MIS 357 - Business Intelligence (Teaching Supported Material)

Management Information Systems Program
Chapter 1
Business Intelligence Concepts,
Tools, and Applications
Lesson 1: Overview of Decision Making

Overview of Decision Making
• Learning Objectives
– Identify role of computerized support for decision making and
explain its importance
– List the different types of decisions managers face, and the process
through which they make a decision.

Business Pressures–Responses–Support
Model
From SHARDA, RAMESH; DELEN, DURSUN; TURBAN, EFRAIM, BUSINESS 3

INTELLIGENCE AND ANALYTICS: SYSTEMS FOR DECISION SUPPORT, 10th
Edition, © 2015. Used by permission of Pearson Education, Inc., New York, NY.
All Rights Reserved.

Decision Making
• Is a process of
– choosing among two or more alternative courses of action for the
purpose of attaining one or more goals.
• It is influenced by
– behavioral and scientific disciplines.

Managerial Roles
• Interpersonal roles
– Figurehead
– Leader
– Liaison
• Informational roles
– Monitor
– Disseminator
– Spokesman
• Decisional roles
– Entrepreneur
– Disturbance handler
– Resource locator
– Negotiator
Sources: (1) Compiled from H. A. Mintzberg, The Nature of Managerial Work. Prentice Hall, Englewood Cliffs, 5
NJ, 1980; and (2) H. A. Mintzberg, The Rise and Fall of Strategic Planning. The Free Press, New York, 1993.

Managerial Responsibilities
• Planning
• Organizing
• Commanding
• Controlling
• Coordinating
From SHARDA, RAMESH; DELEN, DURSUN; TURBAN, EFRAIM, BUSINESS INTELLIGENCE

AND ANALYTICS: SYSTEMS FOR DECISION SUPPORT, 10th Edition, © 2015. Used by 6
permission of Pearson Education, Inc., New York, NY. All Rights Reserved.

Decision Making Steps
• Define the problem
• Construct a model
• Identify & Evaluate possible solutions
• Compare, choose, and recommend a potential solution to
the problem

Decisions Making Scenarios
• Structured Decisions
– established situation, programmable decision, situation fully
understood, routine, specialized mfg. process
• Unstructured Decisions
– emergent situation, creative decision, situation unclear, one-shot,
general processes
• Semi-structured decisions
– have some structured elements and some unstructured elements
From SHARDA, RAMESH; DELEN, DURSUN; TURBAN, EFRAIM, BUSINESS

INTELLIGENCE AND ANALYTICS: SYSTEMS FOR DECISION SUPPORT, 10th 8
Edition, © 2015. Used by permission of Pearson Education, Inc., New York, NY. All
Rights Reserved.

Decision Making
Constraints & Complexities
• Evaluating what-if scenarios
• Experimentation with a real system
• Changes in the decision-making environment may occur
continuously
• Time pressure on the decision maker
• Analyzing a problem takes time/money
• Insufficient or too much information
• Accuracy versus speed
• Effectiveness versus efficiency
9

Decision Making Support
• Group communication and collaboration
• Improved data management
• Giant data warehouses and big data
• Analytical support
• Overcoming cognitive limits in information processing and
storage
• Knowledge management
• The ability to access information anywhere, anytime
10


Lesson 2: Conceptual Foundations of Decision Making
11

Conceptual Foundation of Decision Making
Learning Objectives
• Understand the decision styles and rationality of decision
makers
• List the four stages of Simon’s decision making process
• Identify common strategies and approaches of decision
makers
12

Decision Styles of decision makers
• Perceptive versus Receptive
• Heuristic versus Analytic
• Autocratic Versus Democratic
• Consultative (with individuals or groups)
13

Common approaches of decision makers
• Left-brain approach
• Right-brain approach
• Accommodating
• Integrated
14

Simon’s Decision-Making Process
15

Decision Making Process
Intelligence Phase
• Problem Identification
• Problem Ownership
• Problem Classification
– Classification of problems according to the degree of
structuredness
• Problem Decomposition
– Often solving the simpler sub-problems may help in solving a
complex problem.
– Information/data can improve the structuredness of a problem
situation
• Outcome of intelligence phase is a formal problem
statement 16

Intelligence Phase
• Scan the environment, either intermittently or continuously

• Identify problem situations or opportunities
• Monitor the results of the implementation
17

Design Phase
• Determine alternatives
– Finding/developing and analyzing possible courses of actions
• Predict and measure outcomes
– A model of the decision-making problem is constructed, tested, and
validated
18

Choice Phase
• Making the actual decision and the commitment to follow a
certain course of action
– Search
– Evaluation
– Recommendation
19

Choice Phase
• Search approaches
– Analytic techniques (solving with a formula)
– Algorithms (step-by-step procedures)
– Heuristics (rule of thumb)
– Blind search (truly random search)
• Model manipulation
– Sensitivity analysis
– What-if analysis
– Goal seeking
20

Rationality of decision makers
• Principle of choice
– is a criterion that describes the acceptability of a solution approach
– In a model, it is a result variable
• Normative and Rational decision making
– Optimization (normative models)
– Sub-optimization (heuristic models)
• Descriptive decision making (simulation models)
21

Implementation Phase
• Implementation
– the initiation of a new order of things,
– the introduction of change;
– putting a recommended solution to work
• Issues
– resistance to change,
– degree of support of top management,
– user training
22

Common strategies of decision makers
• Optimizing versus satisfying
• Elimination-by-aspects versus incrementalism
• Mixed scanning
• Minimizing risk and uncertainty
23


Lesson 3: Decision Support Systems
24

Decision Support Systems
Learning Objectives
• Define a decision support system (DSS) and list its main
components
• Summarize DSS types and classifications, and explain
how DSS have changed over time.
25

Decision Support Systems (DSS)
• DSS describes any computerized system that supports
decision making in an organization.
• DSS is to support managerial decisions in semi-structured
and unstructured decision situations that middle-level
managers typically face;
– attempt to combine the use of models or analytical techniques
with traditional data access and retrieval functions;
– focus on features which make them easy to use in an interactive
mode;
– emphasize flexibility and adaptability to accommodate changes in
the environment and decision-making approach of the user.
26

Components of DSS
From SHARDA, RAMESH; DELEN, DURSUN; TURBAN, EFRAIM, BUSINESS 27

INTELLIGENCE AND ANALYTICS: SYSTEMS FOR DECISION SUPPORT, 10th
Edition, © 2015. Used by permission of Pearson Education, Inc., New York, NY.
All Rights Reserved.

Data Management Subsystem
From SHARDA, RAMESH; DELEN, DURSUN; TURBAN, EFRAIM, 28

BUSINESS INTELLIGENCE AND ANALYTICS: SYSTEMS FOR
DECISION SUPPORT, 10th Edition, © 2015. Used by permission of
Pearson Education, Inc., New York, NY. All Rights Reserved.

Model Management Subsystem
From SHARDA, RAMESH; DELEN, DURSUN; TURBAN, EFRAIM,

BUSINESS INTELLIGENCE AND ANALYTICS: SYSTEMS FOR 29

User Interface Subsystem
From SHARDA, RAMESH; DELEN, DURSUN; TURBAN, EFRAIM,

BUSINESS INTELLIGENCE AND ANALYTICS: SYSTEMS FOR 30

DSS Classifications
• Data-driven
• Document-driven
• Knowledge-driven
• Model-driven
• Communications driven
Source: Dan Power is the founder of DSS Resources (www.DSSResouces.com), 31

Evolution of DSS Applications
• Executive Information Systems (EIS)
• Group Support Systems (GSS)
• Geographic Information Systems (GIS)
• Expert Systems (ES)
• Knowledge Management Systems (KMS)
• Enterprise Resource Planning Systems (ERP), Customer
Relationship Management Systems (CRM), Supply Chain
Management Systems (SCM)
From SHARDA, RAMESH; DELEN, DURSUN; TURBAN, EFRAIM, BUSINESS

INTELLIGENCE AND ANALYTICS: SYSTEMS FOR DECISION SUPPORT, 10th 32
Edition, © 2015. Used by permission of Pearson Education, Inc., New York, NY. All
Rights Reserved.
.


Lesson 4: Decision Making Support in Practice
33

Decision Making Support in Practice
• Learning objectives
– Learn how DSS have evolved over last decade
– Comprehend how DSS support various phases of decision making
and identify related DSS
– Summarize how DSS have evolved into Business Intelligence and
Analytic systems
34

DSS Capabilities
35

How decisions are supported in Practice
36

How decisions are supported in practice
Intelligence Phase
• Enabling continuous scanning of external and internal
information sources to identify problems and/or opportunities
• Resources/technologies: Web; ES, OLAP, data warehousing,
data/text/Web mining, EIS/Dashboards, KMS, GSS, GIS, …
• Business activity monitoring (BAM)
• Business process management (BPM)
• Product life-cycle management (PLM)
37

How decisions are supported in practice
Design Phase
• Generating alternatives
– Structured/simple problems
• standard and/or special models
– Unstructured/complex problems
• human experts, ES, KMS, brainstorming/GSS, OLAP, data/text mining
38

Support for the Choice Phase
• Use sensitivity analyses, what-if analyses, goal seeking
• Resources
– KMS
– CRM, ERP, and SCM
– Simulation and other descriptive models
39

Support for Implementation Phase
• Decision communication, explanation and justification to
reduce resistance to change
• Resources
– Corporate portals, Web 2.0/Wikis
– Brainstorming/GSS
– KMS, ES
40

Other DSS types
• Ad hoc DSS
• Custom-Made Versus Ready-Made DSS
• Institutional DSS
41

Generations of DSS
• DSS with separate databases
• DSS with traditional data warehousing
• DSS with real time data warehousing
• DSS embedded in other systems
• DSS components integrated more frequently
42

Evolution of DSS Into
Business Intelligence and Analytics
• DSS began in the late 1960s with researchers with OR/MS
backgrounds
• In early 70’s DSS research focused on conceptual
foundations, development issues, and applications
• In late 70s and early 80s DSS research and practice
intertwined
• In 80’s additional DSS applications (e.g., EIS, GDSS)
emerged
• In the early 90’s data warehousing became important
• In early 2000 BI tops many CIOs agenda
• Today BI and Analytics revolution demands higher-level of
skills 43


Lesson 5: BI Concepts
44

BI Concepts
– Define Business Intelligence
– Learn Evolution of Business Intelligence Capabilities
– Define BI architecture and its components
– Summarize main applications and business value for BI
45

What is Business Intelligence
• Business Intelligence (BI) is an umbrella term that combines
architectures, databases, analytical tools, applications, and
methodologies.
• The Data Warehousing Institute (TDWI 2002) working
definition of business intelligence:
– “The processes, technologies, and tools needed to turn data into
information, information into knowledge, and knowledge into plans that
drive profitable business action. Business intelligence encompasses
data warehousing, business analytic tools and content/knowledge
management”
46

Evolution of BI Capabilities
47

A High-Level BI Architecture
Data Warehouse Business Analytics Performance and
Environment Environment Strategy
Data Technical staff Business users Managers / executives
Sources Built the data warehouse Access
Data
ü Organizing Warehouse BPM strategy
ü Summarizing Manipulation
ü Standardizing Results
User Interface
Future component - browser
intelligent systems - portal
- dashboard
48

Detailed level BI Architecture
49

Source Systems
• Many possible sources – (ERP, Ticket and Change
management system, point of sale, legacy system,
unstructured data, etc.)
• Many platforms – IBM, Oracle, Microsoft, Sybase, SAS
• Many formats – Relational, Hierarchical, Columnar, Multi-
dimensional, Big data MapReduce Databases,
Unstructured text data
50

BI Services components
• Integration Services (ETL, Operational Data Feeds,
Enterprise Application Integration, Enterprise Information
Integration)
• Data Management Services (data warehouse, data marts,
federated data marts, OLAP cubes, etc.)
• Reporting and Analytical Services (Analytical Reporting,
ad-hoc query and batch reporting, dashboards/scorecards,
predictive and prescriptive modeling, data & text
mining/forecasting)
• Information Delivery and Consumption Services (Web
portals, subscription, direct user access, internal portals
51

Types of BI users
• IT developers
• Analysts
• Information workers
• Managers and executives
• Front line workers
• Suppliers, customers, and regulators
52

BI Applications
• Business intelligence (BI) used for decision making can be
broken into three main types of applications:
– Strategic
– Tactical
– Operational
53

Strategic BI Applications
• Such applications help executives as well as business and
financial analysts assess progress in achieving long-term,
enterprise-wide goals such as increased revenue or market
share, reduced costs, better customer retention and
improved profitability.
– For example, Strategic dashboards can reflect enterprise-wide
strategic goals, as well as corresponding KPIs.
– Features on this type of dashboard include global, external, trends
and growth measures, all of which are related to or based on the
Balanced Scorecard Methodology
54

Tactical BI Applications
• These focus on analyzing short-term initiatives within
specific line-of-business domains, such as marketing,
sales, purchasing or customer service. Helping sales
managers optimize their region-wide campaigns is an
example of this type of BI application. For example:
– Tactical (also called analytical) dashboards measure the business’s
progress according to related trends, in accordance with each
strategic initiative. Progress is measured against a preset goal,
such as a budget or a certain target.
– Drilldowns reveal details and break down data for analysis. For
example, they help determine why certain targets were not met and
where a potential problem might be.
55

Operational BI Applications
• This type features process-centric solutions for monitoring and
optimizing specific business processes, such as call center operations,
loan processing and inventory management.
• Operational applications are designed to help organizations manage
their intra-day and daily business operations. For example:
– Operational dashboards monitor specific business processes, such
as order processing and shipping.
– They are mainly used at the departmental level, where operations
take place.
– Updates are tracked daily or weekly using real time charts and
reports, and detailed data is presented with strong analytical
functionality in order to perform a root-cause analysis.
56

BI Business Value
• According to Williams (2004), BI can add value to:
– Management Processes:
• Planning budgeting, performance monitoring/assessment, process
improvement, cost analysis, optimization, etc.
– Revenue Generating Processes:
• Customer segmentation, campaign management, channel management,
sales management, etc.
– Resource Consumption Processes:
• Product/service development, order management,
manufacturing/operations, supply chain, purchasing, etc.
57


Lesson 6: BI Platform Capabilities
58

BI Platform Capabilities
• Learning objectives
– Identify the main components of BI platforms capabilities
– Understand the competitive landscape of BI Platforms
59

BI Platform is the Key Component of
Business Analytic Applications
Analytic
Applications
Customer Analysis
• Customer Segmentation
• Customer Profitability
• Cross-sell / Up-sell
Business Intelligence Applications Supply Chain Management
• Inventory Analysis
• Fulfillment Analysis
Data • Distribution Cost Analysis
Dashboards Mobile Financial Reporting Analysis
Mining & OLAP Data Enterprise Transaction
& Apps & • P&L Reporting
Predictive Analysis Discovery Reporting Services
Scorecards Alerting • Profitability Analysis
Analysis • Financial Compliance Analysis
Business Intelligence Platform

Product Management
• Product Performance Analysis
• Market Basket Analysis
• Category Management
Vendor Performance Analysis
• Service Level Agreement
• Chargeback Analysis
MapReduce Columnar Relational Multi- User & • Relative Sales Analysis
&
Databases Databases Databases dimensional Departmental Risk Analysis
Databases Data • Risk Management
• Portfolio Risk Analysis
Exadata
• Fraud Detection 60
Operations Analysis
• Productivity Reporting
HANA
• HR Reporting
• Web Commerce Analysis
The Full Spectrum of Business Intelligence
in One Seamlessly Integrated Platform
Predictive Analytics
ANALYZE OLAP Analysis
Data Discovery
Enterprise Reports
MONITOR
Dashboards
Alerts
ACT 61
Transactions

Predictive Analytics – Full Range Under One Roof
Climb the Analytical Maturity Model to Outsmart and Outperform Competitors
Optimization What do we want to happen?
Predictions What is likely to happen based on past history?

World’s most
popular
advanced
analytics
Relationship Analysis What factors influence activity or behavior? tool.
Analytical Maturity
Free, open
source.
Benchmarking How are we doing versus comparables?
Trend Analysis What direction are we headed in?
More
Data Summarization What is happening in the aggregate?
62
Industry’s most powerful SQL Engine and 300+ native analytical functions Specialty Tools

OLAP Analysis
• Enables users to gain insight into multi-dimensional data
cube structure through fast, consistent, and interactive
access.
• Commonly used OLAP operations include
– Slice and Dice
– Drill down/ Roll up
– Pivot / Rotate
63

Data Discovery and Visualization Give Meaning to Otherwise
Raw, Hard to Understand Data
Experiment with insightful visualizations to find patterns, trends, and
relationships
64

Enterprise Reporting: Delivering the Complete Range
Print-perfect Operational Reports
• Via Web and Print
• Easy Navigation Through Hundreds of Report Pages
• Parameter Prompting Lets Users Specify Report Content
Pixel-perfect Business Reports
• Created by Business Users, not IT
• Integrated Tables and Graphs
• Powerful Reports for Presentation or Publication
Page-perfect Invoices and

Statements
• On-line Billing
Applications
• Statements
• Other Page Forms
65

Pervasive Personalized Scorecards and Dashboards
for Monitoring Performance
Dashboards
• Consume Information Easily With Gauges And
Dials
• Integrated View of Data Across the Enterprise
Scorecards
• Use Formal Scorecard Methodologies
• Drill Down to View Group/ Employee
Performance Scorecards
66

Alerting and Proactive Notification
Delivers Information via E-Mail, Print, or File
High-volume, high-efficiency … that also allows delivering the
information distribution right information to the right person
engine… at the right time
Time-based
BI Platform
Event-based
Reports & Dashboards Send Now
Data-Driven
Alert Trigger
67

Turn Insight into Action
From Any Web Browser or a Mobile Device
Extend Business Analytic Applications to Allow Real-time Decision
Making
• Enter sales leads
• Update churn
probabilities
• Modify inventories
• Cancel orders
• Approve expense,
time-off requests
• Submit employee
reviews
• Complete surveys
• And many more… 68

An Enterprise Grade Business Intelligence Platform
Desktop / Laptop Mobile
Windows Office Browser BlackBerry iPhone iPad Android

Portals
Full Spectrum Of Full Spectrum Of

Development Tools Admin Tools
MicroStrategy MicroStrategy
Web Mobile
Web Enterprise
Professional Manager
OLAP Distribution Report Transaction
Services Services Services Services
Command
Developer
Manager
MicroStrategy
Intelligence Server
Object
Architect Manager
Integrity
SDK Manager
69
System
Manager
Management Information Systems Program 6

9
Magic Quadrant for Business Intelligence and
Analytics Platforms
70


Lesson 7: Business Reporting
71

Business Reporting
– List multiple types of business reports and describe their shared
building blocks
– Summarize different questions business reports grapple with and
the options for displaying the answers.
– Learn the components and structure of the business reporting
systems
– Create various reports using MicroStrategy BI platform
72

Business Report
• Report?
– Any communication artifact prepared to convey specific information
• A report can fulfill many functions
– To ensure proper departmental functioning
– To provide information
– To provide the results of an analysis
– To persuade others to act
– To create an organizational memory…
73

Business Report
• Business report is A written document that contains
information regarding business matters.
– Purpose: to improve managerial decisions
– Source: data from inside and outside the organization (via the use of
ETL)
– Format: text + tables + graphs/charts
– Distribution: in-print, email, portal/intranet
– Types (in terms of content and format)
• Informal – a single letter or a memo
• Formal – 10-100 pages; cover + summary + text
• Short report – periodic, informative, investigative
74

Business Reports Building Blocks
Attributes Metrics
Descriptive information providing Quantitative business
business context and defining measures
summarization levels for calculations
75

Report Grid or Table
Basic building block for every
business analytic application
76

Prompts
Allow users to dynamically select
the information to be displayed in
the report
Filters Purchased
My Store 77
Specify conditions the data must in the last
Items
6 months
meet to be included on the report
Types of Business Reports
• Standard reports
– Answer the questions: What happened? When did it happen?
Example: Monthly or quarterly financial reports. We all know about
these.
• Ad hoc Reports
– Answer the questions: How many? How often? Where? Example:
Custom reports that describe the number of hospital patients for
every diagnosis code for each day of the week.
• Query drilldown (or OLAP)
– Answers the questions: Where exactly is the problem? How do I
find the answers? Example: Sort and explore data about different
types of cell phone users and their calling behaviors.
78

Types of Business Reports
• Dashboard-type Reports
– present a range of performance indicators on one page, with both
static/predefined elements and customizable widgets and views.
• Balanced Scorecard-type Reports
– present an integrated view of a company’s health and include
financial, customer, business process, and learning/growth
perspectives.
• Metric Management Reports
– involve outcome-oriented metrics based on service level
agreements and/or key performance indicators. Can be used as
part of business performance management
79

Business Reporting
Business Functions
UOB 1.0 X UOB 2.1 X UOB 3.0
Data UOB 2.2

Transactional Records
Exception Event
Symbol Count Description
Action
Machine
1
Failure (decision)
DEPLOYMENT CHART
PHASE 1 PHASE 2 PHASE 3 PHASE 4 PHASE 5
DEPT 1
DEPT 2
DEPT 3
Data
DEPT 4
4 5
2 3
1
Repositories
Decision
Information
Maker80
(reporting)

Business Reporting
• Business reporting is about good story-telling.
– Think of your analysis as a story—use a story structure.
• Be authentic—your story will flow.
• Be visual—think of yourself as a film editor.
• Make it easy for your audience and you. Invite and direct discussion.
81

Components of Business Reporting Systems
82

Business Reporting Systems Components
According to Hill (2008) there are following components to a business
reporting system:
• OLTP (Online transaction processing)- A system that measures some
aspect of the real world as events (e.g., transactions) and records them
into enterprise databases.
• Data supply- A system that takes recorded events/transactions and
delivers them reliably to the reporting system.
• ETL (extract, transform, and load)- This is the intermediate step where
these recorded transactions/events are checked for quality, put into the
appropriate format, and inserted into the desired data format.
• Data storage- This is the storage area for the data and metadata. It
could be a flat file or a spreadsheet, but it is usually a relational
database management system (RDBMS) set up as a data mart, data
warehouse, or operational data store (ODS)
83

Business Reporting Systems Components-
contd
• Business logic- The explicit steps for how the recorded
transactions/events are to be converted into metrics, scorecards, and
dashboards.
• Publication- The system that builds the various reports and hosts them
(for users) or disseminates them (to users). These systems may also
provide notification, annotation, collaboration, and other services.
• Assurance- A good business reporting system is expected to offer a
quality service to its users. This includes determining if and when the
right information is to be delivered to the right people in the right
way/format.
84


Lesson 8: BI OLAP Styles
85

BI OLAP Styles Versus OLTP
– Compare and contrast different types of OLAP
– Understand different applications of OLAP
– Comprehend the differences between OLAP and OLTP
86

OLAP Applications – contd.
• Budgeting & Financial Reporting
– Requires multiple dimensions such as Time, Account,
Organization, Product segment etc.
• EIS, Balanced Scorecards
– Management Reporting based on P&L Ratios
– KPIs, CSFs
• Other Applications
– Profitability Analysis
– Defect Analysis
– Quality Analysis
87

OLAP Applications
• Marketing & Sales Analysis
– Consumer Goods Industries, Retailers
– Financial Services (Banks, Insurance etc.)
• Clickstream Analysis & Web Analytics
– Pure Play E-commerce Sites
– Click-n’-Mortar Organizations
• Database Marketing & CRM
– Customer Segmentation
– Customer Value Analysis
88

OLAP Styles
• ROLAP- Relational OLAP (using relational databases; a
star schema is used)
• MOLAP- Multidimensional OLAP (using multidimensional
databases)
• HOLAP (Hybrid Online Analytical Processing)
• DOLAP- desktop OLAP
89

OLAP Analysis and Advanced ROLAP Analysis
MicroStrategy Satisfies All Analysis Needs
Slice and Dice with Drill Anywhere with
Basic OLAP Analysis
Advanced Relational OLAP Analysis
Revenue for Laptop Computers
In 2011
At All Stores
e
Products Tim
Geography
Revenue for All Electronics
In 2011 and Q1 2012
At Stores in the NE Region
Total Revenue and Costs

In Jan 2011 and Jan 2012
At Top 10 Revenue Stores
Relational OLAP Architecture Allows People To

Single-click OLAP Manipulations Allow
‘Drill Anywhere’ in The Entire Relational 90
People To Slice-and-Dice a Subset of Data To
Database – Across All Dimensions and From
View It from Many Different Perspectives
Summary Level To Transactional-level Detail

Example: Olap Usage of an Automobile Marketer
An automobile marketer wants to improve business

The Story
activity. Therefore he wants to view sales figures from
different perspectives.
 Sales by model
The Data Needs  Sales by dealership
 Sales by color
 Sales over time
 etc.
What is the trend in sales volumes over a period of

A Question
time for a specific model and color across a
specific group of dealerships ?
91

Example: The Multidimensional View of the Data
Sales Volumes
M Van
O
D
Coupe
E
L Smith
Sedan Clyde
Miller
Blue Red White DEALERSHIP
COLOR 92

OLAP Features: “Slicing and Dicing“ the Data
Choosing a range out of each dimension: • Color: Blue and White

• Model: Coupe only
Sales Volumes • Dealership: Clyde only
M Van
O Coupe Clyde
D
E Coupe
L Blue White
Smith
Sedan Clyde
“Sliced and
Miller
Blue Red White DEALERSHIP
Diced“ Data
COLOR
93

OLAP Features: Rotating the Data
Different users will require different views of the multidimensional cube – OLAP
allows easy rotation of data
View of the View of the

Product Manager Account Manager
Sales Volumes Rotate the Sales Volumes

M Van data cube M Van
O O
D by 90° D
Coupe Coupe
E E
L L
Sedan Sedan
Blue Red White Miller Smith Clyde
COLOR DEALERSHIP 94

OLAP Features: Drill-Down and Roll-Up
Data can be disaggregated and aggregated along a dimension according to their
natural hierarchy
Roll-Up Sales Volumes by Organization

Dimension
- three level hierarchy -
State Georgia
Region Atlant Athens

a
Dealership Miller Smith Clyde Lucas Gleason
Drill-Down 95

OLTP versus OLAP
OLTP OLAP
User  Clerk, IT Professional  Knowledge Worker
Function  Day-to-day Operations  Decision Support
Database Design  Application-oriented  Subject-oriented
(E-R based) (Star, Snowflake)
Data
 Current, Isolated  Historical, Consolidated
View
 Detailed, Flat Relational  Summarized, Multidimensional
Usage
 Structured, Repetitive  Ad-Hoc
Unit of Work
 Short, Simple Transaction  Complex Query
Access
 Read / Write  Read Mostly
Operations
 Index/Hash on Prim. Key  Lots of Scans
# Records Accessed
 Tens  Millions
# Users
 Thousands  Hundreds
Database Size
 100s MB-GB  100s GB-TB
Performance Metric
 Transaction Throughput  Query Throughput, Response
96


Lesson 9: Data Visualization
97

Data Visualizations
– Define data visualization.
– Identify different types of data that can be visually represented.
– List types of basic and composite charts and compare and
determine which is most effective to display data associated with
unique case studies
98

Data Visualization
• Companies and individuals increasingly rely on data to
make good decisions.
– Because data is so voluminous, there is a need for visual tools that
help people understand it.
• Data or information visualization
– is the use of visual representations to explore, make sense of, and
communicate data.
• What is portrayed in data visualizations
– is the information (aggregations, summarizations, and
contextualization) and not the data.
99

Visual Data Discovery Empowers Business People
to Conduct Analysis without IT Help
Start Visual Data Discovery Finish
Analyze &
Data Familiarize Visualize
Explore
Insight
100

Types of Data
Nominal Attributes Ordinal Attributes
Data that be counted, but not ordered Data that can be counted and ordered,
or aggregated. but not aggregated.
Examples: Examples:
•Products – Books, Movies, Music •Date – 1/1/2014, 1/2/2014…
•Gender – Male, Female •Grades – A, B, C…
•State – Virginia, Nevada, California •Ranks – Like, Neutral, Dislike
Metrics Ordinal Attributes and Metrics

Quantitative data that can be counted, Some data can be used as either
ordered, and aggregated. attributes or metrics. Their
classification is dependent on usage.
Examples:
•Revenue, Cost, Profit Examples:
•Number of Customers •Age
•Temperature •Scores
•Time
101

There Are Five Categories of Data Comparison
• Share
• Percentage of total
1 COMPONENT
(CONTRIBUTION)
Percentage of a total • Accounted for X percent
• Size
• Rank
• Larger than / Smaller than
2 ITEM Ranking of items • More / Less
• Equal / Same
• Change / Grow
• Rise / Decline
3 TIME SERIES Changes over time • Increase / Decrease
• Fluctuate
• Concentration
• X-to-Y range
4 FREQUENCY Items within ranges • Frequency
DISTRIBUTION • Distribution
• Related to
Relationships • Increases / Decreases with
5 CORRELATION • Changes / Varies with
between variables • Does not increase with 102

This Chart-Comparison Matrix Identifies the Best Chart Type
to Maximize Data Comprehension
Comparison Type
COMPONENT ITEM TIME SERIES FREQUENCY CORRELATION
PIE
BAR
Basic Chart Form
COLUMN
Source: Adapted from Gene Zelazny (2001). Say It

LINE
1 2 3 4 5
With Charts
103
DOT

In Most Cases, One of Five Basic Chart Types
Provides the Most Effective Data Presentation
Recommended usage
Pie Chart 5% frequency
Bar Chart Recommended usage

25% frequency
Column Chart
Recommended usage
50% frequency (combined)
Line Chart
Recommended usage
Dot Chart 10% frequency 104

Composite Charts Convey More Business
Dimensions and Metrics into a Single Display
Pie Chart Heat Map
Bar Chart Bullet Graph
Column Chart Micro Chart
Line Chart Graph Matrix
Dot Chart Bubble Chart 105


Lesson 10: Performance Dashboards
106

Performance Dashboards
– Define and understand the purpose of dashboards

– Review examples in order to understand common characteristics
and types of dashboards
– See how industry leaders have successfully deployed dashboards
– List attributes of metrics included in dashboards
– Practice creating dashboards
107

ENTERPRISE-GRADE
BUSINESS INTELLIGENCE
Produce and publish trusted analytics
to elevate performance
108

Dashboards Combine Many Reports
into a Single, Easy to Understand, Dashboard Application
Dozens of Reports Business Dashboards Multi-layout Dashboard Book
Frequently Used Together Consolidates Dozens of Reports Consolidates Multiple Independent
Dashboard Designs
Tab 1 Tab 2 Tab 3
109

Performance Dashboards
Common Characteristics
• Use of visual components to highlight data and exceptions
that require action.
• Transparent to the user, meaning that they require minimal
training and are extremely easy to use
• Combine data from a variety of systems into a single,
summarized, unified view of the business
• Enable drill-down or drill-through to underlying data sources
or reports
• Present a dynamic, real-world view with timely data
• Require little coding to implement/deploy/maintain
110

Dashboard Types
Scope
• Broad: Displaying information about the entire organization
• Specific: Focusing on a specific function, process, product, etc.
Business
role • Strategic: Provides a high-level, broad, and long-term view of performance
• Tactical: measure the business’s progress according to related trends, in
accordance with each strategic initiative
• Operational: Provides a focused ,near-term, and operational and business
processes view of performance
Time
horizon • Historical: Looking backwards to track trends
• Snapshot: Showing performance at a single point in time
• Real-time: Monitoring activity as it happens
• Predictive: Using past performance to predict future performance
111

Industry Leaders Have Deployed
Successful Dashboards at Unparalleled Scale
900 Store Managers
Retail One large DashboardApp distributed daily
Content: Store Ops, KPI performance, benchmarking
3,000 Retail Managers

Retail Dashboard delivered daily
Content: Manage inventory, improve margins
Open to public access

40+ million Medicare hospital admissions data, growing every
Government month
Content: Detailed insights into Medicare spending per State
Financial 15,000 Branch Managers

One large DashboardApp delivered daily
Services Content: Production data, Customer data, Financial
Financial 2,000 Bank branches employees

Dashboard delivered daily
Services Content: Banking and retail operations
112
Food & 4,000 Store Managers
30,000 DashboardApps delivered daily
Beverage Content: Store operations

Pervasive Personalized Scorecards and Dashboards
for Monitoring Performance
Dashboards
• Consume Information Easily With Gauges And
Dials
• Integrated View of Data Across the Enterprise
Scorecards
• Use Formal Scorecard Methodologies
• Drill Down to View Group/ Employee
Performance Scorecards
113

Action items to consider before you start
• Define the type of data you are working with.
• Consider timeliness of this information, and how frequently
the dashboard itself will be updated.
• Find out about users.
• Evaluate the suitability of the BI platform for the design and
deployment of the dashboards
114

What to include on your dashboard
• Define your dashboard functionality
• Don’t sacrifice substance over style
• Know your users’ requirements
• Validate their information requirements
• Select a right metric
• Select the right visual representation
115

What Makes a perfect metric?
• Actionable
– Metric involves a specific and repeatable action that can be linked
to the observed data
• Transparent
– Metric involves relatively simple calculations, making it easy for
users to follow them
• Accessible
– Metric involves data which is easy accessible, and simple to
maintain
• Recognizable
– There is a clear, distinct, and consistent understanding of what the
metric means throughout the whole dashboard
116

Example of Metrics
Category Measures Category Measures
Sales  Bookings Fulfilment  Number of days to ship

 Billings  Backlog
 Pipeline (anticipated  Inventory levels
sales)
 Number of orders
 Order amounts
 Selling prices
Marketing  Market share Manufacturing  Number of units manufactured

 Campaign success  Manufacturing times
 Customer demographics  Number of defects
Finance  Revenues Human  Employee satisfaction

 Expenses resources  Employee turnover
 Profits  Count of open positions
 Count of late performance reviews
Technical support  Number of support calls

 Resolved cases
 Customer satisfaction 117
 Call durations

Ensure Metrics are Comparable
• Time comparison
– Allows for representing trends in data, and making comparisons
against points in the past, or even against future forecasts.
• Cross comparison
– Allows for analyzing certain variables in relation to one another, to
see if there is any correlation between them.
• Goal comparison
– Allows for charting progress against predetermined goals and
targets.
118

The Five Keys to Successful Information-Driven Applications
2. Actionable and Built
Around A User Workflow
Guided Workflows and
1. Information Rich and advanced visualizations 3. Mass Personalized
Self Contained 100% Interactive Distribution
Very high Information Transact within application Auto role driven
Density customization through any
media
Minimal trips back to server
High volume scalability
Multiple sources –
structured and unstructured In-memory performance
4. Real-time Insight
5. Mobile Optimized
Act in real-time
Native Mobile Interfaces
Event driven triggers
Build once, Deploy many times
Fine tune strategy with
Full use of all mobile sensors feedback
119

Action Items for Selecting Metrics
• Start by defining what your dashboard is trying to achieve.
• Avoid concentrating on style over substance.
• Gain an insight into what it is that your users want.
• Assess what information is really necessary.
Know the components of a ‘perfect metric’.
• Make sure that these metrics allow for meaningful
comparison.
120


Lesson 10: Business Performance Management
121

Business Performance Management
– Define the main BPM BPM components
– List the four phases of the BPM cycle and the product categories
that support each phase
– Explain how organizations typically deploy BPM
122

Business Performance Management (BPM)
• BPM refers to processes and tools for measuring,
monitoring, and managing business performance
• It is also known as
– Corporate Performance Management (CPM by Gartner Group)
– Enterprise Performance Management (EPM by Oracle)
– Strategic Enterprise Management (SEM by SAP)
123

Components of BPM
• According to Colbert (2009), a BPM encompasses three
key components.
– A set of integrated and closed-loop processes for managing
financial and operational activities
– Tools for defining strategic goals and measuring performance
against the goals
– Tools for monitoring set of key performance indicators (KPI) linked
to organizational strategy
124

BPM Product Categories
According to Hagerty and Verma (2007) BPM can include the following
product categories
• Planning, budgeting, and forecasting (PBF)—Contribution, aggregation,
manipulation, and approval of the financial plan on a periodic or continual
basis
• Financial consolidations and reporting—Legal and statutory consolidation
systems along with more generalized financial statement generation
capabilities
• Financial analytics and dashboards —Profitability applications, role-specific
dashboards, metrics, and specific financial analytics for detailed financial
processes
• Financial governance, risk management, and compliance (GRC)—
Governance and control requirements that include national and/or international
regulations, such as SOX or International Financial Reporting Standards
(IFRS)
• Scorecards and strategy —Methodology-based scorecards (such as The
Balanced Scorecard) and strategy management applications 125

BPM Cycle
126

Strategize
Where do we want to Go?
Common tasks for the strategic planning process:
• Conduct a current situation analysis
• Determine the planning horizon
Conduct an environment scan
• Identify critical success factors
• Complete a gap analysis
• Create a strategic vision
Develop a business strategy
• Identify strategic objectives and goals
127

Plan
How do we get there?
• Operational planning
– Operational plan: plan that translates an organization’s strategic
objectives and goals into a set of well-defined tactics and initiatives,
resources requirements, and expected results for some future time
period (usually a year).
• Operational planning can be
– Tactic-centric (operationally focused)
– Budget-centric plan (financially focused)
128

Monitor/Analyze
How we are doing
• A comprehensive framework for monitoring performance
should address two key issues:
– What to monitor?
• Critical success factors
• Strategic goals and targets
• …
– How to Monitor?
• …
129

Act and Adjust: What Do We Need to Do Differently
• Success (or mere survival) depends on new projectsซ
– creating new products,
– entering new markets,
– acquiring new customers (or businesses), or
– streamlining some process.
• Many new projects and ventures fail!
130

The performance management continuum
Pervasive PM
131

Getting Started with BPM
• Organizations initially deploy BPM in one of three ways:
– Functional Approach
– Cross-Functional Approach
– Big Bang” Enterprise Approach
132


Lesson 11: Performance Measurement System
133

Performance Measurement System
– Define the purpose of a performance measurement system
– Understand how to define common key performance indicators
(KPIs) and summarize their distinguishing attributes
134

Performance Measurement System
• A system that assists managers in tracking the
implementations of business strategy by comparing actual
results against strategic goals and objectives
• Purpose
– identify and articulate the strategic mission, goals and objectives of
an organization
– assist managers in tracking the implementations of business
strategy by comparing actual results against these strategic goals
and objectives.
135

DMAIC Performance Measurement Model
• DMAIC (define, measure, analyze, improve, and control) is a
closed loop performance improvement model for
– Defining the goals, objectives, and boundaries of the improvement
activity
– Measuring the existing system to monitor its performance against the
goals
– Analyzing the system to identify ways to eliminate gaps
– Improving the performance of existing system by reducing the gaps
– Controlling by modifying the compensations, incentive systems,
polices, and procedures, or other management systems
• For a new process the model that is used is called DMADV
(define, measure, analyze, design, and verify) instead.
136

Effective Performance Measurement
• Measures should:
– focus on key factors (indicators)
– be a mix of past, present, and future
– balance the needs of shareholders, employees, partners, suppliers,
and other stakeholders
– start at the top and flow down to the bottom
– have targets that are based on research and reality rather than
arbitrary.
137

Key Performance Indicators (KPIs)
• KPIs represents strategic objectives and metrics that
measure performance against a goal
• They are Leading rather that lagging indicators and reflect
future performance
• As such it is not easy to create effective KPIs
138

Common KPIs
• Customer performance
• Service performance
• Sales operations
• Sales plan/forecast
139

Key Performance Indicators
• Distinguishing features of KPIs
– Strategy
– Targets
– Ranges
– Encodings
– Time frames
– Benchmarks
140

How to define effective KPIs
• Need to gather business requirements
– choosing the right KPIs relies upon a good understanding of what
is important to the organization.
– What is important' often depends on the department measuring
the performance - e.g. the KPIs useful to finance will really differ
from the KPIs assigned to sales.
• Identify the right number of metrics
• Select those that
– are not in conflict with other KPIs
– Incentivize employees to work at cross-purposes to support
strategic objectives and foster proactive actions
141


Lesson 12: Business Analytics
142

Business Analytics
Learning objectives
• Define Visual Analytics and explain how it differs from
information visualization.
• Identify major categories and applications of business
analytics (BA) and explain how various form of BA are
supported in practice
• Identify how the combination of BI and BA can result in
competitive advantage for organizations
143

Business Analytics
Visual analytics is the combination of visualization and
predictive analytics.
• Information visualization is aimed at answering
– “what happened” and “what is happening” and
– is closely associated with business intelligence (routine reports,
scorecards, and dashboards),
• Predictive analytics is aimed at answering
– “why is it happening,” “what is more likely to happen,” and
– is usually associated with business analytics (forecasting,
segmentation, correlation analysis).
144

Business Analytics Overview
145

Descriptive Analytics
• Descriptive or reporting analytics refers to
– knowing what is happening in the organization
– understanding some underlying trends and causes of such
occurrences
• It involves
– consolidation of data sources and availability of all relevant data in
a form that enables appropriate reporting and analysis.
– usually development of this data infrastructure is part of data
warehouses
146

Predictive Analytics
• Predictive analytics aims to determine what is likely to
happen in the future.
• Uses statistical and data mining techniques to predict if the
customer is likely to
– switch to a competitor (“churn”),
– buy next and how much,
– respond to promotion,
– worth the risk
147

Bring Predictive Analysis into the Mainstream
for Business Users
Typical Predictive Analyses Powerful Predictive Analyses
Based on Regression Techniques Based on Data Mining Techniques
Sales Forecast Area
Achieve Revenue
Stay in Budget
DETERMINE Respond
WHO IS Purchase
LIKELY TO … Defraud
Be Profitable
Be On Time
Linear Regression
Decision Tree Time Series Neural Network Support Vector Machines 148
Logistic Regression
Clustering Association Rules Rule Set Ensembles of Models
Tree Regression

Prescriptive Analytics
Prescriptive analytics aim to recognize
• what is going on,
• the likely forecast, and
• the best performance possible using optimization
techniques
149

Big Data Analytics
• Big Data? It refers to data that
– cannot be stored in a single storage unit
– is arriving in many different forms, be they structured, unstructured,
or in a stream
– are clickstreams from Web sites, postings on social media sites
such as Facebook, or data from traffic, sensors, or weather
• Big Data analytics solution
– instead of pushing data to a computing node, solution pushes
computation to the data
150

Business and Visual Analytics Platforms
• More BI and analytics vendors are becoming aware that their

customers require quick and preferably interactive visualizations, not
just for their normal reporting systems, but also to illustrate predictive
and prescriptive decision-making information.
• A high-powered visualization environment is one in which high-
performance, in-memory solutions are applied to exploring massive
amounts of data instantaneously.
• Due to the increasing demand for visual analytics coupled with fast-
growing data volumes, there is an ever-growing need to invest in highly
efficient Visual Analytics Platforms.
• MicroStrategy Visual Insight and SAS Visual Analytics are examples of
such platforms.
151

Companies Are Using BI and BA based Strategies
To Achieve Business Excellence
Optimization What’s the best that can happen?
Predictive Modeling What will happen next?

Competitive Advantage
Forecasting/extrapolation What if these trends continue?
Statistical analysis Why is this happening?
Alerts What actions are needed?
Query/drill down Where exactly is the problem?
Ad hoc reports How many, how often, where?
Standard reports What happened?
Sophistication of Intelligence 152

Organizations Are Building Their Competitive
Strategies Around Analytics
Analytic competitors are found in a variety of industries
Stage 5: Entertainment
Analytical Competitors eCommerce
Google, Netflix, New England Patriots,
Yahoo! Harrah’s, Oakland A’s, Industrial
Marriott Products
Stage 4: Retail John Deere,
Analytical Companies Consumer CEMEX
Amazon.com, Products
Wal-Mart Anheuser-Busch,
E&J Gallo Winery,
Stage 3: Telecoms
P&G, Mars
Analytical Aspirations Sprint, O2,
Bouygues Telecom Financial Services
Barclays Bank,
Stage 2: Pharmaceuticals Capital One,
AstraZeneca, Progressive Insurance,
Localized Analytics
Solvay, Vertex WellPoint
Transport
Stage 1:
FedEx, Schneider National,
Analytically Impaired
United Parcel Service 153

Business Intelligence and Analytics Are Readily
Available Across All Interfaces
154

Class Participation # One (1)
• Question # 1: Explain User Interface Subsystem.
• Question # 2: Describe Simon’s Decision-Making

Process.
• Question # 3: Describe in detail Components of DSS.
155

Class Participation # Two (2)
• Question # 1: Explain in detail DSS Capabilities.
• Question # 2: What is Business Intelligence &

Evolution of BI Capabilities.
• Question # 3: Describe the Data Management

Subsystem.
156

Class Participation # Three (3)
• Question # 1: Differentiate OLTP versus OLAP
• Question # 2: What Are Five Categories of Data

Comparison?
• Question # 3: What are the Five Keys to Successful

Information-Driven Applications?
• Question # 4: Explain a High-Level BI Architecture.

157

Class Participation # Four (4)
• Question # 1: Describe the Full Spectrum of Business
Intelligence in One Seamlessly Integrated Platform.
• Question # 2: Explain an Enterprise Grade Business
Intelligence Platform.
• Question # 3: Describe in detail Business Analytics
with suitable examples.
158

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Management Information Systems Program

Management Information Systems Program

Management Information Systems Program

From SHARDA, RAMESH; DELEN, DURSUN; TURBAN, EFRAIM, BUSINESS 3

Management Information Systems Program

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Management Information Systems Program

From SHARDA, RAMESH; DELEN, DURSUN; TURBAN, EFRAIM, BUSINESS

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