BUSINESS INTELLIGENCE

1. Introduction
1.1.

General Introduction
In todays challenging business environment, it is a vital for organization to
access useful information and knowledge. Business Intelligence (BI) is an umbrella
concept for tools, techniques and solutions that helps organizations to understand
business situation. BI is defined as computer based techniques used in identifying,
extracting, and analyzing business data. BI helps organization turn data into useful
and meaningful information and then distribute this information to those who need it,
when they need it, wherever they need it so that they can make timely and betterinformed decisions. (Schiff, 2012)
BI software is already being used by thousands of companies to find new
revenue opportunities, reduce costs, reallocate resources, and improve operational
efficiency. BI has settled a place among the priorities in technological solutions for
the last couple of years. Not surprisingly, BI and analytics are one of the top-ranked
technologies for 2012 according to Gartner. Since 2003, the market has grown from
$1.6 billion, which accounts for an almost 500% growth. An increase in BI
investments is an indicator that organizations recognize the value of properly
implemented BI solutions. BI has achieved this importance because it is an integral
part of the decision making process, and this trend is expected to continue in future.
(Vizgaityt, 2012)

Key Terms
Data: Raw value elements or facts.
Information: The result of collecting and organizing data that provides context and
meaning.
OLAP: A multi-dimensional analysis and reporting application for aggregated data
great for discovering details from large quantities of data.
Data Mining: Processes and techniques for seeking knowledge (relationship,
trends, patterns, etc.) from a large amount of data.
Dashboard: Digital dashboard is a visual and interactive presentation of data to
make it easy to read and understand in a short time.
Data Marts: A data mart is a subset of the data warehouse that is used to support
analytical needs of a particular business function or department.
Meta Data: Metadata refers to data about data.

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1.2.

History

Term BI was used first in 1958. However, in the sense in which currently the term
BI was used, it started happening since 1990s. From technology prospective, BI
was born in 1990s.

Figure 1: Timeline showing the evolution of BI (Harris, 2014)

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2. Background
Companies today are awash in a sea of information. This ever-growing surge of
data can cause uncertainty and bring on stormy and messy conditions for
businesses. To maintain a strong decision management strategy and harness the
power of data, companies need the right tools to achieve breakthrough insights.
Business Intelligence tools offers a compelling vision of the transformation of data
from its raw state all the way through to distilling clear and actionable insights.
When companies perform their day to day operations either using Enterprise
resource planning (ERP) software or some other applications, data gets generated.
These raw data should be analyzed to extract meaningful information from it. Based
on this meaningful information, organizations comes up with strategies for the future
so that they could make more profit and could be more stable in the future. Making
future decisions directly based on the raw data is nearly impossible. This has to be
converted into meaningful information. It is business intelligence software that
converts the raw data into meaningful information. Management of the company
analyses the meaningful information and they take actions based on this information
to make future decisions.

Figure 2: Dashboard of a BI tool (Conceptdraw, 2014)

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2.1 How does BI system work?

The BI system has four major stages. Each of them are described briefly below.

Figure 3: BI Architecture (Khan, 2012)

a. Data capture
The data capturing component consists of an interface to collect data from
operational systems to load into the data warehouse. Data is first entered or
processed by a daily business process that is based on Online Transaction
Processing (OLTP) environment and stored in any kind of operational database.
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b. ETL (Extract, Transform, and Load) Engine

Before raw data is stored in the data warehouse, it has to be passed
through ETL engine.
Extraction: Data captured from numerous sources are purified. It checks for the
correctness of extracted data to correct inconsistent, missing, or invalid values.
Transform: Data transformation integrates data into standard formats and
applies business rules that map data to the warehouse schema. Aggregates
(e.g., summary table data) and imputed characteristics are generated.
Load: Finally extracted and transformed data are loaded in the data warehouse.

c. Data Warehousing
The primary purpose of data warehouse is to support organization in
decision making. Data warehouse stores data collected from operational systems
or external data sources. It must contain enough data to answer certain
questions about business.
Data Marts: Data marts helps to get prototype as soon as possible without
waiting for a larger corporate data warehouse, because its small and easy to
develop. (Bukhbinder, 2005)
Meta Data: It describes where data are being used and stored, the source of
data, what changes have been made to the data, and how one piece of data
relates to other information (Giovinazzo, 2003).

d. Data access and analysis

This component consists of data accessing tools and techniques that give
analysts clear and interactive information, friendly enough for use by a nontechnical person.
OLAP: OLAP provides users with the means to explore and analyze large
amounts of data, involving complex computations, their relationships, and
visually present results in different perspectives.
Data Mining: Data mining helps in data analysis for discovering patterns and
regularities in sets of data. It is responsible for finding the patterns by identifying
the underlying rules and features in the data.

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2.2. Some popular BI software

Figure 4: Major BI vendors with their products (Evelson, 2013)

There is large number of BI products and vendors. Yet, vendors and their
products listed in Figure 4 are the major ones. In 2013, Forrester (technology and
Market Research Company) had selected these 11 BI software vendors and their
products for a market evaluation. According to Forrester, these are complete, selfcontained, fully functional systems having qualities that takes to support BI in complex
organizations.
There are also some Open source BI tools. The three most popular open source BI
reporting tools are: Brit, JasperReport and Pentaho. (Opensource, 2014)
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2.3. BI application areas

Wide number of areas can be benefited from BI. Below is the list of some major
application areas of BI along with key BI features from which they are benifitted.

a. Business management
Performance management
Strategy management
Benchmarking
b. Marketing and sales
Customer relationship management (CRM)
Customer behavior analysis
Targeted marketing and sales strategies
Customer profiling
Collaborative filtering
c. Financial management
Chronological analysis of data
Performance accounting
Risk management
d. Logistics
Supplier and vendor management
Shipping and inventory control
e. Web site management
Web analytics
f. Healthcare management
Monetary Assessment
Medical Data Analysis
Patient care analysis
g. Education
Learning analytics
Institutional effectiveness
h. Telecommunications
Functional and funds evaluation
Capacity supervision
Operational management of various channels
Source: (Business.mapsofindia, 2014)
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3. Analysis
3.1.

Analysis of pros and cons

Pros
a. Better decisions
BI software provides organizations with rich, exact and up-to-date information
and let to dive into data for further investigation, which will become beneficial for
organization to make better decisions.
b. Faster decisions
BI systems displays results in common reports combining data from multiple
sources. It prevents decision maker to manually combine data in spreadsheets,
saving bunch of time.
c. Reduced labor costs
BI tool can automatically perform multiple tasks, such as data collection, report
generation, graphs and charts designing, etc. It reduces staff training needed for
maintaining such activities. Thus BI system is beneficial in reducing time and effort
of staffs preventing them to prepare reports manually.
d. Reduced information bottlenecks
BI tool provides individualized and role-based dashboards along with clear
documentation of information allowing users to analyze and validate the data without
involving IT specialists. Thus, users can easily view, assemble and personalize
information.
e. Get insight into customers behavior
BI system allows companies to gain visibility into what customers are buying (or
not), giving them "the ability to turn this knowledge into additional profit" and retain
valuable customers.
Cons
a. Costs are difficult to quantify
Implementing BI system is not very suitable in small and medium sized
organization. Investing too much on such expensive systems just to get information
on data is quite unrealistic.
b. Complexity
Even a company owns a BI system, it is very complex to maintain. To run the BI
system smoothly and extract better results, trained professionals is required.
Sometimes it can be a problem in an organization.
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c. Security Risks
Storing valuable information in the companys server increases the risk of being
accessed by unauthorized users. Information is less secured if there is some
problem in the software itself or if any illegal users get access to storage devices of
the users who have legal access.

Despite these drawbacks, BI really have cool features that can benefit a company in
a greatest possible ways. It is up to the company implementing BI and the user of the
system to eliminate these risks and use BI tools to make great decisions for better
business future.

3.2.

How is BI paying off in business?

a. Perrys Ice Cream

Perrys ice cream is the distributor of 12 million gallons of ice-cream every year, situated
in New York.
Business Needs: According to CIO of Perrys Ice Cream, Mr. David Hodgson,
company processed lots of transactions and business was going well. However,
company was not able to figure out the customers behavior. Company had to deal with
limited customers and was not able to take its business to next level.
Solution: Logi Analytics
Results: Logi Info turned out to be not just a solution we could afford, but also a better
solution for us, stated Mr. Hodgson. By integrating BI, company was able to analyze its
sales, which showed a high level of summary of transactions across Perrys various
customer-based and item-based categories. Users were able to drill into the data to find
whatever info they wanted. (Logi Analytics, 2010)

b. Stein Mart
Stein Mart is a nationwide department store with 265 locations across the United States.
It offers discount brand name merchandise including clothing, shoes, accessories, and
home decor.
Business Needs: Company needed better access to business data to set prices each
week. Company needed to analyze trends of its sales so that it could figure out the
popular products and put those popular items in stock before they became in high
demands.
Solution: Microsoft data warehouse and BI solution, in July 2009
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Results: According to Kevin Cornett, Senior Manager of Business Intelligence at Stein

Mart, company was able to manage information more efficiently and cut reporting time
from hours to minutes. The solution was easy to use and manage, and the company
has cut its total cost of ownership by more than 60 percent. This created a better
shopping experience for customers and a more profitable business model for Stein
Mart. (Microsoft, 2014)

Above examples of BI implementation shows, companies are taking good benefit

from BI tools. Not only business organizations are benefitted from BI. Customers can
also experience a better shopping experience being able to shop their favorite products
minimizing the chance lack of items in the stock.

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3.3.

BI Capabilities

Figure 5: Four synergistic BI capabilities (Sabherwal, 2011)

Figure 5 points out major capabilities of BI software. The chief BI capability is the
Organizational Memory. Information and knowledge are stored in BI system in such a
way that they can be accessed and observed later. It aids the next BI ability, i.e.
Information Integration, which is the ability to link structured and unstructured
information from variety of sources. Information integration helps in Insight Creation.
Creating Insight means ability to develop new intuitions to use them in business for
short term or long term for better decision making. Lastly, insight creation provides
contributions to Presentation capability by providing new insights and information.
Thus, BI system have ability to use appropriate reporting and stable scorecard tools
making BI more appreciated to its users.

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3.4.

Comparison of Information gathering practice with or without using Selfservice BI tool

Table 1: Comparison of information gathering practice with or without using BI tool

Based on the comparison in Table 1, we can conclude that decision making in an
organization can be much more effective by the use of self-service BI tools.

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3.5.

Open Source BI (OSBI) vs. Proprietary BI

Table 2: Comparison between OSBI and Proprietary BI tools (MAIA Intelligence , 2010)

The comparison in Table 2 points out many limitations of OSBI comparing with
proprietary BI. Most people have a mistaken perception that Open Source is Free. The
cost of implementing BI is not only the cost of software. There might require indirect
costs to purchase any other supporting products and monitoring tools. This comparison
clearly indicates, even though Open Source BI is being hyped a lot, it is still a long way
to go and compete with the actual BI market.
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3.6.

BI Market

Top 5 Business Intelligence and Analytics Software Vendors, Worldwide, 20122013 (Millions of Dollars)

Table 3: Market details of top 5 BI software vendors in 2012 and 2013 (Gartner, 2014)

Table 3 shows the details of a recent market research done by Gartner, Inc. on
market growth of top BI software vendors from 2012 to 2013. According to the research,
global BI and analytics software market grew by 8% (approx.). SAP became top vendor
with 21.3% market share and total revenue of $3057.0 million followed by Oracle
(13.9%) and IBM (12.7%). Microsoft had the highest market growth rate among top 5
vendors with revenue rising by 15.9% compared with 2012.
Business Intelligence has become the top ranked IT priority among enterprise
business leaders over the last few years. But single digit market growth in 2013 shows
that confusion still reign around business companies on how to make best analysis
relying on information. Challenging macros and excess use of IT-led traditional BI tools
might also be factors of slowing BI market in 2013.

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4. Conclusion
4.1.

Critical Evaluation
The topic Business Intelligence have always become the topic of my interest
since I started to know about it. So I was really excited to write report on the topic. I had
gone through some difficulties while preparing the report. Major difficulty was I couldnt
find proper graphs and charts representing progress in a company after using BI tool.
So I had to spend a lot of time in the analysis section. Yet, I really enjoyed this report
preparation from which I also got to know many facts about BI.
Based on analysis, in my opinion, BI has lot of capabilities to enhance the way of
conducting business by allowing companies to make smart decisions and take
necessary actions whenever necessary. Large enterprises are already aware of this
fact. However, small and medium enterprises are still in the state of confusion whether
to invest in BI or not. This misperception should be eliminated and business companies
should drive for finding a suitable BI tool for their business based to their needs.

4.2.

Future Escalation
With the rapid advancement in technology and evolving of advanced social
networking sites, smartphones and cloud based applications, BI is not only restricted to
traditional desktop or web based systems. New BI trends have already emerged out
and are in a position to take hike in the market within few years. Some of the new trends
are Social BI (analytics through social networking sites), Mobile BI (analysis on mobile
devices such as smartphones and tablets) and Cloud BI (Bi applications hosted on
virtual network).
Global BI market size, by technologies, 2013-2018 ($ Billion)

Figure 6: Global BI market size by technologies, 2013-2018 (Redwood Capital, 2014)

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Figure 5 shows that traditional BI is projected to slow down its growth in next few
years. Newer BI technologies are expected to grow at rates between 20% and 30%
over next 4 years. Cloud BI is estimated to grow by $2.94 billion by 2018, for a
Compound annual growth rate of 31%.
Thus, BI has been successful to become the top ranked IT priority among
enterprise business leaders over the last few years and is expected to increase its
market in the future.

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