ISYS 650 Business Intelligence

David Chao

Fundamental Roles of IS in Business

Types of Information Systems

• Operations Support Systems– Efficiently support day-to-day operations

• Management Support Systems– Provide information and support for effective

decision making by managers

• Strategic Information Systems– Help get a strategic advantage over customer

• Transaction Processing Systems, TPS– Record and process business transactions

• Any exchange of money or other benefits between two or more parties

• Order processing, purchasing

• General ledger, accounts payable, accounts receivable

– Large amount of data, high processing speed, high reliability, accuracy, and security (fault tolerant)

– Data: internal, historical, detailed

Operations Support Systems

Current Trend in Operations Support Systems

• Enterprise Resources Planning ERP– for the internal world of a company

• Customer Relationship Management CRM– for the external world of a company.

Enterprise Resources Planning, ERP

• A company-wide, integrated, cross-functional system used to manage and coordinate all the resources, information, and functions of a business from shared data bases.– Manufacturing– Transaction processing– Supply chain management– Accounting– Human resource

• Major vendors:– SAP, Oracle, Microsoft

Customer Relationship Management, CRM

• Front office operations:• Direct interaction with customers, e.g. phone calls, e-

mail, online services etc.• Call Center

• Sales Force Automation• tracks all contact that has been made with a given

customer, the purpose of the contact, and any follow up that might be required.

• Sales Intelligence• Cross-selling/Up-selling/Switch-selling

• Example: SalesForce.Com

Types of Management Support Systems

• Management Information Systems (MIS)– Reports and displays – Example: daily sales analysis reports

• Decision Support Systems (DSS)– Interactive and ad hoc support– Example: a what-if analysis to determine where to spend

advertising dollars

• Executive Information Systems (EIS)– Critical information for executives and managers– Example: easy access to actions of competitors

Management Information Systems

• Facilitate management control by producing summarized reports that compare actual performance against planned performance on a regular and recurring basis.– Management control: Ensuring that performance

meets established standards.

• Serve middle management• Provide reports on firm’s current performance,

based on data from TPS

Sample MIS ReportSample MIS Report

Sales Comparison

• A DSS is a computerized system for helping make decisions typically by modeling problems and employing quantitative models for solution analysis. A decision is a choice between alternatives based on estimates of the values of those alternatives. – Serve middle management– Support nonroutine decision making

• E.g. What is impact on production schedule if December sales doubled?

– Often use external information as well from TPS and MIS

Decision support systems

Components of DSS

• Database: Current & Historical Data from Many Sources. – Internal and external data

• Model base: Collection of Mathematical & Analytical Building Blocks

• Interface for analysis: What - If Questions; visual dashboard

DSS Components

• An Executive Information System (EIS) is a type of information system intended to facilitate and support the information and decision-making needs of senior executives by providing easy access to both internal and external information relevant to meeting the strategic goals of the organization. It is commonly considered as a specialized form of a Decision Support System.– Support senior management– Address nonroutine decisions requiring judgment, evaluation, and

insight– Incorporate data about external events (e.g. new tax laws or

competitors) as well as summarized information from internal MIS and DSS

Executive support systems

Business Intelligence (BI)

• BI is an evolution of decision support concepts over time.– Meaning of EIS/DSS…• Then: Executive Information System • Now: Everybody’s Information System (BI)

• BI systems are enhanced with additional visualizations, alerts, and performance measurement capabilities.

Recent Developments In Decision Support Related Technologies

• Data warehouse• Online Analytical Process, OLAP• Data visualization• Dashboard• Business Performance Management• Data mining

Definition of BI• BI is an umbrella term that combines architectures,

tools, databases, analytical tools, applications, and methodologies.

• BI a content-free expression, so it means different things to different people.

• 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.

• BI supports every level of business operation.

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 — DSS, Executive Information Systems (EIS)– 1990s — OLAP, dynamic, multidimensional data

warehouse, ad-hoc reporting– 2005+ — Inclusion of Artificial Intelligence and

Data/Text Mining capabilities; Web-based Portals/Dashboards

– 2010s — Yet to be seen

The Evolution of BI Capabilities

Changing Business Environment & Computerized Decision Support

• Companies are moving aggressively to computerized support of their operations => Business Intelligence

• Business Pressures–Responses–Support Model– Business pressures result of today's competitive

business climate– Responses to counter the pressures – Support to better facilitate the process

Business Pressures–Responses–Support Model

Organizational Responses

• Be Reactive, Anticipative, Adaptive, and Proactive

• Managers may take actions, such as:– Employing strategic planning.– Using new and innovative business models.– Restructuring business processes.– Participating in business alliances.– Improving corporate information systems.– Improving partnership relationships.– Encouraging innovation and creativity. …cont…>

Organizational Responses, continued

– Improving customer service and relationships.– Moving to electronic commerce (e-commerce).– Using new IT to improve communication, data access

(discovery of information), and collaboration.– Responding quickly to competitors' actions (e.g., in

pricing, promotions, new products and services).– Automating many tasks of white-collar employees.– Automating certain decision processes.– Improving decision making by employing analytics.

Automated Decision System • A relatively new approach to supporting highly

structured decisions• An ADS is a rule-based system that provides a

solution to a repetitive managerial problem in a specific area. – If only 70% of seats on a fight from LA to NY are sold

three days prior to departure, offer a discount of x % to nonbusiness travelers.

– If an applicant owns a house and makes over $100,000 a year, offer a $10,000 credit line.

– An ADS is event-driven alert:– Monitor credit card transactions for possible fraud– Offer financial services when customers make big

deposit.

Closing the Strategy Gap

• One of the major objectives of computerized decision support 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 to achieve them.

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

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 .

• Business analytics are the tools that help users transform data into knowledge (e.g., queries, data/text mining tools, etc.).

Components in a BI Architecture• Business Performance Management (BPM), which

is also referred to as corporate performance management (CPM), is an emerging portfolio of applications within the BI framework that provides enterprises tools they need to better manage their operations.

• User Interface (i.e., dashboards) provides a comprehensive graphical/pictorial view of corporate performance measures, trends, and exceptions.

The Benefits of BI• 1.Helps align the organization towards its key objectives

objectives• 2.Enables faster and fact-based decision making• 3.Combines multiple sources of data for decision making• 4.Efficient collection and distribution of vital data and

statistics

• “The right information at the right time and in the right place”

Intelligence and Espionage• Stealing corporate secrets, CIA, …– Intelligence vs. Espionage

• IntelligenceThe 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

Major BI Tools and Techniques

• Tool categories– Data management– Reporting, status tracking– Visualization– Strategy and performance management– Business analytics– New/advanced tools/techniques to handle

massive data sets for knowledge discovery

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

• Microstrategy– May be the only independent large BI vendor

• Others include Microsoft, SAS, Teradata (mostly considered a DW vendor)