Business

Intelligence
Unit 1
Unit I: Introduction to Business Intelligence

Business Intelligence (BI), Scope of BI solutions and their fitting into

existing infrastructure, BI Components and architecture, BI
Components, Future of Business Intelligence, SaaS and Cloud
computing techniques, Functional areas of BI tools, End user
assumptions, setting up data for BI, Data warehouse, OLAP and
advanced analytics, Supporting the requirements of senior executives
including performance management, Glossary of terms and their
definitions specific to the field of BI and BI systems.
 What is Business
Intelligence
Business Intelligence (BI) refers to the strategies, technologies, and
tools that organizations use to collect, integrate, analyze, and
present business data.

The main goal of BI is to enable data-driven decision-making,

improve business performance, and gain actionable insights from
vast amounts of information.
or
The process of taking large amounts of data, analyzing that data
and presenting a high-level set of reports that condense the
essence of that data into the basis of business actions enabling
management to make fundamental daily business decisions.
Stackowiak et
al 2007
 Why Business Intelligence is
Required
Improved Data-Driven Decisions: BI provides real-time insights
and extract critical facts at a rapid speed, empowering businesses to
make timely, informed decisions.

Enhanced Efficiency: Streamlining data processes and automating

reporting reduces manual efforts and increases productivity.

Increased Collaboration: BI tools foster collaboration across teams

by providing a unified view of data, making it accessible to everyone.

Competitive Advantage: Organizations using BI gain a competitive

edge by understanding market trends, customer behavior, and
operational inefficiencies.
Understanding customer behavior: By identifying patterns in
customer behavior, businesses gain insights into who their most
valuable customers are, how to retain them, and, in some cases,
when it may be necessary to part ways with certain customers. The
deeper your knowledge of your target audience, the more effectively
you can grow your business.

Supports Cost Control – BI enhances visibility across functions like

inventory management, reducing storage and maintenance costs.
By optimizing production efficiency, it helps prevent waste in
manufacturing processes, leading to more streamlined operations
and lower expenses.
Scope of BI Solutions and Their Integration into
Existing Infrastructure
Business Intelligence (BI) solutions provide tools and techniques for
analyzing and interpreting business data.

They play a critical role in decision-making, performance

management, and strategic planning.

Understanding how BI fits into existing infrastructure is crucial for

organizations looking to leverage data effectively.
 Scope of BI
Data Integration Solutions
BI solutions help in collecting, integrating, and consolidating data
from multiple sources—databases, spreadsheets, APIs, IoT devices,
and more—into a single repository (e.g., data warehouses or data
lakes).

Data Analysis
They offer advanced analytics, predictive modeling, and machine
learning to derive insights, trends, and forecasts from data.

Reporting and Visualization

BI tools provide intuitive dashboards, reports, and visualizations
(charts, graphs, tables) to represent data insights in a user-friendly
way. Tools like Power BI, Tableau, and Looker play a significant role.
Performance Management
BI helps track key performance indicators (KPIs) and monitor business
processes for better efficiency and effectiveness. It also enables real-
time tracking for timely decision-making.

Collaboration and Sharing

BI solutions allow sharing insights with stakeholders across the
organization through interactive reports, emails, or collaboration
platforms.

Compliance and Governance

BI solutions ensure data security, integrity, and compliance with
regulatory standards, like GDPR, HIPAA, etc.
 Fitting BI Solutions into Existing
Infrastructure
Assessment of Current Infrastructure
Before implementing BI solutions, assess the existing infrastructure,
including databases, storage systems, and analytics tools.

Data Sources
Identify data sources—structured and unstructured—and ensure
compatibility with BI tools.

Integration
BI solutions should easily integrate with existing databases, data
warehouses, or cloud platforms (e.g., AWS, Azure, Google Cloud).
Architecture Design
Design a scalable architecture that can handle data growth and
evolving business needs, often involving ETL (Extract, Transform,
Load) processes.

Data Governance
Ensure that BI solutions comply with existing governance policies,
such as security protocols and metadata management.

User Accessibility
BI solutions should be accessible to all stakeholders, ensuring role-
based access and support for mobile and desktop platforms.
 Applications of BI in
Business
Sales and Marketing Analysis
• Customer Segmentation: Identify target customer groups and
tailor marketing strategies.
• Sales Forecasting: Predict future sales trends based on historical
data.
• Campaign Effectiveness: Measure and optimize marketing
campaign performance.
Financial Management
• Budgeting and Forecasting: Analyze financial data to predict
future performance.
• Profitability Analysis: Assess which products or services are most
profitable.
• Risk Management: Identify financial risks and take preemptive
Operational Efficiency
• Process Optimization: Analyze workflows to identify bottlenecks
and inefficiencies.
• Supply Chain Management: Monitor inventory levels and
optimize logistics.
• Resource Allocation: Ensure optimal use of resources like staff,
materials, and equipment.
Customer Relationship Management (CRM)
• Customer Retention: Identify patterns leading to customer
churn and devise retention strategies.
• Personalized Experiences: Use data to tailor customer
interactions.
• Feedback Analysis: Analyze customer feedback for
product/service improvements.
Business Intelligence
Components
few of the core components of a typical business intelligence
deployment:

• Source Data
• Extract, Transform, Load (ETL)
• Data Warehouse
• Online Analytical Processing (OLAP)
• Visualizations
• Dashboards
Data Sources
This component of BI involves various forms of stored data. It’s about
taking the raw data and using software applications to create
meaningful data sources that each division can use to positively
impact business. It can be operational databases, historic data,
external data from market research companies or a relational
database. It may be structured data as well as unstructured data.
• Internal Data: Enterprise Resource Planning (ERP) systems,
Customer Relationship Management (CRM) systems, financial
systems, etc.

• External Data: Market research, social media, and other publicly

available data.

• Big Data Sources: IoT devices, sensors, and log files.

Data warehouse
Data warehouse holds data obtained from internal sources as well as
external sources. The internal sources include various operational
systems. It is the significant component of Business Intelligence. It is
subject oriented and integrated.

A data warehouse is subject oriented because it provides information

around a subject rather than the organization's ongoing
operations. These subjects can be product, customers, suppliers,
ETL
In business intelligence, an ETL tool extracts data from one or more
data-sources, transforms it and cleanses it to be optimized for reporting
and analysis, and loads it into a data store or data warehouse. ETL
stands for extract, transform, and load.

Tools: Talend, Apache Nifi, Informatica.

Data Mining

Identifies patterns, correlations, and trends within large datasets.

Techniques include clustering, regression, and classification.

OLAP (Online Analytical Processing)
Online analytical processing (OLAP) is a technology that organizes
large business databases and supports complex analysis. It can be
used to perform complex analytical queries without negatively
affecting transactional systems.

OLAP (online analytical processing) is a computing method that

enables users to perform multidimensional analysis of data.

slicing, dicing, and drill-down operations

Advanced Analytics
It is referred to as data mining, forecasting or predictive analysis. This
set of tools allows business leaders to look at the statistics of certain
products or services.
 Future of Business
Intelligence
AI and Machine Learning Integration
AI and ML algorithms will enable BI tools to not just analyze historical
data but also predict future trends, customer behaviors, and market
dynamics, enhancing decision-making capabilities.

Self-Service BI
Non-technical users will soon have greater access to self-service BI
tools, allowing them to independently query data, create reports,
and visualize information without needing assistance from IT teams.
Cloud and BI Integration
The expansion of cloud-based BI platforms is set to continue,
providing benefits such as scalability, flexibility, and reduced costs in
contrast to traditional on-premise systems.

Enhanced Security and Privacy

As data privacy regulations become more stringent, BI tools will
incorporate enhanced security measures, ensuring data compliance
and privacy.

Social BI
Integration with social media and collaborative platforms will allow
businesses to gather insights from social interactions, customer
feedback, and trends.
 Functional areas of BI tools

The primary functional areas of BI tools include:

1. Data Integration and Preparation

• ETL Processes: Extract, Transform, and Load (ETL) capabilities for

combining data from various sources.

• Data Cleansing: Ensuring data quality by removing duplicates,

missing values, and correcting errors.

• Data Transformation: Structuring raw data into formats suitable

for analysis.
2. Data Storage and Management
• Data Warehousing: Centralized storage for integrated data from
multiple sources for providing multi-dimensional view.
• Data Modelling: Creating logical data models to optimize query
performance.
3. Data Analysis and Reporting
• Descriptive Analytics: Summarizing historical data through charts,
tables, and dashboards.
• Diagnostic Analytics: Identifying trends and patterns to explain past
performance.
• Predictive Analytics: Using statistical and ML techniques to forecast
outcomes.
• Prescriptive Analytics: Providing actionable recommendations based
on data insights.
4. Visualization and Dashboards
Interactive Dashboards: Real-time, customizable views of key metrics.
Visualizations: Charts, graphs, and maps to represent data effectively.
Drill-down Capabilities: Navigating through data hierarchies for in-
depth analysis.5.

5. Performance Management
Key Performance Indicators (KPIs): Tracking and measuring critical
success factors.
Scorecards: Monitoring and aligning organizational goals with
performance metrics.
Alerts and Notifications: Automated triggers for anomalies or specific
thresholds.
6. Advanced Analytics and AI Integration
ML Integration: Building and deploying ML models within BI workflows.
NLP: Allowing users to query data using natural language.
AI-Driven Insights: Automated anomaly detection, trend identification, and
predictions.

7. Security and Governance

Role-Based Access: Ensuring appropriate data access based on user roles.
Data Governance: Enforcing compliance with regulations and policies.
Audit Trails: Tracking changes and interactions with BI systems for
accountability.
 SaaS and Cloud Computing
Techniques
To analyze the large amounts of data or to find the hidden patterns in
the data we need companies, software. These software can be owned
by the companies, or a service can be outsourced to a third party.

SaaS (Software as a Service)

is a cloud-based software delivery model in which applications are
hosted by a service provider or vendor and made available to users
over the internet.
It eliminates the need to install, maintain, or manage software locally.
It allows organizations to access business functionality at a cost lower
than paying for licensed applications.
Also, the software is hosted remotely, users don’t need to invest in
additional hardware.
 Key Features of SaaS

Web-Based Access: Software is accessible via a web browser,

requiring no installation on individual devices.

Subscription Model: Users typically pay on a subscription basis

(based on usage or desired features).

Scalability: Resources can be scaled up or down based on user

needs.

Accessibility: As it can be accessed using a browser so it can be used

from any device which supports any browser.
 Challenges of SaaS

• Data Security: Trusting third-party providers with sensitive

information is a risk.

• Internet Dependence: Functionality depends on stable

internet connectivity.

• Limited Customization: SaaS may not meet all unique

business requirements.
 SaaS and BI

SaaS (Software as a Service) is closely related to Business

Intelligence (BI) as it provides an efficient, scalable, and cost-
effective way to deploy and use BI tools.

1. SaaS BI Tools:
Tableau Online, Power BI Pro, Zoho Analytics.

2. Benefits of using SaaS BI:

Accessibility and Mobility, Cost Efficiency, and Scalability.

3. Functional Alignment:
Data Integration, Real Time Analytics, and Customize
dashboards.
 Cloud Computing
Cloud computing is a colloquial expression used to describe a variety of
different types of computing concepts that involves a large number of
computers connected through a real time communication network,
typically the internet.

cloud computing is the delivery of computing services—including

servers, storage, databases, networking, software, analytics, and
intelligence—over the Internet (“the cloud”) to offer faster innovation,
flexible resources, and economies of scale.

User typically pay only for cloud services they use, helping lower their
operating costs, run their infrastructure more efficiently and scale as
user business needs change.
 Essential characteristics of cloud
computing
On demand self service: Cloud computing resources can be provisioned
without human interaction from the service provider. An organization can
provision additional computing resources as needed without going
through the cloud service provider.

Broad network access

Cloud services are available over a network—ideally high broadband
communication link—such as the internet, or in the case of a private
clouds it could be a LAN.

Resource pooling
Cloud computing resources are designed to support a multi-tenant model.
Multi-tenancy allows multiple customers to share the same applications or
the same physical infrastructure while retaining privacy and security over
their information.
 Benefits of Cloud Computing
Cost
Cloud computing eliminates the capital expense of buying hardware
and software and setting up and running on-site datacenters

Global scale
The benefits of cloud computing services include the ability to scale
elastically. In cloud speak, that means delivering the right amount of
IT resources—for example, more or less computing power, storage,
bandwidth etc.

Productivity
On-site datacenters typically require a lot of “racking and stacking”—
hardware setup, software patching, and other time-consuming IT
management chores. Cloud computing removes the need for many of
these tasks, so IT teams can spend time on more important business
Performance
The cloud computing services run on a worldwide network of secure
datacenters, which are regularly upgraded to the latest generation of
fast and efficient computing hardware.
Security
Many cloud providers offer a broad set of policies, technologies and
controls that strengthen your security posture overall, helping protect
your data, apps and infrastructure from potential threats.
Speed
Most cloud computing services are provided self service and on
demand, so vast amounts of computing resources can be provisioned
in minutes, typically with just a few mouse clicks
 End User Assumptions

The end user should not assume that any two tools of business
intelligence would do the same thing in the same way.

The end user must have a clear idea as to what kind of output he
needs and the analysis he needs to complete.

The important thing to accomplish by end user is to create the

output with clean, accurate data and present it in a clear and
logical way.
1. BI Tools Are Intuitive and Easy to Use

Assumption: BI tools have a simple interface, requiring no

technical expertise or extensive training.

Reality: While modern BI tools focus on usability, some advanced

features and customization require technical skills.

2. BI Systems Automatically Improve Decision-Making

Assumption: Implementing BI tools will lead to better business

decisions without much effort.

Reality: BI tools support decision-making, but their effectiveness

depends on how well users interpret and act on the insights.
3. BI Delivers Instant Results
Assumption: BI tools provide immediate insights as soon as data is
input or connected.
Reality: The speed of insights depends on the quality of data,
system configurations, and the complexity of the analysis.

4. All Data Can Be Easily Integrated

Assumption: BI systems can connect to any data source without
issues.
Reality: Integration can be challenging if data sources are
incompatible or lack proper structure.
5. BI Is a One-Time Investment
Assumption: After purchase, there will be no additional costs for BI
systems.
Reality: Costs often include ongoing updates, training, licensing, and
maintenance.

6. BI is Secure by Default
Assumption: BI platforms ensure data security and regulatory
compliance.
Reality: Security and compliance often require additional configuration.

7. BI Predicts the Future

Assumption: BI tools not only analyze past and present data but also
provide foolproof predictions.
 Setting up Data for Business
Intelligence
Preparing data for Business Intelligence (BI) can be a very tedious and
time-consuming process. You want the data to turn into the best reports
for analysis.

But, the raw data needs lots of processing and handling before you can
even approach the results. In addition, it’s essential to make sure data is
collected and shared across the whole organization.

To reach our desired results, there are several steps to take to go from
raw data to useful analytics:

1. Collect and load data (ETL Tools)

ETL tools and processes are responsible for the extraction of data from
one or many source systems, as they transform data from many different
formats into a common format and then load that data into s data
The extracted data has to be deemed central to the business. The ETL
tools manipulate and present the data into information that is then
used for managerial decision making.

ETL tools are divided into 3 distinct stages. The three stages of ETL are:

1. The Extraction stage: It involves obtaining access to data originating

from different sources. These sources are often distributed cross
multiple platforms and can be part of customer’s information
system.
2. The Transformation stage: This stage transforms the extracted data
and is considered the most complex stage of ETL process. It
converts the data into the same schema of the data warehouse to
which it is to be loaded.
The transformation phase is usually performed by means of
traditional programming languages, script languages or sql.
3. The load stage: The load stage pushes the transformed data and
Categories of ETL Tools

Generally, there are 4 categories of ETL tools

1. Tools that addresses the extraction and loading aspects of the ETL
process.
2. Tools that provide a preference for the data types and format to be
extracted and loaded.
3. Tools that offer a balance across all tool functions.
4. Tools that emphasize the integration of data into data warehouse.
2. Data Warehouse: A single, complete and consistent store of data
obtained from a variety of different sources made available to end
users in a what they can understand and use in a business context.

The data warehouse is an informational environment that

• Provides an integrated and total view of the enterprise

• Makes the enterprise’s current and historical information easily
available for decision making
• Makes decision-support transactions possible without hindering
operational systems
• Renders the organization’s information consistent
• Presents a flexible and interactive source of strategic information
Data warehouse Operational system
Subject oriented Transaction oriented

Large (hundreds of GB up to several TB) Small (MB up to several GB)

Historic data Current data

De-normalized table structure (few tables, Normalized table structure (many tables,
many columns per table) few columns per table)
Batch updates Continuous updates

Usually very complex queries Simple to complex queries

A Three-Tier Data Warehouse Architecture
 A Three-Tier Data Warehouse Architecture
Data warehouses often adopt a three-tier architecture

1. The bottom tier is a warehouse database server that is almost always a

relational database system. Back-end tools and utilities are used to feed
data into the bottom tier from operational databases or other external
sources. These tools and utilities perform data extraction, cleaning, and
transformation as well as load and refresh functions to update the data
warehouse.

2. The middle tier is an OLAP server that is typically implemented using

either (1) a relational OLAP (ROLAP) model, that is, an extended relational
DBMS that maps operations on multidimensional data to standard relational
operations; or (2) a multidimensional OLAP (MOLAP) model, that is, a
special-purpose server that directly implements multidimensional data and
operations.
3. The top tier is a front-end client layer, which contains query and
reporting tools, analysis tools, and/or data mining tools (e.g., trend analysis,
prediction, and so on).
From the architecture point of view, there are three data warehouse
models: the enterprise warehouse, the data mart, and the virtual
warehouse.
Enterprise warehouse: An enterprise warehouse collects all of the
information about subjects spanning the entire organization. It
provides corporate-wide data integration, usually from one or more
operational systems or external information providers, and is cross-
functional in scope. It typically contains detailed data as well as
summarized data, and can range in size from a few gigabytes to
hundreds of gigabytes, terabytes, or beyond.

Data mart: A data mart contains a subset of corporate-wide data that

is of value to a specific group of users. The scope is confined to
specific selected subjects.

Virtual warehouse: A virtual warehouse is a set of views over

operational databases. A virtual warehouse is easy to build but
3. Query tools and Reporting: A querying and reporting tool helps
to run regular reports, create organized listings and perform cross
tabular reporting and querying.

These tools are meant to allow the users to interact directly with the
organization’s data.

Common query tools provide a graphical interface to make it easy to

see what data fields are available and few also provides drag and
drop capabilities to allow users to adjust their queries.
OLAP and Advanced Analytics

1. OLAP Techniques: A core component of data warehousing

implementations, OLAP enables fast, flexible multidimensional data
analysis for business intelligence (BI) and decision support applications.

OLAP (for online analytical processing) is software for performing

multidimensional analysis at high speeds on large volumes of data from
a data warehouse, data mart, or some other unified, centralized data
store.

OLAP extracts data from multiple relational data sets and reorganizes it
into a multidimensional format that enables very fast processing and
very insightful analysis.
2. Data Mining: Data mining has attracted a great deal of attention in
the information industry and in society as a whole in recent years, due
to the wide availability of huge amounts of data and the imminent
need for turning such data into useful information and knowledge.

Data mining refers to extracting or mining knowledge from large

amounts of data.

Thus, data mining should have been more appropriately named as

knowledge mining which emphasis on mining from large amounts of
data.

It is the computational process of discovering patterns in large data

sets involving methods at the intersection of artificial intelligence,
machine learning, statistics, and database systems.
Tasks of Data Mining

Data mining involves six common classes of tasks:

Anomaly detection (Outlier/change/deviation detection) – The

identification of unusual data records, that might be interesting or data
errors that require further investigation.

Association rule learning (Dependency modelling) – Searches for

relationships between variables. For example a supermarket might gather
data on customer purchasing habits. Using association rule learning, the
supermarket can determine which products are frequently bought
together and use this information for marketing purposes. This is
sometimes referred to as market basket analysis.

Clustering – is the task of discovering groups and structures in the data

that are in some way or another "similar", without using known structures
Classification – is the task of generalizing known structure to apply to
new data. For example, an e-mail program might attempt to classify an
e-mail as "legitimate" or as "spam".

Regression – attempts to find a function which models the data with

the least error.

Summarization – providing a more compact representation of the data

set, including visualization and report generation.
 Supporting the requirements of senior executives
including performance
At senior levels, BI systems provide the input to strategic and tactical
decisions and at lower managerial levels help individuals do their day
to day job.

A BI system allows managers to make decisions using real time data by

monitoring competition, carry out constant analysis of numerous data
and considering different variants of organization performance.
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