Business Intelligence

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Kalinga Gunawardhana

kalinga@appsc.sab.ac.lk

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 ILO
• To understand why BI is important

• To understand the need for a Data warehouse

• To understand the need for BI at all levels

• To understand the difference between BI and ERP

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 Business Pressures-
Responses-Support Model

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 Decision Making

• Is a process of 

- Choosing among two or more alternative courses of
actions for the purpose of attaining one or more goals.

• It is influenced by 

- behavioral and scientific disciplines

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Managerial Responsibilities

• Planning

• Organizing

• Commanding

• Controlling

• Coordinating

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 Decision Styles of decision
makers

• Perceptive vs Receptive

• Heuristic versus Analytic

• Autocratic versus Democratic

• Consultative(with individual or groups)

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Perceptive vs receptive

• Perceptive individuals come into a situation with an

expectation, use concepts to filter data and look at what
information conforms or deviates from their assumption. 

• But receptive thinkers suspend judgment, respond to

stimuli, and directly examine every piece of information
that is made available

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 Heuristic vs Analytic

• A heuristic style decision maker relies on inquiry they

follow rules and procedures and value hands on
experience. 

• Others have a more analytical approach and use

quantitative techniques for reasoning.

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Autocratic vs democratic

• some of us may have a more autocratic, my way or

highway, decision making style,

• while others take a more consolidative and democratic

approach to decision making.

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Decision making steps

• Define the problem

• Construct a model

• Identify & Evaluate possible solutions

• Compare,choose and recommend a solution to the

problem

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Decisions making scenarios

• Structured Decisions

-established situation, programmable decision, situation
fully understood, routine , specialized mfg.process

• Unstructured Decisions 

-emergent situation, creative decision, situation unclear ,
one-shot , general processes.

• Semi structured decisions 


- have some structured elements and some unstructured
elements.

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 Decision Making
Constraints & Complexities
• Evaluating what-if scenarios

• Experimentation with a real system

• Changes in the decision-making environment may occur

continuously

• Time pressure on the decision maker

• Analyzing a problem takes time and money

• Accuracy versus speed

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Decision making support
• Group communication and collaboration

• Improved data management

• Giant data warehouses and big data

• Analytical support

• Overcoming cognitive limits in information processing and storage

• Knowledge management

• The ability to access information anywhere, anytime

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 What is BI?
Howard Dresner, of the Gartner Group, in 1989 coined the term BI. He defined BI
as
“a set of concepts and methodologies to improve decision making in business
through use of facts and fact-based systems”.

• The goal of BI is improved decision making. Yes, decisions were made earlier
too (without BI). The use of BI should lead to improved decision making. 


• BI is more than just technologies. It is a group of concepts and methodologies. 


• It is fact based. Decisions are no longer made on gut feeling or purely on hunch.
It has to be backed by facts. 


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BI defined

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 BI is

• Fact based decision making

• Single version of truth

• 360 degrees perspective on your business

• Virtual team members on the same page

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BI and decision making

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Why BI?

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 Need for BI at Virtually All
Levels

• There is too much data , but too little insight

• Structured and unstructured data need to converge!

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How BI?

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Retail industry

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Retail Industry leveraging BI

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 Data mining in retail
• A (hypothetical) pattern learned from transaction data :
“On Friday evenings, shoppers who buy diapers also
beer”

• Highlights new , surprising correlations that can be acted

on by the store.

-To promote more users to display this behavior, consider
dynamic store layout decisions might alter locations of
products based on co purchase.



- Consider couponing strategies that can be used to
cross promote related in some cases.

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 Data mining in Credit card
fraud.

• Credit card fraud costs the industry billions of dollars

each year and pattern discovery tools and machine
learning models such as neural networks are routinely
used to analyze fraud databases to identify triggers.

• “A self-service transaction at a gas station followed by

expensive purchase” is indicative of fraud.

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Data mining for marketing

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 Introduction to Business
Analytics

• Business analytics is heavily dependent on data

• For its successful implementation , business analytics

requires a high volume of high quality data.

• The challenges faced by business analytics are: storage ,

integration , reconciliation of data from multiple disparate
sources across several business functions and the
continuous updates to the data warehouse.

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Differences between BI and
BA

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