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Business Intelligence: A Managerial ApproachChapter 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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Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall
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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Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall
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
Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall
The Evolution of BI Capabilities
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Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall
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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Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall
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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Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall
A High-level Architecture of BI
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Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall
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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Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall
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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Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall
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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Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall
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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Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall
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
Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall
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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Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall
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
Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall
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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Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall
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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Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall
Magic Quadrant for Business Intelligence Platforms
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Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall
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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Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall
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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Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall
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!
Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall
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.
Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall
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
Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall
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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Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall
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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Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall
Intelligence Creation and UseA Cyclical Process of Intelligence Creation And Use BI practitioners often follow the national security model used in military intelligence initiatives.1-26
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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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Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall
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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Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall
BI Governance Issues/Tasks1.
2. 3. 4. 5.1-29
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
Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall
Intelligence and Espionage
Stealing corporate secrets? CIA?
Intelligence vs. EspionageThe 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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Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall
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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Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall
End of the Chapter
Questions / Comments
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Copyright 2011 Pearson Education, Inc. Publishing as Prentice Hall
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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