the exponential growth in the amount of raw data is the emergence of sensor data
including Radio Frequency IDentification (RFID). Applications based upon sensor
and location data will likely be among the most exciting and fastest growing
application categories for the next generation of BI specialists. That, coupled with
new approaches to synthesize information from text sources through “text mining”
and from the Web via Web mining (Chapter 4), suggests that organizations are on
the verge of an explosive new era of BI for decision support.
BI has adapted a set of nomenclature, systems, and concepts that clearly
distinguish it from its espionage-oriented counterpart of national and international
intelligence! That said, there are many analogies between the two, including the
fact that major effort must be expended to achieve the collection of reputable
sources of intelligence, the processing of that intelligence for purity and reliability,
the analysis of raw intelligence to produce usable and actionable information, and
the mechanisms for the appropriate dissemination of that information to the right
users.

OLTP vs. OLAP

We can divide IT systems into transactional (OLTP) and analytical (OLAP). In general we can
assume that OLTP systems provide source data to data warehouses, whereas OLAP systems help
to analyze it. 
- OLTP (On-line Transaction Processing) is characterized by a large number of short on-
line transactions (INSERT, UPDATE, DELETE). The main emphasis for OLTP systems is put on
very fast query processing, maintaining data integrity in multi-access environments and an
effectiveness measured by number of transactions per second. In OLTP database there is detailed
and current data, and schema used to store transactional databases is the entity model (usually
3NF). 

- OLAP (On-line Analytical Processing) is characterized by relatively low volume of transactions.

Queries are often very complex and involve aggregations. For OLAP systems a response time is an
effectiveness measure. OLAP applications are widely used by Data Mining techniques.
In OLAP database there is aggregated, historical data, stored in multi-dimensional schemas (usually
star schema). 

The following table summarizes the major differences between OLTP and OLAP system design.

OLTP System 
Online Transaction OLAP System 
Processing  Online Analytical Processing 
(Operational System) (Data Warehouse)
Operational data; OLTPs are the Consolidation data; OLAP data comes
Source of data original source of the data. from the various OLTP Databases

Purpose of To control and run fundamental To help with planning, problem solving,

data business tasks and decision support
 Reveals a snapshot of ongoing Multi-dimensional views of various kinds
What the data business processes of business activities

Inserts and Short and fast inserts and updates Periodic long-running batch jobs refresh
Updates initiated by end users the data

Relatively standardized and simple

queries Returning relatively few Often complex queries involving
Queries records aggregations

Depends on the amount of data involved;

batch data refreshes and complex queries
Processing may take many hours; query speed can be
Speed Typically very fast improved by creating indexes

Larger due to the existence of aggregation

Space Can be relatively small if historical structures and history data; requires more
Requirements data is archived indexes than OLTP

Database Typically de-normalized with fewer tables;

Design Highly normalized with many tables use of star and/or snowflake schemas

Backup religiously; operational data is Instead of regular backups, some

critical to run the business, data loss is environments may consider simply
Backup and likely to entail significant monetary reloading the OLTP data as a recovery
Recovery loss and legal liability method

Successful BI Implementation
Implementing and deploying a BI initiative can be lengthy, expensive, and failure
prone. Let’s explore some of the issues involved.
The Typical BI User Community
BI may have a larger and more diversified user community. The success of BI
depends, in part, on which personnel in the organization would be the most likely
to make use of BI. One of the most important aspects of a successful BI is that it
must be of benefit to the enterprise as a whole. This implies that there are likely to
be a host of users in the enterprise—many of whom should be involved from the
outset of a DW investment decision. Not surprisingly, there are likely to be users
who focus at the strategic level and those who are more oriented to the tactical
level.
The various classes of BI users who exist in an organization can help to guide how
the DW is structured and the types of BI tools and other supporting software that
are needed. Members of each group are excellent sources of information on
assessing the costs and benefits of specific BI projects once a DW is in place. From
the above discussion, it is obvious that one important characteristic of a company
that excels in its approach to BI is proper appreciation for different classes of
potential users.
Appropriate Planning and Alignment with the Business Strategy
First and foremost, the fundamental reasons for investing in BI must be aligned
with the company’s business strategy. BI cannot simply be a technical exercise for
the information systems department. It has to serve as a way to change the manner
the company conducts business by improving its business processes and
transforming decision-making processes to be more data-driven. Many BI
consultants and practitioners involved in successful BI initiatives advise that a
framework for planning is a necessary precondition. One framework, developed by
Gartner, Inc. (2004), decomposes planning and execution into business,
organization, functionality, and infrastructure components. At the business and
organizational levels, strategic and operational objectives must be defined while
considering the available organizational skills to achieve those objectives. Issues of
organizational culture surrounding BI initiatives and building enthusiasm for those
initiatives and procedures for the intraorganizational sharing of BI best practices
must be considered by upper management—with plans in place to prepare the
organization for change. One of the first steps in that process is to assess the IS
organization, the skillsets of the potential classes of users, and whether the culture
is amenable to change. From this assessment, and assuming there is justification
and need to move ahead, a company can prepare a detailed action plan. Another
critical issue for BI implementation success is the integration of several BI projects
(most enterprises use several BI projects) among themselves and with the other IT
systems in the organization and its business partners. If the company’s strategy is
properly aligned with the reasons for DW and BI initiatives, and if the company’s
IS organization is or can be made capable of playing its role in such a project, and
if the requisite user community is in place and has the proper motivation, it is wise
to start BI and establish a BI Competency Center (BICC) within the company. The
center could serve some or all of the following functions (Gartner, 2004).
• The center can demonstrate how BI is clearly linked to strategy and execution of
strategy.
• A center can serve to encourage interaction between the potential business user
communities and the IS organization.
• The center can serve as a repository and disseminator of best BI practices
between and among the different lines of business.
• Standards of excellence in BI practices can be advocated and encouraged
throughout the company.
• The IS organization can learn a great deal through interaction with the user
communities, such as knowledge about the variety of types of analytical tools that
are needed.
• The business user community and IS organization can better understand why the
data warehouse platform must be flexible enough to provide for changing business
requirements.
• It can help important stakeholders like high-level executives see how BI can play
an important role.
Another important success factor of BI is its ability to facilitate a real-time, on
demand agile environment, introduced next.

Real-Time, On-Demand BI Is Attainable

The demand for instant, on-demand access to dispersed information has grown as
the need to close the gap between the operational data and strategic objectives has
become more pressing. As a result, a category of products called real-time BI
applications has emerged (see Chapter 3). The introduction of new data-generating
technologies, such as radio-frequency identification (RFID), is only accelerating
this growth and the subsequent need for real-time BI. Traditional BI systems use a
large volume of static data that has been extracted, cleansed, and loaded into a data
warehouse to produce reports and analyses. However, the need is not just
reporting, since users need business monitoring, performance analysis, and an
understanding of why things are happening. These can provide users, who need to
know (virtually in real time) about changes in data or the availability of relevant
reports, alerts, and notifications regarding events and emerging trends in Web, e-
mail, or instant messaging (IM) applications. In addition, business applications can
be programmed to act on what these real-time BI systems discover. For example, a
supply chain management (SCM) application might automatically place an order
for more “widgets” when real-time inventory falls below a certain threshold or
when a customer relationship management (CRM) application automatically
triggers a customer service representative and credit control clerk to check a
customer who has placed an online order larger than $10,000.
One approach to real-time BI uses the DW model of traditional BI systems. In this
case, products from innovative BI platform providers (like Ascential or
Informatica) provide a service-oriented, near-real-time solution that populates the
DW much faster than the typical nightly extract/transfer/load (ETL) batch update
does (see Chapter 2). A second approach, commonly called business activity
management (BAM), is adopted by pure play BAM and or hybrid BAM-
middleware providers (such as Savvion, Iteration Software, Vitria, webMethods,
Quantive, Tibco, or Vineyard Software). It bypasses the DW entirely and uses Web
services or other monitoring means to discover key business events. These
software monitors (or intelligent agents) can be placed on a separate server in the
network or on the transactional application databases themselves, and they can use
event- and process-based approaches to proactively and intelligently measure and
monitor operational processes.

Developing or Acquiring BI Systems

Today, many vendors offer diversified tools, some of which are completely
preprogrammed (called shells); all you have to do is insert your numbers. These
tools can be purchased or leased. For a list of products, demos, white papers, and
much current product information, see information-management.com/. Free user
registration is required. Almost all BI applications are constructed with shells
provided by vendors who may themselves create a custom solution for a client or
work with another outsourcing provider. The issue that companies face is which
alternative to select: purchase, lease, or build. Each of these alternatives has several
options. One of the major criteria for making the decision is justification and cost–
benefit analysis.
Justification and Cost–Benefit Analysis
As the number of potential BI applications increases, the need to justify and
prioritize them arises. This is not an easy task due to the large number of intangible
benefits. Both direct and intangible benefits need to be identified. Of course, this is
where the knowledge of similar applications in other organizations and case studies
is extremely useful. For example, the Data Warehousing Institute (tdwi.org/)
provides a wealth of information about products and innovative applications and
implementations. Such information can be useful in estimating direct and indirect
benefits.
Security and Protection of Privacy
This is an extremely important issue in the development of any computerized
system, especially BI that contain data that may possess strategic value. Also, the
privacy of employees and customers needs to be protected.
Integration of Systems and Applications
With the exception of some small applications, all BI applications must be
integrated with other systems such as databases, legacy systems, enterprise systems
(particularly ERP and CRM), e-commerce (sell side, buy side), and many more. In
addition, BI applications are usually connected to the Internet and many times to
information systems of business partners.
Furthermore, BI tools sometimes need to be integrated among themselves, creating
synergy. The need for integration pushed software vendors to continuously add
capabilities to their products. Customers who buy an all-in-one software package
deal with only one vendor and do not have to deal with systems’ connectivity. But,
they may lose the advantage of creating systems composed from the “best-of-
breed” components.