Section 4:

Business Intelligence in
Decision Making
Decision Making for Business
and Strategic Choices

Prepared by Teddy Bakhos

 Introduction to Business Intelligence
• Decision making at different levels:
– Operational: Related to daily activities with short-term effect
Structured decisions taken by lower management
– Tactical: Semi-structured decisions taken by middle management
– Strategic: Long-term effect
Unstructured decisions taken by top management

• Decision making steps include:

– Problem Identification
– Finding Alternative Solutions
– Making a Choice

• Information and knowledge form the backbone of the decision making process.
 Decision Making Cycle
Technology is needed to push information closer to the point of service to
enhance decision-making, and to make the data actionable.
 Introduction to Business Intelligence
• Decision Support: IT is necessary to help the knowledge worker (executive, manager,
analyst) make faster and better decisions.

• Organizations need various kinds of information to support decisions.

• Two types of applications:

- Operational applications
- Analytical applications

• Decision-making speed is an important success factor in the information economy.

• The problem is to find the right information and analyze it.

 Introduction to Business Intelligence
Basic Definitions:

• Business Intelligence

• Data Warehouse

• Data Cube

• OLTP

• OLAP

• Data Mart
 Introduction to Business Intelligence
What is Business Intelligence (BI)?
• The new technology for understanding the past and predicting the future.
• A broad category of technologies that allows for:
 Gathering, storing, accessing and analyzing data to help business users make better
decisions.
 Analyzing business performance through data-driven insight.

• A broad category of applications, which include the activities of:

 Decision support systems.
 Query and reporting.
 Online analytical processing (OLAP).
 Statistical analysis, forecasting, and data mining.
 Introduction to Business Intelligence
What is Business Intelligence (BI)?
• BI applications can be:
 mission-critical and integral to an enterprise's operations or occasional to meet a special
requirement.
 enterprise-wide or local to one division, department, or project.
 centrally initiated or driven by user demand.
 Introduction to Business Intelligence
What is Business Intelligence (BI)?
 Introduction to Business Intelligence
What is Data Warehouse (DW)?
• Defined in many different ways, but not rigorously:
 A decision support database that is maintained separately from the organization’s
operational database.
 A consistent database source that bring together information from multiple sources for
decision support queries.
 Support information processing by providing a solid platform of consolidated, historical
data for analysis.

• Data warehousing:
 The process of constructing and using data warehouses.
 Introduction to Business Intelligence
What is Data Warehouse (DW)?
• A data warehouse is based on a multidimensional data model which views data in the
form of a data cube:
 Introduction to Business Intelligence
What is Data Cube?
• Users of Decision Support Systems (DSS)
often see data in the form of data cubes.

• The cube is used to represent data along

some measure of interest.

• Although called a “Cube", it can be 2-

dimensional, 3-dimensional, or even higher-
dimensional sometimes.

• Each dimension represents some attribute in

the database and the cells in the data cube
represent the measure of interest.
 Introduction to Business Intelligence
What is Data Warehouse (DW)?
• OLTP (on-line transaction processing):
 Major task of traditional relational Data Base Management System (DBMS).
 Day-to-day operations: purchasing, inventory, banking, manufacturing, payroll, registration,
accounting, etc.
 Aims at reliable and efficient processing of a large number of transactions and ensuring data
consistency.

• OLAP (on-line analytical processing):

 Major task of data warehouse system.
 Data analysis and decision making.
 Aims at efficient multidimensional processing of large data volumes: Fast, interactive
answers to large aggregate queries.
 Introduction to Business Intelligence
What is Data Warehouse (DW)?
 Introduction to Business Intelligence
What is Data Warehouse (DW)?

OLTP OLAP
User IT Professional Knowledge worker
Function Day-to-day Operations Decision support
DB Design Application-Oriented Subject-oriented
Data Current / Isolated Historical / Consolidated
View Detailed Summarized
Usage Structured, Repetitive Ad hoc
Unit of work Short, Simple transaction Complex query
Access Read / Write Read Mostly
 Introduction to Business Intelligence

What is Data Mining?

Data Mining is a business-driven

process, supported by adequate tools,
aimed at the discovery and consistent
use of meaningful, profitable knowledge
from corporate data.
 Introduction to Business Intelligence
What is Data Mining?

OLAP Data Mining

Task Summaries and Trends Knowledge Discovery and Forecasts

Type of Result Analysis Anticipations

Multidimensional data modeling, Induction (Build the model, apply it to

Method
Aggregation, Statistics new data, get the result)

What is the average income of mutual Who will buy a mutual fund in the next
Question Example
fund buyers by region by year? 6 months and why?
 Introduction to Business Intelligence
Data Mining in the BI context:
 Introduction to Business Intelligence
Business Intelligence Process:
 Introduction to Business Intelligence
Data Mart vs. Data Warehouse?
A data mart is a subject-oriented database that is
often a partitioned segment of an
enterprise data warehouse. The subset
of data held in a data mart typically aligns with a
particular business unit like sales, finance, or
marketing.

A data warehouse is a large centralized

repository of data that contains information from
many sources within an organization. The collated
data is used to guide business decisions
through analysis, reporting, and data mining tools.
 Introduction to Business Intelligence

Business Intelligence:
…then
 Introduction to Business Intelligence

Business Intelligence:
…now
 Introduction to Business Intelligence
The Complete Decision Support System (DSS) from BI Perspective: