Most of us associate Business Intelligence with Data Mining, a term frequently used by News Media and Privacy Groups when they report on U.S. Government’s efforts on tracking phone records and financial transactions to nab suspected terrorists.

In reality, Business Intelligence is much more than Data Mining. While, Data Mining is literally about mining raw data to get some useful information (using pre-defined parameters and complex algorithms), Business Intelligence on the other hand includes Reporting and Analysis Systems, Corporate Performance Measurement, Executive Dashboards, and Decision Support Systems.

What is Business Intelligence?

Business Intelligence (BI) is the process of translating raw data into information, helping organizations gain valuable insight from their transactional data. Business Intelligence helps organizations promote a superior decision-making process and can help generate higher revenues and reduce costs.

Accelerating top-line growth – Business Intelligence can provide organizations with insight on their customers and identify cross-selling opportunities by analyzing sales data, measure promotion events, and review campaign performance.

Strategy execution by management – Business Intelligence can help strategy execution at organizations by setting goals and tracking corporate performance through Balanced Scorecards and Dashboards.

Retaining customers – Business Intelligence can help organizations seamlessly access customer data stored in multiple databases. This can help managers change product mix, pricing, or marketing campaigns as appropriate to retain customers.

Growing Profits – Business Intelligence increases profitability by analyzing key cost metrics and help in discovering cost-reduction opportunities within the organization.

Faster speed to market – Business Intelligence helps organizations to make faster, more effective decisions by delivering critical business information across departments and management tiers.

Components of a Business Intelligence System

Business Intelligence Systems typically include the following components –

1.    Data Warehouse

A Data Warehouse is a database geared towards the business intelligence requirements of an organization. The data warehouse integrates data from the various operational areas, including external sources, and is typically loaded from these systems at regular intervals.

A Data Warehouse design that is based on a well-conceived data model not only provides dimensional flexibility and superior performance, but will also allow for future growth and dimensional expansion of the underlying dataset.

2.    ETL Engine

ETL is the acronym for Extraction, Transformation, and Load.

Extracting - Determining what data should be extracted; how the data should be extracted; and optimizing the data extraction from source systems.
Transformation - Including Cleansing, Integration, Referential Integrity checking, Derivations, De-normalization / re-normalization, Aggregation, Audit Information, and Null conversion.
Loading – Loading the data from the source systems into the data warehouse.

3.    Reporting / Analytics Layer

The visualization and reporting layer used by business users to perform data analysis, executive reporting (dashboards) for senior executives, and standard reports for compliance & transactional reporting.

Some of the common reasons why Business Intelligence projects fail –

i.    Inability to report on key performance indicators – BI solutions fail when the project teams do not identify and track key parameters of the organization and include them in the BI project.

ii.    Poor data quality – If the data in source systems is of poor quality, this leads to loss of confidence by end users, and therefore limit BI system use.

iii.    Minimal end-user training – BI systems can be quite complex. Without proper training and support end-users cannot use the systems effectively.

So the next time you hear about Business Intelligence, don’t think about National Security Agency (NSA) database. Think about how BI can be leveraged by your company to increase sales and reduce costs.

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