MODULE 1

WHAT IS BUSINESS INTELLIGENCE?

Business intelligence refers to a set of tools and processes to help companies manage their data from the
collection to the reporting stage. Through this, organizations can discover valuable trends and insights to inform
their strategies and ensure continuous growth. No matter how big or small, all companies are gathering data in
some capacity.
This data can be anything from customer demographics, sales for different periods, production volumes,
and inventory, among many others. In a lot of cases, this data is just sitting there hiding an immense potential
waiting to be untapped. Meanwhile, decision-makers are basing their decisions on pure intuition or experience,
a practice that is highly subjective and error-prone.
BI technologies offer present (real-time), historical, and predictive views of internally structured data
relating to all departments within an organization. With the level of insight provided by professional BI tools,
companies don’t need to rely on intuition anymore. Instead, they can make informed decisions based on their
own data, which exponentially enhances operational insight and improves organizational performance as a
whole.

WHAT ARE THE CONCEPTS OF BUSINESS INTELLIGENCE?

There are 5 basic components of business intelligence:

1. The business
2. The data itself (raw data)
3. The data warehouse
4. Data access, analytics, and presentation
5. Data dashboarding and reporting

1) The business: The first, and arguably the most important, of business intelligence components is the
company itself. This is important to consider as the way BI is applied will be significantly influenced by the
type of business and its specific requirements. Most traditional companies have standard functions and
departments such as sales, marketing, finances, human resources, and manufacturing, among others. Each of
these areas has different necessities which will help decision-makers narrow the focus of general BI
requirements such as the data they need to collect.
For example, the sales department might need to increase sales by improving the performance of sales
reps. For that purpose, the company needs to gather valuable performance data to identify weaknesses and
opportunities and provide the necessary training to improve performance.

2) The raw data: The second concept of business intelligence is the data itself. As mentioned, this data could
be anything like sales records for the year, the keywords implemented in your latest advertising program, salary
and benefit tables, or profit and loss statements.
A company’s data is typically stored across a host of databases which can be internal or external and
structured or unstructured, depending on how each specific data set is collected (through CRMs, ERPs, flat
files, APIs, etc.).
As a result of this fragmentation, today’s BI solutions are developed with various data connectors that
let users consolidate all of their databases into one centralized data warehouse, allowing them to work on each
insight conjointly and enhancing cross-database analysis.

3)The data warehouse: As mentioned, the data storage warehouse is the logistics platform that connects all of
your different databases together and allows you to create relationships between them. This is an area that has
seen great advances recently with the introduction of cloud-based BI tools.
The legacy approach to a data warehouse was often a mishmash of different Excel sheets, old
mainframe-style databases that had to be accessed by technicians, paper-based records, and proprietary program
databases.
After realizing how difficult it was to make use of all of these scattered data sources, people began to
integrate databases through the use of warehouses and systems. Modern systems are also superior to legacy
systems in that they often update in real time, as opposed to having to be manually updated – a process that
often required the IT department.

4) Data access, analytics, and presentation: Once all of your data is connected and can ‘talk to each other,’
one of the next key business intelligence fundamentals is to make use of that data. This involves accessing the
data, analyzing it for important trends using different methods and techniques, and presenting it in a way that is
immediately understandable for any type of audience no matter their technical knowledge.
These steps can often blend together, especially if you use interactive dashboards that let you zoom in
and out of your data according to your business need. Data presentation has also come a long way since the
Excel days. Now there are beautiful, intuitive dashboard examples that can give you the information you need at
a glance.

5) Data dashboarding and reporting: Building on our previous point, the fourth and perhaps most pivotal
component of an interactive dashboard is the ability to continuously track, monitor, and report your data.
By having access to a flexible, customizable, data-driven online dashboard, you can set targets, identify
patterns, spot trends, and uncover insights that foster growth and improvement. Through initiative functionality
and seamless data visualization, it’s also possible to share your discoveries with others within the organization
in a way that's inclusive as well as digestible.

DATA, INFORMATION AND KNOWLEDGE

1. DATA: Data is a set of representation of plain facts. Data are the facts of the world. Data represent a
structured codification of single primary entities, as well as of transactions involving two or more
primary entities.

2. INFORMATION: Information is the outcome of extraction and processing activities carried out on
data, and it appears meaningful for those who receive it in a specific domain.
 3. KNOWLEDGE: Information is transformed into knowledge when it is used to make decisions and
develop the corresponding actions. The activity of providing support to knowledge workers through the
integration of decision-making processes and enabling information technologies is usually referred to as
knowledge management.

EXPLAIN THE ARCHITECTURE OF BUSINESS INTELLIGENCE(BI).

BI architecture is a framework useful to articulate technology, data management, and analytics practices from
an organization.

Components of BI Architecture: Before renovating your house, you need to make a budget, evaluate how
much can be spent, what are the priorities, if children or elderly people frequent the house, and how long the
renovation will take, in short, it is necessary to collect data. It is no different for Business Intelligence, so the
first component is data management.

1. Data management: As the name implies, it is concerned with how you gather, keep, and access data. In
order to support BI activities, a solid data management system must be in place. This system should be
tailored to the organization’s unique requirements.
Data management happens at all levels of the company, from sensor and device data to personnel
data, everything is recorded into databases. External sources of data including social media, market
research organizations, and government authorities are also stored.
However, as you may already know, this is not enough, it is necessary to transform this data into
insights. Now is when data analytics comes into the picture.

2. Data Analytics: The process of transforming data into insights is known as data analytics. Businesses
may acquire a better knowledge of their consumers, operations, and industry trends by utilizing data
analytics. There are several sorts of data analytics, but they all have the same goal: to assist
organizations in making decision processes to get better results.
Data analytics may be classified into three types: descriptive analytics, predictive analytics, and
prescriptive analytics. Descriptive analytics provides a solution to the inquiry, “What happened?” Its
objective is to comprehend historical events and patterns. Predictive analytics: Predictive analytics
provides a solution to the query, “What will happen?” It’s useful to predict future events and trends.
Prescriptive analytics: Prescriptive analytics provides a solution to the query, “What should we do?” Its
function is to make suggestions for activities that would improve corporate performance.

3. Technology: You know that in business intelligence architecture, you need to gather data and then act
on that data. So, how do you do that? You’ll need the correct technology. Technology is essential for
business intelligence since it facilitates data collection, storage, and analysis. You will also be able to
share your ideas with others in your business if you use the correct technologies. Data warehouses, data
lakes, and business intelligence tools are among the most significant technologies for business
intelligence.

Importance of Business Intelligence in Today’s World

Business Intelligence (BI) describes technologies, applications, strategies & practices that are used to collect,
analyze, and integrate other pertinent information to allow businesses to take informed and strategic decisions
related to them. Businesses can leverage critical information and extract meaningful insights from old and
current data. This is made possible by the use of business intelligence tools, which process big data sets from
various sources and deliver the results and insights in visual forms that are easy to understand and take action
on. Let’s illustrate departmental-specific examples regarding the use of BI:
 1. Human resources– The HR department can reap benefits from BI implementation by utilizing
productivity analysis, compensation, payroll tracking & other insights into employees.
2. Finance– BI can provide valuable and in-depth insights into financial data. It can help track budgets,
identify potential financial problems, and help improve the overall organizational business health and
financial stability.
3. Sales– By predicting sales cycles and analyzing the conversion rates and income, BI can help increase
sales. It can show what works for the company and what does not which can help in enhancing sales
performance. It keeps track of the customer data and provides a better understanding of their interaction
with the company. Such analysis can help resolve customer issues and also leverage sales with tailored
messages.
4. Marketing– BI solutions can help marketing teams to develop better campaigns that can generate higher
ROI by providing analytics on current and previous campaigns. It can also provide metrics like customer
acquisition cost (CAC), cost per lead (CPL), along with campaign click-through rates (CTR) which are
essential for successful marketing campaigns.

Some of the tools and software used for Business Intelligence are

 Spreadsheets- Microsoft Excel and Google Docs are some of the most widely used BI tools.
 Reporting software- It’s used to report, organize, filter and display data.
 Visualization software- Data visualization software translates and transforms data into visual graphical
representation for easier and simpler interpretation.
 Data mining tools- These tools dig into big data and data streams to find patterns and trends using
artificial intelligence, machine learning and statistics.
 Online analytical processing (OLAP)- These tools are used to analyze datasets.

APPLICATION OF BI:
FINANCIAL ANALYSIS: Financial analysis is the process of evaluating businesses, projects, budgets, and
other finance-related transactions to determine their performance and suitability. Typically, financial analysis is
used to analyze whether an entity is stable, solvent, liquid, or profitable enough to warrant a monetary
investment.

STATISTICAL ANALYSIS: It is the process of collecting and analyzing large volumes of data in order to
identify trends and develop valuable insights.

In the professional world, statistical analysts take raw data and find correlations between variables to reveal
patterns and trends to relevant stakeholders. Working in a wide range of different fields, statistical analysts are
responsible for new scientific discoveries, improving the health of our communities, and guiding business
decisions.
SALES ANALYSIS: Sales analysis is reviewing your sales data to identify trends and patterns. Sales data can
help you make better decisions about your product, pricing, promotions, inventory, customer needs other
aspects of your business. Sales analysis can be as simple as reviewing your sales figures regularly. But it can
also involve more complex statistical methods. Either way, the goal is to gain insights that will help you boost
sales and improve your bottom line. There are many ways to approach sales analysis. Some businesses use
software that automatically crunches the numbers and produces charts and graphs. Others prefer to do things
manually, using Excel or another spreadsheet program. The most important thing is to review your sales data
regularly and look for opportunities to improve your business. With sales analysis, you can make informed
decisions that will help you grow your business and achieve your sales goals.
What is Customer Relationship Management (CRM) software?

CRM stands for “Customer Relationship Management” and is a software system that helps business owners
easily track all communications and nurture relationships with their leads and clients. CRM software for small
business replaces the multitude of spreadsheets, databases and apps that many businesses patch together to track
client data. The result: organization, efficiency, better time management and impressed clients.

A CRM connects all the data from your sales leads and customers, all in one place. It also consolidates all
communications (form fills, calls, emails, text messages and meetings), documents, quotes, purchases and tasks
associated with each lead and client. Your entire team can access those details at the right time — to close a sale
or deliver outstanding service.

Understanding Balanced Scorecards (BSCs)

BSCs were originally meant for for-profit companies but were later adapted for nonprofit organizations and
government agencies. It is meant to measure the intellectual capital of a company, such as training, skills,
knowledge, and any other proprietary information that gives it a competitive advantage in the market. The
balanced scorecard model reinforces good behavior in an organization by isolating four separate areas that
need to be analyzed. These four areas, also called legs, involve:
 Learning and growth
 Business processes
 Customers
 Finance
 The BSC is used to gather important information, such as objectives, measurements, initiatives, and
goals, that result from these four primary functions of a business. Companies can easily identify factors
that hinder business performance and outline strategic changes tracked by future scorecards.
 The scorecard can provide information about the firm as a whole when viewing company objectives.
An organization may use the balanced scorecard model to implement strategy mapping to see where
value is added within an organization. A company may also use a BSC to develop strategic initiatives
and strategic objectives.
 This can be done by assigning tasks and projects to different areas of the company in order to boost
financial and operational efficiencies, thus improving the company's bottom line.

Characteristics of the Balanced Scorecard Model (BSC)

Information is collected and analyzed from four aspects of a business:

1. Learning and growth are analyzed through the investigation of training and knowledge resources.
This first leg handles how well information is captured and how effectively employees use that
information to convert it to a competitive advantage within the industry.
2. Business processes are evaluated by investigating how well products are manufactured. Operational
management is analyzed to track any gaps, delays, bottlenecks, shortages, or waste.
3. Customer perspectives are collected to gauge customer satisfaction with the quality, price, and
availability of products or services. Customers provide feedback about their satisfaction with current
products.
4. Financial data, such as sales, expenditures, and income are used to understand financial performance.
These financial metrics may include dollar amounts, financial ratios, budget variances, or income
targets
Examples of a Balanced Scorecard (BSC)
Corporations can use their own, internal versions of BSCs, For example, banks often contact customers and
conduct surveys to gauge how well they do in their customer service. These surveys include rating recent
banking visits, with questions ranging from wait times, interactions with bank staff, and overall satisfaction.
They may also ask customers to make suggestions for improvement. Bank managers can use this information
to help retrain staff if there are problems with service or to identify any issues customers have with products,
procedures, and services.
In other cases, companies may use external firms to develop reports for them. For instance, the J.D. Power
survey is one of the most common examples of a balanced scorecard. 1 This firm provides data, insights, and
advisory services to help companies identify problems in their operations and make improvements for the
future. J.D. Power does this through surveys in various industries, including the financial services and
automotive industries. Results are compiled and reported back to the hiring firm.
What Is a Balanced Scorecard and How Does It Work?
A balanced scorecard is a strategic management performance metric that helps companies identify and
improve their internal operations to help their external outcomes. It measures past performance data and
provides organizations with feedback on how to make better decisions in the future.
What Are the Four Perspectives of the Balanced Scorecard?
The four perspectives of a balanced scorecard are learning and growth, business processes, customer
perspectives, and financial data. These four areas, which are also called legs, make up a company's vision and
strategy. As such they require a firm's key personnel, whether that's the executive and/or its management
team(s), to analyze the data collected in the scorecard.
How Do You Use a Balanced Scorecard?
Balanced scorecards allow companies to measure their intellectual capital along with their financial data to
break down successes and failures in their internal processes. By compiling data from past performance in a
single report, management can identify inefficiencies, devise plans for improvement, and communicate goals
and priorities to their employees and other stakeholders.
What Are the Balanced Scorecard Benefits?
There are many benefits to using a scorecard. The most important advantages include the ability to bring
information into a single report, which can save time, money, and resources. It also allows companies to track
their performance in service and quality in addition to tracking their financial data. Scorecards also allow
companies to recognize and reduce inefficiencies.
What Is a Balanced Scorecard Example?
Corporations may use internal methods to develop scorecards. For instance, they may conduct customer
service surveys to identify the successes and failures of their products and services or they may hire external
firms to do the work for them. J.D. Power is an example of one such firm that is hired by companies to conduct
research on their behalf.
What Is Decision Modeling, and Why Is It Important?

Decision modeling is a structured process that predicts the outcome of certain scenarios, offering valuable
insights to business users. Decision models are a forecasting tool that provide an overview of all the potential
possibilities of specific actions.

Every day, executives make dozens of critical decisions. Should we enter a certain market? How should we
design our new product? Which partners and distribution channels should we use? These decisions need to
happen quickly, and they often determine the business’s profitability and overall success.

Decision modeling helps teams streamline their decision-making processes so they can prioritize their top
business objectives. Even if they don’t have a ton of information at their fingertips, managers can still use
decision models to lay the groundwork for their decision networks and alter them accordingly.

For instance, when businesses plan to develop a new product, they don’t have to wait for it to take shape
completely. Instead, the sales team can design several strategies depending on what they know and develop
them further when the product is completed.

Decision Modeling Basics

Developing a decision model involves four basic stages—let’s explore them.

1. Formulation
 Before developing a model, you need to know what problem you’re trying to solve. From there, a V1 of the
model is developed, typically in a decision tree or similar format.

The formulation phase can be conceptual, or it might feature all the decision logic needed to define the
decision-making. For example, what are the KPIs (risk, churn, NPS) surrounding certain decisions?
2. Description

The description stage details the decisions and shows how improving them will affect business metrics and
objectives.

Key information about every decision is captured, including the business context, questions and answers,
application context, and organizational context. For instance, what would be the impact of using a
prioritization algorithm which includes a Net Promoter Score (NPS) for service-related communications?
3. Specific Decision Requirements

A decision model describes the decision requirements in terms of input data, knowledge about the decision, and
related decisions. These elements can be collectively joined in a Decision Requirement Diagram.

For example, what knowledge is needed to define suitability rules for a cross-sell discount proposition? A
marketing leader should provide the inputs required to determine eligibility requirements for the discount.
4. Refinement

The final stage is to iteratively refine the model using a graphical notation of Decision Requirement Diagrams.
The refinement processes include opportunities to test possible changes in the decision management model to
identify their implications and suggest ways to modify the model.

For instance, eligibility decisions could be refined by suitability and applicability. The process repeats until the
decisions are specified completely and every member has a clear picture of how the decisions will be made.
How Can Businesses Use Decision Modeling to Their Advantage?

Here are some of the major advantages of using decision models in your business.
Make Decisions About New Products and Campaigns

Marketers are tasked with building brands, creating demand, promoting sales, and helping companies
increase customer loyalty. To achieve this, they use decision models to gather real-time information about
consumer behavior, including their preferences and spending patterns.

This model helps them address questions such as:

 Which product lines you should focus your market support?

 How much money should you spend on your marketing campaign?

 Which features of the product you should highlight in your marketing efforts?
Determine Crop Yields
 Some companies in the US are using decision models to gather years of data about rainfall and temperature.
They then run weather simulations and help farmers decide what to plant in certain seasons and when to plant to
get the best crop yields.
Decide Who’s Best for the Job

If you want to assign specific tasks with tight deadlines to an employee, you can use a decision model to
identify which employee performed best on similar tasks in the past, indicating who would be the best fit.
Common Techniques of Decision Modeling

Different decision models act as reliable tools that facilitate the decision-making process. The most common
decision models include:
Rational Decision Model

This model requires you to follow a series of steps to find the best solution. It involves analyzing multiple
solutions at the same time to come up with one that offers the best possible outcome. The steps are:

1. Begin by defining the problem

2. Identify the method you will use to evaluate possible solutions identified

3. Determine the importance of each method

4. Compile a list of all possible alternatives

5. Select the best option or solution

Bounded Rationality Model

Bounded reality decision modeling is focused on decisions that are “good enough” rather than perfect. That
means that the selected decision is enough to address the current situation, but doesn’t maximize the potential
value in the situation – a process known as satisficing.

This model is used in incidents where quick decisions are required, as it takes less time and provides satisfying
results. It’s an ideal model when you’re limited on time and/or context.
Recognition-Primed Model

This model uses prior experience and quick thinking to make decisions, often in a fast-paced decision-making
environment. It involves the following:

 Identifying any type of pattern in the information provided

 Selecting a way that you think you can take action on it, then running it through your head

 Creating possible solutions

 Making any necessary tweaks to your course of action

Recognition-primed modeling works best when you apply knowledge from experience in a similar area. It can
come in handy when you have strict time limits and need to make a decision quickly.