Business Intelligence

Unit 14: Business Intelligence

Unit code: M/615/1641
Unit type: Core Unit level 5
Credit value: 15

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Data, Information & Knowledge

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 Overview of BI
Future plans and decisions Dashboards,
Incorporated into business to Visualization,
ensure better performing Scorecards,
Business business Intelligence OLAP

Generates Evaluation and

raw data Interpretation

Mining/Business
Data Analytics/Reporting/
Preprocessed &
Transformed Data

ETL, Data
warehousing
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Wholeness of Business Intelligence
• Business is the act of doing something productive to serve
someone’s needs.

• Business activities are recorded on paper or using

electronic media, and then these records become data.
There is more data from customers’ responses and on the
industry as a whole.

• All this data can be analyzed and mined using special tools
and techniques to generate patterns and intelligence,
which reflect how the business is functioning. These ideas
can then be fed back into the business so that it can evolve
to become more effective and efficient in serving customer
needs.

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 Role of Data, Information &
Knowledge in BI

BI inputs:
1. Data
2. Information

BI direct outputs:
1. Information which is produced through appropriate analysis and
presented in a friendly fashion 5
2. New Knowledge or insights by revealing unknown patterns in data
 BI for Better Decisions
• The goal is to make effective decisions, while reducing risk.

• Businesses calculate risks and make decisions based on a broad set of

facts and insights.

• Reliable knowledge about the future can help managers make the right
decisions with lower levels of risk.

• Examples:
1.Measurement: creating KPI (Key Performance Indicators) based on historic
data
2. Identify and set benchmarks for varied processes.
3. With BI systems organizations can identify market trends and look for
opportunities and spot business problems that need to be addressed.

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 Business Process
• The route to a business is an organization: a
group of people coordinating together to create
value.
• A collection of processes is what makes the
business.
• Breaking the task of creating value into activities
and assigning activities to an individual according
to skill set.
• The activities are carried out in a sequence.
• Each activity has an input and an output
• Business Process: A sequence of activities
designed to create something of value or
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• A business process is a series of steps
performed by a group of stakeholders to
achieve a concrete goal.
• A business process can often be visualized as a
flowchart or workflow of logical steps.

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 Primary Types of Business processes :
• These types of business process are extremely important and fundamental
for business.
• The deal with the basic values and work alongside
the vision and mission of the business.
• Adding value to end user

Examples:
1. Sales : ultimate revenue generator

2. Customer service: process orders and provides them to the customers,

customer queries and complaints.

3. Finance: expense management and investment management

4. Operations: inventory management, daily operations

5. Production: manufacturing of the product is of paramount importance

for any business to run.

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 BI in contemporary organizations
• Improvement in Customer Service:
By enabling decision makers to make more
responsive and anticipated decisions related
to customer requests and needs.
BI solutions can help organizations to
anticipate consequences of changes in
customer-oriented process by analyzing
“what-if” scenarios.
E.g. insurance company can use BI to analyze
and change claim process.

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• Improvement in Operations
BI can help:
Detect events like delays in flights
Monitor trends in business environment and
organization
Respond faster to changes in conditions
E.g. BI tool helped an oil and gas company
that was facing cash flow problem to detect
that it was delivering gas to customers but
invoice was sent a week later.

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 Support Types of Business Processes
• These are the types of business processes
which are not involved in the delivery of the
final product to the clients but they create a
suitable environment for the functioning of
primary processes.
• Examples
1. Accounting process
2. Middle Management
3. HR
4. IT

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BI in contemporary organizations
• BI can help accounts department to perform
KPI tracking to forecast cash flows.
• Track disputes with credit account holders.

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 Management processes
• These types of business processes are similar to
the support processes which do not add value to
the end consumer. Management processes are
concerned with orientation and monitoring and
analyzing the day to day business activities.
• Examples:
1. leadership and executive decisions which are
executed at the frontlines
2. Deciding on the targets, new product launches,
expansions or closing of different departments.

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 BI in contemporary organizations
• BI solutions may provide information about
sales in different regions of a multinational
company, allowing the managers to decide
about geographic expansion opportunities
through partnerships and franchising.

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 Challenges Related to Business Processes

• Duplication of work and redundancy

• Lack of visibility
• Integration issues

Technical Solutions to these Challenges

• Management Dashboards
• Verification and Error Handling
• Integration Wizards
• Collaboration Tools

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 Decision Types
There are three main kinds of decisions: strategic
decisions, tactical and operational decisions.

Strategic decisions
• Business leaders use strategic decision-making when
they plan the company's future.
• A decision to develop new policy

Example: The decision to reach out to new customer set

would be a strategic decision to increase revenue.

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Tactical Decisions
• More detailed and specific
• Decisions based on aims or goals of organization
• Made by middle-level managers.
• How to achieve the policy of organization

Examples: Employ transfer staff, launch new product, buy machinery.

Operational decisions
• routine decisions, focused on developing greater efficiency to
complete day-to-day tasks.
• Made by lower level managers

Example: job assignments, ordering materials from supplier.

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 Why do companies need BI
What is the best that
Optimization can happen?
STRATEGIC/
Predictive Modeling What will happen next?
TACTICAL BI
Forecasting What if these trends
continue?
Competitive advantage

Statistical Analysis
Why is this happening?

Alerts What actions are Operational

Query needed? BI
Reports- Ad hoc and What happened?
standard Where exactly is the
problem?

Intelligence 19
 BI Tools
• BI includes a variety of software tools and
techniques to provide the managers with the
information and insights needed to run the
business.
• A dash boarding system, such as Tableau.
• Data mining systems, such as IBM SPSS
Modeler.
• Oracle BI, SAP Business Objects, SAS BI
• Informatica

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BI Capabilities

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 Application of BI
Sector : Health Care and Wellness
BI applications can help apply the most effective
diagnoses and prescriptions for various ailments
• Diagnose disease in patients : IBM Watson, absorb
all the medical research to date and make
probabilistic diagnoses in the form of a decision tree,
along with a full explanation for their
recommendations.

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Education
• Student enrolment : Marketing to new potential
students requires schools to develop profiles of
the students that are most likely to attend.
Schools can develop models of what kinds of
students are attracted to the school, and then
reach out to those students.

• Course offerings: Schools can use the class

enrolment data to develop models of which new
courses are likely to be more popular with
students. This can help increase class size, reduce
costs, and improve student satisfaction.

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• Tasks

1. List two application areas of business

intelligence in the Banking sector.

2. List 2 strategic, tactical and operational BI

tools in industry with its description.

3. How BI can help improve primary, supporting

and management processes.

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 Data Processing Chain
• Data lies at the heart of business intelligence.
• There is a sequence of steps to be followed to
benefit from the data in a systematic way.

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Data:
• Anything that is recorded is data. Observations
and facts are data. Anecdotes and opinions are
also data, of a different kind. Data can be
numbers, such as the record of daily weather or
daily sales.
• Data could come from any number of sources
and in many formats.
• May come from operations of an organization.
Examples:
movies and songs in DVDs, meta-data etc.

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 Types of Data
Structured Data:
The data that has a structure and is well organized either in the form of
tables or in some other way and can be easily operated is known as
structured data. Searching and accessing information from such type
of data is very easy.

For example: relational database, spreadsheet.

Unstructured Data:
• The data that is unstructured or unorganized Operating such type of
data becomes difficult and requires advance tools and software's to
access information.
• For Example, images and graphics, pdf files, word document, audio,
video, emails, power point presentations, webpages and web
contents, wikis, streaming data, location coordinates etc
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Semi-Structured Data:

• Semi-structured data is basically a structured data that is unorganised.

Web data such JSON(JavaScript Object Notation) files, BibTex files, .csv
files, tab-delimited text files, XML and other markup languages are the
examples of Semi-structured data found on the web.
• Due to unorganized information, the semi-structured is difficult to
retrieve, analyze and store as compared to structured data.

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 Database
• A database is a modeled collection of data
that is accessible in many ways.
• A data model can be designed to integrate
the operational data of the organization.
• The data model abstracts the key entities
involved in an action and their relationships.
• Most databases today follow the relational
data model and its variants.
• Example: oracle, MySQL.
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 Data warehouse
• A data warehouse is an organized store of data from all
over the organization, specially designed to help make
management decisions.
• Data can be extracted from operational database to
answer a particular set of queries. This data, combined
with other data, can be rolled up to a consistent
granularity and uploaded to a separate data store
called the data warehouse.
• Therefore, the data warehouse is a simpler version of
the operational data base, with the purpose of
addressing reporting and decision-making needs only.

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 Objective: Managing inventory

Another way of describing a Data warehouse is by listing its characteristics

• Subject Oriented
• Integrated
• Non-volatile
• Time Variant

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Function DATABASE DATAWAREHOUSE
Purpose Data stored in databases can be used Data in data warehouse is
for many purposes including day-to-day cleansed data, which is useful for
operations reporting and analysis

Granularity highly granular data including all Lower granularity data; rolled up
activity and transaction details to certain key dimensions of
interest

Complexity highly complex with dozens or Typically organized around a large

hundreds of data files, linked through fact tables, and many lookup
common data fields tables

Size Database grows with growing volumes Grows as data from operational
of activity and transactions. Old databases is rolled up and
completed transactions are deleted to appended every day. Data is
reduce size retained for long term trend
analyses

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Data Mining:

Data Mining is the art and science of discovering useful innovative patterns from
data. There is a wide variety of patterns that can be found in the data. There are
many techniques, simple or complex, that help with finding patterns.

Data mining is concerned with making informed decision about the

real world on the basis of data extracted from the real world

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 Data Mining Algorithms
• Classification – Supervised
• Regression and Prediction
• Clustering: Unsupervised Classification
• Association rule mining
• Miscellaneous Techniques (Outlier Analysis,
Sequence Pattern Discovery, Summarization)
• Decision Trees

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 Data Visualization
• As data and insights grow in number, a new
requirement is the ability of the executives
and decision makers to absorb this
information in real time.
• Executive dashboards are designed to provide
information on select few variables for every
executive. They use graphs, dials, and lists to
show the status of important parameters

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Sample executive dashboard
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• Associated technologies with BI

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Data warehouse: input & output

Data Mining: input & output

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 Decision-Support Systems

A decision support system (DSS) is a computer-based application that collects,

organizes and analyzes business data to facilitate quality business decision-making
for management, operations and planning. A well-designed DSS aids decision
makers in compiling a variety of data from many sources: raw data, documents,
personal knowledge from employees, management, executives and business
models.

e.g. medical diagnosis

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Knowledge Management: Inputs & Outputs

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 BI KM DW DM DSS

INPUT Data, info Data, info, data data Data, info,

knowledge knowledge

NATURE OF Internal, Internal, Internal, Internal, Internal,

INPUT external, external, structured structured external,
structured, structured, structured
unstructured unstructured

OUTPUT Info & explicit knowledge data info Decision

knowledge recommendat
ions
USERS Across Across IT IT Users
organization organization

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