HISTORY OF BUSINESS INTELLIGENCE

In 1958, IBM researcher Hans 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.

WHAT IS BUSINESS INTELLIGENCE (BI)?

Business Intelligence (BI) refers to technologies, applications, and practices

for the collection, integration, analysis, and presentation of business information. It is

computer-based techniques which used in spotting, digging-out, and analyzing

business data, such as associated costs and incomes or sales revenue by products and

departments.

The common functions of Business Intelligence technologies are including

statistics, predictive analytics, data and text mining, reporting, online analytical

processing, forecasting, business performance management, benchmarking, and

optimization.

Business Intelligence aims to support better business decision making. It

describes a set of concepts and methods to improve business decision making by

using fact- based support systems. Thus it can be known as a decision support system

(DSS). The term business intelligence is also used as a synonym for competitive

intelligence, because both are supporting decision-making. BI uses applications,

processes, and technologies to analyze internal structured data and business processes

while competitive intelligence is used to gather, analyze and disseminate information

with or without support from technology and focuses on all structured and

unstructured data, mostly external.

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.

3. Situation awareness

Business Intelligence is filtering out irrelevant business information. Through

creating awareness it helps to understand and make better decisions.

Algorithms for situation assessment provide 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.

TOOLS OF BUSINESS INTELLIGENCE

Business intelligence tools are a type of application 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 or data 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

 business intelligence, which also encompasses relational reporting and data

mining.

The typical applications of OLAP are in business reporting for 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 OLAP was 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 of profiling practices, such

as marketing, surveillance, fraud detection and scientific discovery.

5. Process mining

Process mining is a process management technique that allow for the analysis

of business 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 of management 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.

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
 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?"

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

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.
 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 user’s 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
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.

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

can’t possibly meet the needs of different types of users, and begrudgingly
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
 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 don’t 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 don’t 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

 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 doesn’t achieve a healthy ROI, it

simply means that the organization doesn’t gain many benefits from the

implementation of Business Intelligence system or tools.

6. Strong project management and resource commitment

 Ensure you have a strong project manager to support and participate in the project.

A strong project manager enables the organization the implementation of Business

Intelligence system goes smoothly. Some of the organizations do not put much

effort after implement the Business Intelligence system. This may lead to failure

of implementation.

7. Commitment from company executives

Besides support from a CIO or Director, support from the CEO and top

management is also needed. If the CEO and top management own selves do not

commit to the implementation of Business Intelligence, employees may think is it

not important for them to commit which in the end will lead to the failure.

8. Take time to plan up front

Ensure things are done right at the beginning of the project rather than spending

time to fix the problems later on. Preventing a problem is always better and easier

than solving a problem. It is also incurred less cost if find out the problem at the

beginning if compare to fixing the problem when it already happened.

9. Ensure adequate training and change management

Helping people to understand and effectively use the Business Intelligence

system. Certain training is required to provide to employees to help them

 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

Microsoft’s 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

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.

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
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.

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
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 Malaysia’s 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.

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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