Business Intelligence

1
Business Intelligence
2
Business Intelligence

• Business intelligence (BI) is a broad category of
  application programs and technologies for
  gathering, storing, analyzing, and providing
  access to data to help enterprise users make
  better business decisions. BI applications
  include the activities of decision support, query
  and reporting, online analytical processing
  (OLAP), statistical analysis, forecasting, and
  data mining.
• Essentially, exploiting data to make a business
  more profitable

3
Harrahs Entertainment

• Harrahs maintains a database that contains data
  on customer activity slot machines, restaurants
  and other retail outlets as well as demographic
  data and gambling habits
• Harrahs used this data to determine that 26 of
  gamblers generate 82 of their income and those
  gamblers were not the high rollers
• From this they generate promotions targeted at
  specific groups or even specific customers

4
Meijer

• Meijer, a regional supermarket, used data mining
  to determine that certain core items sold in all
  stores but many other items only sold in some
  stores
• Meijer tailors store stocks based on this data

5
Business Intelligence Process
6
Analysis

• People analyze the world using mental models
• Mental models are a result of experience,
  education, etc. but are also constrained by the
  information available
• BI systems (should) allow free-form acquisition
  to information so allowing less restrictive
  mental models

7
Insight

• Insight is the product of broad, free-ranging
  analysis born of questions that only humans can
  ask and discovery of patterns that only humans
  can recognize as useful
• BI enables people to ask questions and look for
  patterns and also allows them to convince others
  of their insights

8
Action

• Well-reasoned, supported analysis allows
  organizations to act more quickly with confidence
  so they can be more nimble and responsive to
  changing conditions

9
Measurement

• BI provides for more thorough and timely
  measurement
• A wider variety of measures taken from a broader
  range of data sources can be accessed
• Timeliness of measures can be tailored to
  requirements of each level of management

10
Managers Information Requirements
11
BI Goals

• Making better decisions faster
• Converting data into information
• Difference between the information that managers
  require and the large amount of information
  available has been called the analysis gap
• Using a rational approach to management

12
Increasing the Pace of Decisions
Organizations must constantlyengage in a process
of planningimplementing plans, monitoringthe
status of plans, evaluatingresults against the
plan and reevaluating the plans. One of the
goals of BI is to increase the rate at which
thiscycle can be performed. BI allows managers
to monitor, providesinformation to evaluate and
provides information as input for planning.
Back
13
Data Information - Knowledge
14
Data

• Data is a collection of raw value elements or
  facts used for calculating, reasoning, or
  measuring. Data may be collected, stored, or
  processed but not put into a context from which
  any meaning can be inferred

15
Data Information

• Information is the result of collecting and
  organizing data in a way that establishes
  relationships between data items, which thereby
  provides context and meaning.
• Turning Data into Information
• Process of determining what data can be collected
  and in what context
• For example, designing a database that models a
  real world set of entities and relationships
  among the entities
• Requires technical and some business expertise

16
Information Knowledge

• Knowledge is the concept of understanding
  information based on recognizing patterns in a
  way that provides insight to information.
• Turning Information into Knowledge
• Information becomes knowledge when it can be used
  to address problems confronted by a business
• For example, using analytical systems to find
  patterns in data that suggest courses of action
• Requires business expertise

17
From Data to Action
Back
18
Informate

• Use information to transform work. In the context
  of enterprise solutions, organizations informate
  by transforming enterprise solutions data into
  context rich information and knowledge that
  supports the unique business analysis and
  decision-making needs of multiple work forces

19
End User Access to Data
20
Informating

• Organizations and users require experience with a
  new enterprise system to understand what data is
  available and to learn what they can do with it
• Often requires adding bolt-ons that provide
  analytic or DSS capabilities (e.g. Business
  warehouse or CRM)
• Information portals are often a key component of
  systems that give users access to data and
  analytical tools

21
The BI Attitude

• Seeking objective measurable quantitative facts
  about the business
• Using organized methods and technologies to
  analyze the facts
• Inventing and sharing models that explain the
  cause and effect relationships between
  operational actions and the effects these have on
  reaching the goals of the business
• Experimenting with alternative approaches and
  monitoring feedback on results
• Understanding that people are not always rational
• Running the business based on all these
  characteristics

22
Evidence-Based Management

• EBM is a philosophy of management that
• Requires that claims be backed-up by supporting
  data
• Parse underlying logic for faulty
  cause-and-effect
• Encourage experimentation and exploration
• Reinforce continuous learning

23
Removing Cognitive Blinders

• See information Notice what is happening in the
  environment
• Seek information Dont rely only on the
  processed and filtered information provided to
  you
• Use information Use all relevant data
• Share information Make sure all team members
  share their unique information

24
BI Systems ROI

• The decision to invest in a BI system is a
  business decision and should be justified as such
  
• Costs have to be balanced against the expected
  value
• The Gartner Group reports that the average ROI
  from BI projects is 430

25
Costs

• Fixed costs of BI infrastructure
• Servers, storage, software
• Fixed costs of development
• Cleansing data, database development, etc.
• Variable costs of software
• Licenses, training, support
• Variable costs associated with maintenance

26
Value of Information

• Companies that manage their data as a strategic
  resource and invest in its quality are already
  pulling ahead in terms of reputation and
  profitability
• PricewaterhouseCoopers Global Management Survey,
  2003

27
Determining the Value of Information

• Historical Cost
• What did we pay to acquire the information?
• Market Value
• How much would someone pay to acquire the
  information?
• Utility Value
• What value can we derive from this information?

28
Factors Affecting Information Value

• Time value of data
• Data represents a snapshot of reality and so its
  value degrades over time
• Information as a sharable resource
• Data is not degraded (with a few exceptions) by
  being shared and its value is often increased by
  being shared
• Increased value through increased use
• The more it is used the more likely actionable
  knowledge will be generated

29
Factors Affecting Information Value

• Increasing value through quality
• Information of questionable value not only has
  little value but may have negative value
• Increasing value through merging
• Merging information from disparate sources
  increases value because of the information
  contained in the relationships
• Value versus volume
• Value is not necessarily increased and may be
  decreased by volume
• One can often define an optimum amount of
  information
• There is a qualitative difference between having
  lots of data from disparate data sources and
  having the same amount from the same source

30
Course Outline

• Implementation of Business Intelligence Systems
• Analytical Techniques
• Data warehouses
• Data Profiling and Data Quality
• Data Models
• Extraction, Transfer and Loading (ETL)
• SAP Business Warehouse