Business Intelligence – Chapter 5 (TBIT)

Business Intelligence is a broad category of applications, technologies, and processes for

gathering, storing, accessing, and analyzing data to help business users make better decisions.

Business Intelligence is divided into –

- Querying
- Reporting
- Online Analytical processing
- Business Analytics

Business Analytics is a subset of BI based on statistics, prediction, and optimization. Most

popular BI tool is Excel.

Manager Roles –
- Interpersonal Roles: Figurehead, Leader, Liaison
- Informational Roles: Monitor, Disseminator, Spokesperson, Analyzer
- Decisional Roles: Entrepreneur, Disturbance Handler, Resource Allocator, Negotiator

Phases of Decision-Making
- Intelligence: What is the problem?
- Design: What are my options?
- Choice: Pick an option and decide how to implement it.

Why Managers need IT support?

- Number of alternatives constantly increasing due to innovations in technology.
- Decisions made under time pressure. Not enough time to process information manually
fast enough.
- Sophisticated analysis required in order to make good decision out of many complex
decisions.
- Information required to take decisions may be present at different locations. Need to
bring it together in one place to facilitate decision making.

Framework for Computerized Decision Analysis

- Problem Structure: Decision making process ranges from highly structured to highly
structured.
o Structured decisions deal with routine and repetitive problems for which
standard solution exists. These types of decisions can be easily automated.
 o Unstructured decisions are those where there is no standardized procedure for
carrying out any of the three phases. Human intuition & judgement play a big
role. For e.g., new service offerings, hiring an executive, etc.
o Semi-structured decisions are those where some of the decision phases are
structured. For e.g., evaluating employees, setting marketing budgets, etc.

- Nature of Decisions
o Operational Control – executing specific tasks efficiently & effectively.
o Management Control – acquiring & using resources efficiently in
accomplishing organizational goals.
o Strategic Planning – long-range goals & policies for growth and resource
allocation.

Business Intelligence
Major BI Software Vendors
- SAS
- Hyperion (owned by Oracle)
- Business Objects (owned by SAP)
- Information Builders
- SPSS (owned by IBM)
- Cognos

Different levels of usage of BI

- Development of one or a few related BI applications: Organizations create a data
mart for a particular department where BI tools are being implemented.
- Development of Infrastructure to support Enterprise-wide BI: Enterprise Data
Warehouse (EDW) is set up which encompasses the whole organization.
- Support for Organizational Transformation: Company uses BI to transform the
ways it competes in the marketplace. BI supports a new business model. This is closely
aligned with Corporate Performance Management.
o Corporate Performance Management (CPM) is involved with monitoring
and managing an organization’s performance according to KPIs.

Sentiment Analysis refers to the use of natural language processing, text analysis, machine
learning, and statistics to identify and extract subjective information in source materials.
Business Intelligence Applications for Data Analysis

1. Multidimensional Analysis or Online Analytical Processing

OLAP involves
- “slicing and dicing” data stored in a dimensional format
- drilling down in the data to greater detail
- aggregating data

2. Data Mining
Refers to the process of searching for valuable business information in a large database,
data warehouse, or data mart.
Performs two basic operations-
- predicting trends and behaviors. Targeted Marketing relies on predictive information.
- identifying previously unknown patterns. Detecting fraudulent credit card transactions.
In most cases, the purpose of data mining is to identify a business opportunity in order to
create a sustainable competitive advantage.

3. Decision Support Systems

They combine models and data to analyze semi-structured and some unstructured
problems that involve extensive user involvement.
Enables business managers & analysts to access data interactively, to manipulate these
data, and to conduct appropriate analyses.
Capabilities of DSS –
- Sensitivity Analysis: study of impact that changes in one or more parts of decision-
making model have on other parts.
o Examine impact that changes in input variables have on output variables.
o Two types of input variables - decision and environmental variables.
o Enables system to adapt to changing conditions and situations.

- What-if Analysis: attempts to predict the impact of a change in assumed input on the
proposed solution.

- Goal-Seeking Analysis: attempts to calculate the value of the inputs necessary to

achieve a desired level of output.
Business Intelligence Applications for Presenting Results
1. Dashboards
- Provides easy access to timely information and direct access to management reports.
- Enables managers to examine exception reports and drill down into detailed data.
- User-friendly and supported by graphics.
Management Cockpit is a strategic management room containing an elaborate set of
dashboards that enable top-level decision makers to pilot their businesses better. The
dashboard graphically displays KPIs and information relating to critical success factors on
the walls of management cockpit room.
Management Cockpit Room has four differently colored walls – Black, Red, Blue and
White.
- Black Wall – Principal Success factors and financial indicators
- Red Wall – measures market performance
- Blue Wall – projects performance of internal processes and employees
- White Wall – indicates the status of strategic projects

2. Data Visualization Technologies

- Geographic Information System is a computer-based system for capturing,
integrating, manipulating, and displaying data using digitized maps.
o Every record or digital object has an identified geographical location (this is
called Geocoding)
o GIS software vendors – ESRI, Intergraph & Pitney Bowes MapInfo
- Reality Mining allows analysts to extract information from the usage patterns of
mobile phones and other wireless devices.

3. Real-Time BI
- Enables users to employ multidimensional analysis, data mining, and decision support
systems to analyze data in real time.
- Helps organizations to make decisions and to interact with customers in new ways.