Data Warehousing and Data Mining Unit 9

Unit 9 Business Intelligence

Structure:
9.1 Introduction
Objectives
9.2 Business Intelligence (BI)
9.3 Business Intelligence Tools
9.4 Business Intelligence Infrastructure
9.5 Business Intelligence Applications
9.6 BI versus Data Warehouse
9.7 BI versus Data Mining
9.8 Future of BI
9.9 Summary
9.10 Terminal Questions
9.11 Answers

9.1 Introduction
In the previous unit we have studied about Data warehousing concepts and
how it is essential in data mining. In this unit you are going to study about
Business Intelligence (BI).BI is actually an environment in which business
users receive data that is reliable, consistent, understandable, easily
manipulated and timely. With this data, business users are able to conduct
analyses that yield overall understanding of where the business has been,
where it is now and where it will be in the near future.
Objectives:
After studying this unit, you should be able to:
discuss the concepts of BI
describe the BI tools
list the differences between data warehouse and Data mining
explain the infrastructure of BI
list BI applications.

9.2 Bushiness Intelligence (BI)

Todays business is getting increasingly global, while the boundaries
between functions are dissolving. BI is getting merged with processes to
provide an integrated user experience. From being the prerogative of only
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the top management a few years ago, BI today is all pervasive, aiding
executives to fine tune strategies at the operational level. Seamless
integration of BI with MS-Office and on-demand delivery is a significant
productivity driver. Advanced BI systems handle both structured and
unstructured data to deliver tremendous value to users. Real-time BI
reduces latency time to quickly deliver up-to-date results and innovative
service models are revolutionizing the concept of information delivery.
BI serves two main purposes. it monitors the financial and operational health
of the organization (reports, alerts, alarms, analysis tools, key performance
indicators and dashboards). It also regulates the operation of the
organization providing two-way integration with operational systems and
information feedback analysis.
Some of the definitions for BI are given below:
Converting data into knowledge and making it available throughout the
organization are the jobs of processes and applications known as
Business Intelligence..
BI is a term that encompasses a broad range of analytical software and
solutions for gathering, consolidating, analyzing and providing access to
information in a way that is supposed to let the users of an enterprise
make better business decisions.
Today's exciting BI market is ripe with opportunities to hit your strategic
business targets. Gaining market share, keeping customers and controlling
costs remain key objectives. Mid-market executives and big corporate
department heads rush to cost effectively meet these complex needs. How?
Through improved use of their existing database Systems. CFOs (Chief
Financial Officers) require 'business intelligence' systems that display
accurate SKU (Stock Keeping Unit), permitting reliable channel and store
comparisons over time. Improved forecasts are vital, too! Data warehousing
and analytical skills are combined with an understanding of industry issues.
According to Gartner survey of 1,400 CFOs, business intelligence was
ranked the top technology priority surpassing security. The BI and analytics
market is currently valued at $8.5 billion and is expected to grow to $13
billion over the next five years.

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9.3 Business Intelligence Tools

Consider organizations where every year organizations gather and store
increasing amounts of data. Mid-size organizations tell us that, on average,
they have a minimum of 7 operational data sources. These sources contain
data the business users often want to tap into, in order to make the best
decisions to steer the business in the right direction. But for IT to respond to
the escalating requests and really help the business use that data can be a
huge drain on time and resources. And the requests are piling up. Requests
such as:
Could you give me a report that combines sales and forecast data?
Could you provide a spreadsheet that shows our top 100 customers by
product type what and when they bought, and where they are located?
Could you provide us a dashboard that shows the executives our key
performance indicators such as sales, costs, and profits, so that they can
have up-to-the minute access to this information?
Sounds familiar? You want to help, but are limited in time and resources.
And you often dont want to give them access to the data directly for control
and security purposes. Thats where Business Intelligence (BI) is used and it
uses software tools to accomplish the task. Software enables business
users to see and use large amounts of complex data.
The following three types of tools are referred to as Business Intelligence
Tools:
1) Multidimensional Analysis Software Also Known As OLAP (Online
Analytical Processing) Software that gives the user the opportunity to
look at the data from a variety of different dimensions.
2) Query Tools Software that allows the user to ask questions about
patterns or details in the data.
3) Data Mining Tools Software that automatically searches for significant
patterns or correlations in the data.
Self Assessment Questions
1. The ______ software gives the user the opportunity to look at the data
from a variety of different dimensions.
2. Which of the following statements defines Business Intelligence?
A. Converting data into knowledge and making it available throughout
the organization
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B. Analytical software and solutions for gathering, consolidating,

analyzing and providing access to information in a way that is
supposed to let the users of an enterprise make better business
decisions.
C. Both A & B

9.4 Business Intelligence Infrastructure

Business organizations can gain a competitive advantage with well-
designed business intelligence (BI) infrastructure. Think of the BI
infrastructure as a set of layers that begin with the operational systems
information and Meta data and end in delivery of business intelligence to
various business user communities. See Fig. 9.1 & Fig. 9.2.
Based on the overall requirements of business intelligence, the data
integration layer is required to extract, cleanse and transform data into load
files for the information warehouse. This layer begins with transaction-level
operational data and Meta data about these operational systems. Typically
this data integration is done using a relational staging database and utilizing
flat file extracts from source systems. The product of a good data-staging
layer is high-quality data, a reusable infrastructure and meta data supporting
both business and technical users.

Fig. 9.1: BI infrastructure

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Fig. 9.2: BI infrastructure Technical Overview

The information warehouse is usually developed incrementally over time

and is architected to include key business variables and business metrics in
a structure that meets all business analysis questions required by the
business groups.
1) The information warehouse layer consists of relational and/or OLAP
cube services that allow business users to gain insight into their areas of
responsibility in the organization.
2) Customer Intelligence relates to customer, service, sales and marketing
information viewed along time periods, location/geography, and product
and customer variables.
3) Business decisions that can be supported with customer intelligence
range from pricing, forecasting, promotion strategy and competitive
analysis to up-sell strategy and customer service resource allocation.
4) Operational Intelligence relates to finance, operations, manufacturing,
distribution, logistics and human resource information viewed along time
periods, location/geography, product, project, supplier, carrier and
employee.
5) The most visible layer of the business intelligence infrastructure is the
applications layer, which delivers the information to business users.
6) Business intelligence requirements include scheduled report generation
and distribution, query and analysis capabilities to pursue special
investigations and graphical analysis permitting trend identification. This

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layer should enable business users to interact with the information to

gain new insight into the underlying business variables to support
business decisions.
7) Presenting business intelligence on the Web through a portal is gaining
considerable momentum. Portals are usually organized by communities
of users organized for suppliers, customers, employers and partners.
8) Portals can reduce the overall infrastructure costs of an organization as
well as deliver great self-service and information access capabilities.
9) Web-based portals are becoming commonplace as a single
personalized point of access for key business information.
Self Assessment Questions
3. Based on the overall requirements of business intelligence, the _____
layer is required to extract, cleanse and transform data into load files
for the information warehouse.
4. Data Mining is not a business solution; it is just a technology.
(True/False)

9.5 Business Intelligence Applications

BI applications and technologies can help companies analyze in the
following way:
changing trends in market share
changes in customer behavior and spending patterns
customers' preferences
company capabilities
market conditions
Now, let us discuss the significance of BI in various fields
Significance of BI to know about Customers
Having access to timely and accurate information is an important resource
for a company, which can expedite decision-making and improve customers'
experience. In the competitive customer-service sector, companies need to
have accurate, up-to-date information on customer preferences, so that the
company can quickly adapt to their changing demands. BI enables
companies to gather information on the trends in the marketplace and come
up with innovative products or services in anticipation of customer's
changing demands.

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Significance of BI to know about Competitors Market

BI applications can also help managers to be better informed about actions
that a company's competitors are taking. BI systems can also be designed
to provide managers with information on the state of economic trends or
marketplace factors, or to provide managers with in depth knowledge about
the internal operations of a business.
Significance of BI for avoiding Guesswork
BI can be used to help analysts and managers determine which adjustments
are most likely to respond to changing trends. BI systems can help
companies develop a more consistent, data-based decision making process
for business decisions, which can produce better results than making
business decisions by "guesswork."
Significance of BI for sharing of information
BI can help companies share selected strategic information with business
partners. Some businesses use BI systems to share information with their
suppliers like inventory levels, performance metrics other supply chain data
Significance of BI for improving performance
BI applications can enhance communication among departments,
coordinate activities, and enable companies to respond more quickly to
changes (e.g., in financial conditions, customer preferences, supply chain
operations, etc.). When a BI system is well-designed and properly integrated
into a company's processes and decision-making process, it may be able to
improve a company's performance.
Examples
1. A hotel franchise uses BI analytical applications to compile statistics on
average occupancy and average room rate to determine revenue
generated per room. It also gathers statistics on market share and data
from customer surveys from each hotel to determine its competitive
position in various markets. Such trends can be analyzed year by year,
month by month and day by day, giving the corporation a picture of how
each individual hotel is faring.
2. A bank bridges a legacy database with departmental databases. This
gives giving the branch managers and other users access to BI
applications to determine who the most profitable customers are or
which customers they should try to cross-sell new products to. The use
of these tools frees information technology staff from the task of
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generating analytical reports for the departments. It also gives the

department personnel autonomous access to a richer data source.
3. A telecommunications company maintains a multi terabyte decision-
support data warehouse and uses business intelligence tools and
utilities to let users access the data they need without giving them carte
blanche to access hundreds of thousands of mission-critical records.
The tools set boundaries around the data that users can access,
creating data "cubes" that contain only the information that's relevant to
a particular user or group of users.

9.6 BI versus Data Warehouse

Data Warehousing deals with all aspects of managing the development,
implementation and operation of a data warehouse or data mart including
Meta data management, data acquisition, data cleansing, data
transformation, storage management, data distribution, data archiving,
operational reporting, analytical reporting, security management,
backup/recovery planning, etc.
Business intelligence, on the other hand, is a set of software tools that
enable an organization to analyze measurable aspects of its business such
as sales performance, profitability, operational efficiency, effectiveness of
marketing campaigns, market penetration among certain customer groups,
cost trends, anomalies and exceptions, etc. Business intelligence is used
to refer to systems and technologies that provide the business with the
means for decision-makers to extract personalized meaningful information
about their business and industry, not typically available from internal
systems alone. This includes advanced decision support tools and back-
room systems and databases to support those tools. Business Intelligence
encompasses any and all decision support activities, whether operational,
tactical or strategic.
Self Assessment Questions
5. ________ is used to refer to systems and technologies that provide the
business with the means for decision-makers to extract personalized
meaningful information about their business and industry.

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9.7 BI versus Data Mining

Business intelligence is information about a company's past performance
that is used to help predict the company's future performance. It can reveal
emerging trends from which the company might profit. Data Mining allows
users to sift through the enormous amount of information available in data
warehouses. It is from this sifting process that business intelligence gems
may be found.
Data mining is not an intelligence tool or framework. Business intelligence,
typically drawn from an enterprise data warehouse, is used to analyze and
uncover information about past performance on an aggregate level. Data
mining is more intuitive, allowing for increased insight beyond data
warehousing. An implementation of data mining in an organization will serve
as a guide to uncovering inherent trends and tendencies in historical
information. It will also allow for statistical predictions, groupings and
classifications of data.
Note: Data Mining is not a business solution, it is just a technology.

9.8 Future of BI
BI users are beginning to demand [Real time BI] or near real time analysis
relating to their business, particularly in front line operations. They will come
to expect up to date and fresh information in the same fashion as they
monitor stock quotes online. Monthly and even weekly analysis will not
suffice.
Noted CEO of a software company makes a statement on BI, Business
users dont want to wait for information. Information needs to be always on
and never out of date. This is the way we live our lives today. Why should
Business Intelligence be any different?"
Another CEO of Data Mirror corp states "This instant "Internet experience"
will create the new framework for business intelligence, but business
processes will have to change to accommodate and exploit the real-time
flows of business data."
In order to fulfill the requirements new terminology BI 2.0 coined. BI 2.0" is
the part of the continually developing BI industry and heralds the next step
for BI. BI 2.0" is used to describe the acquisition, provision and analysis of
"real time" data.

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The mismatch between fantasy and reality is driven by two factors. The first
is that business rules and structures (general ledgers, product classification,
asset hierarchies, etc.) are not in fact uniform, but are spread out among
many disparate transaction system implementations. The second problem is
that the landscape of business structures is itself in constant flux, as groups
reorganize, subsidiaries are sold or new companies acquired.
As long as Business Intelligence relies upon some kind of data warehouse
structure (including web-based virtual data "warehouses"), data will have to
be converted into a lowest common denominator consistent set. When it
comes to dealing with multiple, disparate data sources and the constantly
changing, often volatile, business environment, which requires tweaking and
restructuring of IT systems, getting BI data in a genuinely true, "real time"
format remains, a pipe dream.
Self Assessment Questions
6. State true or false
i) BI applications can also help managers to be better informed about
actions that a company's competitors are taking
ii) BI can help companies share selected strategic information with
business partners.
iii) BI 2.0" is used to describe the acquisition, provision and analysis
of "real time" data
A) i-T, ii-F, iii-F
B) i-T, ii-T, iii-F
C) i-T, ii-F, iii-T
D) i-T, ii-T, iii-T

9.9 Summary
1. Business intelligence is actually an environment in which business users
receive data that is reliable, consistent, understandable, easily
manipulated and timely.
2. Business organizations can gain a competitive advantage with a well-
designed business intelligence (BI) infrastructure.
3. Data Mining is not a business solution, it is just a technology.

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4. Data Warehousing and Business Intelligence provide a method for users

to anticipate future trends from analyzing past patterns in organizational
data.
5. Business intelligence requirements include scheduled report generation
and distribution, query and analysis capabilities to pursue special
investigations and graphical analysis permitting trend identification. This
layer should enable business users to interact with the information to
gain new insight into the underlying business variables to support
business decisions.

9.10 Terminal Questions

1. What is Business Intelligence? Explain the components of BI
architecture.
2. Differentiate between Data warehouse and Business Intelligence.
3. What is operational intelligence?

9.11 Answers
Self Assessment Questions
1. Multidimensional Analysis
2. C. Both A & B
3. Data integration
4. True
5. Business Intelligence
6. D
Terminal Questions
1. Business intelligence is actually an environment in which business users
receive data that is reliable, consistent, understandable, easily
manipulated and timely. Refer section 9.5.
2. Data warehousing deals with all aspects of managing the development,
implementation and operation of a data warehouse or data mart
including meta data management, data acquisition, data cleansing, data
transformation, storage management, data distribution, data archiving,
operational reporting, analytical reporting, security management,
backup/recovery planning, etc.

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Business intelligence, on the other hand, is a set of software tools that

enable an organization to analyze measurable aspects of its business
such as sales performance, profitability, operational efficiency, market
penetration among certain customer groups, cost trends, anomalies and
exceptions, etc. Refer section 9.3 and 9.4.
3. Operational Intelligence relates to finance, operations, manufacturing,
distribution, logistics and human resource information viewed along time
periods, location/geography, product, project, supplier, carrier and
employee. Refer section 9.4

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