Business Intelligence: basics you need to know

We’re going to cover the following topics:

  • The origin of business intelligence
  • Business Intelligence as a method
  • Information as a corporate resource
  • User field of databases

 

The origin of business intelligence

 

The concept of business intelligence derives from Howard Dresner (Gartner Group, 1989), who defined it as a set of techniques and tools for the acquisition and transformation of raw data into meaningful and useful information for business analysis purposes.

 

"concepts and methods to improve business decision making by using fact-based support systems."Howard Dresner

 

 

On Wikipedia we find the following definition:

"Business Intelligence: A set of techniques and tools for the acquisition and transformation of raw data into meaningful and useful information for business analysis purposes."Wikipedia

 

The key general categories of business intelligence tools are:

  • Spreadsheets
  • Reporting and querying software ‒ tools that extract, sort, summarize and present selected data
  • OLAP
  • Digital Dashboards
  • Data mining
  • Process mining
  • Business performance management

 

The phrase originally derives from Hans Peter Luhn (IBM, 1958):

"The ability to apprehend the interrelationships of presented facts in such a way as to guide action towards a desired goal."Peter Luhn

 

The English word “intelligence” in the context means gaining information. It derives from the word “intelligentia” with the connection of the Latin word “inter” (between) and “legere” (to choose). Intelligence means the analytical and distinctive ability of the mind that supports us to choose between things. A kind of decision-making ability.

 

Business Intelligence as a method

using-business-iq-as-method

 

However, we do not necessarily need a data warehouse in order to build up a business intelligence system, yet those questions that come up in the course of planning a data warehouse can highlight the fact that business intelligence does not stop with the collection of data or the application of different software applications, but it means a full organisational transformation and new thinking method and outlook of managers.

It includes the whole screening of the company’s functioning, re-planning of internal processes and accurate identification of business purposes.

 

In the course of planning a data warehouse you have to take into consideration the following questions that may rise (Krajcsak 2012):

  • What kind of data are we still in need of?
  • How collected data can be depurated?
  • In what format should they be stored?
  • At which intervals data in the data warehouse should be updated?
  • Should a strategic bottom-up or a tactical top-down structure be applied?
  • What tasks can be done by using it?
  • Who is going to use it?
  • On what devices is it going to be used?

 

Information as a corporate resource

business-intelligence

 

Information as a corporate resource has economic value, mainly in terms of competitive advantage. It is particularly important for collected and stored pieces of information to be high-quality, otherwise we will be doing only database-building that is impossible to use for analysis and research.

 

Sources of error in case of data files can be the following (Krajcsak 2012):

  • Formats of data vary
  • Meaning of data is not unequivocal
  • It is hard to handle the data
  • Exactness of data are unknown
  • Topicality of data is inappropriate
  • Data is stored in different systems that cannot be connected with each other
  • There is redundant data in the system
  • We have inconsistent data (the same information appears in different ways)
  • Searched data cannot be found

 

These kinds of data is called disparate data, and they may be characterized by these basic problems:

  • In an organization implementing a database system, there is not a single, complete or integrated inventory of all the data.
  • The real substance, meaning and content of all the data within the organizational data resource is not readily known or well defined.
  • There is very high data redundancy all over the organization.
  • There is a very high variability of data formats and contents.

 

User field of databases

business-db

 

 

Databases serve two main fields in the management of the enterprise.

1)

On the one hand, databases serve operative processes through such enterprise application systems that support daily activities on the lower and middle management levels.

These are for example the supply chain management tools that support logistics, company resource management tools that support enterprise management projects and the customer relationship management systems that support sales activities.

Their advantages are that they provide such data availability for more users at the same time, which always shows the actual condition.

Their disadvantage is that an enquiry can be executed only through predetermined dimensions.

 

2)

On the other hand, there are those systems that support decision making and strategic management of the enterprise. These systems are applied on the high and middle management levels of the organization.

Their advantage is the processed and flexibly manageable enquiry. In the course of enquiries, decision-makers can receive answers to the questions:

  • “What happened?”
  • “Why did it happen?”
  • “What is happening now?”
  • “What could happen?”

 

So, in the course of applying business communication systems, data has an essential role, just like the juggler’s ball ‒ it can bring success and at the same time failure (if it happens to fall down).

 

 

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