Business Intelligence
By Clay Stephens, Brian Peterson, & Kosta Golemis
BA 370
Dr. René F. Reitsma
11/15/2005
Abstract:
This paper discusses the topic of business intelligence, and touches on multiple
areas within this subject. Areas discussed include a history and the definition of business
intelligence, how we gather it, a discussion of data warehouses and data marts, the
business intelligence data warehouse (BIDW) process, business and government uses of
business intelligence, and the technology used to gather it.
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Introduction
Business intelligence (BI) is a relatively new thing to hit the business world.
Only recently did it start to garner attention, being introduced in the early 90’s with lots
of promise. Since then, BI has had its ups and downs, but is currently a point of focus for
business managers and IT professionals. Gathering information has always been a high
priority for businesses (no matter what field they may be in), and business intelligence
has greatly affected the way businesses gather information and what information they can
obtain. It is no wonder that business intelligence has attracted so much interest in the
business world, as all companies can benefit from it, and is now almost a necessity if for
no other reason than to keep up with competitors.
What is Business Intelligence?
The term business intelligence refers to the process of taking raw data, turning
those data into information, and then making business decisions on the basis of that
information. An example would be a grocery store recording every sale it makes in a
day, being able to print out a report that states how many of a particular product has been
sold in a given time frame, and from that make a decision on when to put this product on
sale. This has potential to make and save companies lots of money, as it makes decision
making easier and can provide valuable information that had otherwise been ignored.
History
Business intelligence first started to make an impact in the business environment
in the early 90’s. Computer technology started to really come about around then and
people started talking about how business intelligence was going to save companies
millions (or perhaps even billions) of dollars. BI had a big surge in popularity, and
everyone started recording market data into databases. Towards the late 90’s, however,
the surge of BI slowed to a standstill. Companies had started the process, but didn’t
know how to finish it because nobody really knew how to get from gathering information
to saving money. Also, the vision of BI wasn’t supported by current technology.
Processor speed was a lot slower back then, and it took a lot longer to record these data
into databases and extract them, thus hampering the process. Tools that help this process
were not widely available back then as either.
Recently, however, business intelligence has made a big comeback. Technology
is now up to par with the requirements of efficiently extracting data, and there is a wide
variety of tools to help companies with the data extraction process. People have had a
few years to discuss how this can help save money, and BI is now being used with those
goals in mind and companies have more realistic expectations out of it.
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Gathering Business Intelligence
The process of gathering business intelligence starts with data integration. This is
the process of combining databases into one consolidated database for sharing and
analysis. After this is complete, a process called data mining can start. Data mining is
the process of extracting previously unknown and useful information from large data sets
or databases. The mined data are then stored in a data warehouse or a data mart. A data
warehouse is a special database where all the useful information is stored for easy access.
A data mart is essentially the same thing, but with more specific information of
predetermined selected data. This process of extracting the data into a smaller database
makes for more efficient data analysis and reporting. After this is complete, a company
must use these data to help it make business decisions such as planning and forecasting.
This is the most important step, as not taking any action would render all the previous
steps useless.
The BIDW Process
The business intelligence data warehousing (BIDW) process (see figure 1) begins
with data integration. Part of data integration includes extraction, transformation, and
loading (E.T.L.). Extraction is the phase where data are extracted from outside sources,
converting the data into fields. In the transformation phase a series of rules or functions
are applied to the extracted data, making the data fit to what the business needs. Loading
the data into the data warehouses is the last phase of the E.T.L. process.
Figure 1: BIDW Process
Source: Business Intelligence and Data Warehousing
The raw data are stored, retrieved, and updated by an organization’s on-line
transaction processing (OLTP) system. The OLTP is a system for collecting and
managing the base data in an organization. An ATM machine or an electronic employee
time clock is an example of an OLTP system. None of the data collected have analytical
value. The information is then cleansed (duplicate information is removed, for example)
and optimized, and data are structured for queries and analysis.
In the next two phases of the BIDW process, data mining, query, and analytical
tools generate intelligence which enables companies to spot trends, enhance business
relationships, and create new opportunities. This intelligence is used to make decisions,
create strategies, and implement programs for competitive advantage.
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Meanwhile, throughout the whole process the system is regulated by an overall
corporate security policy. A company wants a strong security policy because the data
collected and analyzed are typically confidential and critical to a business’ operations,
therefore all the data must be secure from external and internal threats.
In the end, if a company wants to have a well-run BIDW operation it needs to
have business performance management (BPM) applications, which help track the results
of the decisions made and the performance of the programs created.
Uses of Business Intelligence
Business Intelligence uses include government, retail, financial services, and
Telco (see figure 2). Business Intelligence can be modified to work for a variety of
companies and agencies, but in the end it can be separated into two main fields:
government and business.
Figure 2 (brief breakdown of service sector for BI, Source: www.computerworld.com)
According to ComputerWorld there are three factors that shape BI today. 1)
Today's BI software is mostly reactive; focused on transactions and static data. 2) In five
years, BI will move beyond the boundaries of an organization and expand into the supply
chain. This means that BI will become better at recognizing and understanding
customer’s behavior. And lastly, with security becoming a major priority for enterprises,
3) Companies will adopt an information-aware infrastructure model in the next five years
that will support global, distributed BI while automatically protecting the security and
privacy of information (ComputerWorld, The Future of BI, 19 Sept 2005).
“Over the next three years, the pervasiveness of business intelligence technology will
explode, by as much as fivefold, as three technology trends converge: the availability of
64-bit in-memory processing technology improving BI performance by factors of 10 to
100; the service-enabling of business applications; and the growth of rich Internet
applications, or RIA. Together, they enable organizations to leverage BI in new and
innovative ways. Imagine you've been driving with the parking brake on, and suddenly
you release it. You not only go cheaper and faster to the same places as before, but you
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also explore new places and opportunities.” -- Lothar Schubert, director of SAP
NetWeaver product marketing, Walldorf, Germany (ComputerWorld, The Future of BI,
19 Sept 2005)
BI applications will become much more commonplace using applications such as
spreadsheets. BI applications themselves are also becoming much easier to use so that
non statisticians and non IT individuals will be able to use them. A dashboard is a layer
within an operating system that hosts mini applications. Figure 3 is an example of what a
dashboard for the common end user would be using for BI.
Figure 3 (BI dashboards built from Oracle’s Database, Source:
http://www.oracle.com/technology/pub/images/rittman_dash_f1.gif)
Business Uses
Businesses use business intelligence to analyze competitors, conduct market and
industry research, and try to gain the competitive advantage. Take one such example:
You own a retail store and customer Joe buys a silk shirt. Now when the customer is
rung up, his information is stored into the computer. It turns out that Joe buys four silk
shirts every six months- with BI a report can be sent to the manager stating that Joe has a
pattern of buying items that are alike. The manager now has the knowledge about these
patterns and he could send out a silk shirt flier in the future to Joe. This could possibly
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get Joe to buy more shirts than he normally does with knowledge of sales/events from
these fliers.
Government
Government use of BI includes sharing data between local and federal
intelligence agencies to reduce crime levels and lower the risk of terrorist attacks. It also
helps further develop a uniform system of government BI resources, in which local, state,
and federal services are available online (such as the DMV, social security, etc.). One
hypothetical example is as follows: A rural neighborhood has had six unsolved burglaries
in the last five months. BI will look for patterns that people may not think to look for.
For instance it may turn out that seven months ago an ex-con moved into an apartment
building less than half a mile away, and that he was originally in jail for burglary.
Take this real government agency example: North Carolina Department of Health
and Human Services is responsible for ensuring the health, safety, and well being of 7
million North Carolinians. This department has nearly 20 divisions with over 19,000
employees. They try and share information across departments and keep track of records
on millions of individuals. If the agency did not complete required reports on time they
risked loosing federal funding and/or paying large fines. They also needed a tool that
could help case workers view important information about clients more easily. They
decided to go with a data warehouse system and chose BI tools from Business Objects to
deliver critical information to its end users in easy-to-understand reports. Employees in
the divisions are now able to correlate data from other case outcomes. This allows staff
to identify higher level trends and improve service to their customers. They also use the
new reporting system to run clean-up queries that identify cases coded incorrectly in the
data warehouse. By identifying these coding mistakes faster than before, they were able
to save $1 million per year on administrative costs that would have otherwise been spent
on fixing these errors. With less time and money spent on paperwork they are able to
focus on serving the needs of their clients.
Software in Business Intelligence
There are many software firms that produce BI tools and software, ranging from
Oracle & Microsoft to even Sun Microsystems (see figure 4) - although the company that
seems to be leading them all is Cognos. Cognos is an Ottawa, Ontario based company
which makes BI and performance planning software. They were founded in 1969 and
employ 3,300 people and serve more than 23,000 customers in over 135 countries.
Cognos has continually demonstrated return on investments to its customers and partners.
Cognos has been recognized by Network Computing Magazine as Editor’s Choice for
leading BI intelligence solutions. Cognos Metrics Manager was awarded Intelligent
Enterprise Magazine’s Readers’ Choice award for best business monitoring solution, &
Cognos was also named one of the Top 12 Most Influential Enterprise Software
Companies by Intelligent Enterprise Magazine. (Cognos)
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Figure 4 (Direction of BI software companies. Source: unknown)
Lee Martin believes that in the next 6-7 years that of the very large number of BI
products that exist today there will only be about five left. This will be due to mergers,
buyouts, bankruptcies and other companies that just plain outperform others.
Conclusion
Business Intelligence has a lot of practical use, and can save companies a lot of
money. However, it will not solve all the problems in a company, and one must have the
correct tools in order to properly extract business intelligence. The process can be time
consuming, but the outcome can be very useful and beneficial in the long run. Several
software companies are currently developing BI software, but in the future we may see
some change in that BI may become even more popular, and that a few companies may
overtake the smaller companies to dominate the market. We will have to wait and see
what business intelligence brings us in the future.
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References
.ComputerWorld (10 Nov. 2005) The Future of BI; Available:
http://www.computerworld.com/databasetopics/businessintelligence/story/0,10801,10458
9,00.html
Cognos (10 Nov. 2005) Awards; Available:
http://www.cognos.com/news/awards/index.html
Wikipedia Encyclopedia (8 November 2005), Extract, transform, load;.
Available: http://en.wikipedia.org/wiki/Extract%2C_transform%2C_load
Sun Microsystems (2005), Business Intelligence and Data Warehousing;
Available: http://www.sun.com/storage/white-papers/bidw.pdf
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