Need for Business Intelligence

It is not the strongest of the species that survives, nor the most intelligent that survives.But it is the one that is the most adaptable to change.      

-Charles Darwin

Above quote also applies to businesses. Adaptive businesses sustain.

In order to observe the changing trend or in other words predict the market trend, business intelligence plays a pivotal role.

Let’s take an example of music industry. Roughly a decade ago, music lovers used to purchase cassettes (magnetic tapes), so the music industry made whopping profit with the demand for it. Less than a few years ago, with the invention of audio compact disc, music companies made a switchover from cassettes to compact disc as the magnetic tape lose its sensitivity due to aging unlike compact disc which have longer life span.

The buyers too started switching over to compact disc, so obviously the usage or the demand for cassettes would have gone down considerably. The music company should take into account of this trend change and reduce or stop the production of cassettes or else there will be scenario where the supply of cassettes will be more with no takers thus becoming surplus and on the compact disc side, there will be deficit production. So the music company should (which after making the change over) should analyze the sales record and devise a strategy to handle the deficit , thus increasing the production of compact discs and reducing the production of cassettes.

For a business to make optimum profit in the market it should manage the equilibrium between demand and supply. It should be able to forecast the market based on past sales record.

Decision making is a crucial task in any business .Business Intelligence comes into picture when analyzing the sales record.

Thus Business Intelligence can be defined as

Business intelligence (BI) is a broad category of applications and technologies for gathering, storing, analyzing, and providing access to data to help enterprise users make better business decisions.

Business intelligence reporting supports all decision making task or executive support system by collecting and collaborating facts and figures into a single informative report.

Companies that run business usually collect large amount of data from various sources like ERP-databases, MS excels, CRM and other sources. These raw data should be converted to information from which analysis can be done in middle management and top management level for decision making and devising strategy. To handle these huge set of raw data and convert them to information we make use of data warehouses. To analyze these information we use various BI tools.

So generally data warehouse and business intelligence go hand in hand. BI can be used across all hierarchies of the management. In the middle management level it can be used to monitor the daily operations. In top management to review the information based on time limits (monthly, quarterly, annually). Some of the BI tools predominantly used in market are SQL server Analysis services, SQL server reporting services, Informatica, IBM cognos, Micro strategy, Teradata, SAS ,pentaho, Jaspersoft, Eclipse BIRT, Oracle enterprise BI server.

Following diagram shows the complete Data warehousing-Business Intelligence architecture

Diagram Source:


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