Week 2

8102 - Enterprise Systems

and Business Analysis
Dr Wallayaporn Techakriengkrai
(Wally)

Contact details
wallytechakriengkrai@icl.ac.nz
Learning Objectives
❑ Understand the need for computerized support of managerial
decision making
❑ Learn the conceptual foundations of the DSS methodology
❑ Describe the BI methodology and concepts and relate them to DSS
❑ Understand the concept and applications of automated rule-based
decision systems
❑ Describe the concept and evolution of rule-based expert systems
(ES)
❑ Understand the architecture of rule-based ES
❑ Learn the knowledge engineering process used to build ES
Changing Business
Environment & Computerized
Decision Support
➢ Business Pressures–Responses–Support Model
✓ Business pressures result of today's competitive
business climate
✓ Responses to counter the pressures (action taken)
✓ Support to better facilitate the process
Business Pressures–
Responses–Support Model
Business Environment
Factors
FACTOR DESCRIPTION
Markets Strong competition
Expanding global markets
Blooming electronic markets on the Internet
Innovative marketing methods
Opportunities for outsourcing with IT support
Need for real-time, on-demand transactions
Consumer Desire for customization
demand Desire for quality, diversity of products, and speed of delivery
Customers getting powerful and less loyal
Technology More innovations, new products, and new services
Increasing obsolescence rate
Increasing information overload
Social networking, Web 2.0 and beyond
Societal Growing government regulations and deregulation
Workforce more diversified, older, and composed of more women
Prime concerns of homeland security and terrorist attacks
Necessity of Sarbanes-Oxley Act and other reporting-related legislation
Increasing social responsibility of companies
Greater emphasis on sustainability
Organizational Responses
❑ Be Reactive, Anticipative, Adaptive, and Proactive

❑ Managers may take actions, such as

✓ Employ strategic planning.

✓ Use new and innovative business models.
✓ Restructure business processes.
✓ Participate in business alliances.
✓ Improve corporate information systems.
Decision-Making Process
Managers make decisions by following a four-step
process

1. Define the problem

2. Construct a model that describe the real world problems
3. Identify possible solutions to the modeled problem and
evaluate the solutions
4. Compare, choose, and recommend a potential solution to
the problem
Information Systems Support
for Decision Making
❑ Group communication and collaboration
❑ Improved data management
❑ Managing data warehouses and Big Data
❑ Analytical support
❑ Overcoming cognitive limits in processing and
storing information
❑ Knowledge management
❑ Anywhere, anytime support
An Early Decision Support
Framework (by Gory and
Scott-Morten, 1971)
 An Early Decision Support
Framework
❑ Degree of Structuredness (Simon, 1977)
➢ Decisions are classified as
✓ Highly structured (a.k.a. programmed)
✓ Semi-structured
✓ Highly unstructured (i.e., nonprogrammed)

❑ Types of Control (Anthony, 1965)

✓ Strategic planning (top-level, long-range)
✓ Management control (tactical planning)
✓ Operational control
The Concept of DSS
❑ DSS - interactive computer-based systems, which help decision
makers utilize data and models to solve unstructured problems
(Gorry and Scott-Morton, 1971)

❑ Decision support systems couple the intellectual resources of

individuals with the capabilities of the computer to improve the
quality of decisions.
Definition of Business
Intelligence (BI)
❑ BI is an umbrella term that combines architectures, tools,
databases, analytical tools, applications, and methodologies

❑ BI is 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
The Evolution of BI
Capabilities
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
Data Warehouse Business Analytics Performance and
Environment Environment Strategy
Data Technical staff Business users Managers / executives
Sources Built the data warehouse Access
Data
✓ Organizing Warehouse BPM strategy
✓ Summarizing Manipulation
✓ Standardizing Results

User Interface
Future component - browser
intelligent systems - portal
- dashboard
Analytics Overview
❑ Analytics?
✓ Something new or just a new name for …
❑ A Simple Taxonomy of Analytics (proposed by INFORMS)
✓ Descriptive Analytics
✓ Predictive Analytics
✓ Prescriptive Analytics
❑ Analytics or Data Science?
Analytics Overview
Automated Decision-Making
Framework
Architecture of the Airline
Revenue Management Systems
Artificial Intelligence (AI)
• Artificial intelligence (AI)
 A subfield of computer science, concerned with
symbolic reasoning and problem solving

• AI has many definitions…

 Behavior by a machine that, if performed by a human
being, would be considered intelligent
 “…study of how to make computers do things at
which, at the moment, people are better”
 Theory of how the human mind works
AI Objectives
❑Make machines smarter (primary goal)
❑Understand what intelligence is
❑Make machines more intelligent & useful

❑Signs of intelligence…
 Learn or understand from experience
 Make sense out of ambiguous situations
 Respond quickly to new situations
 Use reasoning to solve problems
 Apply knowledge to manipulate the environment
The AI Intelligent tutoring

Field… Autonomous Robots

Intelligent Agents

Natural Language Processing

Speech Understanding

The Disciplines Automatic Programming

Voice Recognition

and Applications of Machine Learning Neural Networks

Computer Vision
AI Genetic Algorithms

Applications
Game Playing
Fuzzy Logic
Expert Systems
The AI
Tree

• AI provides
the scientific
foundation Philosophy Mathematics
Computer Science

for many Human Behavior

Engineering
Disciplines

commercial Neurology Logic Robotics Management Science

technologies Sociology Information Systems

Statistics
Psychology

Human Cognition Pattern Recognition

Linguistics Biology
AI Areas
❑ Major…
 Expert Systems
 Natural Language Processing
 Robotics and Sensory Systems
 Computer Vision and Scene Recognition
 Intelligent Computer-Aided Instruction
 Automated Programming, Neural Computing

❑ Additional…
 Fuzzy Logic, Genetic Algorithms
 Game Playing, Intelligent Software Agents …
AI is Often Transparent in
Many Commercial Products
• Anti-Lock Braking Systems (ABS)
• Automatic Transmissions
• Video Camcorders
• Appliances
 Washers, Toasters, Stoves, …
• Help Desk Software
• Subway Control
• …
Expert Systems (ES)
• Is a computer program that attempts to imitate
expert’s reasoning processes and knowledge in
solving specific problems
• Most Popular Applied AI Technology
 Enhance Productivity
 Augment Work Forces
• Works best with narrow problem areas/tasks
• Expert systems do not replace experts, but
 Make their knowledge and experience more widely
available, and thus
 Permit non-experts to work better
Important Concepts in ES
• Expert
A human being who has developed a high level of
proficiency in making judgments in a specific
domain
• Expertise
The set of capabilities that underlines the
performance of human experts, including
✓ extensive domain knowledge,
✓ heuristic rules that simplify and improve
approaches to problem solving,
✓ meta-knowledge and meta-cognition, and
✓ compiled forms of behavior that afford great
economy in a skilled performance
Features and Concepts in ES
• Experts / Expertise
 Degrees or levels of expertise
 Ratio of non-experts to experts → 100 to 1

• Transferring Expertise
 From expert to computer to nonexperts via
acquisition, representation, inferencing, transfer
• Symbolic Reasoning / Inferencing
• Deep Knowledge / Self Knowledge
Applications of Expert Systems
• Classical Applications
 DENDRAL
 Applied knowledge (i.e., rule-based reasoning)
 Deduced likely molecular structure of compounds
 MYCIN
 A rule-based expert system
 Used for diagnosing and treating bacterial
infections
 XCON
 A rule-based expert system
 Used to determine the optimal information systems
configuration
• New applications: Credit analysis, Marketing, Finance,
Manufacturing, Human resources, Science and
Engineering, Education, …
Applications of Expert Systems
Structure of Expert Systems
• Development Environment
• Consultation Environment
• Major Components
- Knowledge base
- Inference engine
- User interface
Structures
of Expert

en nt
nm e
t
ro pm
vi lo
Human

Systems

En e v e
Expert(s) Other Knowledge

D
Sources

en n
nm tio
t
Knowledge Information

ro ta
Elicitation Gathering

vi sul
En on
C Knowledge
Rules
Knowledge
Knowledge Base(s)
Engineer (Long Term)
Inferencing
Rules

Rule
Questions Inference Engine Firings
/ Answers

Explanation Knowledge
User Facility Refinement Refined
User Rules
Interface
Blackboard (Workspace)

Facts Data /
Facts Information

Working External Data

Memory Sources
(Short Term) (via WWW)
Knowledge Engineering (KE)
• A set of intensive activities encompassing the acquisition of
knowledge from human experts (and other information sources)
and converting this knowledge into a repository (commonly
called a knowledge base)

• The primary goal of KE is to

 help experts articulate how they do what they do, and
 to document this knowledge in a reusable form
Knowledge Engineering (KE)
One principle in knowledge engineering is the transfer principle.
This method involves transferring human logic and knowledge
into a technology. Over time, this principle has given way to a
more popular model principle, which involves the simulation of
human knowledge rather than its direct transfer from human to
machine.
Difficulties in KE
Knowledge Representation in ES
• Expert knowledge must be represented in a computer-
understandable format and organized properly in the
knowledge base
 Different ways of representing human knowledge include:
 Production rules (*)
 Semantic networks
 Logic statements
Forms of Production Rules
• IF premise, THEN conclusion
 IF your income is high, THEN your chance of being audited
by the IRS is high
• Conclusion, IF premise
 Your chance of being audited is high, IF your income is high
• Inclusion of ELSE
 IF your income is high, OR your deductions are unusual,
THEN your chance of being audited by the IRS is high,
ELSE your chance of being audited is low
• More complex rules…
Knowledge and Inference Rules
• Knowledge rules (declarative rules), state all the facts and
relationships about a problem
 Knowledge rules are stored in the knowledge base

• Inference rules (procedural rules), advise on how to solve a

problem, given that certain facts are known
 Inference rules contain rules about rules (metarules)
 Inference rules become part of the inference engine
 Example:
 IF needed data is not known THEN ask the user
 IF more than one rule applies THEN fire the one with the
highest priority value first