Business Intelligence: A Managerial Approach

Chapter 1: Introduction to Business Intelligence

Learning Objectives

Understand today's turbulent business environment and describe how organizations survive and even excel in such an environment (solving problems and exploiting opportunities) Understand the need for computerized support of managerial decision making Describe the business intelligence (BI) methodology and concepts and relate them to decision support systems (DSS) Understand the issues in implementing BI

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A Framework for Business Intelligence (BI)

BI is an evolution of decision support concepts over time.

Meaning of EIS/DSS

Then: Executive Information System Now: Everybodys Information System (BI)

BI systems are enhanced with additional visualizations, alerts, and performance measurement capabilities. The term BI emerged from industry applications.

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A Brief History of BI

The term BI was coined by the Gartner Group in the mid-1990s However, the concept is much older

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1970s MIS reporting static/periodic reports 1980s Executive Information Systems (EIS) 1990s OLAP, dynamic, multidimensional, ad-hoc reporting -> coining of the term BI 2005+ Inclusion of AI and Data/Text Mining capabilities; Web-based Portals/Dashboards 2010s Yet to be seen

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The Evolution of BI Capabilities

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Definition of BI

BI is an umbrella term that combines methodologies, architectures, databases, analytical tools, and applications. BI is a content-free expression, so it means different things to different people.

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Definition of BI

BI's major objective is to enable easy access to data (and models) to provide business managers with the ability to conduct analysis. BI helps transform data, to information (and knowledge), to decisions and finally to action.

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A High-level Architecture of BI

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Components in a BI Architecture

The data warehouse is the cornerstone of any medium-to-large BI system.

Originally, the data warehouse included only historical data that was organized and summarized, so end users could easily view or manipulate it. Today, some data warehouses include access to current data as well, so they can provide real-time decision support.

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Components in a BI Architecture

Business analytics are the tools that help users transform data into knowledge (e.g., reports, queries, data/text mining tools, etc.).

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Components in a BI Architecture

User Interface (i.e., dashboards) provides a comprehensive graphical/pictorial view of corporate performance measures, trends, and exceptions.

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Components in a BI Architecture

Business Performance Management (BPM/CPM/EPM) is an emerging portfolio of applications within the BI framework that provides enterprises tools they need to better manage their operations.

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Transaction Processing Versus Analytic Processing

Transaction processing systems are constantly involved in handling updates (add/edit/delete) to what we call operational databases.

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ATM withdrawal transaction, sales order entry via an e-commerce site updates DBs Online transaction processing (OLTP) handles routine on-going business ERP, SCM, CRM systems generate and store data in OLTP systems The main goal is to have high efficiency

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Transaction Processing Versus Analytic Processing

Online analytic processing (OLAP) systems are involved in extracting information from data stored by OLTP systems

Routine sales reports by product, by region, by sales person, etc. Often built on top of a data warehouse where the data is not transactional Main goal is effectiveness (and then, efficiency) provide correct information in a timely manner

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Major BI Tools and Techniques

Tool categories

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Data management Reporting, status tracking Visualization Business analytics (BA) New/advanced tools/techniques to handle massive data sets for knowledge discovery Social networking (Web 2.0) Strategy and performance management

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Major BI Tools and Techniques

Business analytics implies the use of models and data to improve an organization's performance and/or competitive posture Predictive analytics describes the business analytics method of forecasting problems and opportunities rather than simply reporting them as they occur Web analytics implies using business analytics on real-time Web information to assist in decision making; often related to e-commerce

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Major BI Vendors

In recent years, the landscape of BI vendors has changed

Cognos acquired by IBM in 2008

IBM also acquired SPSS in 2009

Hyperion acquired by Oracle in 2008 Business Objects acquired by SAP in 2009

Other vendors include MicroStrategy, SAS, Information Builders, Microsoft, QlikTech

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Magic Quadrant for Business Intelligence Platforms

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Styles of BI / BA

MicroStrategy, Corp. distinguishes five styles of BI and offers tools for each:
1. 2. 3. 4. 5.

report delivery and alerting enterprise reporting (using dashboards and scorecards) cube analysis (also known as slice-anddice analysis) ad-hoc queries statistics and data mining

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Successful BI Implementation

Implementing and deploying a BI initiative is a lengthy, expensive and risky endeavor! Success of a BI system is measured by its widespread usage for better decision making. The typical BI user community includes all levels of the management hierarchy (not just the top executives, as was for EIS)

Provide what is needed to whom he/she needs it

A successful BI system must be of benefit to the enterprise as a whole.

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BI and Business Strategy

To be successful, BI must be aligned with the companys business strategy.

BI cannot/should not be a technical exercise for the information systems department.

BI changes the way a company conducts business by

transforming decision-making process to be more data-driven, and improving its business processes.

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BI should help execute the business strategy and not be an impediment for it!

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BI for Business Strategy

Strategy should be aligned with BI initiatives It is wise to establish a BI Competency Center (BICC) which can:

Demonstrate linkage BI to strategy execution. Encourage interaction between the potential business users and the IS organization.

Both sides have a lot to learn from each other

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Serve as a repository and disseminator of best BI practices among the different lines of business. Advocate and encourage standards of excellence in BI practices. Help stakeholders understand the crucial role of BI.

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Real-time, On-demand BI

The demand for real-time BI is growing! Is real-time BI attainable? Technology is getting there

Automated, faster data collection (RFID, sensors, ) Database and other software technologies (agent, SOA, ) are advancing Telecommunication infrastructure is improving Computational power is increasing while the cost for these technologies is decreasing

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Trent -> Business Activity Monitoring

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Issues for Successful BI

Developing vs. Acquiring BI systems

Developing everything from scratch Buying/leasing a complete system Using a shell BI system and customizing it Use of outside consultants?
It is easier to quantify costs Harder to quantify benefits

Justifying via cost-benefit analysis

Most of them are intangibles

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Issues for Successful BI

Security and Privacy

Still an important research topic in BI How much security/privacy? BI must integrate into the existing IS

Integration of Systems and Applications

Often sits on top of ERP, SCM, CRM systems

Integration to outside (partners of the extended enterprise) via internet

customers, vendors, government agencies, etc.

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Intelligence Creation and Use

A Cyclical Process of Intelligence Creation And Use
BI practitioners often follow the national security model used in military intelligence initiatives.
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Intelligence Creation and Use

Steps Involved

Data warehouse deployment Creation of intelligence

Identification and prioritization of BI projects

By using ROI and TCO (cost-benefit analysis) This process is also called BI governance

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Intelligence Creation and Use

BI Governance

Who should do the prioritization?

Committee Partnership between functional area heads Partnership between customers and providers

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BI Governance Issues/Tasks
1.

2. 3. 4. 5.
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Create categories of projects (investment, business opportunity, strategic, mandatory, etc.) Define criteria for project selection Determine and set a framework for managing project risk Manage and leverage project interdependencies Continuously monitor and adjust the composition of the portfolio

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Intelligence and Espionage

Stealing corporate secrets? CIA?

Intelligence vs. Espionage

The way that modern companies ethically and legally organize themselves to glean as much as they can from their customers, their business environment, their stakeholders, their business processes, their competitors, and other such sources of potentially valuable information

Intelligence

Problem too much data, very little value

Use of data/text/Web mining

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BI Resources

Teradata University Network

A great and free academic resource for BI (the available resources include cases, articles, tools including Microstrategy, datasets, exercises, etc.

The Data Warehousing Institute (tdwi.org) The OLAP Report (olapreport.com) DSS Resources (dssresources.com) Business Intelligence Network (b-eye-network.com) AIS World (isworld.org) Microsoft Enterprise Consortium (enterprise.waltoncollege.uark.edu/mec)

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End of the Chapter

Questions / Comments

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All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America.

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