Importance in Business Intelligence: Types of BI

The first step in Business Intelligence is the process of transforming data into information. There are many ways of extracting the data and formulation into information, but in reality, the type of information needed is dependent on the type of the people who are expecting it. There could be people who might be working in the operational activities such as customer service representatives, and then there could be people who might be working in the tactical leave such as the lower and middle level management and those who are responsible for the strategy of an organization, such as senior and the executive management. Base on this classification, the BI component can be classified as:

1. Operational BI

2. Tactical BI and

3. Strategic BI

Based on the nature of the needs of their own field of working, the nature of the information also varies. See the following picture, which is referred as the BI pyramid depicts the nature of the information required by each user group. The pyramid is used to explain this as the number of users is less as we move from operational to strategic BI needs. This is the classical way of explain the types of BI and is religiously shown in all BI presentations:

The senior management who needs the strategic gives the information as a global overview of the entire business. In olden days it was referred as the Executive information system (EIS) and now evolved as dashboards as they are indicators of the actual performance of the critical indices.

The middle management who is very much working on the tactical issues, needs more flexible and detailed reports to improve their decision making. The information can be quickly assembled into useable form using ad-hoc queries. They are not the pre defined dash boards, but flexible and modular set of queries, which can slice and dice the data cubes for the discovery.

In the operational level, the requirement is with standardized, detailed, preformatted reports provided by an automatic report engine. Typically these reports are of the type of spreadsheets, and can be taken offline to format and regroup using standard software like Microsoft Excel.

Given the types of the BI that are needed for any organization, now-a-days most of the BI software packages do come with a variety of tools that addresses each section of the BI pyramid, though there are some inconsistencies on the definition of each layer. The only important thing that is missing in this pyramid is the data mining, which is for a special set of people who are specializing in that activity. Data mining is itself a huge subject and we can discuss this later as a separate topic. I recently read one very detailed paper (draft) by one of my colleague on the data mining explaining its relevance and importance to UNICEF.

Let’s now get into the practical side of the BI and the way in which is it used:

It is very hard to see a senior manager that is content with an overview of the business activities - unless he or she is incompetent. Any I’m sure the every competent senior manager will always need detailed data for some or many specific operations - and often on a regular basis. My honest opinion is that the dashboards are great for management meetings, but whoever runs an organization based on this alone, may at times will feel short of information that are required to make effective decisions. This is due to the very nature of the dashboard and the lack of details in it.

I have yet to see the middle managers that indulge in On-Line Analytical Processing (OLAP) and ad hoc querying more than others in the organization. Middle managers especially non-IT organizations are not more computer literate than anyone else. And OLAP and ad hoc querying do demand more computer skills from these managers. The very notion of using tools like this will drive them away from using them or try to move that work under them to operational group. Practically they get the information from the operations team, whose mind set is still in the preformatted reports.

Finally, who on an operational level feels happy about only having standardized and detailed reports? First problem is that they do not always agree with the standard form of reports, secondly the time taken to create & download the reports, thirdly the repetitive nature of the report generation creates boredom and finally they had to convert all the reports to spreadsheets for them to use it. We should not forget the fact that the use of spreadsheets is grown more then the legacy systems, ever after the implementation of all the new dimensions products such as ERP and BI.

Going back to my previous statement about the popular BI pyramid, which looks nice - especially when it comes in fancy colors - but it is rather imperfect and too far from what is practiced. As a result, more and more BI solution providers are beginning to realize that the reality is a bit more multidimensional than the BI pyramid: Strategic users also want detailed data and operational staff wants to have the overall picture. The middle managers want and need both detail and overview, and they are not more likely than anyone else to decide to spend and afternoon doing their own ad hoc queries in their office.

After a decade of BI evolution, some, but not all, have finally realized that BI is as complicated as anything else. The users are as irrational in their needs as they are with anything else. Many of them do like the colorful BI pyramid though and, given its inclusion in BI presentations, it will probably stay on for some years.

If allowed, I’d refine the BI pyramid by adding a group called systems analyst, which will be the central focus of the BI function, who will closely work with the three different user groups. They are the core set of people who knows how to use the BI tools effectively and efficiently and they are not the IT people. There is always the involvement of IT in this whole picture which is ideally the provider of BI infrastructure and not the provider of BI itself.