MODULE 3

UNIT 9: Business Intelligence Architecture and Tools

Structure
9.0 Learning Objectives
9.1 Introduction
9.2 Business intelligence
9.3 Business intelligence architecture
9.4 Business intelligence Tools
9.5 Data mining
9.6 Data mining methods
9.7 Data mining frame work
9.8 Summary
9.9 Key Words
9.10 Exercise
9.11 References

9.0 Learning Objectives

After studying this unit, you will be able to
 know about Business intelligence, architecture and tools of business intelligence
 know about concepts of Data mining

9.1 Introduction

The current business environment is constantly evolving. The global economic scenario is
providing opportunities as well as challenges. The factors affecting business environment

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are consumer needs, globalization, and government policies, etc.
In such a business environment, organization basically has four action steps. The
organization can be reactive, anticipative, adaptive, or/and proactive. For this, organization
can develop a new strategy, get into partnership, etc.
Today most of the businesses are having a computerized business support. This support is
in form of decision support system, business analysis, etc.
The main objective of business intelligence is to bridge the gap between organization
current status and its desired position. Business intelligence helps organization achieve
commercial success along with sound financial management.
Business intelligence is framework designed to support decision-making process. This
framework combines architecture, database, analytical tools and applications. Business
analytics forms an integral part of business intelligence.

9.2 Business Intelligence

Framework of Business Intelligence
More and more businesses are moving towards business intelligence. The reason for this
movement is the business environment. Organizations are forced to capture, store and
interpret data. This data is at the core of business success. Organizations require correct
information for any decision-making process.
Business intelligence combines data warehousing, business analytics, performance,
strategy and user interface. Business receives data from various sources. This data is
capture in the data warehouse where it is stored, organized and summarized as per further
utilization. Authorized users can access this data and work on it to get desired results. This
result than are shared to executives for decision-making process. These data results can be
published through dashboards or share points.
Benefit of Business Intelligence
The benefits of Business intelligence are as follows:
 Business intelligence is faster more accurate process of reporting critical
information.
 Business intelligence facilitates better and efficient decision-making process.

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  Business intelligence provides timely information for better customer relationship
management.
 Business intelligence improves profitability of the company.
 Business intelligence provides a facility of assessing organization‘s readiness in
meeting new business challenges.
 Business intelligence supports usage of best practices and identifies every hidden
cost.
Business intelligence usage can be optimized by identifying key projects on which
company would like to focus. This process of highlighting key projects is called business
intelligence governance.
The importance of business intelligence is growing, and its usage has proliferated across
various types of users. Earlier, it was in the domain of IT staff, but now business team is
also independently handling business intelligence.

9.3 Business Intelligence Architecture

Business Intelligence Architecture and Components

The main components of business intelligence are data warehouse, business analytics and
business performance management and user interface.
Data warehouse holds data obtained from internal sources as well as external sources. The
internal sources include various operational systems.
Business analytics creates a report as and when required through queries and rules. Data
mining is also another important aspect of business analytics.
Business performance management is a linkage of data with business objectives for
efficient tracking. This business performance is then broadcasted to an executive decision-
making body through dashboards and share-point.

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9.4 Business intelligence Tools

Business intelligence is an important to ensure the following:

 Various decision-makers and analyst have a direct and un-interrupted access to
data. The data been used across the organization should be non-disputable.
 Decision makers spend their time analyzing the data rather than collecting and
formatting them.
 Decision makers are able to focus their energy in improving the business process
rather than searching for data across systems.
 Decision makers can instantaneously carry out what if analysis without much
manual intervention.
 Data management is done from enterprise perspective rather than at a departmental
level.
 Data is considered as a strategic resource rather than as an input for business
intelligence process.
 Business forecast is used supply and demand side of business users.
 Majority of the decision-making process is done through an automated process.
 Data is shared effortlessly within the company.
 Reports generated utilize primary and secondary data without any additional
efforts.
For business intelligence to ensure the above it is necessary that it has a robust architecture.
Business intelligence architecture is divided into six critical elements‘ data management,
transformation tools and processes, data repositories, application tools for analysis,
presentation tools and operational processes.
1. Data Management
For to achieve data integrity following points need to be addressed. The 1st major point
organization is the need of the data. The organization must come to agreement that a
particular analytics will provide competitive advantage and enhance business performance.

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The next question which needs to be addressed is the source of the information. This
sourcing of data can be from enterprise itself, or it may be from the external sources. If the
source is within the organization than it is essential there is a common platform for all flow
of information.
The next question is the quantity of the data. Since there is large volume of data available,
based on the required company should gather data to have a normalized business behavior.
The next question is to make data valuable, once that is determined data management
comes from the picture, i.e. acquisition of data to retirement of data.
2. Transformation Tools
The required data needs to undergo ETL process. ETL process consists of extracting data,
transforming the data and loading the data. The process extracting data from the repository
is a straight-forward process. However, validation and cleansing of data is a difficult task.
This validation and cleansing of data is done through various well established business
rules. Transformation of data involves converting the data to standardized form.
3. Data Repositories
Organization can store data through data warehouses. Data warehouse sometime has data
mart, which is a partition to handle single business function. A metadata repository is used
to store data definition and technical information.
4. Analytical Tools and Presentation
There are several business tools available on the market, but it is essential to identify what
it intends to do with the data and then choose the tool.
5. Presentation Tools and Applications
Business intelligence can only work if end users are able to make sense out of that data.
Presentation tools should allow the users to manipulate complex data into to ad hoc reports
for company-wide distribution.
6. Operational Process
Operational Process determines how data management and business intelligence is to be
implemented within the organization. It deals with the question how the organization
creates manages data and different applications.

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9.5 Data Mining
Data warehouses are large databases containing historical transactions and other data.
However, data warehouses in themselves are useless. To make data warehouses useful,
organizations must use software tools to process data from these huge databases into
meaningful information. Because executives can obtain significantly more information
about their customers, suppliers, and their own organizations, they like to call information
gleaned with such tools business intelligence (BI) or business analytics. The two main
uses of these databases are data mining and online analytical processing. These terms are
often used interchangeably by some people.
Data Mining
Data warehouses could be regarded as a type of mine, where the data is the ore, and new
useful information is the precious find. Data mining is the process of selecting, exploring,
and modeling large amounts of data to discover previously unknown relationships that can
support decision making. Data-mining software searches through large amounts of data for
meaningful patterns of information.
Data mining has four main objectives:
• Sequence or path analysis: Finding patterns where one event leads to another, later event.
• Classification: Finding whether certain facts fall into predefined groups.
• Clustering: Finding groups of related facts not previously known.
• Forecasting: Discovering patterns in data that can lead to reasonable predictions.

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9.6 Data Mining Methods

Some data-mining tools are complex statistical analysis applications, and others use
additional tools which go beyond statistical analysis and hypothesis testing. While some
tools help find predefined relationships and ratios, they do not answer the question that
more powerful data-mining tools can answer: ―What are the relationships we do not yet
know?‖ This is because the investigator must determine which relationships the software
should look for in the first place.
Several types of analytical software are available: statistical, machine learning, and neural
networks.
 Artificial neural networks: Non-linear predictive models that learn through
training and resemble biological neural networks in structure.
 Genetic algorithms: Optimization techniques that use processes such as genetic
combination, mutation, and natural selection in a design based on the concepts of
natural evolution.

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  Decision trees: Tree-shaped structures that represent sets of decisions. These
decisions generate rules for the classification of a dataset. Specific decision tree
methods include Classification and Regression Trees (CART) and Chi Square
Automatic Interaction Detection (CHAID) . CART and CHAID are decision tree
techniques used for classification of a dataset. They provide a set of rules that you
can apply to a new (unclassified) dataset to predict which records will have a given
outcome. CART segments a dataset by creating 2-way splits while CHAID
segments using chi square tests to create multi-way splits. CART typically requires
less data preparation than CHAID.
 Nearest neighbor method: A technique that classifies each record in a dataset
based on a combination of the classes of the k record(s) most similar to it in a
historical dataset (where k 1). Sometimes called the k-nearest neighbor technique.
 Rule induction: The extraction of useful if-then rules from data based on statistical
significance.
 Data visualization: The visual interpretation of complex relationships in
multidimensional data. Graphics tools are used to illustrate data relationships.

9.7 Data Mining Framework

Data mining consists of five major elements:

 Extract, transform, and load transaction data onto the data warehouse system.
 Store and manage the data in a multidimensional database system.
 Provide data access to business analysts and information technology professionals.
 Analyze the data by application software.
 Present the data in a useful format, such as a graph or table.

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