Download Lecture Material (Sep 11): Introduction to Business

Business
Intelligence intro
Matti Rossi, Professor
Aalto University School of Economics
Information Systems
BI definition
Business Intelligence (BI)
refers to skills, technologies, applications and practices used to
help a business acquire a better understanding of its
commercial context.
Source: WikiPedia,
http://en.wikipedia.org/wiki/Business_intelligence
Business Intelligence (BI)
BI is an umbrella term that combines architectures, tools,
databases, analytical tools, applications, and methodologies
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
A Brief History of BI
The term BI was coined by the Gartner Group in the mid-1990s
However, the concept is much older
• 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; Webbased Portals/Dashboards
• 2010s Mobile, real-time marketing campaigns
Business Pressures–Responses–
Support Model
CRISP-DM
= Cross-Industry Standard Process for Data Mining
The purpose of CRISP-DM is to present an industry, tool and application neutral
description of data mining / knowledge discovery process (non-linear, repeatedly backtracking).
Source: http://www.dataminingtechniques.net
The Evolution of BI Capabilities
Competitive intelligence
the action of defining, gathering, analyzing, and distributing
intelligence about products, customers, competitors and any
aspect of the environment needed to support executives and
managers in making strategic decisions for an organization
BI has internal focus and CI external focus
Business Intelligence Done Right
Turns
• Data Into Information
• Information Into Knowledge
• Knowledge Into Decisions
• Decisions Into Profits
http://DavidHubbard.net/powerpoint
Business Intelligence is used for
Understanding business through collected data
Answering questions such as:
• Which Of Our Customers Are Most Profitable?
• Where Are Our Most Profitable Customers?
• Who Are Our Customers?
• Which Products Cost The Most To Maintain?
• Where Can We Cut Costs?
BI users
• 80% are casual users relying on production reports
• Senior executives
- Use monitoring functionalities
• Middle managers and analysts
- Ad-hoc analysis
• Operational employees
- Prepackaged reports
- E.g. sales forecasts, customer satisfaction, loyalty and attrition, supply chain
backlog, employee productivity
Turban 2011
BI and Business Strategy
To be successful, BI must be aligned with the company’s
business strategy.
• BI cannot/should not be a technical exercise for the information
systems department.
BI changes the way a company conducts business by
• improving business processes, and
• transforming decision making to a more data/fact/information driven
activity.
BI should help execute the business strategy and not be an
impediment for it!
Real-time, On-demand BI
The demand for “real-time” BI is growing!
• 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
Trend -> Business Activity Management
Data and information in organizations
Source: http://www.ibm.com/developerworks/data/library/techarticle/dm0505cullen/index.html
The Architecture of BI
A BI system has four major components
• a data warehouse, with its source data
• business analytics, a collection of tools for manipulating, mining, and
analyzing the data in the data warehouse;
• business performance management (BPM) for monitoring and
analyzing performance
• a user interface (e.g., dashboard)
A High-Level Architecture of BI
What we need to get there?
http://www.servicetechmag.com/I53/0811-2
Transaction data
Data produced in the day to day operations of a company
Usually stored in relational databases
Optimized for storing and retrieving individual data items in real
time
Data warehouse
A decision support database that is maintained separately from
operational databases
A consistent database source that bring together information
from multiple sources for decision support
Support information processing by providing a platform of
consolidated, historical data for analysis
Data warehousing:
• The process of constructing and using data warehouses
A data warehouse is based on a multidimensional data model
which views data in the form of a data cube
Examples of BI applications
• Predictive analytics
- Use patterns in data to predict future behavior
- E.g. Credit card companies use predictive analytics to determine customers at risk
for leaving
• Data visualization
- Help users see patterns and relationships that would be difficult to see in text lists
• Geographic information systems (GIS)
- Ties location-related data to maps
Turban 2011
E-Business Infrastructure for
Finance E-Business Accounting
Operations
Analytic World
Billing &
Payment
Systems
CRMSystems
SCM Systems
E-Commerce
Systems
Business
Partner
Systems /
ASP
SHARED MASTER DATA AND META DATA
OLAP / Data Warehousing
Enterprise
Application
Integration
Accounting
“Engine”
BW
Acc.
Views
Data Warehousing
Industryspecific /
Legacy
Systems
ERP
Systems
Data Mart
Analytics / Reporting
Strategy &
Enterprise
Management
Data Mart
Business Analytics
Data Mart
Reporting
(Middleware)
SHARED BUSINESS FUNCTIONS
Analytics data transfer /
transactions trigger
Source SAP ag
Advanced example: http://www.nytimes.com/2012/02/19/magazine/shoppinghabits.html?pagewanted=all
Source: Henrikki Hervonen
Simple Visualisation of Complex Data
Extremely attractive
High interactivity
Feather light
Highly scalable
Easy to build and maintain
Performance Dashboards
Facebook report examples: http://www.postplanner.com/6facebook-reporting-tools-in-depth-analysis-fan-pages/
Geospatial data 1
Own sensors
Cell phone
…….
Water metering
Energy consumption
Connecting and visualizing data from different
sources
Display on map, Windshield display, or dashboards
Sources: Open Data, Commercial databases,
Crowd sourced measuring devices
Weather
Lake water
temperatures
Water quality
Traffic
Air quality
Statistics
Energy
production
Factory
pollution
Syncron Tech Oy
Source: Syncron Tech Oy white paper
Geospatial data 2
Source: Deloitte LLC
Target case
Target build predictive models of trying to identify when women
become pregnant
They analyzed the known pregnant customers against all
customers and found 21 variables that predict pregnancy:
• buying large quantities of unscented lotions
• extra large bags of cotton balls
• scent-free soaps
• Etc.
The model was very accurate, but risky to use
• Why important and why risky?
http://aisel.aisnet.org/cais/vol34/iss1/65/
High velocity automated decision
making
• Made possible through computer algorithms precisely defining steps
for a highly structured decision
• Humans taken out of decision
• E.g. High-speed computer trading programs
- Trades executed in 30 milliseconds
- Responsible for “Flash Crash” of 2010
• Require safeguards to ensure proper operation and regulation
Turban 2011
Summary
Business intelligence is based on the use of data resources of a
company for better decision making
Key is the aggregation, transformation and presentation of the
data in ways useful for decision making
Further reading
Watson, Hugh J. (2009) "Tutorial: Business Intelligence – Past,
Present, and Future," Communications of the Association for
Information Systems: Vol. 25, Article 39.
Available at: http://aisel.aisnet.org/cais/vol25/iss1/39
http://webtechman.com/blog/2011/05/16/enterprise-3-0-semanticsocial-business/
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)