What is Business Intelligence? Definition, Components & Solutions of BI Tools


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Business Intelligence Definition:

Business Intelligence is the ability to transform data into information and information into knowledge so that they can optimize the process of decision-making in business. In other words, Business intelligence is the part of the responsible business management in collecting, processing and presentating of relevant information to facilitate decision-making. From a more pragmatic point of view, and linking it directly with the information technology. We can define Business Intelligence as a set of methodologies, applications and technologies to collect, improve and convert data from transactional systems and unstructured information in structured information for direct use or for analysis and translation into knowledge, thus giving support to decisions about the business.

Business Intelligence acts as a planned factor for a company or business, generating a potential competitive advantage, which is simply to offer private information to reply to business problems: entering new markets, promotions or product offerings, eliminate islands of information, economic control, cost optimization, production planning, analysis of customer profiles, profitability of a particular product, etc.


Components of Business Intelligence Systems and Tools:

Important types of Business Intelligence (BI) components that exist in the market are listed below. Let us overview the major components of BI tools.

1. Balanced Scorecards (BSC): It is a business intelligence and analytics tool of corporate control that allows you to set and monitor the objectives of a company and its different areas or units. Balance scorecard can also be used as an application that helps a company to express the objectives and initiatives necessary to comply with its strategy, showing continuously when the company and the employees reach the results defined in its strategic plan.

2. Decision Support Systems (DSS): A Decision Support System is a business intelligence software system focused on the analysis of data organization. The Decision Support System (DSS) is one of the most suggestive of the Business Intelligence tools because, among other properties, allow solving many of the limitations of management programs.

3. Executive Information Systems (EIS): It is a BI software tool based on a Decision Support System (DSS), which provides managers with easy access to internal and external information of your company, and that is relevant to their main success elements. The main objective is that the executive has at its disposal a complete picture of the state of business indicators that affect instantly, while also maintaining the ability to analyze in detail those not meeting the expectations set out, to determine the plan most appropriate action.

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Business Intelligence Solutions:

Business intelligence system consists of data sources, models, users and technical means. The main function of the system is to collect information from all relevant sources, validate, process and deliver it in the appropriate format to the users who need it. The data model defines how we process the data into information. The effectiveness of a business intelligence system can be measured based on various parameters:


1. Speed:

It is the system’s ability to provide the requested information in the shortest possible time. Do not forget that the value of information often depends on the time of consumption. The information has to be available at the time it needed, have it later often takes away all their value. To achieve this a powerful system is not only necessary, it is also necessary to create a logical data model or layer with sufficient flexibility to be able to respond to any kind of questions that may arise during the operation of the system.


2. Reliability:

It refers to the quality of the information. A system that does not provide reliable information can lead to bad decisions. Often valuable information is obtained from fragments that must be aggregated and processed. In this process, the integrity of the data can be altered to provide greater reliability for users to process data processing must have a certain level of transparency and traceability. From allowing that data has getting treatment information as the data have been subjected to reach the result offered.


3. Abstraction Layer:

It is the ability to answer complex questions based on the processing of smaller information units. For example: To find the average orders returned a week, you have to locate all orders returned in the company records of one year and divide it by the number of weeks. Again so that a system can offer a high degree of abstraction it is necessary to design a solid model data. Besides it is necessary to have a high level of business logic and role of each data is to provide understanding.

Also, a typical example of the level of abstraction is the ability to know the benefits of a business notes based on the sales and expenses a year. Here we use thousands of data, which by themselves have little significance to achieve relevant information that will facilitate decision-making.


4. Navigation of Depth:

It is the ability to pass more comprehensive or more specific issues. To cite an example, we can be at the overall sales of the company for months, This information can be accessed through a link on sales per month by customers, then we say that it has depth, allowing us to navigate through data and related concerns arising during thinking process.

If we are going with the example of the report on benefits, a report with navigation in-depth allows us to easily access product sales, expenses by Department, sales per month. This is sailing in depth. If for example from sales per month, could access the sales per month for each product would be adding one level of depth.


5. Presentation of Information:

It is related to the presentation of information. Better the system performance, lesser the effort required by the user to interpret the information. This section is crucial in the terms of efforts made for the visual design of reports, dashboards, and other visualization elements. Not only is that reports get to look good, what is sought is that the structure facilitates visual interpretation. Beyond a simple aesthetic issue, a good job in reporting improves the ROI of our BI solution.

The business intelligence systems and components differ in operating systems that are optimized to inquire and report on data. This typically means that in a data warehouse, data is validated to support high-performance queries, while in operational systems commonly found a standard to support ongoing operations of addition, modification and deletion of data. In this sense, the ETL (Extract, Transform and Load) processes which nurture the business intelligence systems have to translate one or more standardized and independent system to a single validated operational systems, whose data are fully integrated.


In short, a complete BI solution allows:

  • Detect what is happening?
  • Considerate why is it?
  • Predict what would happen?
  • Collaborate what should make the team?
  • Decide what path to follow?

- Tutorial Course - Basics of Business for Beginners Module -

» e-Learning Chapter 1: How to Start a Business? Step by Step Guide for Beginners to Business Basics.

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