Business intelligence is the process of transforming raw data into meaningful information.
Raw Data and Meaningful Data
Businesses generate data in the course of their daily operations. Through a variety of programs, and also by means of strictly manual operations, businesses create raw data. Much of this data resides in databases. We want to analyse that data to develop strategies that would help us to achieve our goals: generate more profits, reduce costs, improve our image, expand our market, and so on.
Before we can develop any strategies, we have to transform the raw data (facts) into meaningful information. Without meaning, raw data is useless to both humans and computers.
What is Business Intelligence?
Business intelligence (BI) is the process of transforming raw data into meaningful information. This allows you to base your business strategies on meaningful information and not raw data. To achieve this goal, you need BI software – sometimes called a tool or application – designed to convert raw data into meaningful information.
The Business intelligence approach takes into account the context in which businesses operate. The world is constantly changing. As the world is dynamic, so must the strategies adopted to flourish be adaptable.
In recognition of the ever-changing business environment, BI projects limit their analyses of meaningful data to a specified timeframe. Business intelligence attempts to predict the future based on what it has been able to understand about the past. It identifies key performance indicators, (known simply as KPIs), that determine outcomes and then generates reports that allow management to follow trends.
BI applications do the work of benchmarking, data mining, and predicting based on how they have been programmed. Benchmarking compares your business numbers to industry standards; it tells you how you are doing in relation to the competition. Data mining is the process of looking at raw data in order to identify trends or patterns. Based on that data mining, the BI applications predict outcomes. All of that work arrives in our hands in the form of reports.
BI applications first capture the data that are being generating moment by moment and then warehouse them. The data exists in the raw form in databases and is also transformed for storage in a data warehouse. Real time Business intelligence refers to the use of data before it is transferred to data warehouses and analyzed with a view to generating high-level predictive reports. (For instance, a department manager may want to see how sales are going during the course of the day.) However, day-to-day transactions are not helpful to upper management until they have passed through the “analytical processing” functions of the BI tools. Management wants the reports that are made possible by the data captured and stored in data warehouses. Data is stored in data warehouses in a way that facilitates the production of reports upon which management relies.