IBM ICE (Innovation Centre for Education)

Welcome to:

Unit 2: Business intelligence basics

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Unit objectives IBM ICE (Innovation Centre for Education)
IBM Power Systems

After completing this unit, you should be able to:

• Understand the terms and concepts of BI
• Gain knowledge on BI applications
• Identify the examples of BI-based organizations
• Understand OLAP and its usages

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What is business intelligence? IBM ICE (Innovation Centre for Education)
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• Its roots go back to the late 1960s

• In the 1970s, there were decision support systems (DSS)

• In the 1980s, there were EIS, OLAP, GIS, and more

• Data warehousing and dashboards/scorecards became popular in the 1990s

• Howard Dresner, a Gartner analyst, coined the BI term in the early 1990s

• Today there is much discussion of analytics

• There are many BI definitions, but the following are useful

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Definitions of business intelligence IBM ICE (Innovation Centre for Education)
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• “The process of taking huge amount of data, analyzing that data and presenting a high level
set of reports that condense the essence of that data into the basis of business actions,
enabling management to make fundamental daily business decisions” (Stachowiak et al.,
2007).

• “The way and method of improving business performance by providing powerful assists for
executive decision maker to enable them to have actionable information at hand” ( Cui et al.,
2007).

• “The process of collection, treatment, and diffusion of information that has an objective, the
reduction of uncertainty in the making of all strategic decisions” (Zeng et al., 2006).

• Business intelligence (BI) is a wide classification of applications, processes, and

technologies. Alternatively, BI is a process of analyzing, gathering, storing, and accessing
data to help the business users make better decisions.

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What is analytics? IBM ICE (Innovation Centre for Education)
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• Analytics is a new term for BI

• Analytics is nothing but a data analysis, which is a part of BI

• There are three kinds of analytics:

• Descriptive analytics
• Predictive analytics
• Prescriptive analytics

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Descriptive analytics IBM ICE (Innovation Centre for Education)
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Predictive analytics IBM ICE (Innovation Centre for Education)
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Prescriptive analytics IBM ICE (Innovation Centre for Education)
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• What should occur?

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Sample BI architecture IBM ICE (Innovation Centre for Education)
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Things are getting more complex IBM ICE (Innovation Centre for Education)
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• Source systems include social media, machine sensing, and click stream data (Big Data)

• The cloud, Hadoop/Reduce, and appliances are being used as data stores

• Advanced analytics are growing in popularity and importance

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BI components and architecture IBM ICE (Innovation Centre for Education)
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Functional areas of BI tools IBM ICE (Innovation Centre for Education)
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• Business and decision-making process

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A single or a few applications IBM ICE (Innovation Centre for Education)
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• A point solution

• May be departmental

• Serves a specific business need

• A possible entry point

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Enterprise analytical capabilities IBM ICE (Innovation Centre for Education)
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• The infrastructure is created for enterprise-wide analytics

• Analytics are used throughout the organization

• Analytics are key to business success

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Organizational transformation IBM ICE (Innovation Centre for Education)
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• Brought about by opportunity or necessity

• The firm adopts a new business model enabled by analytics

• Analytics are a competitive requirement

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Academic research IBM ICE (Innovation Centre for Education)
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• For BI-based organizations, the use of BI/analytics is a requirement for successfully

competing in the marketplace.

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Conditions that lead to analytics-based
organizations IBM ICE (Innovation Centre for Education)
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• The nature of the industry

• Seizing an opportunity

• Responding to a problem

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Complex systems versus volume operations IBM ICE (Innovation Centre for Education)
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• A distinction made by Geoffrey Moore

• Helps in understanding what kinds of organizations are most likely to be analytics based

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Complex systems IBM ICE (Innovation Centre for Education)
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• Solving the complex problem by providing individual solutions

• Products and services are organized based on the individual customer need

• Dollar value of interactions with each customer is high

• With each customer, there is a considerable interaction

• Examples: IBM, Halliburton, World Bank

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The nature of industry: online retailers IBM ICE (Innovation Centre for Education)
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• BI applications

• Analysis of clickstream data

• Customer profitability analysis
• Customer segmentation analysis
• Product recommendations
• Campaign management
• Pricing
• Forecasting
• Dashboards

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Seizing an opportunity: Harrah’s IBM ICE (Innovation Centre for Education)
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• In 1993, the gaming laws changed

• Harrah’s decided to compete and expand using a brand and customer loyalty strategy

• Implemented WINet with an ODS and DW

• Offered the industry’s first customer loyalty program – Total Rewards

• Fact-based decision-making replaced “Harrahisms”

• Today it is the largest gaming company in the world

• Recently renamed Caesars

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Responding to a problem: First
American Corp IBM ICE (Innovation Centre for Education)
IBM Power Systems

• The bank was failing

• A new management team stopped the bleeding

• A customer intimacy strategy was implemented, tailored client solutions

• The business strategy enabled by a data warehouse and BI

• External talent was brought in as needed

• Applications using VISION were developed for every component of TCS

• The bank was transformed from “banking by intuition” to “banking by information and
analysis”

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A clear business need IBM ICE (Innovation Centre for Education)
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Alignment between IT and business IBM ICE (Innovation Centre for Education)
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A fact-based decision-making culture IBM ICE (Innovation Centre for Education)
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Creating a fact-based culture IBM ICE (Innovation Centre for Education)
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A strong data infrastructure IBM ICE (Innovation Centre for Education)
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The right analytical tools IBM ICE (Innovation Centre for Education)
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New tools and architectures may be
needed IBM ICE (Innovation Centre for Education)
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Analytics workforce IBM ICE (Innovation Centre for Education)
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• Strong analytical personnel in an appropriate organizational structure

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Knowledge requirements IBM ICE (Innovation Centre for Education)
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• Knowledge requirements for advanced analytics

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Business analyst IBM ICE (Innovation Centre for Education)
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• Uses BI tools and applications to understand business conditions and drive business
processes

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Data scientist IBM ICE (Innovation Centre for Education)
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• Uses advanced algorithms and interactive exploration tools to uncover non-obvious patterns
in data

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Where to put the analytics team IBM ICE (Innovation Centre for Education)
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• Spread throughout the organization

• In a standalone unit

• In some form of an Analytics Competency Center

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Benefits of BI IBM ICE (Innovation Centre for Education)
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Maximize value from BI systems IBM ICE (Innovation Centre for Education)
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Strategy and business intelligence IBM ICE (Innovation Centre for Education)
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Decision support IBM ICE (Innovation Centre for Education)
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• Information technology to help the knowledge worker (executive, manager, analyst) make
faster & better decisions
• “What were the sales volumes by region and product category for the last year?”

• “How did the share price of comp. manufacturers correlate with quarterly profits over the past 10
years?”

• “Which orders should we fill to maximize revenues?”

• On-line analytical processing (OLAP) is an element of decision support systems (DSS)

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Three-tier decision support systems IBM ICE (Innovation Centre for Education)
IBM Power Systems

• Warehouse database server

• Almost always a relational DBMS, rarely flat files

• OLAP servers
• Multidimensional OLAP (MOLAP): special-purpose server that directly implements multidimensional
data and operations
• Relational OLAP (ROLAP): extended relational DBMS that maps operations on multidimensional data
to standard relational operators

• Clients
• Analysis tools
• Data mining tools
• Query and reporting tools

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Exploring and analyzing data IBM ICE (Innovation Centre for Education)
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Setting up data for BI IBM ICE (Innovation Centre for Education)
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• ETL tools
• Extraction of data from one or many source systems is done by ETL tools and processes and they
also transfer the data from many different formats into a common format and then load the data into
data warehouse.

• Data warehouse
• A data warehouse is a group of appropriate business data that is systematized and authenticated so
that it can be examined to support business judgment.

• The data that has been extracted from scattered databases, often unrelated and in some cases,
outside to the organization that is using it all these data, will populate the data warehouse.

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OLAP and advanced analytics IBM ICE (Innovation Centre for Education)
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• OLAP techniques

• Query tools and reporting

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Data analysis and OLAP IBM ICE (Innovation Centre for Education)
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• Online Analytical Processing (OLAP)

• Interactive analysis of data, allowing data to be summarized and viewed in different ways in an online
fashion (with negligible delay)

• Data that can be modeled as dimension attributes and measure attributes are called
multidimensional data.
• Measure attributes
− measure some value
− can be aggregated upon
− for example, the attribute number of the sales relation

• Dimension attributes
− define the dimensions on which the measured attributes (or aggregates thereof) are viewed
− for example, the attributes item name, color, and size of the sales relation

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Cross tabulation of sales by item name
and color IBM ICE (Innovation Centre for Education)
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• The table above is an example of a cross-tabulation (cross-tab), also referred to as a pivot-

table.
• Values for one of the dimension attributes form the row headers
• Values for another dimension attribute form the column headers
• Other dimension attributes are listed on top
• Values in individual cells are (aggregates of) the values of the dimension attributes that specify the
cell

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Relational representation of cross-tabs
IBM ICE (Innovation Centre for Education)
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Data cube IBM ICE (Innovation Centre for Education)
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• A data cube is a multidimensional generalization of a cross-tab

• Can have n dimensions; we show three below
• Cross-tabs can be used as views on a data cube

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Hierarchies on dimensions IBM ICE (Innovation Centre for Education)
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• Hierarchy on dimension attributes lets dimensions to be viewed at different levels of detail

• For example, the dimension DateTime can be used to aggregate by hour of day, date, day of week,
month, quarter, or year

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Cross tabulation with hierarchy IBM ICE (Innovation Centre for Education)
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• Cross-tabs can be easily extended to deal with hierarchies

• Can drill down or roll up on a hierarchy

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OLAP server architectures IBM ICE (Innovation Centre for Education)
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• Relational OLAP (ROLAP)

• Use relational or extended relational DBMS to store and manage data repositories and middleware
tools to support lost parts
• Contains optimization of DBMS backend, implementation of aggregation navigation logic, and
additional tools and services
• Greater scalability

• Hybrid OLAP (HOLAP)

• User friendly; for example, low level: relational, high level: array
• Expert SQL servers
• Generalized support for SQL queries over star/snowflake schemas

• Multidimensional OLAP (MOLAP)

• Array-based multidimensional storage engine (sparse matrix techniques)
• Fast indexing to pre-computed summarized data

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Multi-feature cubes IBM ICE (Innovation Centre for Education)
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• Multi-feature cubes: Calculate complex queries including multiple dependent aggregates at

multiple granularities

• For example: Grouping by all subsets of {item, region, month}, find the maximum price in
1997 for each group, and the total sales among all maximum price tuples
• select item, region, month, max (price), sum (R.sales)
• from purchases
• where year = 1997
• cube by item, region, month: R
• such that R.price = max (price)

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Discovery-driven data cubes IBM ICE (Innovation Centre for Education)
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Typical OLAP operations IBM ICE (Innovation Centre for Education)
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• Roll up (drill-up): summarize data

• By climbing up hierarchy or by dimension reduction

• Drill down (roll-down): reverse of rollup

• From higher-level summary to lower-level summary or detailed data, or introducing new dimensions

• Slice and dice:

• Project and select

• Pivot (rotate):
• Reorient the cube, visualization, 3D to series of 2D planes

• Other operations:
• Drill across: involving (across) more than one fact table
• Drill through: through the bottom level of the cube to its back-end relational tables (using SQL)

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OLTP versus OLAP IBM ICE (Innovation Centre for Education)
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OLTP OLAP
Users Clerk, IT professional Knowledge worker
Function Day-to-day operations Decision support
DB design Application oriented Subject oriented
Data Current, up-to-date, detailed, Historical, summarized,
flat relational isolated multidimensional, integrated,
consolidated

Usage Repetitive Ad-hoc

Access Read/write Lots of scans
Index/hash on prim. Key

Unit of work Short, simple transaction Complex query

# Records accessed Tens Millions
Users Thousands Hundreds
DB size 100 MB-GB 100 gb-tb
Metric Transaction throughput Query throughput, response
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Business query IBM ICE (Innovation Centre for Education)
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First query Purpose Related ad-hoc query

Inventory by product To determine whether the Is the product available in

order can be fulfilled on other branches/
that day elsewhere?

Regular top 10 customers To find out what products Anybody has dropped
they are interested in off? And any new entry? If
so, what product they are
interested in.

Patients in hospital per To understand busy Is there adequacy of

hour periods and wait times staff?

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Dashboards and scorecards
development IBM ICE (Innovation Centre for Education)
IBM Power Systems

• ‘A dashboard is a visual display of the most important information needed to achieve one or
more objectives, consolidated and arranged on a single screen so that the information can be
monitored at a glance’ - Stephen Few

• Most dashboards share a set of common features.

• Global navigation feature

• Appealing and differing graphics
• Interactivity
• Custom-made interface
• Embedded content
• Browser-based capabilities

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Checkpoint (1 of 2) IBM ICE (Innovation Centre for Education)
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Multiple-choice questions:

1. What are the three types of analytics ?

a) Descriptive, Deceptive, Detective
b) Descriptive, Predictive, Probing
c) Descriptive, Predictive, Prescriptive
d) Detective, Predictive, Prescriptive

2. What are the three conditions that lead to an analytics-based organization?

a) Nature of the industry, need of the management, and responding to a problem
b) Seizing an opportunity, responding to a problem, and need of the customers
c) Responding to a problem, the nature of the industry, and seizing an opportunity
d) Need of the customers, need of the management, and nature of the industry

3. Data mining is the process of:

a) Identifying different patterns
b) Identifying predictabilities
c) a or b
d) a and b

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Checkpoint solutions (1 of 2) IBM ICE (Innovation Centre for Education)
IBM Power Systems

Multiple-choice questions:

1. What are the three types of analytics?

a) Descriptive, Deceptive, Detective
b) Descriptive, Predictive, Probing
c) Descriptive, Predictive, Prescriptive
d) Detective, Predictive, Prescriptive

2. What are the three conditions that lead to an analytics-based organization?

a) Nature of the industry, need of the management, and responding to a problem
b) Seizing an opportunity, responding to a problem, and need of the customers
c) Responding to a problem, the nature of the industry, and seizing an opportunity
d) Need of the customers, need of the management, and nature of the industry

3. Data mining is the process of:

a) Identifying different patterns
b) Identifying predictabilities
c) a or b
d) a and b

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Checkpoint (2 of 2) IBM ICE (Innovation Centre for Education)
IBM Power Systems

Fill in the blanks:

1. _________can mean The requirement to obtain zero latency within a process.

2. The main aim of the ___________is pulling out data from one or many source systems.
3. ________________does not provide any added insights by way of telling the decision
maker the impact of what is analyzed.
4. The science of providing an insight into the data is known as ___________.

True or False:

1. Predictive analytics tells the managers what to do whereas prescriptive analytics tells how to
do. True/False
2. Business intelligence helps businesses to know whether the day-to-day operational process
is right or not. True/False
3. Multidimensional data cube is built by taking data from all the similar businesses in the
market. True/False

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Checkpoint solutions (2 of 2) IBM ICE (Innovation Centre for Education)
IBM Power Systems

Fill in the blanks:

1. Real-time can mean The requirement to obtain zero latency within a process.
2. The main aim of the ETL tool is pulling out data from one or many source systems.
3. Descriptive analytics does not provide any added insights by way of telling the decision
maker the impact of what is analyzed.
4. The science of providing an insight into the data is known as Analytics.

True or False:

1. Predictive analytics tells the managers what to do whereas prescriptive analytics tells how to
do. True
2. Business intelligence helps businesses to know whether the day-to-day operational process
is right or not. False
3. Multidimensional data cube is built by taking data from all the similar businesses in the
market. False

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Unit summary IBM ICE (Innovation Centre for Education)
IBM Power Systems

Having completed this unit, you should be able to:

• Understand the terms and concepts of BI
• Gain knowledge on BI applications
• Identify the examples of BI-based organizations
• Understand OLAP and its usages

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