Business intelligence (BI) is a big buzzword in today's IT world. It is a concept understood by some, but misunderstood by many.
The purpose of this article is to clarify what BI is and to discuss its main components. It will also discuss why BI is drawing so much attention, even during this economic downturn, and why it is not only winning the hearts and minds of decision makers, but is also penetrating many functional areas like marketing, finance, and securities.
Part of the confusion about BI lies in the flurry of acronyms relating to analyzing business information. In addition to business intelligence, terms like business performance management (BPM), business process management (also BPM), corporate performance management (CPM), and business activity monitoring (BAM), have also emerged. All of these are a part of BI. They are all dependent on BI tools, but it should be noted that BI is not dependent on them.
Though the name was coined by the Gartner Group in mid nineties, business intelligence as a concept started much earlier. The concept was rooted in the reporting systems of mainframe computers in the seventies. During that period reporting systems was static, two dimensional, and had no analytical capabilities. The demand for dynamic multidimensional reporting systems for predictive and intelligent decision-making pushed BI to develop. With the advent of new technologies and applications, BI came to its present state and is continuing to grow every day. BI today is capable of multidimensional analysis of data to see 360 degree business insight, statistical analysis, and forecasting to help better decision support systems.
Based on present trends, the use of BI will become so widespread that every desktop will have a BI icon that in the future. BI will become an integral part of an enterprise's information system and, like word processing software, BI will be used by almost all end users, business users, and government officials to gauge whether their strategies are aligned with their companies' overall strategic plan.
What BI Is All About
BI is neither a product nor a system. It is an umbrella term that combines architectures, applications, and databases. It enables the real-time, interactive access, analysis, and manipulation of information, which provides the business community with easy access to business data. BI analyzes historical data—the data businesses generate through transactions or by other kinds of business activities—and helps businesses by analyzing the past and present business situations and performances. By giving this valuable insight, BI helps decision makers make more informed decisions and supplies end users with critical business information on their customers or partners, including information on behaviors and trends.
Businesses generate a sea of data. Every datum carries a small piece of the business' story. This data is scattered everywhere, in disparate systems and in different departments. It is held captive in dead hard drives, and can even be situated in geographically different regions. However, it is in data, where the true nature of business—its trends, strengths, and weaknesses—lie. BI gathers all the related data to turn it into information and information that is analyzed properly can be used for decision making which can finally go into action.
In other words, BI transforms data into information, information into decisions, and decisions into action.
How BI Evolved
Key to understanding how BI analyzes business is understanding how data is processed into information (via different technologies) and how it is analyzed. Knowing these processes and how it fits into BI's architecture, tools, and applications will also provide clarity about BI.
BI doesn't produce any data, but it uses data produced by other business applications like enterprise resource planning (ERP), customer relationship management (CRM), supply chain management (SCM) etc. Over the past two decades, and especially in nineties, organizations have stored huge amounts of data by building online transaction processing (OLTP) systems and ERP systems, call centers, and the Internet. In pursuit of better data management enterprises build data warehouses (DW), data marts, and installed extract transform load (ETL) tools to work with data warehouses. But very few of these data were processed into information, and even less was used for decision support systems, largely because of the lack of tools to access and analyze the data for business users.
In seventies and eighties, accessing information systems was very tedious and it was rarely permitted to end users. Query and reporting was cumbersome and analytical reporting was spreadsheet based. The whole process of accessing information was time consuming, and delayed reporting didn't achieve results. The advent of technology and the increasing demand from companies to have better information, pushed BI systems to evolve.
Why BI
BI has a tremendous impact on business once installed. It produces the right information at the right time, which is key element for the success of any business enterprise. BI is the art of knowing and gaining the business advantage from data. Whether it is marketing competition, customer retention, inventory control, financial modeling, or even in national security, BI is the answer. BI can answer a company's critical questions such as, why market shares are going to competitors; which products contribute the most to profit; how can business become more profitable; why some divisions are not profitable; which plants produce at the lowest cost; how can productivity improve; which parts of the world are the most profitable; who are best and worst customers; where is money being lost or made, etc.
BI answers these questions by analyzing and comparing business historical data. Data is created by business activities or data from outside sources like environmental, demographic, immigration data, etc. to study a particular group of people or customers. Such information is used by businesses to understand their business trends, their strengths and weakness, and to analyze competitors and the market situation. The information can also be used by government or secret agencies, especially like US Homeland Security, that need to have access to financial, immigration, transportation, and any kind of related data that can be analyzed to determine probable attacks on its citizens or property.
In addition to determining trends, another push to implement BI comes from, the Sarbanes-Oxley legislation, which affects corporate financial reporting, and accounting rules for publicly-held companies. To be in compliance with Sarbanes-Oxley, BI systems will be needed to insure the timely and accurate analysis of business data. Thus real time BI is not only relevant but key to achieving compliance.
Business Intelligence Activities and Tools
As mentioned earlier, BI is a combination of technologies and architectures. Some important BI tools are data warehouses (DW) and data mart, extract transfer load (ETL), reporting and query tools, data visualization, balanced scorecards, dashboards, OLTP, OLAP, data mining, alerting and notification systems, and analytics. Under the BI umbrella all these tools are combined within a special architecture.
The purpose of this article is to clarify what BI is and to discuss its main components. It will also discuss why BI is drawing so much attention, even during this economic downturn, and why it is not only winning the hearts and minds of decision makers, but is also penetrating many functional areas like marketing, finance, and securities.
Part of the confusion about BI lies in the flurry of acronyms relating to analyzing business information. In addition to business intelligence, terms like business performance management (BPM), business process management (also BPM), corporate performance management (CPM), and business activity monitoring (BAM), have also emerged. All of these are a part of BI. They are all dependent on BI tools, but it should be noted that BI is not dependent on them.
Though the name was coined by the Gartner Group in mid nineties, business intelligence as a concept started much earlier. The concept was rooted in the reporting systems of mainframe computers in the seventies. During that period reporting systems was static, two dimensional, and had no analytical capabilities. The demand for dynamic multidimensional reporting systems for predictive and intelligent decision-making pushed BI to develop. With the advent of new technologies and applications, BI came to its present state and is continuing to grow every day. BI today is capable of multidimensional analysis of data to see 360 degree business insight, statistical analysis, and forecasting to help better decision support systems.
Based on present trends, the use of BI will become so widespread that every desktop will have a BI icon that in the future. BI will become an integral part of an enterprise's information system and, like word processing software, BI will be used by almost all end users, business users, and government officials to gauge whether their strategies are aligned with their companies' overall strategic plan.
What BI Is All About
BI is neither a product nor a system. It is an umbrella term that combines architectures, applications, and databases. It enables the real-time, interactive access, analysis, and manipulation of information, which provides the business community with easy access to business data. BI analyzes historical data—the data businesses generate through transactions or by other kinds of business activities—and helps businesses by analyzing the past and present business situations and performances. By giving this valuable insight, BI helps decision makers make more informed decisions and supplies end users with critical business information on their customers or partners, including information on behaviors and trends.
Businesses generate a sea of data. Every datum carries a small piece of the business' story. This data is scattered everywhere, in disparate systems and in different departments. It is held captive in dead hard drives, and can even be situated in geographically different regions. However, it is in data, where the true nature of business—its trends, strengths, and weaknesses—lie. BI gathers all the related data to turn it into information and information that is analyzed properly can be used for decision making which can finally go into action.
In other words, BI transforms data into information, information into decisions, and decisions into action.
How BI Evolved
Key to understanding how BI analyzes business is understanding how data is processed into information (via different technologies) and how it is analyzed. Knowing these processes and how it fits into BI's architecture, tools, and applications will also provide clarity about BI.
BI doesn't produce any data, but it uses data produced by other business applications like enterprise resource planning (ERP), customer relationship management (CRM), supply chain management (SCM) etc. Over the past two decades, and especially in nineties, organizations have stored huge amounts of data by building online transaction processing (OLTP) systems and ERP systems, call centers, and the Internet. In pursuit of better data management enterprises build data warehouses (DW), data marts, and installed extract transform load (ETL) tools to work with data warehouses. But very few of these data were processed into information, and even less was used for decision support systems, largely because of the lack of tools to access and analyze the data for business users.
In seventies and eighties, accessing information systems was very tedious and it was rarely permitted to end users. Query and reporting was cumbersome and analytical reporting was spreadsheet based. The whole process of accessing information was time consuming, and delayed reporting didn't achieve results. The advent of technology and the increasing demand from companies to have better information, pushed BI systems to evolve.
Why BI
BI has a tremendous impact on business once installed. It produces the right information at the right time, which is key element for the success of any business enterprise. BI is the art of knowing and gaining the business advantage from data. Whether it is marketing competition, customer retention, inventory control, financial modeling, or even in national security, BI is the answer. BI can answer a company's critical questions such as, why market shares are going to competitors; which products contribute the most to profit; how can business become more profitable; why some divisions are not profitable; which plants produce at the lowest cost; how can productivity improve; which parts of the world are the most profitable; who are best and worst customers; where is money being lost or made, etc.
BI answers these questions by analyzing and comparing business historical data. Data is created by business activities or data from outside sources like environmental, demographic, immigration data, etc. to study a particular group of people or customers. Such information is used by businesses to understand their business trends, their strengths and weakness, and to analyze competitors and the market situation. The information can also be used by government or secret agencies, especially like US Homeland Security, that need to have access to financial, immigration, transportation, and any kind of related data that can be analyzed to determine probable attacks on its citizens or property.
In addition to determining trends, another push to implement BI comes from, the Sarbanes-Oxley legislation, which affects corporate financial reporting, and accounting rules for publicly-held companies. To be in compliance with Sarbanes-Oxley, BI systems will be needed to insure the timely and accurate analysis of business data. Thus real time BI is not only relevant but key to achieving compliance.
Business Intelligence Activities and Tools
As mentioned earlier, BI is a combination of technologies and architectures. Some important BI tools are data warehouses (DW) and data mart, extract transfer load (ETL), reporting and query tools, data visualization, balanced scorecards, dashboards, OLTP, OLAP, data mining, alerting and notification systems, and analytics. Under the BI umbrella all these tools are combined within a special architecture.
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