What is Business Intelligence?

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Business Intelligence is the talk of a new changing and growing

world that can be defined as a set of concepts and methodologies
to improve decision-making in business through the use of facts
and fact-based systems. The Goal of Business Intelligence is to
improve decision-making in business ideas and analysis. Business
Intelligence is not just a concept it’s a group of concepts and
methodologies. Business Intelligence uses analytics and gut
feelings for making decisions.
What Is Business Intelligence?
Business intelligence refers to a collection of mathematical
models and analysis methods that utilize data to produce
valuable information and insight for making important decisions.
Main Components of Business Intelligence System:
1. Data Source
2. Data Mart / Data Warehouse
3. Data Exploration
4. Data Mining
5. Optimization
6. Decisions
1.Data Source:
To begin, the first step is gathering and consolidating data from
an array of primary and secondary sources. These sources vary in
origin and format, consisting mainly of operational system data
but also potentially containing unstructured documents like
emails and data from external providers.
2.Data Mart / Data Warehouse:
Through the utilization of extraction and transformation tools, also
known as extract, transform, load (ETL), data is acquired from
various sources and saved in databases designed specifically for
business intelligence analysis. These databases, commonly known
as data warehouses and data marts, serve as a centralized
location for the gathered data.
3.Data Exploration:
The third level of the pyramid offers essential resources for
conducting a passive analysis in business intelligence. These
resources include query and reporting systems, along with
statistical methods. These techniques are referred to as passive
because decision makers must first develop ideas or establish
criteria for data extraction before utilizing analysis tools to
uncover answers and confirm their initial theories. For example, a
sales manager might observe a decrease in revenues in a
particular geographic region for a specific demographic of
customers. In response, she could utilize extraction and
visualization tools to confirm her hypothesis and then use
statistical testing to validate her findings based on the data.
4.Data Mining:
The fourth level, known as active business intelligence
methodologies, focuses on extracting valuable information and
knowledge from data. Part II of this book will delve into various
techniques such as mathematical models, pattern recognition,
machine learning, and data mining. Unlike the tools discussed in
the previous level, active models do not rely on decision makers
to come up with hypothesis but instead aim to enhance their
understanding.
5.Optimization:
As you ascend the pyramid, you’ll encounter optimization models
that empower you to choose the most optimal course of action
among various alternatives, which can often be quite extensive or
even endless. These models have also been effectively
incorporated in marketing and logistics.
6.Decisions:
At last, the pinnacle of the pyramid reflects the ultimate decision
made and put into action, serving as the logical end to the
decision-making process. Despite the availability and effective
utilization of business intelligence methodologies, the decision
still lies in the hands of the decision makers, who can incorporate
informal and unstructured information to fine-tune and revise the
suggestions and outcomes generated by mathematical models.
Role Business Intelligence:
The characteristics of a business intelligence analysis can be
summarized by a rational and methodical approach.
 Firstly, the objectives are clearly identified and performance
indicators are chosen to evaluate different options.
 Next, mathematical models are created by utilizing the
connections between control variables, parameters, and
evaluation metrics.
 Finally, “what-if” scenarios are explored to understand the
impact of changing control variables and parameters on
performance.
Process Used in Business Intelligence:
BI(Business Intelligence) uses a set of processes, technologies,
and tools (such as Informatica/IBM) to transform raw data into
meaningful information and then transform information to provide
knowledge. Then afterward some beneficial insights can be
extracted manually and by some software then the decision-
makers can make an impactful decision on the basis of insights.
To sound short and clear – Business Intelligence about
provides accurate information in the right and ethical format to
the decision-makers of the organization. Some Important features
of Business Intelligence are:
 Fact-based decision making.
 360 degrees perspective on your business.
 Virtual team members are on the same page.
 Measurement for creating KPI (Key Performance Indicators) on
the basis of historic data fed into the system.
 Identify the benchmark and then set the benchmarks for
different processes.
 Business Intelligence systems can use to identify market trends
and also to spot business problems that need to be identified
and solved.
 Business Intelligence helps in data visualization will increase
the quality of data and then also increases the quality of
decision making.
 Business Intelligence systems can be used by large
enterprises, and organizations along with Small and Medium
Enterprises, because it is quite affordable.
Types of Users of Business Intelligence:
 Analyst (Data Analyst or Business Analyst): They are the
statistician of the company, they used BI on the basis of
historical data priorly stored in the system.
 Head or Manager of the Company: Head of the company
uses Business Intelligence used to increase the profitability of
their company by increasing the efficiency in their decisions on
the basis of all the knowledge they discovered.
 IT Engineer: For his company.
 Small Business Owners: Can be used by a small
businessman because it is quite affordable too.
 Government Officials: In the decision-making of the
government.
Types of Decisions Supported by Business
Intelligence:
 Strategic Level: The strategic level is the level where the
Heads of the company decide the strategies of any business.
 Tactical Level: Once the strategy is made though for handling
all the details and matters have a tactical level where all the
 technologies and methodologies come under one umbrella.
This level is further responsible for continuously updating the
data.
 Operational Level: Operation decisions are made at this
level. Operational decisions help in operating the system.
Applications of Business Intelligence:
 In Decision Making of the company by decision-makers of the
organizations.
 In Data Mining while extracting knowledge.
 In Operational Analytics and operational management.
 In Predictive Analytics.
 In Prescriptive Analytics.
 Making Structured data from unstructured data.
 In Decision Support System.
 In Executive Information System (EIS).
Business Intelligence Tools and Software
1. Tableau: A business intelligence and data visualization
application that enables users to connect to different data
sources, build interactive dashboards, and share findings with
others.
2. Microsoft Power BI: A cloud-based business intelligence
program that enables users to connect to a variety of data
sources, produce visualizations, and communicate findings.
3. QlikView is a business intelligence and data visualization
platform that enables users to build interactive dashboards and
examine data in novel ways.
4. Data visualization, reporting, and analytics tools are all
included in SAP BusinessObjects, a complete business
intelligence suite.
5. IBM Cognos: A tool for performance management and
corporate intelligence that enables users to build reports,
scorecards, and dashboards.
6. Data visualization, reporting, and analytics technologies are all
part of the full business intelligence suite known as Oracle
Business Intelligence.
7. Create dynamic dashboards and reports with MicroStrategy, a
business intelligence and data visualization tool.
8. Data visualization, reporting, and analytics tools are all part of
the full business intelligence suite known as SAS Business
Intelligence.
9. TIBCO Spotfire is a business intelligence and data visualization
platform that enables users to build interactive dashboards and
investigate data in novel ways.
10. Looker: A tool for business intelligence and data
visualization that enables users to build interactive dashboards
and investigate data in novel ways.
Advantages of Business Intelligence
1. Decision-making is improved because users have access to
real-time data and insights through business intelligence tools.
This enables users to base their decisions on correct and
current information.
2. Efficiency gain: Many manual data analysis operations are
automated by business intelligence systems, freeing up time
and resources for other tasks.
3. Better data management: Business intelligence
technologies aid in the administration and organization of data,
making it simpler to locate the facts required for decision-
making.
4. Greater visibility: Business intelligence solutions give users a
comprehensive picture of the functioning of the firm, enabling
them to spot areas that could use improvement.
5. A better understanding of customers: Business
intelligence technologies helps firms understand their
customers better, enabling them to customize products and
services to suit their needs.
6. Cost savings: Business intelligence technologies assist firms
in locating inefficiencies and cost savings, which boosts
revenue.
7. Better forecasting: Organizations may evaluate past data
and predict future patterns using business intelligence
technologies, which enables them to plan more successfully for
the future.
8. Competitive advantage: By granting access to important
data and insights that can guide them in making better
decisions, business intelligence technologies provide firms a
leg up on their rivals.
9. Collaboration is improved as a result of using business
intelligence technologies to disseminate information between
teams and departments. This promotes better decision-making
and collaboration.
10. Better Monitoring: Business intelligence technologies
assist firms in tracking important metrics like revenue,
customer happiness, and staff performance and in monitoring
performance.
Disadvantages of Business Intelligence
1. Complexity: The implementation and upkeep of business
intelligence systems can be extremely difficult and
 complicated. This may be a drawback for companies with
constrained IT resources.
2. High costs: Some businesses find it prohibitively expensive to
implement and purchase business intelligence technologies.
3. Business intelligence strongly depends on accurate and current
data. The insights produced by business intelligence
technologies could not be accurate if the data is inconsistent,
erroneous, or incomplete.
4. Data Security: Business intelligence systems handle and
store a lot of sensitive data, which, if not adequately protected,
is susceptible to security breaches.
5. Dependence on IT: Because business intelligence solutions
frequently rely largely on IT assistance, it may be challenging
for enterprises to quickly get the data they require.
6. Limited scalability: For firms with huge data volumes,
business intelligence solutions may not be able to handle
enormous amounts of data.