ⓘ Business intelligence


ⓘ Business intelligence

Business intelligence comprises the strategies and technologies used by enterprises for the data analysis of business information. BI technologies provide historical, current, and predictive views of business operations. Common functions of business intelligence technologies include reporting, online analytical processing, analytics, data mining, process mining, complex event processing, business performance management, benchmarking, text mining, predictive analytics, and prescriptive analytics. BI technologies can handle large amounts of structured and sometimes unstructured data to help identify, develop, and otherwise create new strategic business opportunities. They aim to allow for the easy interpretation of these big data. Identifying new opportunities and implementing an effective strategy based on insights can provide businesses with a competitive market advantage and long-term stability.

Business intelligence can be used by enterprises to support a wide range of business decisions ranging from operational to strategic. Basic operating decisions include product positioning or pricing. Strategic business decisions involve priorities, goals, and directions at the broadest level. In all cases, BI is most effective when it combines data derived from the market in which a company operates external data with data from company sources internal to the business such as financial and operations data internal data. When combined, external and internal data can provide a complete picture which, in effect, creates an "intelligence" that cannot be derived from any singular set of data. Amongst myriad uses, business intelligence tools empower organizations to gain insight into new markets, to assess demand and suitability of products and services for different market segments, and to gauge the impact of marketing efforts.

BI applications use data gathered from a data warehouse DW or from a data mart, and the concepts of BI and DW combine as "BI/DW" or as "BIDW". A data warehouse contains a copy of analytical data that facilitate decision support.


1. History

The earliest known use of the term business intelligence is in Richard Millar Devens Cyclopædia of Commercial and Business Anecdotes 1865. Devens used the term to describe how the banker Sir Henry Furnese gained profit by receiving and acting upon information about his environment, prior to his competitors:

Throughout Holland, Flanders, France, and Germany, he maintained a complete and perfect train of business intelligence. The news of the many battles fought was thus received first by him, and the fall of Namur added to his profits, owing to his early receipt of the news.

The ability to collect and react accordingly based on the information retrieved, Devens says, is central to business intelligence.

When Hans Peter Luhn, a researcher at IBM, used the term business intelligence in an article published in 1958, he employed the Websters Dictionary definition of intelligence: "the ability to apprehend the interrelationships of presented facts in such a way as to guide action towards a desired goal." Business intelligence as it is understood today is said to have evolved from the decision support systems DSS that began in the 1960s and developed throughout the mid-1980s. DSS originated in the computer-aided models created to assist with decision making and planning.

In 1989, Howard Dresner later a Gartner analyst proposed business intelligence as an umbrella term to describe "concepts and methods to improve business decision making by using fact-based support systems." It was not until the late 1990s that this usage was widespread.

Critics see BI merely as an evolution of business reporting together with the advent of increasingly powerful and easy-to-use data analysis tools. In this respect it has also been criticized as a marketing buzzword in the context of the "big data" surge.


2. Definition

According to Solomon Negash and Paul Gray, We define business intelligence BI as systems that combine:

  • Data gathering
  • Knowledge management
  • Data storage

with analysis to evaluate complex corporate and competitive information for presentation to planners and decision maker, with the objective of improving the timeliness and the quality of the input to the decision process."

According to Forrester Research, business intelligence is "a set of methodologies, processes, architectures, and technologies that transform raw data into meaningful and useful information used to enable more effective strategic, tactical, and operational insights and decision-making." Under this definition, business intelligence encompasses information management. Therefore, Forrester refers to data preparation and data usage as two separate but closely linked segments of the business-intelligence architectural stack.

Some elements of business intelligence are:

  • A method of interfacing with unstructured data sources
  • Realtime reporting with analytical alert
  • Open item management
  • Group consolidation, budgeting, and rolling forecasts
  • Statistical inference and probabilistic simulation
  • Denormalization, tagging, and standardization
  • Multidimensional aggregation and allocation
  • Version control and process management
  • Key performance indicators optimization

Forrester distinguishes this from the business-intelligence market, which is "just the top layers of the BI architectural stack, such as reporting, analytics, and dashboards."


2.1. Definition Compared with competitive intelligence

Though the term business intelligence is sometimes a synonym for competitive intelligence because they both support decision making, BI uses technologies, processes, and applications to analyze mostly internal, structured data and business processes while competitive intelligence gathers, analyzes, and disseminates information with a topical focus on company competitors. If understood broadly, business intelligence can include the subset of competitive intelligence.


2.2. Definition Compared with business analytics

Business intelligence and business analytics are sometimes used interchangeably, but there are alternate definitions. Thomas Davenport, professor of information technology and management at Babson College argues that business intelligence should be divided into querying, reporting, Online analytical processing OLAP, an "alerts" tool, and business analytics. In this definition, business analytics is the subset of BI focusing on statistics, prediction, and optimization, rather than the reporting functionality.


3. Data

Business operations can generate a very large amount of information in the form of e-mails, memos, notes from call-centers, news, user groups, chats, reports, web-pages, presentations, image-files, video-files, and marketing material. According to Merrill Lynch, more than 85% of all business information exists in these forms; a company might only use such a document a single time. Because of the way it is produced and stored, this information is either unstructured or semi-structured.

The management of semi-structured data is an unsolved problem in the information technology industry. According to projections from Gartner 2003, white collar workers spend 30–40% of their time searching, finding, and assessing unstructured data. BI uses both structured and unstructured data. The former is easy to search, and the latter contains a large quantity of the information needed for analysis and decision making. Because of the difficulty of properly searching, finding, and assessing unstructured or semi-structured data, organizations may not draw upon these vast reservoirs of information, which could influence a particular decision, task, or project. This can ultimately lead to poorly informed decision making.

Therefore, when designing a business intelligence/DW-solution, the specific problems associated with semi-structured and unstructured data must be accommodated for as well as those for the structured data.


3.1. Data Unstructured data vs. semi-structured data

Unstructured and semi-structured data have different meanings depending on their context. In the context of relational database systems, unstructured data cannot be stored in predictably ordered columns and rows. One type of unstructured data is typically stored in a BLOB binary large object, a catch-all data type available in most relational database management systems. Unstructured data may also refer to irregularly or randomly repeated column patterns that vary from row to row or files of natural language that do not have detailed metadata.

Many of these data types, however, like e-mails, word processing text files, PDFs, PPTs, image-files, and video-files conform to a standard that offers the possibility of metadata. Metadata can include information such as author and time of creation, and this can be stored in a relational database. Therefore, it may be more accurate to talk about this as semi-structured documents or data, but no specific consensus seems to have been reached.

Unstructured data can also simply be the knowledge that business users have about future business trends. Business forecasting naturally aligns with the BI system because business users think of their business in aggregate terms. Capturing the business knowledge that may only exist in the minds of business users provides some of the most important data points for a complete BI solution.


3.2. Data Limitations of semi-structured and unstructured data

There are several challenges to developing BI with semi-structured data. According to Inmon & Nesavich, some of those are:

  • Searchability of unstructured textual data – A simple search on some data, e.g. apple, results in links where there is a reference to that precise search term. Inmon & Nesavich, 2008 gives an example:" a search is made on the term felony. In a simple search, the term felony is used, and everywhere there is a reference to felony, a hit to an unstructured document is made. But a simple search is crude. It does not find references to crime, arson, murder, embezzlement, vehicular homicide, and such, even though these crimes are types of felonies.”
  • Volume of data – As stated earlier, up to 85% of all data exists as semi-structured data. Couple that with the need for word-to-word and semantic analysis.
  • Terminology – Among researchers and analysts, there is a need to develop a standardized terminology.
  • Physically accessing unstructured textual data – unstructured data is stored in a huge variety of formats.


3.3. Data Metadata

To solve problems with searchability and assessment of data, it is necessary to know something about the content. This can be done by adding context through the use of metadata. Many systems already capture some metadata, but more useful would be metadata about the actual content – e.g. summaries, topics, people, or companies mentioned. Two technologies designed for generating metadata about content are automatic categorization and information extraction.


4. Applications

Business intelligence can be applied to the following business purposes:

  • BI can facilitate collaboration both inside and outside the business by enabling data sharing and electronic data interchange
  • Knowledge management is concerned with the creation, distribution, use, and management of business intelligence, and of business knowledge in general. Knowledge management leads to learning management and regulatory compliance.
  • Business reporting can use BI data to inform strategy. Business reporting may involve data visualization, executive information system, and/or OLAP
  • Analytics quantify processes for a business to arrive at optimal decisions, and to perform business knowledge discovery. Analytics may variously involve data mining, process mining, statistical analysis, predictive analytics, predictive modeling, business process modeling, data lineage, complex event processing, and prescriptive analytics.
  • Performance metrics and benchmarking inform business leaders of progress towards business goals business process management.

5. Marketplace

In a 2013 report, Gartner categorized business intelligence vendors as either an independent "pure-play" vendor or a consolidated "megavendor". In 2012 business intelligence services received $13.1 billion in revenue. In 2019, the BI market was shaken within Europe for the new legislation of GDPR General Data Protection Regulation which puts the responsibility of data collection and storage onto the data user with strict laws in place to make sure the data is compliant. Growth within Europe has steadily increased since May 2019 when GDPR was brought. The legislation refocused companies to look at their own data from a compliance perspective but also revealed future opportunity using personalization and external BI providers to increase market share.


5.1. Marketplace Historical predictions

A 2009 paper predicted these developments in the business intelligence market:

  • By 2012, business units will control at least 40 percent of the total budget for business intelligence.
  • Because of lack of information, processes, and tools, through 2012, more than 35 percent of the top 5.000 global companies regularly fail to make insightful decisions about significant changes in their business and markets.
  • By 2012, one-third of analytic applications applied to business processes will be delivered through coarse-grained application mashups.

A 2009 Information Management special report predicted the top BI trends: "green computing, social networking services, data visualization, mobile BI, predictive analytics, composite applications, cloud computing and multitouch". Research undertaken in 2014 indicated that employees are more likely to have access to, and more likely to engage with, cloud-based BI tools than traditional tools.

Other business intelligence trends include the following:

  • Operational applications have callable BI components, with improvements in response time, scaling, and concurrency.
  • Third party SOA-BI products increasingly address ETL issues of volume and throughput.
  • Companies embrace in-memory processing, 64-bit processing, and pre-packaged analytic BI applications.
  • Open source BI software replaces vendor offerings.
  • Near or real time BI analytics is a baseline expectation.

Other lines of research include the combined study of business intelligence and uncertain data. In this context, the data used is not assumed to be precise, accurate, and complete. Instead, data is considered uncertain and therefore this uncertainty is propagated to the results produced by BI.

According to a study by the Aberdeen Group, there has been increasing interest in Software-as-a-Service SaaS business intelligence over the past years, with twice as many organizations using this deployment approach as one year ago – 15% in 2009 compared to 7% in 2008.

An article by InfoWorlds Chris Kanaracus points out similar growth data from research firm IDC, which predicts the SaaS BI market will grow 22 percent each year through 2013 thanks to increased product sophistication, strained IT budgets, and other factors.


6. Bibliography

  • Peter Rausch, Alaa Sheta, Aladdin Ayesh: Business Intelligence and Performance Management: Theory, Systems, and Industrial Applications, Springer Verlag U.K., 2013, ISBN 978-1-4471-4865-4.
  • Munoz, J.M. 2017. Global Business Intelligence. Routledge: UK. ISBN 978-1-1382-03686
  • Ralph Kimball et al. "The Data warehouse Lifecycle Toolkit" 2nd ed. Wiley ISBN 0-470-47957-4