Business IntelligenceBusiness Intelligence

Business IntelligenceBusiness Intelligence

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

Essentially, exploiting data to make a Essentially, exploiting data to make a business more profitablebusiness more profitable

Harrah’s EntertainmentHarrah’s Entertainment

Harrah’s maintains a database that contains Harrah’s maintains a database that contains data on customer activity slot machines, data on customer activity slot machines, restaurants and other retail outlets as well as restaurants and other retail outlets as well as demographic data and gambling habitsdemographic data and gambling habits

Harrah’s used this data to determine that Harrah’s used this data to determine that 26% of gamblers generate 82% of their 26% of gamblers generate 82% of their income and those gamblers were not the high income and those gamblers were not the high rollersrollers

From this they generate promotions targeted From this they generate promotions targeted at specific groups or even specific customersat specific groups or even specific customers

MeijerMeijer

Meijer, a regional supermarket, used Meijer, a regional supermarket, used data mining to determine that data mining to determine that certain core items sold in all stores certain core items sold in all stores but many other items only sold in but many other items only sold in some storessome stores

Meijer tailors store stocks based on Meijer tailors store stocks based on this datathis data

Business Intelligence Business Intelligence ProcessProcess

InsightAction

Mea

sure

men

t

Analys

is

BusinessIntelligence

AnalysisAnalysis

People analyze the world using People analyze the world using mental modelsmental models

Mental models are a result of Mental models are a result of experience, education, etc. but are experience, education, etc. but are also constrained by the information also constrained by the information availableavailable

BI systems (should) allow free-form BI systems (should) allow free-form acquisition to information so allowing acquisition to information so allowing less restrictive mental modelsless restrictive mental models

InsightInsight

Insight is the product of broad, free-Insight is the product of broad, free-ranging analysis born of questions that ranging analysis born of questions that only humans can ask and discovery of only humans can ask and discovery of patterns that only humans can patterns that only humans can recognize as usefulrecognize as useful

BI enables people to ask questions and BI enables people to ask questions and look for patterns and also allows them look for patterns and also allows them to convince others of their insightsto convince others of their insights

ActionAction

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

MeasurementMeasurement

BI provides for more thorough and BI provides for more thorough and timely measurementtimely measurement A wider variety of measures taken from A wider variety of measures taken from

a broader range of data sources can be a broader range of data sources can be accessedaccessed

Timeliness of measures can be tailored Timeliness of measures can be tailored to requirements of each level of to requirements of each level of managementmanagement

Manager’s Information Manager’s Information RequirementsRequirements

Line Line ManagersManagers

Middle Middle ManagementManagement

Upper Upper ManagementManagement

GoalsGoals Day-to-DayDay-to-Day Short TermShort Term Long TermLong Term

Concrete Concrete MeasuresMeasures

Detail-level Detail-level drilldowndrilldown

Summarized Summarized data with data with drilldowndrilldown

Highly Highly summarized summarized

KPIsKPIs

TimingTiming Hourly or dailyHourly or daily Weekly or Weekly or monthlymonthly

Weekly, Weekly, monthly or monthly or

longerlonger

BI GoalsBI Goals

Making better decisions fasterMaking better decisions faster Converting data into informationConverting data into information

Difference between the information that Difference between the information that managers require and the large amount managers require and the large amount of information available has been called of information available has been called the “analysis gap”the “analysis gap”

Using a rational approach to manageUsing a rational approach to managementment

Increasing the Pace of Increasing the Pace of DecisionsDecisions

Plan

ImplementEvaluate

Monitor

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.

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Data – Information - Data – Information - KnowledgeKnowledge

Knowledgeand

Intelligence

Information

Data

Levelof

Abstraction

Size of Data

DataData

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

Data – InformationData – Information

Information Information is the result of collecting and is the result of collecting and organizing data in a way that establishes organizing data in a way that establishes relationships between data items, which thereby relationships between data items, which thereby provides context and meaning.provides context and meaning.

Turning Data into InformationTurning Data into Information Process of determining what data can be collected and Process of determining what data can be collected and

in what contextin what context For example, designing a database that models a real For example, designing a database that models a real

world set of entities and relationships among the entitiesworld set of entities and relationships among the entities Requires technical and some business expertiseRequires technical and some business expertise

Information – KnowledgeInformation – Knowledge

Knowledge Knowledge is the concept of understanding is the concept of understanding information based on recognizing patterns in information based on recognizing patterns in a way that provides insight to information.a way that provides insight to information.

Turning Information into KnowledgeTurning Information into Knowledge Information becomes knowledge when it can be Information becomes knowledge when it can be

used to address problems confronted by a used to address problems confronted by a businessbusiness

For example, using analytical systems to find For example, using analytical systems to find patterns in data that suggest courses of action patterns in data that suggest courses of action

Requires business expertiseRequires business expertise

From Data to ActionFrom Data to Action

Data- Lifestyle- Point of sale- Demographic- Geographic

Information- X lives in Z- S is Y years old- X and S moved- W has money Z

Knowledge- Product A is boughtX% of time if product Bis bought- Amount of matter Y ismostly used in region Z- Customers of class Ywill use X% of C duringperiod D

Decision- Let us promote productA in region Z in stores- Send catalogs tohouses of profile P- Allocate X% of fundsto population B- Offer additionalservices to clients P

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InformateInformate

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

End User Access to DataEnd User Access to Data

0 5 10 15 20 25 30 35

Extensive use of analytics

Significant use of analytics

Some analytic use with a datawarehouse

End user use of ad hoc reportswith data warehouse

Very little access to data and noanalytics

InformatingInformating

Organizations and users require Organizations and users require experience with a new enterprise system experience with a new enterprise system to understand what data is available and to understand what data is available and to learn what they can do with itto learn what they can do with it

Often requires adding bolt-ons that Often requires adding bolt-ons that provide analytic or DSS capabilities (e.g. provide analytic or DSS capabilities (e.g. Business warehouse or CRM)Business warehouse or CRM)

Information portals are often a key Information portals are often a key component of systems that give users component of systems that give users access to data and analytical toolsaccess to data and analytical tools

The “BI Attitude”The “BI Attitude”

Seeking objective measurable quantitative facts about Seeking objective measurable quantitative facts about the businessthe business

Using organized methods and technologies to analyze Using organized methods and technologies to analyze the factsthe facts

Inventing and sharing models that explain the cause Inventing and sharing models that explain the cause and effect relationships between operational actions and effect relationships between operational actions and the effects these have on reaching the goals of the and the effects these have on reaching the goals of the businessbusiness

Experimenting with alternative approaches and Experimenting with alternative approaches and monitoring feedback on resultsmonitoring feedback on results

Understanding that people are not always rationalUnderstanding that people are not always rational Running the business based on all these characteristicsRunning the business based on all these characteristics

Evidence-Based Evidence-Based ManagementManagement

EBM is a philosophy of management EBM is a philosophy of management that:that: Requires that claims be backed-up by Requires that claims be backed-up by

supporting datasupporting data Parse underlying logic for faulty cause-Parse underlying logic for faulty cause-

and-effectand-effect Encourage experimentation and Encourage experimentation and

explorationexploration Reinforce continuous learningReinforce continuous learning

Removing Cognitive Removing Cognitive BlindersBlinders

See information – Notice what is See information – Notice what is happening in the environmenthappening in the environment

Seek information – Don’t rely only on Seek information – Don’t rely only on the processed and filtered information the processed and filtered information provided to youprovided to you

Use information – Use all relevant dataUse information – Use all relevant data Share information – Make sure all team Share information – Make sure all team

members share their unique informationmembers share their unique information

BI Systems ROIBI Systems ROI

The decision to invest in a BI system The decision to invest in a BI system is a business decision and should be is a business decision and should be justified as such justified as such

Costs have to be balanced against Costs have to be balanced against the expected valuethe expected value

The Gartner Group reports that the The Gartner Group reports that the average ROI from BI projects is 430%average ROI from BI projects is 430%

CostsCosts

Fixed costs of BI infrastructureFixed costs of BI infrastructure Servers, storage, softwareServers, storage, software

Fixed costs of developmentFixed costs of development Cleansing data, database development, Cleansing data, database development,

etc.etc. Variable costs of softwareVariable costs of software

Licenses, training, supportLicenses, training, support Variable costs associated with Variable costs associated with

maintenancemaintenance

Value of InformationValue of Information

““Companies that manage their data Companies that manage their data as a strategic resource and invest in as a strategic resource and invest in its quality are already pulling ahead its quality are already pulling ahead in terms of reputation and in terms of reputation and profitability”profitability” PricewaterhouseCoopers Global PricewaterhouseCoopers Global

Management Survey, 2003Management Survey, 2003

Determining the Value of Determining the Value of InformationInformation

Historical CostHistorical Cost What did we pay to acquire the What did we pay to acquire the

information?information? Market ValueMarket Value

How much would someone pay to How much would someone pay to acquire the information?acquire the information?

Utility ValueUtility Value What value can we derive from this What value can we derive from this

information?information?

Factors Affecting Information Factors Affecting Information ValueValue

Time value of dataTime value of data Data represents a snapshot of reality and so its Data represents a snapshot of reality and so its

value degrades over timevalue degrades over time Information as a sharable resourceInformation as a sharable resource

Data is not degraded (with a few exceptions) Data is not degraded (with a few exceptions) by being shared and its value is often by being shared and its value is often increased by being sharedincreased by being shared

Increased value through increased useIncreased value through increased use The more it is used the more likely actionable The more it is used the more likely actionable

knowledge will be generatedknowledge will be generated

Factors Affecting Information Factors Affecting Information ValueValue

Increasing value through qualityIncreasing value through quality Information of questionable value not only has little Information of questionable value not only has little

value but may have negative valuevalue but may have negative value Increasing value through mergingIncreasing value through merging

Merging information from disparate sources increases Merging information from disparate sources increases value because of the information contained in the value because of the information contained in the relationshipsrelationships

Value versus volumeValue versus volume Value is not necessarily increased and may be Value is not necessarily increased and may be

decreased by volumedecreased by volume One can often define an optimum amount of informationOne can often define an optimum amount of information There is a qualitative difference between having lots of There is a qualitative difference between having lots of

data from disparate data sources and having the same data from disparate data sources and having the same amount from the same sourceamount from the same source

Course OutlineCourse Outline

Implementation of Business Implementation of Business Intelligence SystemsIntelligence Systems

Analytical TechniquesAnalytical Techniques Data warehousesData warehouses

Data Profiling and Data QualityData Profiling and Data Quality Data ModelsData Models Extraction, Transfer and Loading (ETL)Extraction, Transfer and Loading (ETL)

SAP Business WarehouseSAP Business Warehouse