1.

Introduction to Business Intelligence (BI)

Definition of Business Intelligence (BI)

• BI is a technology-driven process that collects, processes, and analyzes business data

to support decision-making.
• It includes data warehouses, analytical tools, dashboards, and performance
management systems.
• BI helps convert raw data into useful insights that improve business operations
and strategy.

Why is BI Important?

• Helps organizations make data-driven decisions in a competitive market.

• Facilitates real-time data access, improving efficiency and decision-making.
• Enables businesses to identify trends, forecast demand, and optimize operations.

Case Study: ITC Limited Uses BI for Decision Support

• Problem: ITC faced challenges in analyzing customer demand and optimizing

inventory.
• Solution: Implemented BI tools for real-time data analysis and improved
forecasting.
• Result: Increased operational efficiency and better customer service.

2. Business Environment and the Need for BI

Business Pressures-Responses-Support Model

• Businesses face increasing competition, globalization, and technological

advancements.
• Responses include:
o Strategic planning
o Business process restructuring
o E-commerce and digital transformation
o Automation of tasks and decision-making

Challenges in the Business Environment

• Globalization: Increased competition in global markets.

• Changing Consumer Demands: Customization, speed, and quality.
• Technology Evolution: AI, IoT, and automation.
• Social Responsibility: Sustainability, ethics, and compliance with regulations.
3. Components and Architecture of BI
BI Architecture

A BI system consists of four key components:

1. Data Warehouse – Stores historical and real-time business data.

2. Business Analytics – Tools for data mining, reporting, and analysis.
3. Business Performance Management (BPM) – Tracks KPIs, trends, and goals.
4. User Interface (Dashboards) – Visual tools for decision-makers.

Evolution of BI

• 1970s – Management Information Systems (MIS).

• 1980s – Executive Information Systems (EIS).
• 1990s – Online Analytical Processing (OLAP).
• 2000s – AI-driven predictive analytics and real-time BI.

Benefits of BI

• Faster decision-making with real-time insights.

• Improved operational efficiency and forecasting.
• Better customer service through personalized marketing.

4. Automated Decision-Making and BI Governance

Automated Decision Systems (ADS)

• Rule-based decision-making systems that automate repetitive managerial tasks.

• Example: Loan approval system that evaluates customers based on predefined rules.
• ADS are widely used in banking, airlines (dynamic pricing), and customer
service.

BI Governance

• Establishes standards and best practices for BI implementation.

• Ensures alignment between business goals and BI strategies.
• Involves key stakeholders such as functional managers, IT teams, and business
analysts.

5. Transaction Processing vs. Analytical Processing

Online Transaction Processing (OLTP)

• Real-time transactional databases (e.g., sales, ATM withdrawals).

• Focus on high efficiency and data integrity.
• Used in ERP, CRM, and supply chain management.

Online Analytical Processing (OLAP)

• Extracts insights from transactional data.

• Used for business reporting, trend analysis, and forecasting.
• Built on data warehouses, allowing multi-dimensional analysis.

6. Business Performance Management (BPM)

What is BPM?

• BPM helps organizations monitor and improve performance.

• It includes strategic planning, monitoring, and corrective actions.

BI vs. BPM

• BI focuses on data collection and analysis.

• BPM focuses on strategy execution and performance measurement.
• BPM = BI + Strategic Planning.

Key Components of BPM

1. Strategize – Set strategic goals and objectives.

2. Plan – Develop business strategies and allocate resources.
3. Monitor – Track KPIs and measure progress.
4. Act & Adjust – Modify strategies based on real-time insights.

7. BI Methodologies: Balanced Scorecard & Six Sigma

Balanced Scorecard (BSC)

• A performance measurement system that aligns business activities with strategy.

• Includes four perspectives:
1. Financial – Revenue, profitability.
2. Customer – Satisfaction, retention.
3. Internal Processes – Efficiency, quality.
4. Learning & Growth – Employee training, innovation.

Six Sigma
 • A data-driven methodology aimed at reducing defects and improving quality.
• Uses DMAIC process:
1. Define – Identify problem areas.
2. Measure – Collect performance data.
3. Analyze – Find root causes of issues.
4. Improve – Implement corrective actions.
5. Control – Maintain improvements over time.
• Lean Six Sigma – Combines Six Sigma with Lean manufacturing for process
optimization.

8. BI Tools, Vendors, and Technologies

Major BI Tools

• Data management tools – ETL (Extract, Transform, Load).

• Reporting tools – Tableau, Power BI.
• Predictive analytics – AI and machine learning.
• Data visualization – Dashboards and scorecards.

Major BI Vendors

• IBM Cognos – Advanced analytics and reporting.

• SAP BusinessObjects – Enterprise-level BI.
• Oracle Hyperion – Financial performance management.
• Microsoft Power BI – Self-service BI and visualization.

9. Real-Time, On-Demand BI
The Demand for Real-Time BI

• Businesses need faster decision-making based on real-time data.

• Examples:
o Retail: AI-driven inventory management.
o Healthcare: Real-time patient monitoring.
o Finance: Fraud detection and risk analysis.

Challenges in Implementing BI

• High cost of implementation.

• Data security and privacy concerns.
• Integration with existing IT systems.
• User adoption and training.
10. Performance Dashboards in BI
What are Dashboards?

• Visual tools that consolidate business data into a single screen.

• Used for tracking KPIs, performance monitoring, and decision-making.

Types of Dashboards

1. Operational Dashboards – Monitor day-to-day activities.

2. Tactical Dashboards – Analyze department-level performance.
3. Strategic Dashboards – Track high-level business goals.

Dashboard Design Best Practices

• Use clear, concise visualizations.

• Enable real-time data updates.
• Provide drill-down capabilities for detailed analysis.

Conclusion
This document provides a comprehensive overview of BI, BPM, and forecasting
methodologies.

• BI helps businesses analyze data and make informed decisions.

• BPM ensures strategic alignment and performance monitoring.
• Tools like dashboards and predictive analytics improve efficiency and
forecasting.

Key Takeaways

✔ BI is essential for data-driven decision-making.

✔ BPM ensures business strategies are executed effectively.
✔ Dashboards provide real-time insights for quick decision-making.
✔ Six Sigma and Balanced Scorecard optimize performance.

Business Intelligence (BI) Architecture & Components

(Reference: Pages 15-18 of the PDF)

A BI system consists of four major components that work together to collect, process,
analyze, and present data for business decision-making:

1. Data Warehouse
o The foundation of any BI system.
 o Stores structured and historical data collected from various sources (ERP,
CRM, transactional databases).
o Some BI systems also include real-time data to provide up-to-date insights.
2. Business Analytics
o A set of tools and techniques used to analyze data from the data warehouse.
o Includes:
▪ Querying and Reporting – Generating insights from historical data.
▪ OLAP (Online Analytical Processing) – Multi-dimensional data
analysis.
▪ Data/Text Mining – Identifying trends and patterns.
▪ Predictive Analytics & AI – Forecasting future trends based on past
data.
3. Business Performance Management (BPM)
o Helps monitor and improve business processes.
o Uses Key Performance Indicators (KPIs) to measure performance.
o Ensures that business goals align with operational activities.
4. User Interface (Dashboards & Reports)
o BI Dashboards provide visual representation of data (charts, graphs, tables).
o Used by executives, managers, and employees to track business performance
in real-time.

Example: Amazon's BI System

• Uses a centralized data warehouse to store customer data.

• AI-driven analytics predict shopping behavior.
• Dashboards show live sales trends to decision-makers.

BI Usage in Businesses

(Reference: Pages 19-21 of the PDF)

Business Intelligence is used across various industries to improve decision-making and

operational efficiency.

1. Retail & E-Commerce (Amazon, Walmart)

o Uses BI for demand forecasting, inventory management, and customer
personalization.
o Example: Amazon's "Customers who bought this also bought…"
recommendation system.
2. Banking & Finance (JPMorgan, ICICI Bank)
o Uses BI for fraud detection, credit risk assessment, and customer
segmentation.
o Example: Banks use real-time BI to detect fraudulent transactions based on
spending patterns.
3. Healthcare (Apollo Hospitals, Fortis)
o Uses BI to track patient data, optimize hospital resources, and predict
disease outbreaks.
o Example: Hospitals use predictive analytics to manage bed availability.
 4. Manufacturing & Supply Chain (Tesla, Ford)
o Uses BI for production planning, quality control, and supplier
management.
o Example: Tesla analyzes real-time factory performance to optimize car
production.
5. Marketing & Customer Insights (Netflix, Google Ads)
o Uses BI to track customer behavior and optimize marketing campaigns.
o Example: Netflix analyzes viewing patterns to recommend personalized
content.

Business Performance Management (BPM)

(Reference: Pages 42-45 of the PDF)

Definition:
BPM is a real-time system that monitors business operations and helps organizations
improve performance.
It ensures that companies stay on track to achieve their strategic goals by using data-driven
decision-making.

Key Components of BPM

1. Strategize (Where Do We Want to Go?)

o Setting business objectives and goals.
o Example: A bank wants to increase loan approvals by 20% in the next year.
2. Plan (How Do We Get There?)
o Developing operational plans to achieve goals.
o Example: A bank implements AI-based loan approval systems to speed up
processing.
3. Monitor (How Are We Doing?)
o Tracking Key Performance Indicators (KPIs) to measure progress.
o Example: Monitoring customer loan applications daily to check if the target
is achievable.
4. Act & Adjust (What Needs to Change?)
o Making improvements based on performance data.
o Example: If loan approvals are lower than expected, the bank adjusts its
credit policy to attract more customers.

Example: Starbucks' BPM System

• Uses BPM to track store sales, employee performance, and supply chain
efficiency.
• Adjusts marketing campaigns based on real-time customer preferences.

Key Performance Indicators (KPIs) & Performance Measurement

(Reference: Pages 58-60 of the PDF)

Definition:
A KPI is a measurable value that indicates how well a business is performing against a
goal.

Types of KPIs:

1. Outcome KPIs (Lagging Indicators)

o Measure past performance.
o Example: Revenue growth, profit margin, customer retention rate.
2. Driver KPIs (Leading Indicators)
o Predict future performance.
o Example: Website traffic, number of sales leads, customer engagement.

How KPIs Indicate Performance?

• Example: Netflix
o Outcome KPI: Monthly subscriber growth.
o Driver KPI: Hours watched per user.
o If "hours watched" decreases, Netflix knows that subscriber growth will slow
down in the future.

Balanced Scorecard Approach (BSC) to KPIs

(Reference: Pages 61-65)

• The BSC framework tracks KPIs in four areas:

1. Financial (Revenue, ROI)
2. Customer (Customer Satisfaction, Retention Rate)
3. Internal Processes (Production Efficiency, Delivery Time)
4. Learning & Growth (Employee Training, Innovation Rate)

Example: Apple’s KPI Strategy

• Financial: iPhone sales revenue.

• Customer: Net Promoter Score (NPS) – How likely a customer is to recommend
Apple.
• Internal: Supply chain efficiency – Time taken to manufacture an iPhone.
• Learning: Employee training hours.

Summary Table

Topic Key Points Example

BI Data Warehouse, Business Analytics, Amazon's AI-driven
Architecture BPM, Dashboards recommendation system
 Topic Key Points Example
Retail, Banking, Healthcare, Netflix’s personalized content
BI Usage
Manufacturing, Marketing recommendations
Strategy, Planning, Monitoring, Starbucks’ supply chain and sales
BPM
Adjusting tracking
Outcome KPIs, Driver KPIs, Balanced Apple’s customer satisfaction
KPIs
Scorecard (NPS)