UNIT-III

Implementation of Business Intelligence (BI) involves deploying technologies, tools, and

processes to collect, analyze, and present business data. The goal is to support better decision-
making, improve business processes, and drive performance through data-driven insights. Here is
a structured approach to implementing BI:

1. Define Business Goals and Objectives

 Identify business challenges: Clearly define the business problems or opportunities BI

is expected to address.
 Set measurable goals: Establish specific goals, such as improved decision-
making, enhanced customer experience, or increased operational efficiency.

2. Assess Data Sources and Quality

 Data inventory: Identify all data sources such as transactional systems (ERP,
CRM), social media, IoT devices, etc.
 Data quality: Evaluate the accuracy, completeness, and consistency of data, ensuring
it’s reliable for analysis.
 Data integration: Design how various data sources will be integrated (ETL
process: Extract, Transform, Load).

3. Choose the Right BI Tools

 Select BI platforms: Evaluate tools based on scalability, ease of use, and ability
to handle the company’s data volume (e.g., Power BI, Tableau, Qlik).
 Customization and flexibility: Ensure tools can be customized to meet
specific reporting and visualization needs.

4. Build Data Warehousing/Infrastructure

 Data warehousing: Develop a central repository to store data from various

sources, optimized for querying and analysis.
 Cloud or on-premise: Decide whether to host the infrastructure in the cloud
(AWS, Google Cloud) or on-premise, based on security, cost, and accessibility
needs.

5. Develop Dashboards and Reports

 User-friendly dashboards: Design intuitive dashboards that provide key

performance indicators (KPIs), metrics, and visual reports tailored to different
stakeholders.
 Custom reports: Ensure the ability to drill down into data for detailed analysis
and customizable reports for specific business functions.

6. Data Governance and Security

 Data governance: Implement policies to ensure data quality, privacy, and
compliance with regulations (GDPR, HIPAA).
  Role-based access: Control access to sensitive information through role-
based permissions and audit trails.

7. Testing and Validation

 Data accuracy: Verify that the data in the reports reflects accurate and up-to-date
information.
 Usability testing: Ensure the dashboards are user-friendly and provide the expected
insights.

8. User Training and Adoption

 Training programs: Conduct training sessions to ensure users understand how to use
BI tools effectively.
 Support adoption: Encourage widespread adoption by demonstrating the value of
BI insights and fostering a data-driven culture.

9. Continuous Monitoring and Improvement

 Monitor performance: Continuously track BI system performance, ensuring it

scales with growing data volumes.
 Feedback loop: Regularly gather feedback from users to refine dashboards, reports,
and processes.
 Iterative updates: Improve and update the system based on evolving business needs
and technological advances.

10. Advanced Analytics Integration (Optional)

 Predictive analytics: Use machine learning models to predict future trends and
behaviors (e.g., forecasting sales).
 AI integration: Enhance decision-making with AI-powered insights,
including recommendations and automation of routine analyses.
 Key drivers of BI
The key drivers of Business Intelligence (BI) are the factors that push organizations to adopt
and implement BI solutions, enabling them to stay competitive, make informed decisions, and
optimize operations. These drivers include technological, business, and competitive factors that
influence BI's role in the modern enterprise.

Here are the primary drivers:

1. Data-Driven Decision Making

 Informed decisions: BI enables companies to make decisions based on data rather

than intuition. This leads to more accurate and effective strategies.
 Improved accuracy: Data insights minimize the risk of errors and ensure decisions
are based on reliable information.

2. Operational Efficiency

 Process optimization: BI helps identify inefficiencies in business processes, such

as supply chain delays or bottlenecks, which can be addressed for smoother
operations.
 Resource allocation: Insights from BI ensure optimal allocation of resources,
improving productivity and reducing waste.

3. Competitive Advantage

 Market trends and competitor analysis: BI helps companies stay ahead by

analyzing market trends, competitor behavior, and customer preferences.
 Faster response: Organizations can react faster to market changes,
emerging opportunities, or threats through real-time data insights.

4. Customer Insights

 Personalized customer experiences: BI provides insights into customer

preferences, behaviors, and buying patterns, enabling businesses to tailor products
and services to individual needs.
 Customer retention: By analyzing customer feedback and interaction data, BI can
identify at-risk customers and help improve retention strategies.

5. Data Availability and Accessibility

 Data democratization: Modern BI tools make data accessible to non-technical

users, allowing employees across the organization to access insights and contribute to
data- driven decision-making.
 Real-time data: With the ability to access real-time data, businesses can make
faster decisions, react to changing circumstances, and improve agility.
6. Cost Reduction and Profitability

 Cost control: BI helps in identifying cost-saving opportunities across the business,

such as optimizing procurement or reducing operational expenses.
 Profit maximization: By analyzing revenue streams, sales trends, and customer
segments, BI helps businesses identify the most profitable areas and focus
resources accordingly.

7. Regulatory Compliance

 Compliance reporting: BI facilitates compliance with regulations by tracking

and reporting on critical metrics, helping organizations avoid fines and legal
issues.
 Audit readiness: Data governance features in BI ensure that organizations can
easily produce audit trails and meet regulatory requirements, such as GDPR or
HIPAA.

8. Technological Advancements

 Big data and analytics: The exponential growth of data and advancements in
cloud computing, machine learning, and AI are making BI more powerful and
accessible.
 Cloud-based BI: Cloud solutions make BI more scalable, cost-effective, and available
to a broader range of organizations, regardless of size.

9. Improved Reporting and Visualization

 Interactive dashboards: BI allows organizations to move away from static reports

and create interactive dashboards that offer dynamic, real-time insights.
 Customizable reports: BI enables users to create reports tailored to specific
business needs, enhancing the relevance and impact of the insights generated.

10. Risk Management

 Predictive analytics: BI uses historical data and advanced analytics to predict

future risks and opportunities, helping companies anticipate challenges.
 Fraud detection: By continuously monitoring transactions and business processes,
BI can detect irregularities that indicate potential fraud or operational risks.

11. Collaboration and Alignment

 Cross-departmental collaboration: BI fosters collaboration across departments by

providing a single source of truth, ensuring everyone works with the same data and
insights.
 Strategic alignment: It aligns operations with strategic goals by tracking
key performance indicators (KPIs) and business metrics across the
organization.

12. Scalability and Flexibility

  Adaptability: As businesses grow, BI solutions can scale to accommodate
increasing data volumes and complexity.
 Customizable solutions: Organizations can tailor BI systems to specific business
needs, allowing flexibility in reporting, data integration, and user roles.

These drivers emphasize the increasing need for data to be leveraged effectively in
organizations, ensuring they remain agile, efficient, and competitive in a data-driven world.

Key Performance Indicators (KPIs) and Performance metrics

Key Performance Indicators (KPIs) and performance metrics are essential tools in Business
Intelligence (BI) used to measure and track a company's progress toward its business
objectives. While both are used to assess performance, there are key differences:

 KPIs: High-level, strategic indicators tied to specific business goals.

 Performance Metrics: Broader, quantifiable measures that track specific activities
or processes contributing to the achievement of KPIs.

Key Performance Indicators (KPIs)

KPIs are strategic measures used to evaluate the success of an organization in achieving key
business objectives. They provide a clear indication of whether the company is moving
toward its goals. KPIs are typically tied to long-term outcomes and are designed to be
actionable and goal-oriented.

Characteristics of KPIs:

1. Specific: Linked to specific business goals or objectives.

2. Measurable: Quantifiable so that progress can be tracked.
3. Actionable: Should inform decision-making and suggest actions.
4. Relevant: Tied to core aspects of the business.
5. Time-bound: Tracked over specific time periods (weekly, monthly, quarterly).

Common Examples of KPIs:

1. Revenue Growth: Tracks the percentage increase in revenue over a specific period.
o KPI Example: “Achieve 10% revenue growth quarter over quarter.”
2. Customer Acquisition Cost (CAC): Measures the total cost of acquiring a
new customer.
o KPI Example: “Reduce CAC by 15% within the next six months.”
 3. Customer Lifetime Value (CLV): Projects the total revenue expected from a
customer over their relationship with the company.
4. Net Profit Margin: Percentage of revenue that is profit, indicating financial health.
5. Customer Retention Rate: Measures the percentage of customers retained over a given
period.
6. Employee Productivity: Tracks how much value each employee contributes,
usually measured in output or revenue per employee.
7. Net Promoter Score (NPS): Gauges customer satisfaction and loyalty by asking
how likely they are to recommend your company.

Performance Metrics

Performance metrics are more granular and focus on specific processes, activities, or operations
within a company. Unlike KPIs, they are not necessarily tied to long-term strategic goals but are
often used to monitor day-to-day performance.

Characteristics of Performance Metrics:

1. Operational: Focus on specific aspects of business functions.

2. Tactical: Can be more short-term and used to improve specific processes.
3. Quantitative: Always measurable, often related to efficiency or throughput.

Common Examples of Performance Metrics:

1. Sales Growth: Measures the percentage increase in sales over a specific period.
2. Conversion Rate: The percentage of leads or prospects that convert into customers.
3. Average Order Value (AOV): The average amount spent per customer transaction.
4. Website Traffic: Number of visitors, sessions, and page views over time.
5. Operational Efficiency: Tracks how efficiently resources (e.g., time, materials,
labor) are used.
6. On-Time Delivery Rate: Measures how often products are delivered within
the promised timeframe.
7. Inventory Turnover: Indicates how quickly inventory is sold and replaced over a period.
8. First Contact Resolution (FCR): Percentage of customer service issues resolved
during the first interaction.
9. Churn Rate: The rate at which customers stop doing business with the company over
a given period.
Differences Between KPIs and Performance Metrics

KPIs Performance metrics

1. KPIs are broader and focus 1. performance metrics tend to be
on long-term goals narrower and more process-specific.

2. KPIs offer strategic insight 2. Performance metrics are operational

(e.g., revenue growth or (e.g., production efficiency or website
customer satisfaction) traffic).

3. KPIs are used to measure 3. performance metrics can be

the overall health or success of used to improve specific areas of
the business performance, like marketing or
operations.

Using KPIs and Metrics in Business Intelligence

In BI systems, KPIs and performance metrics are tracked through dashboards, reports, and
visualizations that provide real-time insights into business operations and strategy. Here’s how they
are typically used:

1. Real-time Dashboards: BI dashboards allow businesses to monitor KPIs and metrics in real-
time, enabling decision-makers to see how the company is performing against its goals.
2. Drill-Down Capabilities: BI tools allow users to drill down from high-level KPIs (e.g.,
revenue growth) to more granular performance metrics (e.g., sales by region, product, or sales
rep) to identify root causes of performance issues.
3. Alerts and Notifications: BI systems can trigger alerts if certain KPIs or performance
metrics fall outside of the acceptable range, prompting action.
4. Trend Analysis: Historical data can be used to spot trends and forecast future
performance, helping companies make proactive adjustments.

Key Areas Where KPIs and Metrics Are Used in BI

 Financial Performance: Revenue, profit margin, cash flow, and financial ratios.
 Customer Insights: Retention rates, satisfaction scores, and average spend per customer.
 Operational Efficiency: Process effectiveness, production costs, and quality control
metrics.
 Sales and Marketing: Conversion rates, lead generation performance, and customer
acquisition costs.
 Human Resources: Employee turnover, productivity, and training effectiveness.

Architecture or framework of Business Intelligence

The architecture or framework of Business Intelligence (BI) consists of a multi-layered system
designed to collect, process, analyze, and present data in a meaningful way. It enables organizations to
make data-driven decisions. A well-structured BI architecture integrates data from various sources,
processes it for analysis, and delivers actionable insights via dashboards, reports, and visualizations

1. Data Source Layer

This is where raw data is collected from different sources, both internal and external. The data source
layer is the foundation of the BI architecture.

Key components:

 Internal Data Sources: These are typically transactional systems such as Enterprise
Resource Planning (ERP), Customer Relationship Management (CRM), databases,
spreadsheets, HR systems, and financial systems.
 External Data Sources: Data from third-party providers, social media, IoT devices,
market data, and competitor analysis tools.
 Unstructured Data Sources: Data in the form of emails, documents, social media feeds,
audio, and video files.

Function:

 To gather and integrate structured, semi-structured, and unstructured data from different data
sources.

2. Data Integration Layer (ETL Process)

This layer is responsible for Extracting, Transforming, and Loading (ETL) data from various sources
into a centralized repository, often a data warehouse or data lake.

Key components:

 ETL Tools: Specialized tools like Talend, Apache NiFi, Microsoft SSIS, Informatica, or
custom-built pipelines for data extraction, transformation, and loading.
 Data Transformation: Involves cleaning, filtering, aggregating, and normalizing data to
ensure consistency and accuracy.
 Data Staging Area: A temporary space where data is stored before being transformed and
loaded into the central repository.

Function:

To cleanse and transform raw data into a unified format for analysis.

3. Data Storage Layer

This layer provides a centralized storage for integrated data. It serves as the primary repository for all
business intelligence activities, enabling efficient querying and reporting.

Key components:

 Data Warehouse: A large, structured repository optimized for reporting and analysis.
Examples include Amazon Red shift, Google Big Query, and Snowflake.
 Data Lake: Stores both structured and unstructured data, allowing flexibility in how data is
accessed and analyzed. Examples include AWS S3, Azure Data Lake, and Hadoop.
 Data Marts: Smaller, department-specific databases that house subject-oriented data
subsets of the enterprise data warehouse (e.g., sales, finance, HR).

Function:

 To provide fast access to historical and current data for reporting and analysis.

4. Data Modeling Layer

The data modeling layer defines how data is structured and organized within the warehouse to make it
accessible and meaningful to end users.

Key components:

 Dimensional Modeling: Organizes data into fact tables (e.g., sales, revenue) and dimension
tables (e.g., customer, time, location) for easier analysis using OLAP (Online Analytical
Processing) cubes.
 Relational Models: Organize data into normalized tables with defined relationships,
suitable for transactional queries (OLTP).

Function:

 To optimize data organization for efficient querying and reporting, making it easy to
generate insights from data.

5. Analytics and Data Mining Layer

In this layer, various analytical techniques and tools are applied to the data to derive deeper insights
and trends.

Key components:

 Descriptive Analytics: Basic analysis of historical data, such as reports, dashboards, and
trend analysis.
 Diagnostic Analytics: Helps determine the root cause of specific trends or events (e.g., why
sales dropped).
 Predictive Analytics: Uses statistical models, machine learning algorithms, and
historical data to forecast future outcomes (e.g., predicting customer churn or sales
forecasts).
  Prescriptive Analytics: Recommends specific actions to optimize business outcomes,
often using AI or optimization algorithms.
 Data Mining: The process of discovering patterns and relationships in large datasets
using tools like clustering, classification, and association rule mining.

Function:

 To provide analytical capabilities for data exploration, predictive modeling, and trend
analysis.

6. Data Access Layer (Query and Reporting Layer)

This layer consists of tools that allow users to access and query data, generating reports and
visualizations for decision-making.

Key components:

 Query Tools: SQL-based tools or user-friendly drag-and-drop interfaces for querying the data
(e.g., SQL Server Reporting Services, Presto).
 Ad Hoc Reporting: Tools that allow users to create reports on the fly without deep
technical knowledge.
 Scheduled Reporting: Predefined reports generated on a regular schedule for specific
business needs.

Function:

 To allow end-users to query data and generate reports for decision-making.

7. Data Presentation Layer (Visualization and Dashboard Layer)

This is the layer where insights are visually represented, making it easier for end-users to
understand and act on the data.

Key components:

 Dashboards: Provide a real-time overview of key performance indicators (KPIs) and metrics
using interactive visualizations. Examples include Power BI, Tableau, and Qlik.
 Visualization Tools: Graphical tools that transform data into charts, graphs, and other visual
formats. These tools allow users to interact with data through filters, drill-downs, and heat
maps.
 Self-Service BI Tools: Enable non-technical users to create reports, dashboards, and
visualizations without relying on IT or data specialists.

Function:

 To visually represent data through charts, graphs, and dashboards, making it easier to
interpret insights.
8. Metadata Layer

The metadata layer manages information about the data itself, ensuring that users and BI tools
understand the data's structure, relationships, and meaning.

Key components:

 Business Metadata: Describes business terms, definitions, and rules for the data (e.g., what
constitutes a "customer").
 Technical Metadata: Includes data types, table structures, and relationships within the data
warehouse.
 Data Lineage: Tracks the origin and transformations applied to data over time.

Function:

 To maintain clarity and consistency in the understanding and use of data, supporting data
governance and data quality management.

9. Security Layer

This layer ensures that data is protected and accessed only by authorized users. BI solutions often
handle sensitive data, making security essential.

Key components:

 Role-Based Access Control (RBAC): Ensures that users only have access to the data they
are authorized to see, based on their role within the organization.
 Data Encryption: Protects data both in transit and at rest using encryption technologies.
 Audit Logs: Tracks data access, report generation, and any modifications to ensure
compliance and security.

Function:

 To ensure that data is accessed securely and that privacy, compliance, and regulatory
requirements (e.g., GDPR, HIPAA) are met.

10. Governance and Management Layer

The governance layer is responsible for ensuring data quality, consistency, and compliance throughout
the BI system.

Key components:

 Data Governance Policies: Formal policies and procedures that ensure data integrity,
accuracy, and consistency.
  Master Data Management (MDM): Ensures that key data (e.g., customer, product) is
consistent across all systems.
 Data Stewardship: Assigns roles and responsibilities for managing data quality and
ensuring that data governance rules are followed.

Function:

 To ensure that data is trustworthy, secure, and managed according to business policies and
regulatory requirements.

Business Decision Making:

Basically application of digital capabilities and technologies in business processes, products, and
models. Moreover, it is a cultural change. It is a change that challenges organizations to be innovative,
adaptive and customer oriented.
There is no digital transformation without business intelligence (which among other things, consists of
information processing and decision-making) and organizational changes.
4 Phases of the Decision-Making Process

Simon’s model defines four phases of decision-making process:

 Intelligence Phase
 Design Phase
 Choice Phase
 Implementation Phase
Intelligence Phase

Firstly, the decision-making process starts with the intelligence phase. In the first phase, decision
makers examine reality and try to identify problems or opportunities correctly. . For example, we
like to practice Lean Startup methodology which emphasizes the importance of right problem
definition before building anything (product or business).

Business Intelligence implementations are considered successful only if you have clear business
needs and see real benefits from it. Business Intelligence is not just about data. It should be
connected with organizational goals and objectives!

Therefore, intelligence phase includes actions like:

 Defining organizational objectives

 Data collection
 Problem identification and classification

The intelligence phase can last really long. But, since decision-making process starts with this
phase, it should be to be done properly. This is a key ingredient in every business success.

Design Phase

The main goal of the design phase is to define and construct a model which represent a system,
by defining relationships between collected variables. Once we validate the model, we define the
criteria of choice and search for several possible solutions for the defined problem (opportunity).
We wrap up the design phase by predicting the future outcomes for each alternative.

Choice Phase

In this phase we are actually making decisions. The end product of this phase is a decision.
Decision is made by selecting and evaluating alternatives defined in previous step. If we are sure
that the decision we made can actually be achieved – we are ready for the next phase.

Implementation Phase

Implementation can be either successful or not. Successful implementation results with a

solution to the defined problem. On the other hand, failure brings us back to the earlier phase.
A process is described as a series of events that precede final decisions. It is important to say
that, at any point, the decision maker may choose to return to the previous step for additional
validation.
Styles of BI:

In Business Intelligence Applications and Business Intelligence Technology concludes 5 common

styles.
each style representing a certain characteristic usage and function by end users.
These 5 Styles of BI are:
 Enterprise Reporting - Broadly deployed pixel-perfect report formats for operational
reporting and scorecards/dashboards targeted at information consumers and executives.
 Cube Analysis - OLAP slice-and-dice analysis of limited data sets, targeted at managers and
others who need a safe and simple environment for basic data exploration within a limited
range of data.
 Ad Hoc Query and Analysis - Full investigative query into all data, as well as automated
slice and-dice OLAP analysis of the entire database - Targeted at information explorers and
power users.
 Statistical Analysis and Data Mining - Full mathematical, financial, and statistical
treatment of data for purposes of correlation analysis, trend analysis, financial analysis and
projections. Targeted at the professional information analysts.
 Alerting and Report Delivery - Proactive report delivery and alerting to very large
populations based on schedules or event triggers in the database. Targeted at very large user
populations of information consumers, both internal and external to the enterprise.

The Value of Business Intelligence:

As the growth of e-commerce continues to saturate the market, the importance of BI becomes
even more apparent than ever. Business owners have to make smart decisions regarding how
they wish to see their marketing spend, as anything a consumer now wants is only a click away.

Integrating business intelligence into their operations helps the company by delivering value
through the following ways:

Effective decision-making

The sole reason behind the implementation of BI is to convert raw company data into analyzable,
well-structured insights that enable the organizational executives to implement strategic
decision- making.

Great business intelligence means having all your business data in a unified dashboard to include
all the relevant data from different areas such as finance, sales, and many others – all that aim to
provide a holistic view of the business.
Sales & marketing

Incorporating BI data allows a company to boost a current marketing campaign’s performance,

increasing sales in the long run. Through BI, the sales department can get the right tools to help
measure consumer trends through improved visibility.

Customer experience

Business intelligence is also helpful by delivering the necessary information to help companies
understand how their customers interact with their business.
Data accuracy is improved when one can access all customer information from a single
dashboard, enabling the businesses to enhance customer support, engagement, and experience.
BI helps analyze customer insights to improve the targeting and segmentation of the different
categories of customers. This helps identify which resources need to be applied for the
businesses to attract only valuable customers to achieve particular goals.

Boosting productivity

The automation of routine tasks through BI helps an organization to refine its operational
processes.Business intelligence introduces ways to seamlessly improve inventory control and
reduce inefficient constrictions within the organizational structure.
Easy-to-access centralized data also cuts down on the administration time and efforts,
simultaneously boosting data integrity and productivity.

Data accuracy and compliance

The centralized nature of BI data boosts transparency in organizational operations. BI also seeks
to expose the errors that might lead to lots of downtime and wasted resources.

Companies are now tasked with heavier responsibilities when it comes to the protection of
personal data. There is a keen focus on organizations to adhere to data protection regulations
should they wish to store customer information. Implementing BI tools ensures that businesses
can address the issue of data governance and integrity.
Tips for choosing the right business intelligence tools

Going for the right BI tools is as important as collecting the data itself. There are many business
intelligence software that one can go for.

Here are three important factors to consider:

Integration

Before implementing any BI tools, every company has its own reporting processes. Ensure that
the tools you go for are easily integrated with existing structures and can easily incorporate the
data received from different sources.

Identify your immediate goals.

One of the first steps to undertake before getting a business intelligence tool is identifying the
goals that wish to achieve. Setting parameters from the initial stages enables to choose the right
data.

User-friendliness

Before settling on a tool, ensure that it has an intuitive interface that’s easy to use by all the
approved users. Nothing is worse than any system that’s clunky and hard to operate. This means
that the BI tool has to be easy to access, operate, and translate the information it provides.