Using MIS

3e Chapter
9
Business
Intelligence
Systems
David Kroenke

Study Questions
Q1

Why do organizations need business

intelligence?

Q2
Q3
Q4
Q5
Q6
Q7
Q8

What business intelligence systems are available?

What are typical reporting applications?
What are typical data-mining applications?
What is the purpose of data warehouses and data marts?
What are typical knowledge-management applications?
How are business intelligence applications delivered?
2020?

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Why Do Organizations Need

Business Intelligence?
Information systems generate enormous amounts
of operational data that contain patterns,
relationships, clusters, and other information that
can facilitate management, especially planning and
forecasting. Business intelligence systems produce
such information from operational data.
Data communications and data storage are
essentially free, enormous amounts of data are
created and stored every day.
12,000 gigabytes per person of data, worldwide
in 2009
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How Big Is an Exabyte?

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Study Questions
Q1

Why do organizations need business intelligence?

Q2

What business intelligence systems are

available?

Q3
Q4
Q5
Q6
Q7
Q8

What are typical reporting applications?

What are typical data-mining applications?
What is the purpose of data warehouses and data marts?
What are typical knowledge-management applications?
How are business intelligence applications delivered?
2020?

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9-5

Business Intelligence (BI) Tools

BI systems provide valuable information for decision making.
(BI video)
Three primary BI systems:
1. Reporting Tools
Integrate data from multiple systems
Sorting, grouping, summing, averaging, comparing data

2. Data-mining Tools
Use sophisticated statistical techniques, regression analysis,
and decision tree analysis
Used to discover hidden patterns and relationships
Market-basket analysis

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Business Intelligence Tools

3. Knowledge-management tool
Create value by collecting and sharing human
knowledge about products, product uses,
best practices, other critical knowledge
Used by employees, managers, customers,
suppliers, others who need access to
company knowledge

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9-7

Study Questions
Q1
Q2

Why do organizations need business intelligence?

What business intelligence systems are available?

Q3

What are typical reporting applications?

Q4
Q5
Q6
Q7
Q8

What are typical data-mining applications?

What is the purpose of data warehouses and data marts?
What are typical knowledge-management applications?
How are business intelligence applications delivered?
2020?

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9-8

Basic Reporting Operations

Reporting tools produce information from
data using five basic operations:
Sorting
Grouping
Calculating
Filtering
Formatting

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List of Sales Data

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Sales Data,
Sorted by
Customer Name
and Grouped
by Orders and
Purchase
Amount

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Sales Data Filtered to Show

Repeat Customers and Formatted
for Easier Understanding

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RFM Analysis
RFM analysis allows you to analyze and rank
customers according to purchasing patterns as this
figure shows.
R = how recently a customer purchased your
products
F = how frequently a customer purchases your
products
M = how much money a customer typically
spends on your products

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Online Analytical Processing

(OLAP)
OLAP, a second type of reporting tool, is
more generic than RFM.
OLAP provides the ability to sum, count,
average, and perform other simple
arithmetic operations on groups of data.
Remarkable characteristic of OLAP reports
is that they are dynamic. The viewer of the
report can change reports format, hence
the term online.
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How Are OLAP Reports Dynamic?

OLAP reports
Simple arithmetic operations on data
Sum, average, count, and so on

Dynamic
User can change report structure
View online

Measure
Data item to be manipulatedtotal sales, average cost

Dimension
Characteristic of measurepurchase date, customer
type, location, sales region

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OLAP Product Family

and Store Type

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OLAP Product Family and

Store Location by Store Type

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Role of OLAP Server

and OLAP Database

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9-18

Study Questions
Q1
Q2
Q3

Why do organizations need business intelligence?

What business intelligence systems are available?
What are typical reporting applications?

Q4

What are typical data-mining applications?

Q5
Q6
Q7
Q8

What is the purpose of data warehouses and data marts?

What are typical knowledge-management applications?
How are business intelligence applications delivered?
2020?

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9-19

Convergence of Disciplines and

Information Technology

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Study Questions
Q1
Q2
Q3
Q4

Why do organizations need business intelligence?

What business intelligence systems are available?
What are typical reporting applications?
What are typical data-mining applications?

Q5

What is the purpose of data warehouses and

data marts?

Q6
Q7
Q8

What are typical knowledge-management applications?

How are business intelligence applications delivered?
2020?

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9-21

What Is the Purpose of Data

Warehouses and Data Marts?
Purpose: (video)
To extract and clean data from various
operational systems and other sources
To store and catalog data for BI
processing
Extract, clean, prepare data
Stored in data-warehouse DBMS

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Components of a Data Warehouse

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Example Typical of Customer

Credit Data

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Problems with Operational Data

Dirty datamistakes in spelling or punctuation,

incorrect data associated with a field, incomplete or

outdated data or even data that is duplicated in the
database.

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Data Warehouses vs. Data Marts

Data mart is a collection of data (video)
Created to address particular needs
Business function
Problem
Opportunity

Smaller than data warehouse

Users may not have data management expertise
Need knowledgeable analysts for specific function

Data extracted from data warehouse for a

functional area

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Components of a Data Mart

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Study Questions
Q1
Q2
Q3
Q4
Q5

Why do organizations need business intelligence?

What business intelligence systems are available?
What are typical reporting applications?
What are typical data-mining applications?
What is the purpose of data warehouses and data marts?

Q6

What are typical knowledge management

applications?

Q7
Q8

How are business intelligence applications delivered?

2020?

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Knowledge Management (KM)

The process of creating value from
intellectual capital and sharing that
knowledge with employees, managers,
suppliers, customers, and others who need it.
Reporting and data mining are used to create
new information from data, knowledgemanagement systems concern the sharing of
knowledge that is known to exist.

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Primary Benefits of KM
1. KM fosters innovation by encouraging the free flow of ideas.
2. KM improves customer service by streamlining response time.
3. KM boosts revenues by getting products and services to
market faster.
4. KM enhances employee retention rates by recognizing the
value of employees knowledge and rewarding them for it.
5. KM streamlines operations and reduces costs by eliminating
redundant or unnecessary processes.
6. KM preserves organizational memory by capturing and storing
the lessons learned and best practices of key employees.

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Sharing of Document Content and

Employee Knowledge
Sharing Document Content
Collaboration systems are concerned with
document creation and change
management, KM applications are
concerned with maximizing content use.

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Two Typical KnowledgeManagement Applications

Two key technologies for sharing content in KM
systems:
1. Indexingmost important content function in KM
applications that provide easily accessible and
robust means of determining if content exists and
a link to obtain the content. Used in conjunction
with search functions.

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Two Typical KnowledgeManagement Applications

RSS (Real Simple Syndication)a standard for subscribing to
content sources on Web sites. An RSS Reader program helps
users to:
Subscribe to content sources.
Periodically check sources for new or updated content through RSS
feeds.
Place content summaries in an RSS inbox with link to the full
content.
Think of RSS as an email system for content
Data source must provide what is termed an RSS feed, which
simply means that the site posts changes according to one of the
RSS standards.

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Study Questions
Q1
Q2
Q3
Q4
Q5
Q6

Why do organizations need business intelligence?

What business intelligence systems are available?
What are typical reporting applications?
What are typical data-mining applications?
What is the purpose of data warehouses and data marts?
What are typical knowledge-management applications?

Q7

How are business intelligence applications

delivered?

Q8

2020?

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How Are Business Intelligence

Applications Delivered?

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BI Portals
Portals might provide common data such as local
weather, and links to company news, and to BI
application results such as reports on daily sales,
operations, new employees, and results of datamining applications.
Authorized users are allowed to place reports,
data-mining results, or other BI application results
on their customized pages.
BI application server pushes the subscribed
results to the user.

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What Are the Delivery Functions

of a BI Server?

Track authorized users

Track the schedule for providing results to users

Issue exception alerts that notify users of an exceptional event

Procedures used depends on the nature of the BI system

Procedures tend to be more flexible than those in an

operational system because users of a BI system tend to be
engaged in work that is neither structured nor routine

Procedures are determined by unique requirements of users

BI results can be delivered to any device, such as computers,

PDAs, phones, other applications such as Microsoft Office,
and as a SOA service

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Study Questions
Q1
Q2
Q3
Q4
Q5
Q6
Q7

Why do organizations need business intelligence?

What business intelligence systems are available?
What are typical reporting applications?
What are typical data-mining applications?
What is the purpose of data warehouses and data marts?
What are typical knowledge-management applications?
How are business intelligence applications delivered?

Q8

2020?

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2020?
Through data mining, companies, known as data aggregators, will
know more about your purchasing psyche than you, your mother,
or your analyst.
If you use your card to purchase secondhand clothing, retread
tires, bail bond services, massages, casino gambling or betting
you alert the credit card company of potential financial problems
and, as a result, it may cancel your card or reduce your credit limit.
Absent laws to the contrary, by 2020 your credit card data will be
fully integrated with personal and family data maintained by the
data aggregators (like Acxiom and ChoicePoint).
By 2020, some online retailers will know a lot more about you, data
aggregators, and most consumers purchases than well know
ourselves.

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All rights reserved. No part of this publication may be reproduced, stored in a

retrieval system, or transmitted, in any form or by any means, electronic,
mechanical, photocopying, recording, or otherwise, without the prior written
permission of the publisher. Printed in the United States of America.

Copyright 2011 Pearson Education, Inc.

Publishing as Prentice Hall

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