INTRODUCTION TO BUSINESS INTELLIGENCE(BI)

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Definition
• Business Intelligence (BI) refers to technologies,
processes, and practices used by organizations,
institutions and businesses to analyze and transform
raw data into meaningful and actionable information.
It involves a set of methodologies, applications, and
technologies that gather, store, and analyze data to
help the above-mentioned entities in making
informed decisions.
• Even so, note that not everything informative is
usually considered to be in the realm of business
intelligence. For instance, other types of information
such as general knowledge, academic research, news
articles, and personal opinions, may provide valuable
insights but do not necessarily undergo the structured
analysis and transformation process characteristic of
BI. They however may inform decision-making
indirectly or provide background context, but they
are not typically classified as BI unless they undergo
the systematic analysis and application within a
business context.
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• Here below are the major characteristics one should

check to consider in a framework which is of
business intelligence nature.
Characteristics of business intelligence
i) Data Integration: Should be able to Bring
together data from various sources across the
organization, including databases, spreadsheets,
flat files, CRM systems, ERP systems, etc., into
a single cohesive view.
ii) Data Warehousing: such an entity should be able
Store integrated data in a central repository
optimized for querying and analysis, often
referred to as a data warehouse. This allows for
historical analysis and trend identification.
iii) Analytics and Reporting: Should have tools and
techniques for analyzing data to uncover insights
and trends, and for generating reports and
visualizations that communicate findings
effectively.
iv) Querying and OLAP: Should be able to provide
capabilities for users to query data interactively
and perform Online Analytical Processing
(OLAP) to analyze multidimensional data sets.
v) Data Visualization: Should have the ability to
presenting data in visual formats such as charts,
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graphs, maps, and dashboards to facilitate

understanding and decision-making.
vi) Predictive Analytics: Should have statistical
algorithms and machine learning techniques to
analyze current and historical data to make
predictions about future events or behaviors.
vii) Data Mining: Should have the ability for
discovering patterns and relationships in large
datasets that go beyond simple analysis, often
using techniques such as clustering,
classification, and association rule mining.
Architecture of a typical business intelligence system
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As illustrated above, a typical business intelligence

system should have the following key components.
Data Sources:
i) Operational Databases: These include
transactional systems such as ERP (Enterprise
Resource Planning) and CRM (Customer
Relationship Management) systems where daily
business transactions are recorded.
ii) External Data Sources: Data obtained from third-
party providers, public data sources, social media
platforms, etc.
iii) Flat Files and Spreadsheets: Data stored in files
like CSV, Excel, or text files.
Data Integration and ETL Processes:
i) Extract: Gathering data from various sources and
systems.
ii) Transform: Cleaning, transforming, and
integrating data to ensure consistency and quality.
iii) Load: Storing processed data in a centralized
repository like a data warehouse or data mart for
further analysis.
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Data Warehouse or Data Repository:

i) Centralized Storage: A structured repository
optimized for querying and reporting.
ii) Historical and Current Data: Stores
integrated data from multiple sources to
support historical analysis and real-time
reporting.
iii) Types: Can include traditional data
warehouses, data lakes, or hybrid architectures
based on organizational needs.
Business Intelligence Tools and Platforms:
i) Reporting and Visualization Tools: Generate
reports, dashboards, and visualizations to present
insights in a meaningful way.
ii) OLAP (Online Analytical Processing) Tools:
Support multidimensional analysis and
interactive querying.
iii) Advanced Analytics: Tools for predictive
analytics, data mining, statistical analysis, and
machine learning to uncover deeper insights.
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User Interface and Interaction:

i) Intuitive Interfaces: User-friendly interfaces
that allow business users to interact with data,
create ad-hoc queries, and generate reports
without needing extensive technical
knowledge.
ii) Self-Service BI Capabilities: Empower
business users to access and analyze data
independently, reducing dependence on IT for
routine reporting tasks.
iii) Mobile Access: Ability to access BI tools and
insights from mobile devices, enabling
decision-making on-the-go.
Basic history of business intelligence systems
The history of BI can be traced back through several key
developments and technological advancements.
Early Beginnings
i) 1950s-1960s: The Foundation
− Decision Support Systems (DSS): The roots of
BI lie in the concept of decision support
systems, which emerged in the 1950s and
1960s. These systems were designed to
support business and organizational decision-
making activities.
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− Mainframes: Large mainframe computers were

used to collect and process data, but the
analysis was often limited and time-
consuming.
ii) 1970s-1980s: Emergence of BI Concepts
− Relational Databases: The introduction of
relational databases in the 1970s allowed for
more efficient data storage and retrieval,
setting the stage for more advanced data
analysis.
− Executive Information Systems (EIS): In the
1980s, EIS were developed to provide senior
executives with easy access to internal and
external information relevant to their critical
success factors.
Modern Development
iii) 1990s: Rise of BI Tools
− Data Warehousing: The 1990s saw the rise of
data warehousing, which involved the
consolidation of data from various sources into
a central repository. This made it easier to
analyze large volumes of data.
− OLAP (Online Analytical Processing): OLAP
tools emerged, allowing users to analyze data
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from multiple perspectives and dimensions

quickly.
iv) 2000s: BI Becomes Mainstream
− ETL Processes: The Extract, Transform, Load
(ETL) processes became standard for
preparing data for analysis, enabling more
accurate and comprehensive BI solutions.
− User-Friendly Tools: BI tools became more
user-friendly, with graphical user interfaces
and more intuitive operations, making them
accessible to non-technical users.
− Real-time BI: Advances in technology allowed
for real-time data processing and analysis,
enabling businesses to make decisions based
on current information.
v) 2010s: Advanced Analytics and Big Data
− Big Data: The explosion of data from various
sources, including social media, mobile
devices, and IoT (Internet of Things), led to
the rise of big data analytics.
− Advanced Analytics: Techniques such as data
mining, predictive analytics, and machine
learning became integral parts of BI, providing
deeper insights and foresight.
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− Self-Service BI: Tools became more self-

service oriented, allowing business users to
create their own reports and dashboards
without needing constant support from IT
departments.
Current Trends and Future Directions
vi) 2020s: AI and Machine Learning
− Artificial Intelligence (AI): AI and machine
learning are increasingly integrated into BI
tools, providing more sophisticated and
automated insights.
− Natural Language Processing (NLP): NLP
allows users to interact with BI tools using
natural language queries, making BI even
more accessible.
− Cloud BI: Cloud computing enables scalable
and flexible BI solutions, reducing the need for
significant on-premises infrastructure.
Emerging Trends
− Data Democratization: Efforts are ongoing to
make data accessible to a broader range of
users within organizations, not just data
scientists and analysts.
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− Augmented Analytics: This involves using AI

to enhance data preparation, insight
generation, and insight explanation, helping
users understand their data better and faster.
− Embedded BI: Integrating BI capabilities
directly into business applications to provide
context-specific insights and improve
decision-making within workflows.
Advantages and disadvantages of business intelligence
• Having looked at the basic and fundamental elements
for business intelligence, here below we look at
sentiments organizations, firms and institutions
should look for to install or be aware of in terms
weaknesses in using these systems.
Advantages of business intelligence
i) Improved Decision-Making
− Data-Driven Decisions: BI provides actionable
insights based on data analysis, leading to
more informed and objective decision-making.
− Timeliness: Real-time data analysis helps in
making timely decisions, which is crucial in
fast-paced business environments.
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ii) Increased Efficiency:

− Automated Reporting: BI tools automate the
process of data collection, analysis, and
reporting, reducing the time and effort
required.
− Resource Optimization: By identifying
inefficiencies and areas for improvement, BI
helps in optimizing the use of resources.
iii) Enhanced Competitive Advantage:
− Market Insights: BI provides insights into
market trends, customer preferences, and
competitor activities, helping businesses stay
ahead of the competition.
− Innovation: Identifying gaps and opportunities
through BI can lead to innovative product or
service offerings.
iv) Better Data Quality:
− Data Integration: BI systems integrate data
from various sources, providing a
comprehensive view and ensuring data
consistency and accuracy.
− Data Cleansing: BI tools often include data
cleansing features that help maintain high-
quality, error-free data.
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v) Cost Savings:
− Operational Efficiency: By streamlining
operations and reducing inefficiencies, BI can
lead to significant cost savings.
− Error Reduction: Automated data processing
and analysis reduce the risk of human error,
leading to more accurate financial planning
and budgeting.
vi) Customer Insights:
− Customer Behavior: BI tools help in
understanding customer behavior and
preferences, leading to better-targeted
marketing campaigns and improved customer
satisfaction.
− Personalization: Insights from BI enable
businesses to personalize their offerings and
communications to individual customers or
segments.
vii) Strategic Planning:
− Performance Monitoring: BI helps in
monitoring and measuring the performance of
various business processes and initiatives,
aiding in strategic planning and execution
− Scenario Analysis: BI tools allow for the
analysis of different business scenarios,
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helping in risk assessment and strategic

decision-making.
Disadvantages/weaknesses of business intelligence
i) High Implementation Costs:
− Initial Investment: The cost of implementing
BI systems, including software, hardware, and
consulting fees, can be substantial.
− Ongoing Maintenance: Maintaining and
updating BI systems can also incur significant
costs over time.
ii) Complexity:
− Technical Expertise: Implementing and
managing BI systems often require specialized
technical skills, which may necessitate hiring
or training staff.
− User Training: End users need to be trained to
effectively use BI tools, which can be time-
consuming and costly.
iii) Data Privacy and Security:
− Sensitive Information: BI systems handle large
volumes of sensitive data, raising concerns
about data privacy and security
− Compliance: Ensuring compliance with data
protection regulations can be challenging and
requires constant vigilance.
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iv) Data Quality Issues:

− Garbage In, Garbage Out: BI systems rely on
the quality of the input data. Poor data quality
can lead to inaccurate insights and misguided
decisions.
− Data Integration Challenges: Integrating data
from various sources can be complex and may
lead to data inconsistency if not managed
properly.
v) Resistance to Change:
− Cultural Barriers: Employees and management
may resist adopting new BI tools and
processes, especially if they are accustomed to
traditional methods.
− Change Management: Effective change
management strategies are needed to ensure
successful BI implementation and adoption.
vi) Over-Reliance on BI:
− Decision Paralysis: There is a risk of over-
relying on data and BI tools, which may lead
to decision paralysis if the data is not
interpreted correctly or if there is an
overabundance of information.
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− Loss of Intuition: Relying solely on BI can

sometimes lead to ignoring valuable intuitive
insights and experience-based decision-
making.
vii) Scalability Issues:
− Performance: As the volume of data grows, BI
systems may face performance issues,
requiring continuous scaling and optimization.
− Infrastructure: Scaling BI infrastructure to
accommodate growing data and user demands
can be complex and costly.