UNIT - I

What Is Business Intelligence?

Business intelligence refers to a collection of mathematical models and analysis methods that utilize data
to produce valuable information and insight for making important decisions.

Main Components of Business Intelligence System:

1. Data Source

2. Data Mart / Data Warehouse

3. Data Exploration

4. Data Mining

5. Optimization

6. Decisions

1.Data Source:

To begin, the first step is gathering and consolidating data from an array of primary and secondary
sources. These sources vary in origin and format, consisting mainly of operational system data but also
potentially containing unstructured documents like emails and data from external providers.

2.Data Mart / Data Warehouse:

Through the utilization of extraction and transformation tools, also known as extract, transform, load
(ETL), data is acquired from various sources and saved in databases designed specifically for business
intelligence analysis. These databases, commonly known as data warehouses and data marts, serve as a
centralized location for the gathered data.

3.Data Exploration:

The third level of the pyramid offers essential resources for conducting a passive analysis in business
intelligence. These resources include query and reporting systems, along with statistical methods. These
techniques are referred to as passive because decision makers must first develop ideas or establish criteria
for data extraction before utilizing analysis tools to uncover answers and confirm their initial theories. For
example, a sales manager might observe a decrease in revenues in a particular geographic region for a
specific demographic of customers. In response, she could utilize extraction and visualization tools to
confirm her hypothesis and then use statistical testing to validate her findings based on the data.

4.Data Mining:

The fourth level, known as active business intelligence methodologies, focuses on extracting valuable
information and knowledge from data. Part II of this book will delve into various techniques such as
mathematical models, pattern recognition, machine learning, and data mining. Unlike the tools discussed
in the previous level, active models do not rely on decision makers to come up with hypothesis but
instead aim to enhance their understanding.

5.Optimization:

As you ascend the pyramid, you’ll encounter optimization models that empower you to choose the most
optimal course of action among various alternatives, which can often be quite extensive or even endless.
These models have also been effectively incorporated in marketing and logistics.

6.Decisions:

At last, the pinnacle of the pyramid reflects the ultimate decision made and put into action, serving as the
logical end to the decision-making process. Despite the availability and effective utilization of business
intelligence methodologies, the decision still lies in the hands of the decision makers, who can incorporate
informal and unstructured information to fine-tune and revise the suggestions and outcomes generated by
mathematical models.

Role Business Intelligence:

The characteristics of a business intelligence analysis can be summarized by a rational and methodical
approach.

 Firstly, the objectives are clearly identified and performance indicators are chosen to evaluate
different options.

 Next, mathematical models are created by utilizing the connections between control variables,
parameters, and evaluation metrics.

 Finally, “what-if” scenarios are explored to understand the impact of changing control variables
and parameters on performance.

Process Used in Business Intelligence:

BI(Business Intelligence) uses a set of processes, technologies, and tools (such as Informatica/IBM) to
transform raw data into meaningful information and then transform information to provide knowledge.
Then afterward some beneficial insights can be extracted manually and by some software then the
decision-makers can make an impactful decision on the basis of insights.
To sound short and clear – Business Intelligence about provides accurate information in the right and
ethical format to the decision-makers of the organization. Some Important features of Business
Intelligence are:

 Fact-based decision making.

 360 degrees perspective on your business.

 Virtual team members are on the same page.

 Measurement for creating KPI (Key Performance Indicators) on the basis of historic data fed into
the system.

 Identify the benchmark and then set the benchmarks for different processes.

 Business Intelligence systems can use to identify market trends and also to spot business
problems that need to be identified and solved.

 Business Intelligence helps in data visualization will increase the quality of data and then also
increases the quality of decision making.

 Business Intelligence systems can be used by large enterprises, and organizations along with
Small and Medium Enterprises, because it is quite affordable.

Types of Users of Business Intelligence:

 Analyst (Data Analyst or Business Analyst): They are the statistician of the company, they
used BI on the basis of historical data priorly stored in the system.

 Head or Manager of the Company: Head of the company uses Business Intelligence used to
increase the profitability of their company by increasing the efficiency in their decisions on the
basis of all the knowledge they discovered.

 IT Engineer: For his company.

  Small Business Owners: Can be used by a small businessman because it is quite affordable too.

 Government Officials: In the decision-making of the government.

Types of Decisions Supported by Business Intelligence:

 Strategic Level: The strategic level is the level where the Heads of the company decide the
strategies of any business.

 Tactical Level: Once the strategy is made though for handling all the details and matters have a
tactical level where all the technologies and methodologies come under one umbrella. This level
is further responsible for continuously updating the data.

 Operational Level: Operation decisions are made at this level. Operational decisions help in
operating the system.

Applications of Business Intelligence:

 In Decision Making of the company by decision-makers of the organizations.

 In Data Mining while extracting knowledge.

 In Operational Analytics and operational management.

 In Predictive Analytics.

 In Prescriptive Analytics.

 Making Structured data from unstructured data.

 In Decision Support System.

 In Executive Information System (EIS).

Business Intelligence Tools and Software

1. Tableau: A business intelligence and data visualization application that enables users to connect
to different data sources, build interactive dashboards, and share findings with others.

2. Microsoft Power BI: A cloud-based business intelligence program that enables users to connect
to a variety of data sources, produce visualizations, and communicate findings.

3. QlikView is a business intelligence and data visualization platform that enables users to build
interactive dashboards and examine data in novel ways.

4. Data visualization, reporting, and analytics tools are all included in SAP BusinessObjects, a
complete business intelligence suite.

5. IBM Cognos: A tool for performance management and corporate intelligence that enables users
to build reports, scorecards, and dashboards.
 6. Data visualization, reporting, and analytics technologies are all part of the full business
intelligence suite known as Oracle Business Intelligence.

7. Create dynamic dashboards and reports with MicroStrategy, a business intelligence and data
visualization tool.

8. Data visualization, reporting, and analytics tools are all part of the full business intelligence suite
known as SAS Business Intelligence.

9. TIBCO Spotfire is a business intelligence and data visualization platform that enables users to
build interactive dashboards and investigate data in novel ways.

10. Looker: A tool for business intelligence and data visualization that enables users to build
interactive dashboards and investigate data in novel ways.

Advantages of Business Intelligence

1. Decision-making is improved because users have access to real-time data and insights through
business intelligence tools. This enables users to base their decisions on correct and current
information.

2. Efficiency gain: Many manual data analysis operations are automated by business intelligence
systems, freeing up time and resources for other tasks.

3. Better data management: Business intelligence technologies aid in the administration and
organization of data, making it simpler to locate the facts required for decision-making.

4. Greater visibility: Business intelligence solutions give users a comprehensive picture of the
functioning of the firm, enabling them to spot areas that could use improvement.

5. A better understanding of customers: Business intelligence technologies helps firms

understand their customers better, enabling them to customize products and services to suit their
needs.

6. Cost savings: Business intelligence technologies assist firms in locating inefficiencies and cost
savings, which boosts revenue.

7. Better forecasting: Organizations may evaluate past data and predict future patterns using
business intelligence technologies, which enables them to plan more successfully for the future.

8. Competitive advantage: By granting access to important data and insights that can guide them
in making better decisions, business intelligence technologies provide firms a leg up on their
rivals.

9. Collaboration is improved as a result of using business intelligence technologies to disseminate

information between teams and departments. This promotes better decision-making and
collaboration.
 10. Better Monitoring: Business intelligence technologies assist firms in tracking important metrics
like revenue, customer happiness, and staff performance and in monitoring performance.

Disadvantages of Business Intelligence

1. Complexity: The implementation and upkeep of business intelligence systems can be extremely
difficult and complicated. This may be a drawback for companies with constrained IT resources.

2. High costs: Some businesses find it prohibitively expensive to implement and purchase business
intelligence technologies.

3. Business intelligence strongly depends on accurate and current data. The insights produced by
business intelligence technologies could not be accurate if the data is inconsistent, erroneous, or
incomplete.

4. Data Security: Business intelligence systems handle and store a lot of sensitive data, which, if
not adequately protected, is susceptible to security breaches.

5. Dependence on IT: Because business intelligence solutions frequently rely largely on IT

assistance, it may be challenging for enterprises to quickly get the data they require.

6. Limited scalability: For firms with huge data volumes, business intelligence solutions may not
be able to handle enormous amounts of data.

Transaction processing (OLTP) and analytical processing (OLAP) are both online data processing
systems, but they have different purposes:

 Transaction processing

OLTP is a business tool that manages and processes transactions in real-time. It ensures that
interdependent operations are either all completed or all canceled successfully, maintaining the system's
integrity. OLTP systems gather, store, alter, and retrieve data transactions, such as trades, orders, and
inventory adjustments. They are enabled by specialized software and workflows, and are often used in
small businesses. Examples of OLTP systems include ATM machines, order processing systems, and
airline seat reservation systems.

 Analytical processing

OLAP is a system that explores, examines, and interprets data to find insights, trends, and patterns. It
involves analyzing large data sets to support strategic planning, informed decision-making, and gain
deeper information. OLAP systems are used to generate reports, perform complex data analysis, and
identify trends. Typical applications of OLAP include business reporting, budgeting, forecasting, and
financial reporting. OLAP systems are suitable for analytics queries and drill-downs.

Business Intelligence is the process of analyzing unprocessed data and turning it into knowledge that the
company can use to make decisions. Organizations can better understand their marketing strategies,
earnings and losses, effective development and management, and market trends and consumer behavior
by using business intelligence.
Phases of Business Intelligence Life Cycle

Business Intelligence Life Cycle

Phase 1: Analyze Business Requirements

The first step in the Business Intelligence life cycle is to analyze the business requirements. The user
identifies the business requirements in order to determine the type of analysis that the user then needs to
perform. Identifying the requirements, let the user decides the further action to be performed.

For example, any retail company can analyze the sales data to figure out the products that are top-selling
and the products that least sell.

Phase 2: Design Data Model

Once the requirements are identified the user needs to design the logical model according to the
requirements. This logical model helps the user to analyze the relationships that exist within the data
entities.

For example, For any retail company, the data model consists of products, their customers, and the sales
data

Phase 3: Design the Physical Schema

Once the logical model is prepared the next step is to design the physical schema using the data model.
The physical schema describes the structure and the content of the data warehouse.
For example, in any retail company, physical schema consists of sales-related facts, product-customer
relationships, and the sales transactions

Phase 4: Build the Data Warehouse

Once the logical and physical schema is designed, the next step is to build the data warehouse. The design
of a data warehouse depends on the physical and logical schema. After the design of the data warehouse,
the data and the content from the source system are loaded into the data warehouse for further steps.

For example, for the retail system, designing the data warehouse consists of developing a database that
would store the details of customers, products, and other requirements for the business.

Phase 5: Create the Project Structure (Metadata)

The next step after designing the data warehouse is to create a project structure also known as metadata.
With the help of this created project structure, the mapping of the tables and data in the data warehouse is
easier. Creating the project structure describes the further steps and types that need to be implemented.

For example, The project structure of the retail company consists of the attributes of the data, the design,
and the working flow of the system. This project structure or metadata gives a brief idea about the
working of the system.

Phase 6: Develop The BI Objects

The next step is to develop the BI objects such as metrics, attributes, dashboards, reports, and facts. This
step consists of developing the reports and dashboards that can be used to analyze the data in the data
warehouse.
For example, the retail company can develop reports and statistics charts that can describe the profit and
loss margins.

Phase 7: Administer and Maintain the Project

The last step is to administer and maintain the project continuously as it undergoes changes. The project
needs to be monitored to maintain the changes, security, and performance of the system.

For example, the retail company needs to monitor the reports and statistics accordingly to increase the
profit of the sales.

The type of ethics in business intelligence (BI) is the ethical principles of conduct that govern an
individual in the workplace or a company in general.

It is also known as professional ethics and not to be confused with other forms of philosophical ethics
including religious conviction, or popular conviction. Professional ethics according to Griffin (1986) is
that profit is not the only important strategy of a business anymore. There is also more of a concern and
motivator of companies to do what is right.
Companies must acknowledge that they have a common good to protect there local community, improve
employee relations and promote informational press to the public. While back in 1986, Griffin was
directing his argument towards ethics in accounting but it is also true today in Business Intelligence.
Government regulations are not changing fast enough to cover all the changes in technology that
bombards users on day to day bases. It is up to corporations to create a code of ethics, and to persistently
be receptive to the needs of the public being served.

Everyday in BI management professionals may be at risk of making unethical practices in there decisions
that regards the consumer, business and/or other employees data. Ethics is a touchy subject, there is
always going to be controversy on how companies choose to handle business decisions. There is no
definite decision to make when it comes to ethical decisions. While sometimes it may involve illegal
practices, other times it is just a decision that needs to be made in a company to promote a better way of
life for all.

difference between Star and Snowflake Schema

Star Schema: Star schema is the type of multidimensional model which is used for data warehouse. In
star schema, The fact tables and the dimension tables are contained. In this schema fewer foreign-key join
is used. This schema forms a star with fact table and dimension tables.
 Snowflake Schema: Snowflake Schema is also the type of multidimensional model which is used
for data warehouse. In snowflake schema, The fact tables, dimension tables as well as sub dimension
tables are contained. This schema forms a snowflake with fact tables, dimension tables as well as sub-
dimension tables.

Let’s see the difference between Star and Snowflake Schema:

S.NO Star Schema Snowflake Schema

While in snowflake schema, The fact tables,

In star schema, The fact tables and
1. dimension tables as well as sub dimension tables are
the dimension tables are contained.
contained.

2. Star schema is a top-down model. While it is a bottom-up model.

3. Star schema uses more space. While it uses less space.

It takes less time for the execution of While it takes more time than star schema for the
4.
queries. execution of queries.

In star schema, Normalization is not While in this, Both normalization and

5.
used. denormalization are used.

6. It’s design is very simple. While it’s design is complex.

The query complexity of star schema While the query complexity of snowflake schema is
7.
is low. higher than star schema.

8. It’s understanding is very simple. While it’s understanding is difficult.

9. It has less number of foreign keys. While it has more number of foreign keys.

10. It has high data redundancy. While it has low data redundancy.