Unit 2

Introduction to Business
Intelligence (BI)

BY: RAKESH RANJAN,

A S S I S TA N T P R O F ES S OR , S O C S
UPES, DEHRADUN
Changing Business Environment &
Computerized Decision Support
Companies are moving aggressively to
computerized support of their operations 
Business Intelligence
Business Pressures–Responses–Support Model
◦ Business pressures result of today's competitive
business climate
◦ Responses to counter the pressures
◦ Support to better facilitate the process

2
Business Pressures–
Responses–Support Model

3
The Business Environment
The environment in which organizations
operate today is becoming more and more
complex, creating
◦ opportunities, and
◦ problems.
◦ Example: globalization.
Business environment factors:
◦ markets, consumer demands, technology, and
societal…

4
Business Environment Factors
FACTOR DESCRIPTION
Markets Strong competition
Expanding global markets
Blooming electronic markets on the Internet
Innovative marketing methods
Opportunities for outsourcing with IT support
Need for real-time, on-demand transactions
Consumer Desire for customization
demand Desire for quality, diversity of products, and speed of delivery
Customers getting powerful and less loyal
Technology More innovations, new products, and new services
Increasing obsolescence rate
Increasing information overload
Social networking, Web 2.0 and beyond
Societal Growing government regulations and deregulation
Workforce more diversified, older, and composed of more women
Prime concerns of homeland security and terrorist attacks
Necessity of Sarbanes-Oxley Act and other reporting-related legislation
Increasing social responsibility of companies

5
Organizational
Responses
Be Reactive, Anticipative,
Adaptive, and Proactive
Managers may take actions,
such as
◦ Employ strategic planning.
◦ Use new and innovative business
models.
◦ Restructure business processes.
◦ Participate in business alliances.
◦ Improve corporate information
systems.
6
Managerial Decision Making
Management is a process by which organizational
goals are achieved by using resources.
◦ Inputs: resources
◦ Output: attainment of goals
◦ Measure of success: outputs / inputs
Management  Decision Making
Decision making: selecting the best solution from
two or more alternatives

7
The Nature of Managers’ Work
Mintzberg's 10 Managerial Roles
Interpersonal
1. Figurehead
2. Leader
3. Liaison
Decisional
7. Entrepreneur
8. Disturbance handler
Informational 9. Resource allocator
4. Monitor 10. Negotiator
5. Disseminator
6. Spokesperson

8
Decision-Making Process
Managers usually make decisions by following a four-
step process (a.k.a. the scientific approach)
1. Define the problem (or opportunity)
2. Construct a model that describes the real-world
problem.
3. Identify possible solutions to the modeled problem and
evaluate the solutions.
4. Compare, choose, and recommend a potential solution
to the problem.

9
 Group communication and collaboration

Improved data management

Managing data warehouses and Big Data

Information
Systems
Support Analytical support

for Decision
Overcoming cognitive limits in processing and
Making storing information

Knowledge management

Anywhere, anytime support

10
An Early Decision Support
Framework (by Gory and Scott-Morten, 1971)

11
 An Early Decision Support
Framework
Degree of Structuredness (Simon, 1977)
◦ Decisions are classified as
◦ Highly structured (a.k.a. programmed)
◦ Semi-structured
◦ Highly unstructured (i.e., nonprogrammed)

Types of Control (Anthony, 1965)

◦ Strategic planning (top-level, long-range)
◦ Management control (tactical planning)
◦ Operational control

12
The Concept of DSS
DSS - interactive computer-based systems, which
help decision makers utilize data and models to
solve unstructured problems
(Gorry and Scott-Morton, 1971)
Decision support systems couple the intellectual
resources of individuals with the capabilities of the
computer to improve the quality of decisions.
DS as an Umbrella Term
Evolution of DS into Business Intelligence

13
A Framework for
Business Intelligence (BI)
BI is an evolution of decision support concepts over time
◦Then: Executive Information System
◦Now: Everybody’s Information System (BI)
BI systems are enhanced with additional visualizations, alerts,
and performance measurement capabilities
The term BI emerged from industry

14
1. Business Intelligence -
Definition:
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.

BI helps transform data, to information (and knowledge),

to decisions, and finally to action

15
 Some Examples
 Marketing
 Online advertising
 Recommendations for cross-selling
 Customer relationship management

 Finance
 Credit scoring and trading
 Fraud detection
 Workforce management

 Retail
 Wal-Mart, Amazon etc.

16
 At the very beginning, historical
data mining methods and tools
were used for strategic
managerial reporting purposes.
History and
Evolution of
Business
The second evolutionary stage
Intelligence:
is characterized by On-Line
Analytic Processing (OLAP)
technologies and dimensional
analysis of data stored in data
warehouses and data marts.

17
In the third stage Balanced Scorecard
methodology is used as a means of
Business Intelligence creation.

With the emergence and growing

popularity of e-Business and other
Internet applications and services the
new stage of BI appeared since Web
analytics and Web mining as a form of
BI began to attract the wide
professional attention.

18
The fifth development stage
started when usage of Business
Dashboard technology became a
core component of alerting and
alarming systems in business
decision-making supported by BI.

Finally, nowadays we are

witnessing the era of Mobile and
location-based Business
Intelligence founded on
appropriate mobile and location-
aware technologies.

19
A Brief History Summary of BI
The term BI was coined by the Gartner Group in the mid-1990s
However, the concept is much older
◦ 1970s - MIS reporting - static/periodic reports
◦ 1980s - Executive Information Systems (EIS)
◦ 1990s - OLAP, dynamic, multidimensional, ad-hoc
reporting -> coining of the term “BI”
◦ 2010s - Inclusion of AI and Data/Text Mining
capabilities; Web-based Portals/Dashboards, Big Data,
Social Media, Analytics
◦ 2020s - yet to be seen
20
 What happened?
• What were our total sales this month?

What’s happening?
• Are our sales going up or down, trend
analysis
BI Why?
Questions
• Why have sales gone down?

What will happen?

• Forecasting & What If Analysis

What do I want to happen?

• Planning & Targets

21
Where is Business Intelligence
applied?
Operational Efficiency Customer Interaction
 ERP Reporting
 Sales Analysis
 KPI Tracking
 Sales Forecasting
 Product Profitability
 Segmentation
 Risk Management
 Cross-selling
 Balanced Scorecard
 CRM Analytics
 Activity Based Costing
 Campaign Planning
 Global Sourcing
 Customer Profitability
 Logistics

22
2. Styles of Business
Intelligence:
There are 5 Styles of BI, which are presented
below:

1) Enterprise Reporting - Broadly deployed pixel-perfect

report formats for operational reporting and
scorecards/dashboards targeted at information
consumers and executives.

23
2) Cube Analysis - OLAP slice-and-dice analysis of limited data
sets, targeted at managers and others who need a safe and
simple environment for basic data exploration within a limited
range of data.

3) Ad Hoc Query and Analysis - Full investigative query into all

data, as well as automated slice and-dice OLAP analysis of the
entire database - down to the transaction level of detail if
necessary. Targeted at information explorers and power users.

24
4) Statistical Analysis and Data Mining - Full mathematical,
financial, and statistical treatment of data for purposes of
correlation analysis, trend analysis, financial analysis and
projections. Targeted at the professional information
analysts.

5) Alerting and Report Delivery - Proactive report delivery

and alerting to very large populations based on schedules or
event triggers in the database. Targeted at very large user
populations of information consumers, both internal and
external to the enterprise.

25
3. Types of BI Tools:

The following are the types of Business Intelligence Tools:

a) Spreadsheets – These interactive Computer Applications manage

information in a visual format.

b) Reporting and Querying Software – These tools extract, sort and

summarize data. There is a variety of software programs used to present
this data, including open-source and commercial software types.

26
c) Online Analytical Processing – This
processing approach quickly answers
queries that are multi-dimensional.
The types of applications included in
this processing include business
reporting, marketing, budget and
forecasting.

d) Data Mining – Data mining is the

bridge between statistics and
computer science. It is used to
uncover patterns in large sets of data.

27
e) Data Warehousing – This
comprehensive database is used for
reporting and data analysis. The
information is uploaded from a
separate operational system.

f) Process Mining – This process

management technique logs various
events to determine business
processes. Process mining provides
techniques and tools that will discover
control data, process and social
structures from event logs.

28
g) Digital Dashboards – A single page
interface in real-time that show at-a-glance
information.

h) Decision Engineering – A frameword that

utilizes the best practices for organizational
decisional making. It helps businesses make
decisions based on a variety of business
approaches.

i) Business Performance Management –

Management and Analytic Processes that
manage a business’ performance to achieve
short and long-term goals.

29
 The following are the benefits
of Business Intelligence:
Faster reporting, analysis or planning
More accurate reporting, analysis or planning
Better business decisions
4. Benefits of Improved data quality

Business Improved Customer-Relationship-Management

Improved employee satisfaction
Intelligence:
Improved operational efficiency
Improved customer satisfaction
Increased competitive advantage
Reduced costs
Increased revenues
Decreased risk
Saved headcount
30
Benefits of Business Intelligence (Cont..)
Business Intelligence can help improve
businesses in a variety of fields:
Customer analysis → customer profiling
Behavior analysis → fraud detection, shopping trends, web activity,
social network analysis
Human capital productivity analysis
Business productivity analysis → defect analysis, capacity planning
and optimization, risk management
Sales channel analysis
Supply chain analysis → supply and vendor management, shipping,
distribution analysis

31
 Architecture Business Intelligence:
A business intelligence architecture is a framework
for organizing the data, information management
and technology components that are used to build
business intelligence (BI) systems for reporting and
data analytics.
The underlying BI architecture plays an important
role in business intelligence projects because it
affects development and implementation decisions.

32
33
The data components of a BI
architecture include the data sources
that corporate executives and other
end users need to access and analyze
to meet their business requirements.

34
Important criteria in the source selection
process include data currency, data quality
and the level of detail in the data.
Both structured and unstructured data may
be required as part of a BI architecture, as
well as information from both internal and
external sources.

35
 A High-Level Architecture of BI
Data Warehouse Business Analytics Performance and
Environment Environment Strategy
Data Technical staff Business users Managers / executives
Sources Built the data warehouse Access
Data
ü Organizing Warehouse BPM strategy
ü Summarizing Manipulation
ü Standardizing Results

User Interface
Future component - browser
intelligent systems - portal
- dashboard

36
High-Level Architecture of BI
A BI system has four major components
◦ a data warehouse, with its source data
◦ business analytics, a collection of tools for manipulating,
mining, and analyzing the data in the data warehouse
◦ business performance management (BPM) for monitoring
and analyzing performance
◦ a user interface (e.g., dashboard)

37
 Components in a BI Architecture
The data warehouse is the cornerstone of any medium-
to-large BI system.
◦ Originally, the data warehouse included only historical data that
was organized and summarized, so end users could easily view or
manipulate it.
◦ Today, some data warehouses include access to current data as
well, so they can provide real-time decision support (for details
see Chapter 2).
Business analytics are the tools that help users transform
data into knowledge (e.g., queries, data/text mining tools, etc.).
BI Examples
Epagogix is an UK-based analytics based BI system that
specializes in predicting success of movies based on a
detailed analysis of movie scripts.
National Australia Bank uses data mining to aid its
marketing initiatives.
Hoyt Highland Partners, a marketing intelligence firm,
assists health care providers with growing their businesses.
 Components in a BI Architecture
Business Performance Management (BPM), which is
also referred to as corporate performance management
(CPM), is an emerging portfolio of applications within
the BI framework that provides enterprises tools they
need to better manage their operations (for details see
Chapter 3).
User Interface (i.e., dashboards) provides a
comprehensive graphical/pictorial view of corporate
performance measures, trends, and exceptions.
Business Value of BI Analytical
Applications
Customer segmentation
Propensity to buy
Customer profitability
Fraud detection
Customer attrition
Channel optimization

41
Bi Applications & technologies can help
companies analyze:
Changes trends in Shares

Changes in customer behavior and spending

patterns

Customers' preferences

Company capabilities

Market conditions

42
Significance of Bi:
Companies need to have accurate, up-to-date information on customer
preferences . So that company can quickly adapt to their changing demands.

BI applications can also help managers to be better informed about actions

that a company’s competitors are taking.

It helps analysts and managers to determine which adjustments are most likely
to respond to changing trends.

It can help companies develop a more consistent, data-based decision, which

can produce better results than making business decisions by “guesswork”.

43
MODULES
Dashboards

Key Performance Indicators

Graphical OLAP

Forecasting

Graphical Reporting

44
45
BI DASH BOARDS:
BI dashboards can provide a customized
snapshot of daily operations, and assist the
user in identifying problems and the source of
those problems, as well as providing
valuable, up-to-date information about
financial results, sales and other critical
information – all in one place

46
 BI provides simplified KPI management and tracking with
powerful features, formulae and expressions, and flexible
frequency, and threshold levels. This module enables clear,
concise definition and tracking of performance indicators for a
period, and measures performance as compared to a previous
period.
❑ Intuitive, color highlighters ensure that users can see these
indicators in a clear manner and accurately present
information to management and team members. Users can
further analyse performance with easy-to-use features like drill
down, drill through, slice and dice and graphical data mining

47
GRAPHICAL BI:
Graphical Business Intelligence (BI) OLAP
technology makes it easy for the users to
find, filter and analyse data, going beyond
numbers, and allowing users to visualize the
information with eye-catching, stunning
displays, and valuable indicators and
gauges, charts, and a variety of graph types
from which to choose

48
FORECASTING &
PREDICTIVE ANALYSIS:
Predictive analysis uses historical product,
sales, pricing, financial, budget and other
data, and forecasts the measures with
numerous timeseries options,
Ex: year, quarter, month, week, day, hour or
even second to improve your planning
process.

49
BI REPORTS:
BI Reports delivers web-based BI reports to
anyone (or everyone) in the organization
within minutes!
The BI suite is simple to use, practical to
implement and affordable for every
organization. With our BI reporting and
performance reporting module, you just point-
and-click and drag-and-drop and you can
instantly create a report to summarize your
performance metrics, or operational data
50
Real-time Business Intelligence:
Real-time business intelligence (RTBI) is a
concept describing the process of delivering
business intelligence (BI) or information
about business operations as they occur.
Real time means near to zero latency and
access to information whenever it is
required.

51
Data latency
1. Data latency is the time it takes for
data Packets to be stored or retrieved.
2. In business intelligence (BI), data
latency is how long it takes for a
business user to retrieve source data
from a data warehouse or business
intelligence dashboard.

52
How Many Matches?

53
How Many Matches Now?

54
BI in Decision-Making:
With high consumer expectations in the
competitive market, decisions that are based
on the most current data available improve
customer relationships, increase revenue,
maximize operational efficiency.
Real-time business intelligence systems
mainly provide the information necessary to
tactical take advantage of events as they
occur.

55
Significance of Latency in BI:
All real-time business intelligence systems have some latency,
but the goal is to minimize the time from the business event
happening to a corrective action or notification being
initiated.
Analyst Richard Hackathorn describes three types of latency:
1. Data latency: the time taken to collect and store the data
2. Analysis latency: the time taken to analyze the data and
turn it into actionable information
3. Action latency: the time taken to react to the information
and take action

56
Real-time business intelligence technologies are
designed to reduce all three latencies to as close to
zero as possible, whereas traditional business
intelligence only seeks to reduce data latency and
does not address analysis latency or action latency
since both are governed by manual processes.

Some commentators have introduced the concept of

right time business intelligence which proposes that
information should be delivered just before it is
required, and not necessarily in real-time.
57
Business Intelligence Value Chain:
In Competitive Market place, it is vital for
every business enterprise whether small or
big to cope with the pace of the market
growth.
This is why organizations are becoming more
dependent on data or information for
improving development of product and
services that can outsell their competitors.

58
BUSINESS INTELLIGENCE
VALUE CHAIN:

59
Organizations are primarily relying on analytical
database solutions like data warehouses. However,
in the entire process this information and later
applying them in action describes a chain of
methods called value chain.
Value chain is the process that converts data into
information and then applies that knowledge in
taking productive business decision, and the
outcome is the ultimate value.
60
What is the primary objective of most
analytic decision support systems?

Monitor the performance results of Key

Business Processes.
Each business Process produces unique metrics
at unique time intervals with unique granularity
and dimensionality.
Each process typically spawns one or more fact
tables
Value chain provides high-level insight into the
overall enterprise data warehouse.
61
 Concept of a Cube or Pivot Table
Month
Product – Chocolate
Region
Month – May 2017
Region – Hyderabad
Measure – Sales

Product

How much Chocolate did we sell in the Hyderabad in May 2017?

62
Evolution of Business Intelligence

• Traditional BI: Descriptive analytics, static reporting, and historical data.

• Modern BI: Real-time analytics, data visualization, self-service tools.

• Future BI: Predictive, prescriptive, and autonomous systems.

 Previewing the future of BI
Key Trends Shaping the Future of BI
1. Artificial Intelligence & Machine Learning: Automating data insights
and decision-making.
2. Augmented Analytics: Simplifying complex data with AI-driven
insights.
3. Natural Language Processing (NLP): Enhancing user interaction
through natural language queries.
4. Edge Computing: Analyzing data closer to the source for real-time
insights.
Data Democratization

• Self-Service Analytics: Empowering non-technical users to analyze

data without IT reliance.

• Impact: Broader access to data-driven decision-making across the

organization.
Real-Time Data Processing
• Streaming Analytics: Analyzing data as it is generated.
• Use Cases: IoT, financial services, supply chain management.
• Future Impact: Faster and more accurate decision-making.
Integration with IoT
• Internet of Things (IoT): BI utilizing massive IoT data.
• Predictive Analytics: Proactive decisions based on real-time sensor
data.
• Example: Predictive maintenance in manufacturing.
Enhanced Data Security &
Privacy
• Data Governance: Stricter regulations like GDPR driving better data
handling.
• BI Solutions: Incorporating stronger security protocols for data
analysis and storage.
Predictive & Prescriptive
Analytics
• Predictive Analytics: Forecasting future trends based on historical
data.
• Prescriptive Analytics: Recommending actions based on predictive
outcomes.
BI in Cloud Computing
• Cloud-Based BI: Scalability, flexibility, and lower costs.
• Future Trend: Increased adoption of cloud-native BI platforms.
Embedded Analytics
• Definition: Embedding BI tools within other applications.
• Use Cases: Customizable dashboards in CRM, ERP systems.
• Future Scope: Seamless data analysis across platforms.
Case Studies of BI Transformation
1. Retail Industry: Personalizing customer experience with real-time BI.
2. Healthcare: Predictive analytics for patient outcomes.
3. Finance: Risk management and fraud detection through AI-powered
BI.
Challenges Ahead
• Data Quality & Integration: Ensuring clean, usable data across sources.
• Skilled Workforce: Addressing the talent gap in BI and analytics.
UNIT-2 Continue…

74