Download Chapter 1 - Daniel Yerelian

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Introduction to
Business Intelligence
Changing Business Environments
and Computerized Decision Support
• The Business Pressures-Responses-Support
Model
– The business environment
– Organizational responses: be reactive, anticipative,
adaptive, and proactive
– Computerized support
• Closing the Strategy Gap One of the major objectives of BI is
to facilitate closing the gap between the current performance
of an organization and its desired performance as expressed
in its mission, objectives, and goals and the strategy for
achieving them
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Changing Business Environments
and Computerized Decision Support
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Managerial Decision Making
• Businesses are always fraught with challenges
• Managers must make decisions almost on a daily
basis
• Many of those decisions have significant financial and
organizational impact
– Examples:
• What tools can we use to make the decisions
efficiently (not waste too much time and resources)
and more effective (have greater impact on the final
outcome)
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Decision Making Process
• Nobel Laureate Herbert Simon postulated that rational
decision maker goes through the following stages:
Systems Prior to BI
• Decision Support Systems
– Mainly model based. Supports the design part with limited
support for the choice part of decision making
• Statistical Tools
– More data oriented. Provides data descriptions and insight
into the data.
• Data Mining
– Specialized data analysis tools for structured data analysis
• Knowledge Management
– Tools for capturing and managing knowledge. Can be
considered as pre-cursor to BI
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Business Intelligence (BI)
• Business Intelligence (BI)
– A conceptual framework for an integrated decision
support environment. It combines architecture,
databases (or data warehouse), analytical and
visual presentation tools.
– The success of a BI solution ultimately is
determined by how well it helps both business and
technical users throughout an organization meet
their mission critical goals.
The 5 Stages of Business Intelligence
• BI development typically follows the 5 stages listed
below:
– 1. The Data: defining which data will be loaded into the system and
analyzed.
– 2. The ETL (Extract, Transform, and Load) Engine: moving the
source data to the Data Warehouse. This can be a complex step
involving modifications and calculations on the data itself. If this step
doesn’t work properly, the BI solution simply cannot be effective.
– 3. Data Warehousing: connects electronic data from different
operational systems so that the data can be queried and analyzed
over time for business decision making.
– 4. Analytic Engine: analyzes multidimensional data sets found in a
data warehouse to identify trends, outliers, and patterns.
– 5. Presentation Layer: the dashboards, reports and alerts that
present findings from the analysis.
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A Framework for
Business Intelligence (BI)
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BI Components
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• Data Warehouses and Data Mining
– A class of information analysis based on databases that looks for
hidden patterns in a collection of data which can be used to
predict future behavior
• Business (or corporate) Performance Management (BPM)
– A component of BI based on the balanced scorecard
methodology, which is a framework for defining, implementing,
and managing an enterprise’s business strategy by linking
objectives with factual measures
• Dashboards
– A visual presentation of critical data for executives to view. It
allows executives to see hot spots in seconds and explore the
situation
Business Intelligence: A Confluence of
Tools and Capabilities
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The three circles of the Venn diagram each
represent (previously considered) distinct
areas of study and application:
– 1. information systems and technology,
– 2. statistics, and
– 3. OR/MS.
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BI can be described as a combination of :
business information intelligence (BII),
business statistical intelligence (BSI) and
business modeling intelligence (BMI).
BI must provide an integrated capabilities for
decision making and those include
capabilities for
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Collection
Description
Prescription
Interpretation
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BI vs. Business Analytics
• Used often interchangeably in the present
business environment
• Analytics is more tools oriented, so it mainly refers
to the technology for BI
• BI is more of the umbrella term that also includes
the business side of the equation
• BI is more of a planning level concept and BA is
more of an implementation level concept
• If you think of KPI (Key Performance Indicators), BI
defines them while BA measures them (roughly
speaking)
• Google Analytics: BI or BA?
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Major BI Vendors
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• List obtained from:
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http://www.business-software.com/business-intelligence-solutions/businessintelligence/index.php
• Leading Vendors are:
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Actuate
Cognos
Information Builders
Microsoft
MicroStrategy
Oracle
Panorama
QlikTech
SAP
SAS
Go to the website listed above, and then investigate the strengths and weaknesses
of the BI products from each of the vendors and create a 2-4 page comparison
report. Identify also the major area of thrust for each of the vendors
Challenges for BI Implementation
• Multi-process, multi-users environment
– The Typical BI User Community
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IT staff
Power users
Executives
Functional managers
Occasional information customers
Partners
• Consumers
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Challenges for BI Implementation
• Lack of a Complete and Integrated Single Vendor Solution
• Some progress are being made though with SaaS model and
In-Memory BI
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Challenges for BI Implementation
• Lack of integration with Organizational Strategy
– BI is viewed more as a technology than an organizational
process change and strategic initiative
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Lack of data standardization
Rapidly growing volume of data
Rapidly changing technology
Need for specialized knowledge and training
Security and legal issues associated with
information access and use
BI Governance
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• BI Governance consists of
– The project prioritization process within organizations
• Creating categories of projects (investment, business opportunity,
strategic, mandatory, etc.
• Defining criteria for project selection
• Determining and setting a framework for managing project risk
• Managing and leveraging project interdependencies
• Continually monitoring and adjusting the composition of the portfolio
– Intelligence Gathering that involves how modern companies ethically
and legally organize themselves to glean as much information as they
can from their:
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Customers
Business environment
Stakeholders
Business processes
Competitors
Other sources of potentially valuable information
– Setting processes instead of just solutions
BI Governance
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Strategic, Tactical & Functional
Benefits of Business Intelligence
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