CONDENSED COURSE MATERIAL

Master of Computer Applications

MBA IVth Sem
Code MS 204
Paper: Business Intelligence and Applications
Credits: 03
External Exam: 60 Marks
Internal Assessment: 40 Marks
 UNIT- I
Business Intelligence
and Business Decisions
 Contents
Business Intelligence and Business Decisions:
Decision Support Systems; Group Decision
Support and Groupware Technologies, Expert
Systems.
 Mintzberg’s 10 Management Roles

• Interpersonal • Decisional
– Figurehead – Entrepreneur
– Leader – Disturbance Handler
– Liaison – Resource Allocation
• Informational – Negotiator
– Monitor
– Disseminator
– Spokesperson
 Productivity

• The ratio of outputs to inputs that measures

the degree of success of an organization and
its individual parts
 Factors Affecting Decision-Making

• New technologies and better information distribution have

resulted in more alternatives for management.
• Complex operations have increased the costs of errors,
causing a chain reaction throughout the organization.
• Rapidly changing global economies and markets are
producing greater uncertainty and requiring faster response
in order to maintain competitive advantages.
• Increasing governmental regulation coupled with political
destabilization have caused great uncertainty.
 What do Decision Support Systems
Offer?
• Quick computations at a lower cost
• Group collaboration and communication
• Increased productivity
• Ready access to information stored in multiple databases and
data warehouse
• Ability to analyze multiple alternatives and apply risk
management
• Enterprise resource management
• Tools to obtain and maintain competitive advantage
 Cognitive Limits
• The human mind has limited processing and storage
capabilities.
• Any single person is therefore limited in their decision making
abilities.
• Collaboration with others allows for a wider range of possible
answers, but will often be faced with communications
problems.
• Computers improve the coordination of these activities.
• This knowledge sharing is enhanced through the use of GSS,
KMS, and EIS.
 Management Support Systems

• The support of management tasks by the

application of technologies
– Sometimes called Decision Support Systems or
Business Intelligence
 Management Support Systems Tools

• DSS • EIP
• Management Science • ERM
• Business Analytics • ERP
• Data Mining • CRM
• Data Warehouse • SCM
• Business Intelligence • KMS
• OLAP • KMP
• CASE tools • ES
• GSS • ANN
• EIS • Intelligent Agents
• E-commerce DSS
Decision Support Frameworks

Type of Control

Type of Operational Managerial Strategic Planning

Control Control
Decision:
Structured Accounts Budget analysis, Investments,
(Programmed) receivable, short-term warehouse
accounts payable, forecasting, locations,
order entry personnel reports distribution centers
Semistructured Production Credit evaluation, Mergers and
scheduling, budget acquisitions, new
inventory control preparation, product planning,
project compensation, QA,
scheduling, HR policy planning
rewards systems
Unstructured Buying software, Negotiations, R&D planning,
(Unprogrammed) approving loans, recruitment, technology
help desk hardware development, social
purchasing responsibility plans
 Technologies for Decision-Making
Processes

Type of Decision Technology Support Needed

Structured MIS, Management Science

(Programmed) Models, Transaction
Processing

Semistructured DSS, KMS, GSS, CRM, SCM

Unstructured GSS, KMS, ES, Neural

(Unprogrammed) networks
 Technology Support Based on
Anthony’s Taxonomy

Type of Control

Operational Managerial Strategic

Control Control Planning
Technology MIS, Management GSS, CRM,
Support Management Science, DSS, EIS, ES,
Needed Science ES, EIS, SCM, neural
CRM, GSS, networks,
SCM KMS
 Management Science/Operations
Research
• Adopts systematic approach
– Define problem
– Classify into standard category
– Construct mathematical model
– Evaluate alternative solutions
– Select solution
 Enterprise Information Systems

• Evolved from Executive Information Systems

combined with Web technologies
• EIPs view information across entire organizations
• Provide rapid access to detailed information through
drill-down.
• Provide user-friendly interfaces through portals.
• Identifies opportunities and threats
 Enterprise Information Systems

• Specialized systems include ERM, ERP, CRM,

and SCM
• Provides timely and effective corporate level
tracking and control.
• Filter, compress, and track critical data and
information.
 Knowledge Management Systems

• Knowledge that is organized and stored in a

repository for use by an organization
• Can be used to solve similar or identical problems in
the future
• ROIs as high as a factor of 25 within one to two years
 Expert Systems
• Technologies that apply reasoning methodologies in a specific
domain
• Attempts to mimic human experts’ problem solving
• Examples include:
– Artificial Intelligence Systems
– Artificial Neural Networks (neural computing)
– Genetic Algorithms
– Fuzzy Logic
– Intelligent Agents
 Hybrid Support Systems
• Integration of different computer system tools to resolve
problems
• Tools perform different tasks, but support each other
• Together, produce more sophisticated answers
• Work together to produce smarter answers
 Emerging Technologies
• Grid computing
• Improved GUIs
• Model-driven architectures with code reuse
• M-based and L-based wireless computing
• Intelligent agents
• Genetic algorithms
• Heuristics and new problem-solving techniques
 Decision Making
• Process of choosing amongst alternative
courses of action for the purpose of attaining
a goal or goals.
• The four phases of the decision process are:
– Intelligence
– Design
– Choice
– implementation
 Systems
• Structure
– Inputs
– Processes
– Outputs
– Feedback from output to decision maker
• Separated from environment by boundary
• Surrounded by environment

Input Processes Output

boundary

Environment
 System Types
• Closed system
– Independent
– Takes no inputs
– Delivers no outputs to the environment
– Black Box
• Open system
– Accepts inputs
– Delivers outputs to environment
 Models Used for DSS
• Iconic
– Small physical replication of system
• Analog
– Behavioral representation of system
– May not look like system
• Quantitative (mathematical)
– Demonstrates relationships between systems
 Phases of Decision-Making
• Simon’s original three phases:
– Intelligence
– Design
– Choice
• He added fourth phase later:
– Implementation
• Book adds fifth stage:
– Monitoring
Decision-Making Intelligence Phase
• Scan the environment
• Analyze organizational goals
• Collect data
• Identify problem
• Categorize problem
– Programmed and non-programmed
– Decomposed into smaller parts
• Assess ownership and responsibility for problem
resolution
 Decision-Making Design Phase
• Develop alternative courses of action
• Analyze potential solutions
• Create model
• Test for feasibility
• Validate results
• Select a principle of choice
– Establish objectives
– Incorporate into models
– Risk assessment and acceptance
– Criteria and constraints
 Decision-Making Choice Phase
• Principle of choice
– Describes acceptability of a solution approach
• Normative Models
– Optimization
• Effect of each alternative
– Rationalization
• More of good things, less of bad things
• Courses of action are known quantity
• Options ranked from best to worse
– Suboptimization
• Decisions made in separate parts of organization without
consideration of whole
 Descriptive Models
• Describe how things are believed to be
• Typically, mathematically based
• Applies single set of alternatives
• Examples:
– Simulations
– What-if scenarios
– Cognitive map
– Narratives
 Developing Alternatives
• Generation of alternatives
– May be automatic or manual
– May be legion, leading to information overload
– Scenarios
– Evaluate with heuristics
– Outcome measured by goal attainment
 Problems
• Satisficing is the willingness to settle for less
than ideal.
– Form of suboptimization
• Bounded rationality
– Limited human capacity
– Limited by individual differences and biases
• Too many choices
 Decision-Making Choice Phase
• Decision making with commitment to act
• Determine courses of action
– Analytical techniques
– Algorithms
– Heuristics
– Blind searches
• Analyze for robustness
 Decision-Making Implementation
Phase
• Putting solution to work
• Vague boundaries which include:
– Dealing with resistance to change
– User training
– Upper management support
Source: Based on Sprague, R.H., Jr., “A Framework for the Development of DSS.” MIS Quarterly, Dec. 1980, Fig. 5, p. 13.
 Decision Support Systems
• Intelligence Phase
– Automatic
• Data Mining
– Expert systems, CRM, neural networks
– Manual
• OLAP
• KMS
– Reporting
• Routine and ad hoc
 Decision Support Systems
• Design Phase
– Financial and forecasting models
– Generation of alternatives by expert system
– Relationship identification through OLAP and data
mining
– Recognition through KMS
– Business process models from CRM, RMS, ERP,
and SCM
 Decision Support Systems
• Choice Phase
– Identification of best alternative
– Identification of good enough alternative
– What-if analysis
– Goal-seeking analysis
– May use KMS, GSS, CRM, ERP, and SCM systems
 Decision Support Systems
• Implementation Phase
– Improved communications
– Collaboration
– Training
– Supported by KMS, expert systems, GSS
 Decision-Making In Humans
• Temperament
– Hippocrates’ personality types
– Myers-Briggs’ Type Indicator
– Kiersey and Bates’ Types and Motivations
– Birkman’s True Colours
• Gender
 Decision-Making In Humans
• Cognitive styles
– What is perceived?
– How is it organized?
– Subjective
• Decision styles
– How do people think?
– How do they react?
– Heuristic, analytical, autocratic, democratic,
consultative
 Groupwork
• Groupwork
– Collaboration and communication
• Members can be located in different places and work at
different times
• Information may be located external to the project
• Allows for rapid solutions
• May exhibit normal team problems of synergy or conflict
• Often Internet based
• Groupware tools support groupwork
• Work called computer-supported cooperative work
• Collaborative computing
 Communication Support
• No collaboration without communication
• Internet supplies fast, reliable, inexpensive
support
• Groups need not only communication, but
information and knowledge
 Time/Place Communication Framework

• Effectiveness of
collaborative
group depends on
– Time
• synchronous or
asynchronous
transmission of
information
– Place
• location of
participants
 Groupware
• Software providing collaborative support to groups
• Different time/place applications
• Most use Internet technologies
• Most offer one or more capabilities
– Electronic brainstorming
• Free flow of ideas and comments
– Electronic conferencing or videoconferencing
– Group scheduling and calendars
– Conflict resolution
– Model building
– Electronic document sharing
– Voting services
• Electronic meeting services also available
• Enterprise-wide systems expensive in cost and human resources
 Popular Groupware
• Lotus Notes/Domino
• Microsoft Netmeeting
• Groove Workspace
• GroupSystems MeetingRoom and OnLine
• WebEx
 Benefits and Problems
• Benefits of groupwork
– Process gains
• Nominal group technique
• Delphi method
– Technology applied as GSS
• Hardware and software combined to enhance groupwork
• Collaborative computing
• Problems in groupwork
– Process losses
– inefficient
 GSS
• Common group activities with computer assistance
– Information retrieval
– Information sharing
• Parallelism
• Anonymity
– Information use
• Support participants
– Improve productivity and effectiveness of meetings
• More efficient decision-making
• Increase effectiveness of decisions
 GSS Technology Deployment
• Special purpose decision room
– Electronic meeting rooms
– Software operates across LAN
– Allowed for face-to-face meetings
– Trained facilitator coordinates meeting
– Group leader structures meeting with facilitator
• Multiple use facility
– General purpose computer lab
– Effective way to lower costs
– Trained facilitator coordinates meeting
– Group leader structures meeting with facilitator
• Web-based groupware with clients
– Anytime/anyplace meetings with deadlines established
– Software bought or leased
– No facility costs
– Flexible
 GSS Meeting Process
• Group leader meets with facilitator to plan meeting structure.
• Participants meet on computers.
• Group leader or facilitator poses question.
• Participants brainstorm by entering comments into computer.
• Facilitator employs idea organization software to sort comments into
common themes.
• Results are displayed.
• Facilitator or group leader leads discussion.
• Themes are prioritized.
• Highest priority topics are either sent through the process again for
further discussion or a vote is taken.
 GSS Meeting Process
• Standard Process
– Exploratory idea generation
– Idea organization tool
– Prioritization
– New idea generation
– Selection of final idea
• Success based upon effectiveness, reduction
in costs, better decisions, increased
productivity
 GSS and Distance Education
• Classroom collaborative computing advantages
– Brainstorming, chat, discussion boards
– Distribution of information, lectures
• Publishes to course site
• Videoconferenced
• Consistent materials
– Textbooks can be bound or electronic
– E-mails and listservs
• One-on-one interaction
– Allows for global classrooms
– Anytime/anyplace with fixed deadlines
• Flexible time frame
• Doesn’t interfere with work shift
– Low delivery costs with large audiences
 GSS and Distance Education, continued

• Disadvantages:
– Fewer social interactions
– Communication problems
– Students must be self-starters and highly disciplined
– Classes require major technical and administrative support
– Technical infrastructure must be reliable
– Courses may need to be redesigned for online
– Special training
• Corporate training online:
– Allows anytime/anyplace training
– Lowers costs
– Decreases time away from jobs
– Shortens learning process
– Delivered via Intranet, intranets, extranets, audio and video conferencing
 Creativity Support System
• Creativity
– Fundamental human trait
– Level of achievement
– Can be learned
• Organizations recognize value in innovation
• Stimulated by electronic brainstorming software
– Free flow idea generation
• Creative computer programs
– Smartbots function as facilitators
– Identify analogies in letter patterns
– Draw art
– Write poems
• Computer programs stimulate human productivity
 Experts
• Experts
– Have special knowledge, judgment, and experience
– Can apply these to solve problems
• Higher performance level than average person
• Relative
• Faster solutions
• Recognize patterns
• Expertise
– Task specific knowledge of experts
• Acquired from reading, training, practice
 Expert Systems Features
• Expertise
– Capable of making expert level decisions
• Symbolic reasoning
– Knowledge represented symbolically
– Reasoning mechanism symbolic
• Deep knowledge
– Knowledge base contains complex knowledge
• Self-knowledge
– Able to examine own reasoning
– Explain why conclusion reached
 Applications of Expert Systems
• DENDRAL project
– Applied knowledge or rule-based reasoning commands
– Deduced likely molecular structure of compounds
• MYCIN
– Rule-based system for diagnosing bacterial infections
• XCON
– Rule-based system to determine optimal systems configuration
• Credit analysis
– Ruled-based systems for commercial lenders
• Pension fund adviser
– Knowledge-based system analyzing impact of regulation and
conformance requirements on fund status
 Applications
• Finance
– Insurance evaluation, credit analysis, tax planning, financial planning and
reporting, performance evaluation
• Data processing
– Systems planning, equipment maintenance, vendor evaluation, network
management
• Marketing
– Customer-relationship management, market analysis, product planning
• Human resources
– HR planning, performance evaluation, scheduling, pension management, legal
advising
• Manufacturing
– Production planning, quality management, product design, plant site
selection, equipment maintenance and repair
 Environments
• Consultation (runtime)
• Development
 Major Components of Expert Systems

• Major components
– Knowledge base
• Facts
• Special heuristics to direct use of knowledge
– Inference engine
• Brain
• Control structure
• Rule interpreter
– User interface
• Language processor
 Additional Components of Expert Systems

• Additional components
– Knowledge acquisition subsystem
• Accumulates, transfers, and transforms expertise to computer
– Workplace
• Blackboard
• Area of working memory
• Decisions
– Plan, agenda, solution
– Justifier
• Explanation subsystem
– Traces responsibility for conclusions
– Knowledge refinement system
• Analyzes knowledge and use for learning and improvements
 Knowledge Presentation
• Production rules
– IF-THEN rules combine with conditions to produce
conclusions
– Easy to understand
– New rules easily added
– Uncertainty
• Semantic networks
• Logic statements
 Inference Engine
• Forward chaining
– Looks for the IF part of rule first
– Selects path based upon meeting all of the IF
requirements
• Backward chaining
– Starts from conclusion and hypothesizes that it is true
– Identifies IF conditions and tests their veracity
– If they are all true, it accepts conclusion
– If they fail, then discards conclusion
 General Problems Suitable for Expert
Systems
• Interpretation systems
– Surveillance, image analysis, signal interpretation
• Prediction systems
– Weather forecasting, traffic predictions, demographics
• Diagnostic systems
– Medical, mechanical, electronic, software diagnosis
• Design systems
– Circuit layouts, building design, plant layout
• Planning systems
– Project management, routing, communications, financial plans
 General Problems Suitable for Expert
Systems
• Monitoring systems
– Air traffic control, fiscal management tasks
• Debugging systems
– Mechanical and software
• Repair systems
– Incorporate debugging, planning, and execution capabilities
• Instruction systems
– Identify weaknesses in knowledge and appropriate remedies
• Control systems
– Life support, artificial environment
 Benefits of Expert Systems
• Increased outputs
• Increased productivity
• Decreased decision-making time
• Increased process and product quality
• Reduced downtime
• Capture of scarce expertise
• Flexibility
• Ease of complex equipment operation
• Elimination of expensive monitoring equipment
• Operation in hazardous environments
• Access to knowledge and help desks
 Benefits of Expert Systems
• Ability to work with incomplete, imprecise, uncertain data
• Provides training
• Enhanced problem solving and decision-making
• Rapid feedback
• Facilitate communications
• Reliable decision quality
• Ability to solve complex problems
• Ease of knowledge transfer to remote locations
• Provides intelligent capabilities to other information systems
 Limitations
• Knowledge not always readily available
• Difficult to extract expertise from humans
– Approaches vary
– Natural cognitive limitations
– Vocabulary limited
– Wrong recommendations
• Lack of end-user trust
• Knowledge subject to biases
• Systems may not be able to arrive at conclusions
 Success Factors
• Management champion
• User involvement
• Training
• Expertise from cooperative experts
• Qualitative, not quantitative, problem
• User-friendly interface
• Expert’s level of knowledge must be high
 Types of Expert Systems
• Rule-based Systems
– Knowledge represented by series of rules
• Frame-based Systems
– Knowledge represented by frames
• Hybrid Systems
– Several approaches are combined, usually rules and frames
• Model-based Systems
– Models simulate structure and functions of systems
• Off-the-shelf Systems
– Ready made packages for general use
• Custom-made Systems
– Meet specific need
• Real-time Systems
– Strict limits set on system response times