DWDI

Unit-3
BI Implementation Key Drivers, Key Performance Indicators and
Performance Metrics, BI Architecture/Framework, Best Practices,
Business Decision Making, Styles of Bl-vent-Driven alerts, cyclic
process of Intelligence Creation. The value of Business Intelligence-
Value-driven and Information
The Value of Business Intelligence (BI)
Business Intelligence (BI) refers to the use of various tools, technologies, applications, and
practices to collect, analyze, and present business data in a meaningful way. It transforms raw
data into useful insights that help organizations make strategic, data-driven decisions. The
ultimate goal of BI is to improve overall business performance and support decision-making
across all levels of management.
1. Improved Decision-Making
The primary value of Business Intelligence lies in enabling organizations to make informed
and accurate decisions.
• BI gathers data from different business functions such as sales, finance, marketing, and
operations.
• This data is analyzed and presented through interactive dashboards and visual reports.
• Managers and executives can easily identify business trends, strengths, and
weaknesses.
• As a result, decisions are based on facts and data analysis rather than assumptions or
intuition.
This helps the company reduce risks and improve overall performance.
2. Centralized Data Access
In most organizations, data is scattered across multiple systems or departments.
• BI tools integrate all this information into a centralized data warehouse.
• Users can access real-time, accurate, and consistent data from one place.
• This unified view eliminates data duplication and ensures all departments work with
the same information.
 Hence, BI promotes collaboration, transparency, and efficient communication within
the organization.

3. Enhanced Sales and Marketing Performance

Business Intelligence tools provide deep insights into sales performance, customer behavior,
and market trends.
• They help identify the most profitable products and customer segments.
• BI tools also track and measure the success of marketing campaigns and promotions.
• By analyzing which campaigns worked best, companies can optimize future marketing
strategies.
Thus, BI supports sales growth and ensures that marketing efforts are more targeted and
effective.
4. Operational Efficiency
BI automates the process of data collection, report generation, and performance tracking.
• This reduces manual effort and the possibility of human errors.
• It helps organizations identify inefficiencies or bottlenecks in their operations.
• By acting on this information, businesses can save time, reduce costs, and improve
productivity.
For example, BI can highlight slow-moving products or underperforming departments
that need attention.
5. Better Customer Insights
Understanding customer needs and preferences is vital for any business.
• BI analyzes customer data from various sources such as feedback, purchase history, and
social media.
• This helps companies predict customer behavior and develop personalized products or
services.
• Businesses can improve customer satisfaction and loyalty through targeted offers and
improved service quality.
In short, BI turns customer data into actionable insights that enhance customer
relationships.
6. Predictive and Strategic Planning
Modern BI systems not only analyze past data but also predict future outcomes using
advanced analytics.
• Predictive analytics helps forecast market trends, sales growth, and potential risks.
• BI also supports strategic planning by providing detailed insights into future
opportunities and threats.
 This enables management to make proactive decisions and stay competitive in a
changing market environment.
7. Competitive Advantage
In today’s data-driven world, companies using BI gain a clear competitive edge.
• BI provides timely insights into market conditions, competitor activities, and emerging
trends.
• With this information, businesses can respond faster to market demands and customer
needs.
• This agility helps them outperform competitors and maintain a strong market position.
8. Financial Management and Profitability
BI tools help monitor and analyze key financial metrics such as revenue, expenses, and profit
margins.
• They identify areas where costs can be reduced and resources can be optimized.
• Financial reports generated through BI help organizations improve budgeting and
forecasting accuracy.
• Overall, BI supports sustainable growth and enhances the company’s profitability.
9. Real-Time Monitoring and Alerts
BI allows real-time monitoring of business activities through dashboards and automated alerts.
• Managers can track performance indicators and receive notifications about sudden
changes or issues.
• This enables quick corrective actions and reduces losses or delays in operations.

Value-driven and Information

Business Intelligence (BI) is not just about collecting and analyzing data it is about creating
value from data by turning it into actionable insights that drive better decision-making. The
value-driven BI process involves a systematic flow of activities from data sourcing to decision
support that helps organisations make informed, evidence-based decisions.

1. Data Sourcing
The first and most crucial step in the BI process is data sourcing, which involves collecting,
storing, and managing raw data from multiple sources.
• Data is collected from internal sources (such as ERP systems, CRM databases, and
spreadsheets) and external sources (such as market research, government data, or social
media).
 • Data warehousing plays a key role in storing and managing this large volume of data
efficiently.
• The quality, accuracy, and relevance of sourced data directly affect the quality of
insights BI can produce.
• A BI analyst must identify:
o What types of data are available (structured, semi-structured, or unstructured)
o Where to find it and how to access it securely
• Data can include numerical values, images, text, or other formats that need proper
organization.
In short: Data sourcing ensures the foundation for the BI process is strong, as good data leads
to good decisions.
2. Data Engineering and Analysis
Once the data is collected, it must be cleaned, structured, and analyzed to derive meaningful
insights.
This stage includes data preparation and analytical processing.
Data Engineering
• Converting unorganized data into a structured (tabular) format
• Cleaning the data by removing duplicates or errors
• Handling missing values and outliers
• Eliminating multicollinearity between variables to ensure reliable results
Exploratory Data Analysis (EDA)
After structuring the data, BI analysts perform EDA to understand data characteristics by:
• Summarizing data using descriptive statistics (mean, median, standard deviation, etc.)
• Finding associations, correlations, and relationships in the data
Structured Data Analysis (SDA)
This step involves three major types of analysis:
1. Trend Analysis: Identifies patterns and trends (e.g., monthly sales variations across
regions).
2. Mathematical Analysis: Uses formulas and calculations to assess performance metrics
such as profit margins or growth rates.
3. Statistical Analysis: Applies inferential statistics (like regression) to predict outcomes
and establish relationships between business variables.
In short: Data engineering and analysis convert raw data into structured information that
supports deeper business insights and forecasting.
3. Situation Awareness
This stage focuses on understanding the current business environment and how external and
internal factors affect it.
• BI systems generate reports, dashboards, and visualizations to present insights clearly.
• Situation awareness helps decision-makers stay informed about key developments such
as:
o Market trends
o Competitor performance
o Government regulations
o Customer behavior patterns
• It ensures that leaders have the right information at the right time to act effectively.
Example: A BI dashboard showing declining sales in a region helps managers act quickly to
adjust pricing or marketing strategies.
4. Decision-Making
Once management understands the data and the surrounding environment, the next step is
making informed decisions.
• BI enables data-driven decision-making rather than relying on assumptions or intuition.
• Decisions can be strategic (e.g., launching a new product, expanding to new markets)
or operational (e.g., running promotional campaigns, adjusting inventory).
• BI insights help leaders understand the “what” and “why” behind business trends,
making their actions proactive rather than reactive.
In short: This stage turns analyzed data into real business actions and strategies.
5. Decision Support
After decisions are proposed, BI provides decision support by evaluating their potential
outcomes.
• Decision support involves risk and opportunity assessment before implementing
actions.
• It evaluates:
o Costs vs. benefits
o Expected return on investment (ROI)
o Possible risks and uncertainties
o Overall business value of each decision
• This helps management choose the most effective and profitable course of action.
 Unit-2
Business Intelligence Introduction- Definition, Leveraging Data and
Knowledge for BI, BI Components, BI Dimensions, Information
Hierarchy, Business Intelligence and Business Analytics.BI Life Cycle.
Data for BI-Data Issues and Data Quality for BI.

Business Intelligence (BI) – Introduction and Definition

Definition:
Business Intelligence (BI) refers to a technology-driven process for collecting, managing, and
analyzing business data to generate actionable insights that support informed decision-
making.
It involves the use of tools, systems, and processes that help organizations turn raw data into
useful information and knowledge.
In simple terms,
“Business Intelligence is the process of using data analysis and visualization techniques to
convert data into meaningful insights for better business decisions.”

Key Components of BI:

1. Data Collection:
BI gathers data from various internal sources (like ERP systems, CRM, finance
records) and external sources (like market research, social media, and competitors).
2. Data Integration and Preparation:
The collected data is cleaned, organized, and stored in data warehouses or data marts
to ensure it is accurate and consistent.
3. Data Analysis:
Using analytical models and statistical methods, BI systems identify patterns,
correlations, and trends in the data.
4. Reporting and Visualization:
The analyzed data is presented in dashboards, charts, graphs, and reports that help
managers and employees understand business performance at a glance.
5. Decision-Making Support:
The final goal of BI is to provide decision-makers with reliable, data-driven insights
for strategic planning and operational improvements.
Example:
A retail company uses BI to analyze sales data from multiple stores.
The BI dashboard shows which products sell best in specific regions or seasons.
Based on these insights, management can make informed decisions about inventory stocking,
pricing, and marketing strategies.
Objectives of Business Intelligence:
• To improve business performance through informed decision-making.
• To identify trends and opportunities in the market.
• To enhance operational efficiency by optimizing processes.
• To provide real-time, data-based insights for faster response to business challenges.
Benefits of BI:
• Enables data-driven decision-making rather than guesswork.
• Improves strategic planning and forecasting.
• Enhances customer understanding and satisfaction.
• Increases profitability and business agility.
• Provides a holistic view of the organization’s performance.

Leveraging Data and Knowledge for BI

Meaning of Leveraging Data
Leveraging data means using collected information wisely to enhance business outcomes.
Data by itself is meaningless until it is analyzed, understood, and applied.
In BI, leveraging data involves:
• Collecting accurate and relevant data
• Organizing it properly (data warehousing)
• Analyzing it using BI tools
• Applying the results to improve operations, sales, and customer satisfaction
Example:
A retail company analyzes its customer purchase data to identify buying trends. By acting on
this insight, it can stock popular items and improve profits.

3. Need for Leveraging Data

Organizations generate massive amounts of data daily from sales, finance, marketing,
production, and customer interactions.
Without BI, this data remains underutilized.
Leveraging data allows businesses to:
• Make data-driven decisions rather than guessing
• Understand market trends and customer behavior
• Predict future outcomes using analytical models
• Improve efficiency and profitability
4. Key Steps in Leveraging Data for BI
Step 1: Data Sourcing
• The first step is collecting data from different internal and external sources — sales
systems, ERP, CRM, websites, and social media.
• Data must be accurate, complete, and relevant.
• Data warehousing is used to store and organize this data for easy access.
Step 2: Data Management
• Data must be cleaned and standardized.
• Ensures consistency, accuracy, and removal of duplicates or missing values.
• Defines who owns the data, who can access it, and how it is secured.
Step 3: Data Integration
• Combines data from multiple sources into one unified system.
• Helps create a single source of truth that can be trusted across departments.
• Integration frameworks and middleware tools are used to connect various systems.
Step 4: Data Analysis
• The data is analyzed using BI tools to identify patterns, relationships, and insights.
• Analytics includes:
o Descriptive analytics → What happened?
o Predictive analytics → What will happen?
o Prescriptive analytics → What should we do?
Step 5: Knowledge Application
• Insights gained from BI are shared with decision-makers through dashboards and
reports.
• Managers use this knowledge to plan, forecast, and make strategic decisions.
5. Importance of Leveraging Data
 • Better Decision-Making: Provides factual insights for confident decisions.
• Operational Efficiency: Helps identify waste, delays, or cost leakages.
• Customer Understanding: Reveals customer needs and buying behavior.
• Competitive Advantage: Enables faster response to market changes.
• Strategic Growth: Supports innovation and long-term planning.
6. Example
A telecom company collects customer call records and feedback data.
Using BI, it analyzes usage patterns and customer complaints.
It finds that most churned customers face poor network quality in specific regions.
By fixing these network issues, the company improves retention and customer satisfaction.
This is how leveraging data leads to better business performance.

7. Role of Knowledge in BI
Data alone is not enough it must be converted into knowledge.
Knowledge involves understanding why something happened and how to act on it.
In BI:
• Data → becomes Information after analysis
• Information → becomes Knowledge when insights are understood and applied
• Knowledge → leads to Wisdom, guiding smart business actions

BI Components
Main Components of Business Intelligence System:
1. Data Source
2. Data Mart / Data Warehouse
3. Data Exploration
4. Data Mining
5. Optimization
6. Decisions
Business Intelligence (BI) is a combination of processes, tools, and technologies that help
organizations transform raw data into useful insights for decision-making.
The BI system consists of several core components, each serving a unique purpose in turning
data into actionable intelligence.
1. Data Source
• This is the first and most fundamental component of a BI system.
• It involves collecting data from various internal and external sources.
• Data can come from:
o Operational systems (e.g., ERP, CRM, HR systems)
o Transactional databases
o Social media, emails, surveys, or third-party providers
o Unstructured sources such as images, documents, and web data
• The main goal is to gather and consolidate all relevant data that the organization needs
for analysis.
Example:
A retail company collects data from sales transactions, customer feedback forms, and website
analytics to get a complete picture of performance.
2. Data Mart / Data Warehouse
• Once data is collected, it must be stored, cleaned, and organized for analysis.
• This is done using Data Warehouses and Data Marts, which act as central repositories.
• The ETL (Extract, Transform, Load) process is used:
o Extract: Collect data from multiple sources.
o Transform: Clean and convert it into a consistent format.
o Load: Store it in the warehouse.
• A Data Warehouse stores large-scale enterprise data, while a Data Mart stores
department-specific data (e.g., Sales Mart, Finance Mart).
Example:
All sales and customer data are combined in a data warehouse to provide a unified view of
business performance.
3. Data Exploration
• This stage allows users to interactively explore and analyze data.
• Tools used: Query systems, Reporting tools, and Statistical methods.
• It’s called passive analysis because analysts first form hypotheses and then test them
using data.
• Helps users identify problems or opportunities based on trends and comparisons.
Example:
A sales manager notices a drop in sales in one region and uses BI reporting tools to explore
possible causes such as product availability or pricing.
4. Data Mining
• Data mining involves discovering hidden patterns and relationships in large datasets.
• It is considered an active BI technique because it automatically identifies useful
insights.
• Techniques include:
o Pattern recognition
o Machine learning algorithms
o Statistical modeling
o Clustering and classification
• Helps in predictive analysis and forecasting future outcomes.
Example:
A bank uses data mining to identify customers likely to default on loans based on their
transaction history.
5. Optimization
• This component focuses on selecting the best possible action or solution among many
alternatives.
• Optimization models are used in marketing, finance, logistics, and supply chain
management.
• It applies mathematical and statistical methods to maximize profit, minimize cost, or
improve efficiency.
Example:
A logistics company uses optimization models to plan delivery routes that minimize travel time
and fuel costs.
6. Decisions
• The final component of the BI process is Decision-Making.
• At this stage, insights and recommendations generated from BI tools are used by
decision-makers (managers, executives, analysts).
• Decisions may be:
o Strategic: Long-term planning, new product launch, expansion
o Operational: Daily activities, pricing adjustments, marketing actions
• Although BI provides data-driven suggestions, human judgment is essential to finalize
decisions.
Example:
Based on BI insights, a company decides to increase marketing in regions where customer
engagement is high but sales are low.
BI Dimensions
Introduction
Business Intelligence (BI) is not just about technology or tools it also includes several
dimensions that define how effectively an organization uses data to make better decisions.
These BI dimensions represent the different perspectives, processes, and elements that together
make BI successful.
Each dimension focuses on a specific aspect of BI from how data is collected to how it is
analyzed, shared, and used strategically.
Main Dimensions of Business Intelligence
1. Data Dimension
• This is the foundation of BI, as all insights depend on the quality and availability of
data.
• It involves collecting, storing, managing, and maintaining data from multiple sources.
• Data must be:
o Accurate – Free from errors
o Consistent – Same meaning across systems
o Timely – Updated regularly
o Relevant – Useful for decision-making
• A strong data dimension ensures reliable and trustworthy analysis.
Example:
A retail company integrates sales, inventory, and customer data to create a unified view for
analysis.

2. Technology Dimension
• Refers to the tools, software, and platforms that enable BI processes.
• Includes:
o ETL tools – for data extraction and transformation
o Data warehouses and data lakes – for storage
o Analytical tools – for reporting, visualization, and data mining
o AI/ML algorithms – for predictive analytics
• A robust technology infrastructure ensures scalability, performance, and security of BI
systems.
Example:
Using tools like Power BI, Tableau, or SAP Analytics Cloud for dashboard creation and
visualization.
3. Process Dimension
• This dimension focuses on the workflow and methods used to turn data into insights.
• Key processes include:
o Data collection and integration
o Data cleaning and transformation
o Analysis and interpretation
o Reporting and decision-making
• The process must be well-defined and repeatable to ensure consistency in results.
Example:
A manufacturing company follows a monthly BI process to collect production data, analyze
efficiency, and generate management reports.

4. People Dimension
• BI is not just about data it’s also about the people who use it.
• This dimension includes:
o Business users: Managers and decision-makers who interpret reports.
o Analysts: Data professionals who prepare and analyze data.
o IT teams: Who manage BI tools and data pipelines.
• Success depends on collaboration, data literacy, and a culture of data-driven decision-
making.
Example:
Training employees to use dashboards effectively helps them make smarter business decisions.

5. Organizational Dimension
• Refers to how BI is structured and governed within an organization.
• It includes:
o Data governance policies – defining data ownership and access control.
o Roles and responsibilities – identifying who manages, analyzes, and approves
data.
o Strategic alignment – ensuring BI supports business goals and KPIs.
 • This dimension ensures BI initiatives deliver value and comply with organizational
standards.
Example:
A company sets up a BI governance team to oversee data quality, security, and compliance.

6. Analytical Dimension
• This focuses on how data is analyzed to derive insights.
• It includes:
o Descriptive Analytics: What happened?
o Diagnostic Analytics: Why did it happen?
o Predictive Analytics: What will happen next?
o Prescriptive Analytics: What should we do about it?
• Analytical techniques include data visualization, data mining, and machine learning.
Example:
Predictive analytics helps forecast future sales trends based on past customer behavior.

7. Strategic Dimension
• The strategic dimension ensures that BI aligns with the overall business strategy and
goals.
• BI initiatives must support:
o Market competitiveness
o Cost reduction
o Customer satisfaction
o Operational efficiency
• It ensures BI delivers measurable business value, not just technical outputs.
Example:
Using BI insights to plan product launches or identify new market opportunities.

Data for BI-Data Issues and Data Quality for BI

Introduction
Data Issues and Data Quality are critical factors that determine the success or failure of any
Business Intelligence (BI) project.
Business Intelligence relies on accurate, consistent, and timely data to generate meaningful
insights and support effective decision-making.
However, if the data is incomplete, inconsistent, or invalid, the insights drawn from BI tools
will be unreliable, leading to poor business decisions.

1. Importance of Data Quality in BI

• BI systems depend on clean and reliable data for accurate analysis.
• Poor-quality data leads to misleading reports, wrong insights, and faulty strategies.
• Good data quality ensures trust, efficiency, and data-driven decision-making.

2. Common Data Quality Issues in BI

(a) Incomplete Data
• Definition: Incomplete data means that some important information is missing or not
fully recorded in the data source.
• Causes:
o Human error during data entry
o System failures or interrupted data capture
o Integration problems between multiple databases
o Lack of standardized data collection processes
• Impact:
o Leads to inaccurate analysis and partial insights.
o Reduces reliability and validity of BI reports.
• Example:
If customer records are missing details like age or location, BI cannot accurately
analyze customer behavior or preferences.
• Prevention:
o Define clear data requirements.
o Validate data at the time of entry.
o Continuously monitor sources for missing data.
o Use data quality rules and checks.

(b) Inconsistent Data

• Definition: Inconsistent data occurs when similar data is recorded differently across
multiple systems or formats.
 • Causes:
o Different data definitions or standards across departments
o Variation in formats (e.g., “NY”, “New York”, “N.Y.”)
o Duplicate records or human errors in entry
• Impact:
o Creates confusion and ambiguity in reports.
o Leads to duplicate counting or incorrect aggregations.
• Example:
If the same product is listed under different names or codes, BI reports may show wrong
sales or stock levels.
• Prevention:
o Establish standardized data formats and naming conventions.
o Use data cleansing and deduplication tools.
o Implement Master Data Management (MDM) to maintain one accurate source
of truth.

(c) Invalid Data

• Definition: Invalid data refers to records that don’t meet business rules or logic.
• Causes:
o Data entry errors or corrupted data
o Poor validation processes
o Integration of incorrect data from external sources
• Impact:
o Produces false, misleading, or irrelevant results.
o Affects accuracy of key metrics like sales, profit, and customer retention.
• Example:
If sales transactions have negative or zero amounts, or customer contact details are
invalid, the BI system may report incorrect revenues or conversion rates.
• Prevention:
o Apply data validation rules during entry.
o Use automated checks to flag and correct invalid records.
o Regularly audit data sources for accuracy.
3. Other Common Data Issues

Issue Type Description Example

Same record appears multiple Customer registered twice with different

Duplicate Data
times spellings

Using last year’s pricing data for current

Outdated Data Data not refreshed regularly
analysis

Data mismatched during ETL Combining mismatched product IDs

Integration Errors
process from two sources

Data Governance Lack of ownership or control Multiple departments using conflicting

Issues policies data definitions

4. How to Ensure High Data Quality in BI

1. Data Profiling:
o Examine data sources to identify errors, patterns, and anomalies before analysis.
2. Data Cleansing:
o Correct inaccurate or incomplete data using automated tools.
3. ETL Process (Extract, Transform, Load):
o Standardize and integrate data from multiple sources into a single data
warehouse.
4. Data Governance Framework:
o Define who owns and manages data and establish policies for accuracy and
access control.
5. Master Data Management (MDM):
o Create one consistent version of key entities (customer, product, etc.) across the
organization.

5. Impact of Poor Data Quality on BI

Aspect Effect of Poor Data Quality

Decision-Making Wrong business conclusions and strategies

Operational Efficiency Increased time spent on correcting reports

Aspect Effect of Poor Data Quality

Financial Impact Loss of revenue and higher reprocessing cost

Customer Experience Poor service due to inaccurate customer data

Reputation Decreased trust in BI systems