Business Intelligence:

A Managerial Approach
(2nd Edition)

Chapter 1:
Introduction to Business
Intelligence
 Learning Objectives
 Understand today’s turbulent business
environment and describe how organizations
survive and even excel in such an
environment (solving problems and exploiting
 opportunities)
 Understand the need for computerized
support of managerial decision making
 Describe the business intelligence/business
analytics methodology Understand the major
issues in implementing business analytics

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 Introduction
 Business environment is changing, and
its become more complex (pressures).
 Force them to respond quickly.
 To take a quick decisions they need a
relevant amount of data, information
and knowledge.

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 Changing Business Environments
and Computerized Decision Support
 The Business Pressures-Responses-Support
Model
 The business environment
 Organizational responses: be reactive, anticipative,
adaptive, and proactive
 Computerized support
 Closing the Strategy Gap One of the major objectives
of BI is to facilitate closing the gap between the current
performance of an organization and its desired
performance as expressed in its mission, objectives, and
goals and the strategy for achieving them

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 Changing Business Environments
and Computerized Decision Support

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 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
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 1.2 A Framework for
Business Intelligence (BI)
 business intelligence (BI)
A conceptual ( umbrella) framework for
decision support. It combines architecture,
databases (or data warehouse), analytical
tools and applications .

 BI Objective: enable interactive access to

data to enable manipulation of data and to
give business managers to take a good
decision.

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 1.2 A Framework for
Business Intelligence (BI)
 The process of BI is based on the
transformation of data to information,
then to decisions, and finally to actions.

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 A Framework for
Business Intelligence

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 A Brief History of BI
 The term BI was coined by the Gartner
Group in the mid-1990s
 However, the concept is much older
 1970s - MIS reporting - static/periodic reports
 1980s - Executive Information Systems (EIS)
 1990s - OLAP, dynamic, multidimensional, ad-hoc
reporting -> coining of the term “BI”
 2005+ Inclusion of AI (Artificial Intelligent) and
Data/Text Mining capabilities; Web-based
Portals/Dashboards
 2010s - yet to be seen
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 A Framework for
Business Intelligence (BI)
 The Origins and Drivers of Business
Intelligence
 Organizations are being compelled to
capture, understand, and harness their
data to support decision making in order to
improve business operations
 Managers need the right information at the
right time and in the right place

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 A Framework for
Business Intelligence (BI)
 BI’s Architecture and Components
1. Data Warehouse
2. Business Analytics
3. Business Performance Management
(BPM)
4. User Interface

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 A Framework for
Business Intelligence (BI)

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 A Framework for
Business Intelligence (BI)
 BI’s Architecture and Components
1) Data Warehouse (Data Sources)
 Data obtained from operational systems
needed to support decision making.

 the data warehouse included only historical or

current data that were organized and
summarized, so end users could easily view or
manipulate data and information.

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 A Framework for
Business Intelligence (BI)
 BI’s Architecture and Components
2 ) Business Analytics
-a collection of tools for manipulating,
mining, and analyzing the data in the data
warehouse;
 Create on-demand reports and queries and
analyze data (originally called Online Analytical
Processing – OLAP)
 Automated decision systems
 Data Mining: looks for hidden patterns in a
collection of data which can be used to predict
future behavior.
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 A Framework for
Business Intelligence (BI)

 BI’s Architecture and Components

3) Business performance management (BPM)
applications and methodology ,BPM extends the monitoring,
measuring, and comparing of sales, profit, cost, profitability,
and other performance indicators by introducing the concept
of management and feedback.

(Monitoring , measuring and comparing )

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 A Framework for
Business Intelligence (BI)
 BI’s Architecture and Components
4) User Interface: Dashboards and
Other Information Broadcasting Tools
 Dashboards
A visual presentation of critical data for
executives to view. It allows executives to see
hot spots in seconds and explore the situation
 Examples of dashboards and scorecards:
http://www.idashboards.com/?gclid=CIDDrpLR0
5QCFQNaFQodSWDQkQ

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 A Framework for
Business Intelligence (BI)

The Benefits of BI
 Time savings
 Single version of truth  Faster, more accurate
 Improved strategies reporting
and plans  Improved decision making
 Improved tactical
decisions  Improved customer service
 More efficient processes Increased revenue
 Cost savings

Many benefits are intangible

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 Automated Decision Making
(ADS)
 It’s a rule based systems that provide a
solution, usually in one functional area
E.g.( finance, manufacturing ) to a
specific repetitive managerial problem.
 Its used in the Airline industry,

dynamicly price ticket based on

demands.

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 Event-Driven Alerts
 Its an example of ADS, which is a
warning or action that is activated when
a predefined or unusual event occur.
 For example: credit card comp. make a
predictive analysis models to identify
cases possible fraud.

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 1.3 Intelligence Creation and Use
 Steps Involved
Data warehouse deployment
Creation of intelligence
Identification and prioritization of BI projects
By using ROI and TCO (cost-benefit analysis)
This process is also called BI governance

 BI Governance
Who should do the prioritization?
Partnership between functional area heads and leaders(middles)
Partnership between customers and providers

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 BI Governance Issues/Tasks
1. Create categories of projects (investment,
business opportunity, strategic, mandatory,
etc.)
2. Define criteria for project selection
3. Determine and set a framework for
managing project risk
4. Manage and leverage project
interdependencies
5. Continuously monitor and adjust the
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 Intelligence and Espionage
 Stealing corporate secrets, CIA, …
Intelligence vs. Espionage
 Intelligence
The way that modern companies ethically and legally
organize themselves to glean as much as they can
from their customers, their business environment,
their stakeholders, their business processes, their
competitors, and other such sources of potentially
valuable information
 Problem – too much data, very little value

Use of data/text/Web mining (see Chapter 4, 5)

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 1.4 Transaction Processing Versus
Analytic Processing
(OLTP Vs OLAP)
 Transaction (OLTP) processing systems are constantly
involved in handling updates (add/edit/delete) to what
we might call operational databases.
ATM withdrawal transaction, sales order entry via an
ecommerce site – updates DBs
Online analytic processing (OLTP) handles routine on-
going business
The main goal is to have high efficiency

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 Transaction Processing Versus
Analytic Processing
 Online analytic processing (OLAP) systems
are involved in extracting information from data
stored by OLTP systems and Analyze them.
Often built on top of a data warehouse where
the data is not transactional
Main goal is effectiveness (and then, efficiency)
 provide correct information in a timely manner

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 1.5 Successful BI Implementation

 Impelementing BI can be lengthy,

expensive and failure prone.
 The Typical BI User: the successful of
BI must benefit to the enterprise as
whole.
 one important characteristic of a company
that excels in its approach to BI is proper
appreciation for different classes of potential
users.
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 1.5 Successful BI Implementation

 Appropriate Planning and Alignment

with Business Strategy
 To be successful, BI must be aligned with the
company’s business strategy.
BI cannot/should not be a technical exercise for
the information systems department.
BI should help execute the business strategy
and not be an impediment for it!

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 1.5 Successful BI Implementation

 Real-time, On-demand BI
o The demand for “real-time” BI is growing!
o Traditional BI use a static data but Real time BI use a
dynamic online data.

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 Issues for Successful BI
1) Developing vs. Acquiring BI
systems
Developing everything from scratch
Buying/leasing a complete system
Using a shell BI system and customizing
it
Use of outside consultants?

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 Issues for Successful BI
2) Justifying via cost-benefit
analysis
It is easier to quantify costs
Harder to quantify benefits
Most of them are intangibles

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 Issues for Successful BI
3) Security and Privacy
Still an important research topic in BI
How much security/privacy?
4) Integration of Systems and pplications
BI must integrate into the existing IS
- Often sits on top of ERP, SCM, CRM systems
Integration to outside (partners of the
extended enterprise) via internet –
- customers, vendors, government agencies, etc.
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 1.6 Major BI Tools and
Techniques
Tool categories ( table 1.3)
Data management (DBMS)
Reporting, status tracking (OLAP)
Visualization (DASHBOARD)
Strategy and performance management (BPM)
Business analytics ( DATA MINING)
Social networking & (Web 2.0)
New/advanced tools/techniques to handle
massive data sets for knowledge discovery
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