Business Intelligence

Business Intelligence allows the decision maker to understand their business and the business environment in order to make informed decisions. Decision making requires evaluating performance (what happened), testing hypotheses (why and how things happened), and predicting future events (what may happen). Stated simply management needs to know if their strategies are sound and if they are being carried out. Most formally a Business Intelligence system allows the user to answer any of the following questions:

  1. Why did it happen?: X-->Y
    • Did X cause Y to happen?
    • If we do X then will Y happen?
  2. How did it happen?: X1 -->Y2
    • How did X produce Y?
    • Can we be certain that X will produce Y, or that Z is actually producing Y?
  3. What happened?: Y1 versus Yy
    • What happened versus what we expected to happen
    • Assuming X produces Y, are we really doing X?
  4. What may happen?: Xf -->Yf
    • If Xf occurs in the future then will Yf also occur?
    • Assuming we did X and it produced Y, can we assume that continuing to do X will continue to produce Y?

Definitions:

  • X: Independent variable
  • Y: Dependent variable
  • X1: Specific instance of X
  • Y2: Specific instance of Y
  • Xf: X in the future
  • Yf: Y in the future

The purpose of this wikibook is to present a process for developing a Business Intelligence (BI) system that will allow the analyst to ask and answer these questions. The process of creating this system is outlined in sections 1 and 2 of this book. This book takes the reader through each stage (planning, development, and production) of the process, step-by-step, in detail. Before moving forward it is necessary to define some concepts. It is important to understand exactly what is meant by a system. One way to look at a system is that it is composed of both an architecture (blueprint) and infrastructure (people, process, and technology). Architecture is "the set of rules or structures providing the framework for the overall design of a system or product". Technical Infrastructure is defined  as the "technologies, platforms, databases, gateways, and other components necessary to make the architecture functional within the corporation". Other components are assumed to mean the people and processes necessary to deploy and maintain the infrastructure. This book therefore defines infrastructure as the people, process, and technologies necessary to implement a BI architecture. This book adopts the current methodology of building a Business Intelligence system from the top-down. Top-down refers to understanding the business strategy and then building the system so the decision makers can determine if the strategy is effective and that the strategy is being successfully implemented. The framework approach explicitly embeds strategy in the Business Intelligence system architecture. This is accomplished by first formalizing the strategy in the form of diagrams and using these diagrams to create the system. In this way the diagrams become part of the Business Intelligence architecture. The explicit statement of strategy is crucial because the purpose of Business Intelligence is to test formal theories and hypotheses about strategy in order to validate the strategy or to monitor performance. As each part of the strategy diagram is verified the company can have confidence that aligning the day-to-day activities with the strategy will help the company create value. Once this is accomplished the system allows management to monitor business performance. Further, if the company is not profitable and the strategy is indeed being executed effectively then management can take steps to determine reformulate the strategy.