Management

Information
Systems

Business Intelligence

Viktor Smusin
Winter 2020/21
 What is BI?
Business Intelligence (BI) is information containing
patterns, relationships, and trends.
Usually very big data volumes are meant, and decisions are
to be made basing on these data.

Three types of BI tools:

• Reporting tools: presenting data for
assessment.
• Data mining: searching for patterns and
relationships among data.
• Knowledge management tools: storing
employee knowledge and making it
available to employees, customers,
vendors etc.
 Example of reporting: RFM analysis
Ranks customer according to their purchasing patterns. Each
customer is given three scores from 1 to 5:
• R (recently) – how recent the last purchase was. Customer list is
sorted by the date of last purchase; the most recent 20% are
given an R score of 1, the next 20% are given an R score of 2
etc.; the least recent 20% are given an R score of 5.
• F (frequently) – frequency of purchases. See R.
• M (money) – revenue from the customer. See R.
The RFM score helps making decisions:
• Whom do we have to contact urgently and ask why he hasn’t
purchased anything for a long time?
• Who should be offered the more expensive goods?
• Which marketing efforts will be in vain?
 Example of data mining: market-basket analysis
Product combinations bought together are analyzed.
You sell tools and analyze 300 purchases.
II. What is the probability (called
I. How many times (of 300) this pair of
“support”) that this pair of tools will
tools was bought together?
be bought together?
Hammer Saw Screwdriver Hammer Saw Screwdriver
Hammer 240 90 70 Hammer 0.8 0.3 0.23
Saw 90 130 55 Saw 0.3 0.43 0.18
Screwdriver 70 55 105 Screwdriver 0.23 0.18 0.35
III. The probability (called IV. How many times the probability of
“confidence”) of buying this tool if buying a tool increases after another
another tool was bought: tool is bought Hammer Saw Screwdriver
Hammer Saw Screwdriver
Hammer 0.87 0.83
Hammer 1 0.69 0.67
Saw 0.87 1.21
Saw 0.38 1 0.52
Screwdriver 0.83 1.21
Screwdriver 0.29 0.42 1
If the customer has bought a saw, the
The probability for somebody who has bought probability that he’ll buy a screwdriver is
a saw to buy a screwdriver too increased by 21%!
 Example of knowledge management: Wiki
A wiki is a website whose content and even
structure can be changed by its users.
It’s useful to companies where employees collect
unstructured experience, which hast to be shared
with their colleagues.
You can create an internal Wiki
on your enterprise portal or
create a public wiki.
The most famous wiki is
Wikipedia.