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BI Basics – What is Business Intelligence

Off late I have been receiving few emails to write about stuffs which can help new comers into Data Warehousing and Business Intelligence space to ramp up and get up to speed. So I thought of writing few posts to explain few basic concepts of Data Warehousing and Business Intelligence to give my perspective of these concepts.

What is BI?

BI stands for Business Intelligence.

There are many definitions for BI given by different people. In short, “Business Intelligence is a Process of Transforming Data into Information”.

There is another very important concept associated with BI and is called as Data Warehousing (DW).

A Data Warehouse is a Centralized Data Repository and servers as the source of data for Analysis and Reporting. Data Warehouses are built by consolidating/integrating data from different data sources belong to different departments/business units and contain both Recent Data (Non Real-Time) as well as Historical Data required for Analysis and Reporting.

There is another smaller entity which is conceptually same as a Data Warehouse but is specific to Subject Areas and is called as a Data Mart. Data Marts are built using the same processes and principles as that of Data Warehouses and are more common when compared to Data Warehouses. Most of the times, the terms Data Warehouse and Data Mart are used interchangeably.

Without a proper data warehouse/data mart in place, BI is ineffective and incomplete in most of the scenarios. Hence a Data Warehouse/Data Mart is always associated with/part of any large-scale Business Intelligence systems.

Data Warehouse and Business Intelligence are collectively abbreviated as DWBI. Most of the times in the industry, DWBI is simple known as BI.

In short, DWBI is a “Process of Extracting Data from Source in Whichever Format it exists, Transforming it into a Consumable Format, Loading it into a Centralized Data Repository, and Delivering/Presenting it to the End Users (Decision Makers) in the Format that they need, to Enable them to make Effective Decisions”.

Notice in the above definitions that, I have referred to BI as a Process. Remember that Business Intelligence is a Process and not a tool. Irrespective of the tools/technologies that you use, the underlying concept/process remains the same. You might hear people saying BI Tools, which most often they are referring to the tools that help us build BI Systems.

[Updated | 2013-02-14]: As Data Warehouses and Data Marts are centralized data repositories and are used to deliver data for analysis and reporting to people at different levels in an organization, they ensure that the same version of the data is delivered to every individual in the organization and thus ensures that “Single Version of Truth” is available to each and every individual.