Business Intelligence Chapter 1 Fundamentals Quiz

Fundamentals of Business Intelligence

• The business environment is constantly changing, requiring organizations to make frequent and quick strategic, tactical, and operational decisions.
• These decisions require a considerable amount of relevant data, information, and knowledge, and need to be made in real-time.

What is Business Intelligence (BI)?

• BI is about getting the right information to the right decision makers at the right time.
• It involves making useful, actionable insights from stored data, allowing for effective business decisions.
• BI includes techniques such as multidimensional analysis, mathematical projection, modeling, 'canned' reporting, and dashboards.
• It is the collection of processes, technologies, skills, and applications used to make informed, data-driven business decisions.

Applications of Business Intelligence

• Customer segmentation: identifying market segments and their characteristics to personalize customer relationships for higher satisfaction and retention.
• Propensity to buy: identifying customers most likely to respond to a promotion to increase loyalty and campaign profitability.
• Customer profitability: determining the lifetime profitability of customers to make individual business interaction decisions.
• Fraud detection: quickly determining fraudulent transactions to minimize cost.
• Customer attrition: identifying customers at risk of leaving to prevent loss of high-value customers.
• Channel optimization: determining the best channel to reach customers in each segment to interact with them based on their preference and manage cost.

Business Intelligence Process

• Data from different sources: multiple operational databases across departments within the organization and external vendors.
• ETL (Extract, Transform, Load) enables extracting data from multiple sources, cleaning and normalizing heterogeneous data, and loading it into a data warehouse (DW).
• DW structures data and facilitates analysis.
• Analytical tools and applications create charts, reports, spreadsheets, and dashboards, enabling visualization, analysis, and interpretation of data.

DIKW Pyramid

• Data: a collection of facts in a raw or unorganized form, such as numbers or characters.
• Data requires context to be meaningful.
• Example: a sequence of numbers becomes meaningful when viewed as a date.