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HISTORY OF BUSINESS INTELLIGENCE
In 1958, IBM researcherHans Peter Luhn defined intelligence as:"the ability
to apprehend the interrelationships of presented facts in such a way as to guide action
towards a desired goal."
In 1989 Howard Dresner described business intelligence as "concepts and
methods to improve business decision making by using fact-based support systems."
This usage was widespread which was not until the late 1990s.
Prior to the start of the Information Age in the late 20th century, businesses
had to collect data from non-automated sources. The businesses then lacked the
computing resources to properly analyze the data, and as a result, companies often
made business decisions primarily on the basis of intuition.
While, in modern businesses, increasing standards, automation, and
technologies have led to vast amounts of data becoming available. Data warehouse
technologies have set up to store these data. Hence, business intelligence has now
become the art of sifting through large amounts of data, extracting information, and
turning that information into knowledge.
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STAGES OF BUSINESS INTELLIGENCE
Business Intelligence is a process for increasing the competitive advantage of
a business by using available data in decision making. This process is the 5 stages of
business intelligence.
1. Data sourcing
Business Intelligence is about getting information from multiple sources of
data. It might be: text documents such as memos or reports or email messages,
web pages, formatted tables, photographs and images, sounds, and URL lists.
The data can obtain from database queries, web searches, scanners, digital
cameras, and computer file access.
2. Data analysis
Business Intelligence is estimating current trends, integrating and
summarizing disparate information, validating models of understanding, and
predicting missing information or future trends. This process of data analysis
is also called data mining. The analysis tools might use:-
probability theory - classification, clustering and Bayesian networks
statistical methods - regression
operations research - queuing and scheduling
artificial intelligence - neural networks and fuzzy logic.
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3. Situation awareness
Business Intelligence is filtering out irrelevant business information. Through
creating awareness it helps to understand and make better decisions.
Algorithms forsituation assessmentprovide such syntheses automatically.
4. Risk assessment
Business Intelligence is discovering what decisions might be made, at
different times. It is helping to weigh up the current and future risk, cost or
benefit of making one decision versus another. Furthermore, it helps in
inferring and summarizing the best options.
5. Decision support
Business Intelligence is using information wisely. It aims to take preventative
actions on takeovers, market changes, and poor staff performance. Other than
that, it helps to analyze and make better decisions, to improve sales or
customer satisfaction or staff morale.
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TOOLS OF BUSINESS INTELLIGENCE
Business intelligence tools are a type ofapplication software designed to
report, analyze and present data. The tools generally read data that have been
previously stored, often, though not necessarily, in a data warehouse ordata mart.
There are few types of business intelligence tools. The key general categories
of business intelligence tools are:
1. Spreadsheets
A spreadsheet is a computer application that simulates a paper, accounting
worksheet. It displays multiple cells that together make up a grid consisting of
rows and columns, each cell containing alphanumeric text, numeric values or
formulas.
2. OLAP
Online analytical processing is an approach to swiftly answer multi-
dimensional analytical queries. OLAP is part of the broader category of
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business intelligence, which also encompasses relational reporting and data
mining.
The typical applications of OLAP are inbusiness reportingfor sales,
marketing, management reporting, business process management (BPM),
budgeting and forecasting, financial reporting and similar areas, with new
applications coming up, such as agriculture. The term OLAPwas created as a
slight modification of the traditional database term OLTP (Online Transaction
Processing).
3. Digital Dashboards
In management information systems, a dashboard is an executive information
system user interface that (similar to an automobile's dashboard) is designed to
be easy to read. For example, a product might obtain information from the
local operating system in a computer, from one or more applications that may
be running, and from one or more remote sites on the Web and present it as
though it all came from the same source.
4. Data mining
Data mining is the process of extracting patterns from data. Data mining is
becoming an increasingly important tool to transform the data into
information. It is commonly used in a wide range ofprofiling practices, such
as marketing, surveillance, fraud detection and scientific discovery.
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5. Process mining
Process mining is a process management technique that allow for the analysis
ofbusiness processes based on event logs. The basic idea is to extract
knowledge from event logs recorded by an information system. Process
mining aims at improving this by providing techniques and tools for
discovering process, control, data, organizational, and social structures from
event logs.
6. Business performance management
Business performance management (BPM) is a set ofmanagement and
analytic processes that enable the performance of an organization to be
managed with a view to achieving one or more pre-selected goals. Synonyms
for "business performance management" include "corporate performance
management" and "enterprise performance management". If we regard BPM
and Corporate performance management (CPM) as near synonyms: BPM
would serve as the more generalized term.
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USES OF BUSINESS INTELLIGENCE
Business intelligence usage can be categorized into the following categories:
1. Business operations reporting
The most common form of business intelligence is business operations
reporting. This includes the actual and how the actual stack up against the
goals. This type of business intelligence often manifests itself in the standard
weekly or monthly reports that need to be produced.
2. Forecasting
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Forecasting is the process of making statements about events whose actual
outcomes (typically) have not yet been observed. A commonplace example
might be estimation of the expected value for some variable of interest at some
specified future date.
3. Dashboard
The primary purpose of a dashboard is to convey the information at a glance.
For this audience, there is little, if any, need for drilling down on the data. At
the same time, presentation and ease of use are very important for a dashboard
to be useful.
4. Multidimensional analysis
Multidimensional analysis is the "slicing and dicing" of the data. It offers good
insight into the numbers at a more granular level. This requires a solid data
warehousing / data mart backend, as well as business-savvy analysts to get to
the necessary data.
5. Finding correlation among different factors
This is diving very deep into business intelligence. Questions asked are like,
"How do different factors correlate to one another?" and "Are there significant
time trends that can be leveraged/anticipated?"
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ADVANTAGES OF BUSINESS INTELLIGENCE
As business intelligence is aiding companies in terms of helping to simplify
and use information in an organization to support better decision making with key
information to decision maker in a timely and efficient manner, business intelligence
has been widely implemented to further generate higher profit while cutting
unnecessary costs. It is clear that there are many advantages to implementing business
intelligence in an organization.
Business intelligence enables aster and fact-based decision making by
enabling easy access to data in its actual format which facilitates faster and fact-based
decision making. More often than not, business intelligence are either delayed or
frequently changed due to frequent changes in the data received or misinterpretations
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which might lead to ineffective decision making and waste of time. Therefore, with
organized data in a way as to allow users to further explore details of the data and
availability of data in accurate and easily accessible manner, discrepancies in data
interpretation can be minimized. Besides that, business intelligence combines multiple
sources of data for decision making.
Decisions made in an organization inevitably affect more than one aspect.
With that, business decisions require data and metrics from various aspects of the
organization. With business intelligence in play, data is provided not only from
various aspects but in ratios and formats that makes comparison among these metrics
easier and more comprehensible whilst enabling more effective and efficient decision
making.
Business intelligence provides efficient collection and distribution of vital data
and statistics. With efficient collection of different data and metric for effective
decision making provided by business intelligence, a system where data can be
collected, retrieved and distributes in a timely manner is established. Thus, accurate
timely data is attainable to ensure decisions are made based on factual or accurate
data.
With the aid of business intelligence, users or employees are allowed
uncomplicated data access which is easy to comprehend and evaluate. Therefore,
users are able to execute in various ways which indirectly improve the overall
business performance and with that firms can make faster and enhanced decisions.
Moreover, people can interconnect with information they wish to access and by using
business tools which are common, easily accessible reduces training costs to the firm.
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Teamwork and allocation are simplified as the incorporation of business
intelligence in the firm enables employees to share data in a security improved web
ambiance with team members, clients and associates. A centralized site is available to
supervise their KPIs, access accounts, information evaluation as well as texts sharing.
People are united to access data competently and successfully as the initiation
of business intelligence has simplified decision making. Data is accessible and
evaluated at any given point of time regardless of place as the latest information is
accessible on the users desktop or over the net.
DISADVANTAGES OF BUSINESS INTELLIGENCE
However, there are certain disadvantages to the initiation of business
intelligence in firms. Use of such system can be a little dear for simple business
transaction. At times, business intelligence is costly for SMEs as the use of such
system requires regular maintenance. Therefore, it is not necessary for all firms to
have such system on board. At times, business intelligence is costly for SMEs as the
use of such system requires regular maintenance.
Another issue is the complexity in the implementation of data. Intricacies and
the complexity can make business techniques rigid to deal with. Therefore, many
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business experts have intricacies can actually throttle any business rather than
improving the overall business. The degree of its complexity will also affect the
execution of the system with untrained users which will in turn be more time
consuming.
Any important aspect to be taken into account is time consumption of
implementation. In such a fast-paced industrial scenario, not many firms are willing to
wait for the execution of business intelligence in their organization. The
implementation takes a round 18 months for data warehousing system to completely
implement the system as many firms have this mindset of gaining profit in the shortest
time possible and that they want to see immediate results.
Till today, not many firms are unable to afford this system. This system can
only be afforded by affluent firms as business intelligence was first established
keeping in consideration the buying competence of affluent firms. Many SMEs do not
consider them to be highly essential considering the complexity as these SMEs
usually are able to go on operating without aids of such systems as their operations
and data storage is not as complicated as large firms.
Therefore, it is important that the firm give enough consideration as to
whether to initiate business intelligence. The complexities and intricacies of this
systems, it must be thoroughly understood as to whether the system is necessary or
not. Data storage with this system without really serving the purpose this system is
built to achieve will only give adverse effects to the firm.
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CRITICAL SUCCESS FACTORS OF BUSINESS INTELLIGENCE
IMPLEMENTATION
To ensure the successful implementation of the Business Intelligence system,
they are few factors that organization should have such as:-
1. Support All Users Via Integrated BI Suites
Executives have always sought to purchase a single BI tool for the enterprise to
reduce administration, training, and support costs and minimize the number of
suppliers and redundant software. They quickly discovered, however, that one tool
cant possibly meet the needs of different types of users, and begrudgingly
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allowed departments and teams to purchase different tools, sometimes from
different vendors.
Organizations need to identify all of the different types of BI users in the
organization. There are few characteristics of the user in one company such as:
1.1 Business role. Typical roles include executive, manager, power user,
business analyst, customer, and supplier.
1.2 Analytical need. Users can be segmented by whether they need to author,
customize, interact with, or view reports, query source data, create forecasts,
develop planning scenarios, or develop statistical models.
1.3 Access and delivery preferences. Different users may prefer to access or
receive information via different methods, such as Windows, the Web, e-mail,
wireless devices, or printers.
1.4 Technical and analytical literacy. Individuals vary by the degree to
which they are comfortable working with computers and know how to analyze
and interpret data.
The BI platform enables organizations to purchase additional modules to support
more than just bread-and-butter reporting and analysis functions. For example, a
BI vendor may offer statistical tools that enable users to analyze customer
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segments or they may offer modules for creating Balanced Scorecards or
developing pixel-perfect reports for invoices or statements.
2. Conforms to The Way Users Work
The problem with earlier generations of BI tools is that they force users to
conform to the way the tools work, rather than conform to the way users work and
prefer to interact with information.
Most users also dont want to spend time analyzing data unless there is an
exception condition that demands their attention. When that happens, they would
want immediate access to all relevant information but in a systematic and
structured way so they dont get lost in the data.
Business Intelligence tools today conform to the way users work to suit the level
of comprehension of users to of users to enable them to gain immediate access to
all relevant information in a systematic and structured way and this is one of the
critical success factors of BI implementation.
3. Integrates with Desktop and Operational Applications
The more BI platforms conform to the way users want to work, the more they
disappear into the background, blending into core applications and central
processes. Thus, BI should integrate with desktop and operational applications to
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make sure the implementation is successful rather than shift to a separate
application to view reports, users should be able to view information within the
same application in which they perform their everyday tasks. This also closes the
loop between analysis and operations, enabling users to take prompt action based
on relevant information and analysis.
Meanwhile, this could make the business process become more effective and
efficient which is also one of the reasons why organizations implement Business
Intelligence.
4. Focus on business processes and requirements
Often companies get tied up in the technical capabilities and ignore how you want
your business operations to run and what your key business requirements are.
Once you have this defined, you can engage in a more effective Business
Intelligence system.
5. Focus on achieving a healthy ROI (Return on Investment)
This requires developing a high-level business case, establishing key performance
measures, setting baselines and targets for those measures, and tracking
performance after go-live. If the organization doesnt achieve a healthy ROI, it
simply means that the organization doesnt gain many benefits from the
implementation of Business Intelligence system or tools.
6. Strong project management and resource commitment
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understand and know how to use the Business Intelligence system. The training
can prevent the employees from making mistakes while using the system.
CURRENT ISSUES
Current Issue 1: Microsoft flexes BI muscle with SQL Server R2 release
As reported in The Star, dated June 28th 2010, the second release of
Microsofts SQL Server 2008 server operating software has brought out more
business intelligence (BI) tools to help companies make better use their data.
The software giant believes the future of enterprise BI is about enabling
everyone to easily use it through familiar and affordable tools. Rohan Thomas,
product marketing manager of application platform at Microsoft Malaysia, said BI
could help businesses make crucial decisions. According to Rohan, businesses today
have more information in their environment than ever before, and with that they are
driving toward a transformation of BI into a natural, actionable part of everyday
business productivity.
SQL Server 2008 R2 brings self-service BI capabilities which Microsoft
believes will bridge the gap between IT professionals and end users by leveraging on
familiar tools, such as Microsoft Excel 2010 and Microsoft SharePoint Server 2010.
Another user-friendly feature that has been included with the new release is
PowerPivot. This allows users to import, manipulate, analyse and export data, as well
as create reports using the familiar Excel interface.
Off late, Microsoft in Malaysia has seen the prospect in marketing their
products here, therefore creating a market of user-friendly tools, which enables
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everyone to use their product, so the Microsoft company has brought about more
business intelligence (BI) tool such as Microsoft Excel 2010 and Microsoft
SharePoint Server 2010 to help the Malaysian companies to increase their service
quality and productivity. Therefore, this is a situation which can encourage more
companies in Malaysia to fully utilize the business intelligence tools to enable them to
enter into the new era of business environment.
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Current Issue 2: Benefits of efficient data collection system
According to The Star newspaper on January 25th 2010, ineffective critical
decisions made by business leaders in the Asia-Pacific have affected the margins of
companies and their ability to compete. Industry observers say this is partly due to the
unavailability or lack of appropriate data collection systems to facilitate an efficient
decision-making process.
IBM Malaysia country manager for software group, Vincent Ler, said in an interview
that in the Asia-Pacific, studies by IBM showed businesses frequently made critical
decisions without the necessary information, with one of three decisions often made
without relevant information. He pointed out that an efficient data collection system
would enable corporate and small and medium-scale enterprises to make informed
decisions that could improve their margins and put them on a stronger footing in local
and overseas markets and organisations that had reliable data collection system would
also have a significant headstart over their competitors in terms of revenue generation
and cost savings amid the economic recovery. Also, recent studies by IBM have
shown that top-performing companies are 15 times more likely to apply business
intelligence and analytics when making strategic decisions compared with their
under-performing peers.
Traditional business decision-making was being challenged by the growing
volume of business data as there were simply too much data being collected from
multiple sources and in multiple formats. In this regard, business intelligence and
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analytics would be an area that companies should strongly focus on to leverage their
decision-making process.
It is evident from the news reported that businesses now are able to reduce the
risk of ineffective critical decisions by adopting Business Intelligence tool. Therefore,
companies should take every opportunity to implement BI into their systems to be
able to gain the competitive advantage as to be able to compete more effectively
amongst other firms. Firms which have already implemented this system are
beginning to report significant increase in profits and therefore, organizations should
take a change to focus on this new type of business control method to encourage
operation is at its optimal level.
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Current Issue 3: SAP brings BI on Demand
As reported in The Star dated March 17th 2010, business software provider,
SAP unveiled SAP Business Objects BI On Demand to make business intelligence
(BI) systems available to everyone. Primarily targeted at casual BI users, the new
solution aims to deliver a complete BI toolset in one flexible offering.
According to SAP, packaged as a Software-as-a-Service (SaaS) users can
access and navigate data from any source using SAP Business Objects Explorer while
casual users can also easily combine data and the software guides them through
reporting and analysis.
SAP Business Objects Division, South East Asia Hub senior director Eric Sin
commented that there is a strong demand for SaaS BI tools because it allows
companies to do more with current resources. The BI market is also proven to be
recession-resillient as chief information officers (CIOs) continue to put it on top of
their priority list. Sin said CIOs still needed a tool to help them track operating costs
and business processes. Furthermore, the cloud computing market is expected to hit
the US$150bil (RM525bil) mark in 2013 from a mere US$46bil (RM161bil) today,
Sin said.
There is potential for business intelligence and many business software
provider has actively provide easy business intelligence tool because in the future,
business are prone to face the new environment challenges in the future. By utilizing
BI tools to manage their company, so this is a good situation for consumer because
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operational activities will be more effectively and provide good quality of service and
goods to consumers.
Current Issue 4: Genting Malaysia wins IT award
As reported in The Star on September 10 2010, Genting Malaysia Bhd beat
eight other finalists to win the Managing Information Strategies Asia 2009 IT
Excellence Award for Best Business Enabler (Private Sector).
According to the MIS Asia 2009 website, Genting Malaysias business
intelligence and data warehousing project consolidates various information from its
diverse business operations to produce a single version of truth required for
effective decision-making.
Some Malaysian companies are already familiar with the effective usage of BI
tools such as Genting Malaysia Berhad. Therefore, Malaysia companies have been
vanguards in the Business Intelligence aspect of Asia. With that, hopefully usages of
Business Intelligence tools will spread to other part of the whole which are yet to be
familiar with such tools that will further enhance the operations of firms in all
boundaries within the company.
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THE FUTURE OF BUSINESS INTELLIGENCE
The future of developments in the business intelligence market was predicted
by a 2009 Gartner paper. By 2010, 20% of organizations will have an industry-
specific analytic application delivered via software as a service, which is a standard
component of the business intelligence portfolio. Through 2012, more than 35 percent
of the top 5,000 global companies will fail to make insightful decisions about
significant changes in their business and markets due to lack of information,
processes, and tools. By 2012, business units will control at least 40% of the total
budget for business intelligence and one-third of analytic applications applied to
business processes will be delivered through coarse-grained application mashups.
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http://techcentral.my/news/story.aspx?
file=/2010/6/28/it_news/20100628100354&sec=it_news
http://business.mapsofindia.com/business-intelligence/disadvantages.htmlhttp://business.mapsofindia.com/business-intelligence/advantages.htmlhttp://www.src.si/en/solutions/businessintelligence/advantages.asphttp://www.itbusinessedge.com/cm/blogs/all/pros-and-cons-of-business-intelligence-in-the-cloud/?cs=35060http://www.itbusinessedge.com/cm/blogs/all/pros-and-cons-of-business-intelligence-in-the-cloud/?cs=35060http://benefitof.net/benefits-of-business-intelligence/http://www.information-management.com/issues/20040101/7924-1.htmlhttp://en.wikipedia.org/wiki/Business_intelligencehttp://www.cmis.csiro.au/bi/what-is-bi.htmhttp://www.1keydata.com/datawarehousing/business-intelligence-uses.phphttp://download.101com.com/pub/TDWI/Files/TDWIMonograph2-BO.pdfhttp://www.i-newswire.com/success-factors-of-business-intelligence/19298http://archives.thestar.com.my/news/story.asp?file=/2010/3/17/technology/20100317145541&sec=technologyhttp://archives.thestar.com.my/news/story.asp?file=/2010/3/17/technology/20100317145541&sec=technologyhttp://business.mapsofindia.com/business-intelligence/disadvantages.htmlhttp://business.mapsofindia.com/business-intelligence/advantages.htmlhttp://www.src.si/en/solutions/businessintelligence/advantages.asphttp://www.itbusinessedge.com/cm/blogs/all/pros-and-cons-of-business-intelligence-in-the-cloud/?cs=35060http://www.itbusinessedge.com/cm/blogs/all/pros-and-cons-of-business-intelligence-in-the-cloud/?cs=35060http://benefitof.net/benefits-of-business-intelligence/http://www.information-management.com/issues/20040101/7924-1.htmlhttp://en.wikipedia.org/wiki/Business_intelligencehttp://www.cmis.csiro.au/bi/what-is-bi.htmhttp://www.1keydata.com/datawarehousing/business-intelligence-uses.phphttp://download.101com.com/pub/TDWI/Files/TDWIMonograph2-BO.pdfhttp://www.i-newswire.com/success-factors-of-business-intelligence/19298http://archives.thestar.com.my/news/story.asp?file=/2010/3/17/technology/20100317145541&sec=technologyhttp://archives.thestar.com.my/news/story.asp?file=/2010/3/17/technology/20100317145541&sec=technologyTop Related