Introduction

Business Intelligence

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 Aim

To provide students with knowledge of concepts and

use of business intelligence

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 Overview

• Definitions - business intelligence (BI) and business

intelligence systems (BIS)
• Role of BIS in supporting business decision making
• Identify the different BIS that were introduced in
the past and explain how such systems supported
business decision making

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 Introduction
• The business environment is constantly changing and is becoming
complex day by day.
• Organizations are now becoming agile to sudden changes hence now
making frequent and quick strategic, tactical, operational decisions.
• Making such decisions require considerable amount of relevant data
• Companies are moving aggressively to computerized support for their
operations.
• Business intelligence is one way that enables managers to make informed
decisions in real time.

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 Business Pressures–Responses–Support Model
• To understand why companies are embracing computerized support,
including business intelligence, Sharda, Delen and Turban (2013)
developed a model called the Business Pressures–Responses–Support
Model
• The Business Pressures–Responses–Support Model, as its name indicates,
has three components:
i. business pressures that result from today’s business climate;
ii. responses (actions taken) by companies to counter the pressures (or to
take advantage of the opportunities available in the environment); and
iii. computerized support that facilitates monitoring the environment and
enhancing the response actions taken by organizations.

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 Business Pressures–Responses–Support Model

Source: Sharda, Delen and Turban (2013)

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 What is
Business Intelligence?

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 What is Business Intelligence?

• Business intelligence is the art of turning raw data into

information that can be used to make strategic business
decisions. When used correctly, BI can give you a detailed
overview of your organization’s performance at every level.
(Misiuro,2022)

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 What is Business Intelligence?
• Business intelligence (BI) is a technology-driven process for analyzing data and
delivering information that helps managers to make informed business decisions.
• As part of the BI process, organizations collect data from internal IT systems and
external sources, prepare it for analysis, run queries using that data and create
data visualizations e.g. dashboards and reports to make the analytics results
available to business users for informed decision-making.

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 What is Business Intelligence?
Business intelligence can be in the forms below:

1. Operational Intelligence
• Affects operational levels of organisation on daily, weekly, monthly basis
and searches and investigates operational data. e.g. real time product
recommenders
2. Tactical Intelligence
• Affects a part of organisation for a limited time (i.e., coming year) into the
future tactical intelligence assesses whether the company has adequate
time, money and manpower to implement the plans.
• It tracks and informs about the effective use of all its assets.

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)
 What is Business Intelligence?

Business intelligence can be in the forms below:

3. Strategic Intelligence
• Affects the entire organisation, or a major part of it for a long period of time (i.e., 2 - 5
years and beyond)
• It helps businesses understand current industry trends and make sense of consumer
behaviour patterns.
Greene (1966)

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 Business Driving forces
There are some business driving forces behind business intelligence. These include:
1. The need to increase revenues, reduce costs, and compete more effectively.
Today companies need to deploy informational applications rapidly, and provide business
users with easy and fast access to business information that reflects the rapidly changing
business environment.

2. The need to manage and model the complexity of today’s business environment
Business intelligence systems provide more than just basic query and reporting
mechanisms, they also offer sophisticated information analysis and information discovery
tools that are designed to handle and process the complex business information
associated with today’s business environment.

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 Business Driving forces Contd…
3. The need to reduce IT costs and leverage existing corporate business information
The investment in IT systems today is usually a significant percentage of corporate
expenses, and there is a need not only to reduce this overhead, but also to gain the
maximum business benefits from the information managed by IT systems.
New information technologies like corporate intranets and thin-client computing help
reduce the cost of deploying business intelligence systems to a wider user audience,
especially information consumers like executives and business managers

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 Examples of how BI can be used
• Using data and statistics to reveal business trends – e.g., compare first, second, third,
and fourth quarter product sales figures to see if sales of an individual product are
increasing or decreasing
• Comparing current results (such as sales) to either historical results or company goals –
e.g., look at year-over-year sales figures in different geographical areas where a
business operates
• Creating visual representations such as charts and graphs to make data analysis more
easily understandable and useful for decision-makers – e.g., creating a chart or
histogram that clearly reveals stock sector trends
• Providing “what if” analysis of different possible business choices – e.g., predicting how
making one change versus another may impact future sales revenue growth

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 The BI process
Although business intelligence is utilized in different ways and for different purposes by
individual companies, the process is fairly uniform throughout all industries and typically
unfolds as follows:
• Data from various sources – including internal company data and external market data
– is collected, integrated, and then stored; because “big data” is commonly used, data
is commonly stored in what’s called a data warehouse, created by a data engineer
• Data sets are created and prepared for data analysis (transforming data), often by
creating data analysis models
• Data analysts run queries against the data sets or models
• The results of queries are used to produce visualizations in the form of charts, graphs,
histograms, or other visual representations, along with BI dashboards and reports
• Decision-makers utilize the data visualizations and reports to help them in making
decisions; they may also use their BI dashboard to probe further into the data for more
information.
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 BI Questions
• What happened?
e.g. What were our total sales this month?
• What’s happening?
e.g. Are our sales going up or down, trend analysis
• Why?
e.g. Why have sales gone down?
• What will happen?
e.g. Forecasting & What If Analysis
• What do I want to happen?
e.g. Planning & Targets
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 Examples of Questions BI is Designed to Answer

A BI solution, with the right data and features, should be able to take operational data
and enable users to answer specific questions such as:
Sales and marketing
• Which customers should I target?
• Which are my most profitable campaigns per region?
• Did store sales spike when we advertised in the local paper or launched an email
campaign?
• What is the most profitable source of sales leads and how has that changed over
time?

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 Questions BI is Designed to Answer
Operational
• Which vendors are best at delivering on time and on budget?
• How many additional personnel do we need to add per store during the holidays?

Financial
• What is the expected annual profit/loss based on current marketing and sales forecasts?
• How are forecasts trending against the annual plan? (KPIs)
• What are the current trends in cash flow, accounts payable and accounts receivable and how do
they compare with plan?
Overall business performance
• What are the most important risk factors impacting the company’s ability to meet annual profit
goals?
• Should we expand internationally and, if so, which geographic areas should we first target?

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 BI Questions
Operational Efficiency Customer Interaction

• KPI Tracking • Sales Analysis

• Product Profitability • Sales Forecasting
• Risk Management • Segmentation
• Balanced Scorecard • CRM Analytics
• Activity Based Costing • Campaign Planning
• Global Sourcing • Customer Profitability
• Logistics

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 Examples of companies using Business Intelligence

Expedia: BI Builds Customer Satisfaction

Expedia is the parent company of some top-tier travel companies, including Expedia, Hotwire and
TripAdvisor.
Challenge: Customer satisfaction is essential to the company's mission, strategy and success. The
online experience should mirror a good trip experience, but the company had no visibility into the
voice of the customer.
Solution: The company had mountains of data they were manually aggregating, leaving little time
for analysis. Using business intelligence, the customer satisfaction group was able to analyze
customer data from across the company and link results with 10 objectives related directly to
corporate initiatives. Owners of those KPIs build, manage and analyze data to discover trends or
patterns.
Results: The customer service team can see how well it is doing against KPIs in real-time and take
corrective steps if necessary. Plus, other departments can use the data. For example, a travel
manager can use BI to discover high volumes of unused tickets or offline booking and create
strategies to adjust behavior and increase overall savings.
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 What is a
Business Intelligence
System?

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 What is Business Intelligence System?
• A BIS is an information system that provides BI to business decision
makers at different levels of an organisation (operational, tactical,
strategic levels)

• BIS is an information system that turns selected data, information,

and/or knowledge into desired intelligence for business gain (Thierauf,
2001)

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 Business Intelligence Systems
A Business Intelligence (BI) System covers the process of collecting, analyzing and
processing data into usable information and their presentation.
It comprises a variety of tools, applications and methods that enable the company to
collect, prepare and analyse information from internal systems and external sources.
There are numerous examples of business intelligence software including:
• Microsoft Power BI
• SAP Business Projects
• Looker
• Tableau
• Qlik Sense
• SQL Server Analysis Services (SSAS)

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 Business Intelligence Systems
BI systems have four main parts:
1. A data warehouse stores company information from a variety of sources in a centralized
and accessible location.
2. Business analytics or data management tools to mine and analyze data in the data
warehouse.
3. Business performance management (BPM) tools that monitor and analyze progress
towards business goals.
4. A user interface (usually an interactive dashboard with data visualization reporting
tools) provides quick access the information.

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 Business Intelligence Systems features
The most important types of business intelligence features and functionality are:
• ETL
• Dashboards
• Visualizations
• Reporting
• Predictive Analytics
• Data Mining
• Drill-Down

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 What is the role of
Business Intelligence
System?

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 Role of BIS

• To provide decision makers with the ability to understand (i.e., the

intelligence to gain insights into) the relationships of presented facts in
the form of data, information, and knowledge in order to guide action
toward a desired actionable goal (Thierauf, 2001)

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 Role of BIS
• Provide decision makers with timely data, information and
knowledge for problem solving, and problem finding

• Past : Decision making as Problem Solving activity

• Reactive approach –use of appropriate management technologies to
resolve current problems as they arise

• Current: Business intelligence activity as problem solving, as well

as problem finding
• Proactive, preventive approach – anticipating future company problems;
looking for future opportunities, competitive edge

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 How did Business
Intelligence Systems
evolve?

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 Evolution of BIS
Computer-based Support Systems technologies
• 1950s Transaction Processing Systems (TPS)
• 1960s Management Information Systems (MIS)
• 1970s Office Automation Systems
Decision Support Systems (DSS)
• 1980s DSS Expanded
Commercial applications of Expert Systems
Executive Information Systems (EIS)
• 1990s Group (Decision) Support Systems

Turban and Aronson (2001)

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Attributes of Computer-based Support Systems
(Turban and Aronson, 2001)

Dimension Focus
TPS Data transactions

MIS Information

DSS Decisions, flexibility, user-friendliness

Expert Systems (ES) Inferencing, transfer of expertise

EIS Tracking, control “drill down”

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Attributes of Computer-based Support Systems
(Turban and Aronson, 2001)
Dimension Applications

TPS Payroll, inventory, record keeping, production and

sales information
MIS Production control, sales forecasting, monitoring

DSS Long-range strategic planning, complex integrated

problem areas
Expert Systems Diagnosis, strategic planning, internal control planning,
(ES) maintenance strategies, narrow domain

EIS Support to top management, decision, environmental

scanning
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Attributes of Computer-based Support Systems
(Turban and Aronson, 2001)

Dimension Decision Capabilities

TPS No decision, have simple decision models

MIS Structured routine problems using conventional

operations research tools
DSS Semi-structured problems, integrated operations
research models, bled of judgment and structured
support capabilities
ES The system makes complex decisions, unstructured;
use of rules (heuristics)
EIS None

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Attributes of Computer-based Support Systems
(Turban and Aronson, 2001)

Dimension Highest Organisation Level served

TPS Sub-managerial, low management

MIS Middle management

DSS Top management

ES Top management and specialists

EIS Senior executives

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 More BIS technologies
• 1990s Data warehouses
• Enable decision makers to “pull” / “extract” BI from a large centralised repository
• created to support the information requirements of an organisation’s decision
makers.
• 1990s OLAP (On-Line Analytical Processing) systems
• Enable decision makers to build and work with analytical models easily and view the
output in multiple dimensions
• 1990s Knowledge Management Systems (KMS)
• Go beyond relationships found in information allowing decision makers to extract
patterns, trends, correlations that underlie the inter-workings of a company currently
and over time

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 Managing Organizations
Informed decision making as a prerequisite for success

i z a t i o nal
Orga n
Vision Context

Mission
Values, Purpose, Structure, Politics, Environment, etc.
Strategic Givens
Direction
Policies, Goals, and Objectives
Decision What should be done ?
Making
Analytics, Decision Making
When and how ??
Implementation
Project Management

Action
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 Summary
• Business intelligence refers to a category of applications and technologies for gathering,
storing, analysing, reporting on and providing access to data to help enterprise users make
better business decisions.
• The role of business intelligence is to provide decision makers with the ability to
understand the relationships of presented facts in order to guide action towards a desired
actionable goal.
• Informed decision making is a pre-requisite for success in the process of managing
organisations.
• Enterprise-wide decisions are important in implementing holistic strategies in
organization.

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