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Chapter 1: Business
Intelligence and its
Impacts
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Outline

 Examples of Business Intelligence (BI)

 Data, Information, and Knowledge

 What is BI

 Factors that drive BI

 BI and Related Technologies

 BI in contemporary organizations
 Improvement in Operational Performance
 Improvement in Customer Service
 Identification of New Opportunities in Contemporary Organizations
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Business Intelligence – A Highly
Important Field

 Benefits
 Management effectively aided
 Intellectual capital better deployed
 Business operations improved
 Customer service enhanced
 New opportunities identified
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Data, Information, Knowledge

 Data
 May or may not be correct
 Ex. Sales order at a restaurant included a large burger, medium fries and milkshake

 Information
 Subset of data
 Data possessing context, relevance, and purpose
 Ex. The numbers indicating the daily sales (in dollars, quantity, etc.) of burgers, fries,
vanilla milkshakes

 Knowledge
 Justified beliefs about relationships among concepts
 Ex. The relationship between the quantity of bread that should be ordered, the
quantity of bread in inventory, and the daily sales of burgers and other products that
use bread.
+ Data, Information, Knowledge, and Decisions

Raw facts, Data that has

observations, been processed
or perceptions so as to have Decisions
context,
relevance, and Justified beliefs
purpose about
relationships
relevant to the
decision

Information Knowledge
Data
Analyze Interpret Apply

© Sabherwal & Becerra-Fernandez

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What is Business Intelligence (BI)?

 Information technology which provides decision makers with

valuable information and knowledge by leveraging a variety
of data sources as well as structured and unstructured
information.
 Data sources external or internal to the organization
 Information quantitative or qualitative
 Output: knowledge
 Input: information and data

 Business intelligence tools: used in BI solutions

 Business solutions: support the BI process

+ BI Product, Process, Solution, and Tools

BI Product

Data and Information Information (that leads to

(External & Internal; BI Process knowledge and/or
Structured & Unstructured) enables decision making)

BI Solution

Other Technologies
(e.g., Data Warehouse,
BI Tools Data Mining)

© Sabherwal & Becerra-Fernandez

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Factors that drive BI
 Exploding data volumes

 Cheaper storage
 More electronic connections (Internet, intranet,…)
 Regulatory changes (Sarbanes Oxley Act 2002)

BI solutions provide managers the ability to more

effectively utilize these larger data volumes
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Factors that drive BI

 Increasingly complicated decisions

 Multi-industry, global competition

 Decisions from structured and unstructured data

BI solutions provide managers the ability to make decisions

that incorporate all the important factors and are based on
integration across the information.
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Factors that drive BI

 Need for quick reflexes

 Faster pace of change (volatility)
 Windows of opportunity close rapidly
 Overcome processing delays
 Converting data from variety of sources
 Integrating information across sources
 Making the results available to the decision maker

BI solutions help address each of the three types of delays.

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Factors that drive BI

 Technological Progress
 Decision Support Systems (DSS)
 Enterprise Resource Planning Systems (ERPS)
 Data warehousing
 Data mining
 Text mining

BI vendors have the necessary inputs for developing effective BI

tools, and organizations adopting them have the platform to
make BI solutions most effective
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BI is not KM

Knowledge Management (KM) Business Intelligence (BI)

 Inputs  Inputs
 Information  Data
 Knowledge  Information

 Output  Output
 Creation of new knowledge  Information presented in a
 Conversion to another form friendly fashion
of knowledge  New knowledge or insight
 Application of knowledge in
making a decision
+ Roles of Data, Information, and
Knowledge in Business Intelligence

Only Explicit (but

Business Intelligence not Tacit)
Knowledge
Decisions

Data Information Knowledge

+ Roles of Data, Information, and
Knowledge in Knowledge Management

Knowledge discovery in data and information;

potential overlap between BI and KM
Knowledge
Management Both Explicit and
Tacit Knowledge
Decisions

Data Information Knowledge

+ BI is not data warehousing, data mining nor decision
support systems

 Data warehouse
 A single logical repository for an organizations data

 Data mining
 The process of discovering hidden patterns from data stored
electronically (ex. in a data warehouse)

 Decision support systems

 Use data as input along with prior knowledge to create rules that
guide decisions

 Business Intelligence
 Presents information to individuals with little technical expertise
+ Roles of Data, Information, and
Knowledge in Data Warehousing

Structured
data, primarily
internal

Data Warehousing

Decisions
Data Information Knowledge
+ Roles of Data, Information, and
Knowledge in Data Mining

Data Mining

Decisions
Data Information Knowledge
+ Roles of Data, Information, and
Knowledge in Decision Support Systems

Either support for decision making (DSS) or automation of

decision making (Automated Decision Systems)
Decision Support
System

Decisions
Data Information Knowledge

Knowledge embedded as rules within the system

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Four Contributions of BI

 Dissemination of user-friendly, real-time information

 Creation of new knowledge based on the past

 Responsive and anticipative decisions

 Decision-making based more closely on all the latest information
 Incorporate predictions regarding the future

 Improved planning for the future

 More effective use of information
 Use of past data for predictions about the future
 Development of knowledge based on information about the past
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Three Benefits of BI to Organizational
Success

 Improvement in operational performance

 Provide real-time information on how performing
 Help make organizations more efficient

 Improvement in customer service

 Improve quality of customer service provided
 Identify problems and potential solutions quickly
 Reduce customer concerns and improve retention

 Identification of new opportunities

 Facilitate new insights through discover of unknown patterns
 Track innovative projects more effectively
+ Impacts of Business Intelligence
Dissemination of real- Enablement of
time information in responsive and Improved operational
user-friendly format anticipative performance
to a variety of users decisions

Business
Improved
Intelligence
customer service

Facilitation of new
knowledge based on Improved planning for Identification of
the new insights in the future new opportunities
information

© Sabherwal & Becerra-Fernandez

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Recap

We have:

• Discussed some of the basics of BI

• Distinguished among data, information, and knowledge

• Explained what BI is and how it differs from other information

technologies

• Discussed the factors driving the importance of BI

• Examined some direct effects of BI and looked at its impacts on

organizational performance
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Key Terms
 business intelligence  knowledge

 data  knowledge management

 data mining  organizational impacts

 data warehouse

 decision support systems

 information

© Sabherwal & Becerra-Fernandez