Business Intelligence

Business Intelligence

In this lesson, you’re expected to:
– learn the basics of Business Intelligence and how it can be used
– understand the applications of Data Warehousing
– explore the difference between KPIs and Metrics

Business Intelligence (BI), is a term that you’ve probably heard about since every big company has a a BI department.

But what is Business Intelligence really about?

What is Business Intelligence?

Business Intelligence is about creating an environment for better decision-making, where decisions rely on insights obtained from data.

In other words, BI delivers reliable and relevant information to the right people at the right time in order to make better and faster decisions in a company.

It involves processes and methodologies that collect, extract, transform, and process raw data, to provide structured, informative and meaningful information that can help departments to make decisions based on it.

Thus, BI systems take a vast amount of data and present it in an accessible and meaningful way.

Business Intelligence involves the following:

• Performance Management
• Analytics
• Predictive Modeling
• Text Mining

[Optional] What is Predictive Modeling?
[Optional] What is Business Intelligence?
Watch this 2-minute video to see how technology company Avitas provides solutions using Business Intelligence: https://www.youtube.com/watch?v=0aHtHl-jcAs
Using Business Intelligence
In order to better understand how BI works and how it benefits a company, let’s think about the following analogy:

When you access your preferred news website, you do not need to browse the entire site in order to find the news that you’re interested in. This is because the news is not randomly displayed, but it is organized. The website contains sections, and each news story is displayed under its corresponding section. For example, if I want information about this weekend’s football matches, I would go to the sports section, and then to the sub-category football. Thus, the website is easy to use and you can navigate through sections, to directly access the required information.

Similarly, in a company, we have lots of data regarding different areas. Each piece of data is like a piece of news in the previous example.

Thus, if I need information about the number of contracted financial products per customer, I would have to first contact an expert in the company who knows where to find that information, and then ask another person to compile, structure, and summarize that information so that it can solve my problem.

BI makes this process possible for us. It takes all the messy data of a company and organizes and summarizes it, so that it resembles the news website schema*.

It gets the bulk data, and transforms it into meaningful reports, tables or dashboards that are organized in a navigable way. Hence, it enables you to navigate through the data and access the information needed to make decisions, without relying on other departments.

Schema: a representation of a plan or theory in the form of an outline or model.
So with BI, we do not need to analyze the data manually or merge multiple reports in order to extract the information that we need.

Instead, BI gives us a tool that enables us to request the piece of updated information we need at anytime. Thus BI tools help to make better and faster strategic decisions within a company.

Advantages of using Business Intelligence

Some advantages of using BI tools are:

• Detect inefficient business processes and hidden patterns
• Identify areas of strength and weakness
• Discover new business opportunities

Data Warehousing

A Data Warehouse (DW) is a system used for reporting and data analysis, and is considered a core component of business intelligence. 

DWs are central repositories of integrated data from one or more disparate sources. The DW stores present and historical data in one single place. They are usually used to create analytical reports that can be used in an organization for decision making.

Data Warehouse Overview
Image Source: wikipedia.org
Enlarged version: http://bit.ly/2nPyqtA
[Optional] Benefits of a Data Warehouse
Watch this 3-minute video to learn more: https://www.youtube.com/watch?v=KGHbY_Sales
BI Metrics

What is a Metric?

A metric is a figure that is directly measurable, but it can also be the combination of multiple figures. There are several kinds of BI metrics that are important for business:

• Quantities, such as individuals per policy, ordered items, unique visitors, purchased products etc.
• Calculated Values, such as contribution margin, customer satisfaction.
• Discrepancies, for example how it compares to the previous month or year.

Key Performance Indicators (KPIs)

A Key Performance Indicator (KPI) is a value that measures how effectively a company is achieving a key objective. Usually, companies use KPIs to evaluate their success at reaching targets.
KPI vs. Metric

Sometimes, a KPI is confused with a metric. However, a Key Performance Indicator is not necessarily a value that is directly measurable, but one that reflects up to what degree we have fulfilled an objective or not.

Thus, in order to calculate a KPI, it has to be concrete and define a measurable objective. For example: “In one year, we want to increase the number of policies subscribed for through the internet by 20%”. The KPI should then show the discrepancy between the actual percentage of subscribed policies through the internet and the target value.

[Optional] What is a KPI?
BI Dashboards

Dashboards display the most relevant business information and KPIs that are important to achieve one or more objectives or business processes.

For example, number of sales, marketing or production. In many cases, dashboards are displayed on a web page that is connected to a database. This connectivity enables the dashboard to be constantly updated.

This is an important feature, as in business it is important to make decisions with updated reports. For example, a policy sales dashboard will display information on number of policy subscriptions, mean age of the policyholders, number of members per policy or number of people who unsubscribe.

Characteristics of BI Dashboards

The most common characteristics of a dashboard are the following:

• The entire dashboard fits on a single computer screen — scrolling to see more violates the definition of a dashboard.
• The dashboard reflects the most important KPIs.
• Dashboards are interactive.
• It is not designed exclusively for executives but rather should be used by the general workforce as effective dashboards are easy to understand and use.
• The data underlying the dashboard has to be automatically updated without any human assistance. The frequency of the updates will vary depend on the company and the use of the dashboard. However, most dashboards are updated at least daily.

Here’s an example of a Business Intelligence Dashboard:
* Created using Microsoft Power BI, a data visualization tool. Check out this link to learn more: https://powerbi.microsoft.com/en-us/what-is-power-bi/

Image Source: getapp.com/blog
Enlarged version: http://bit.ly/2ogSJA0
[Optional] What is a Dashboard?
Jim Rohn Sứ mệnh khởi nghiệp