Lecture 1

Introduction to Business Intelligence

BI capabilities
[email protected]
Outline
 What is BI
 What is BA
 Size of the BI & A market
 Examples of BI & A
 Data, Information, and Knowledge
 Factors that drive BI
 BI and Related Technologies
 BI in contemporary organizations

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What is Business Intelligence (BI)?
 Information technology which provides
decision makers with valuable information
and knowledge by leveraging a variety of
data sources as well as structured and
unstructured information.
 Data sources external or internal to the organization
 Information quantitative or qualitative
 Output: knowledge
 Input: information and data
 Business intelligence tools: used in BI solutions
 Business solutions: support the BI process
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What is Business Intelligence (BI)?
 BI refers to application and technology, which is used
to gather, provide access to, and analyze data and
information about the company operations
 BI is neither a product nor a system. It is an
architecture and a collection of integrated operational
as well as decision-support applications and databases
that provide the business community easy access to
business data.
 In 1989 Howard Dresner a Research Fellow at Gartner
Group popularized "BI“ as an umbrella term to
describe a set of concepts and methods to improve
business decision-making by using fact-based support
systems
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BI Product, Process, Solution, and Tools BI Product

Data and Information Information (that leads to

(External & Internal; BI Process knowledge and/or
Structured & Unstructured) enables decision making)

BI Solution

Other Technologies
(e.g., Data Warehouse,
BI Tools Data Mining)

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What is Business Intelligence (BI)?
 BI is an umbrella term that combines
architectures, tools, databases, analytical tools,
applications, and methodologies
 Like DSS, BI a content-free expression, so it means
different things to different people
 BI's major objective is to enable easy access to data
(and models) to provide business managers with
the ability to conduct analysis
 BI helps transform data, to information (and
knowledge), to decisions and finally to action
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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 and Data/Text Mining
capabilities; Web-based Portals/Dashboards
 2010s - yet to be seen

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Evolution of Business Intelligence
Free Form
Composing and
Analysis Using
Running Ad hoc
Dimensionally
Reports Against
Integrated and
Running Dimensionally
Pre-Aggregated
Reports Against Integrated Data
Data (OLAP Data
Real-time Copy (Relational Data
Running Mart)
of Operational Warehouse)
Reports Against
Nightly Copy of DB (ODS)
Operational DB
(Reporting
Running Server)
Canned Reports
Directly Against
Operational DB

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Evolution from Static Report to BI…

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The Evolution of BI Capabilities

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Business Intelligence – A Highly
Important Field
Benefits
 Management effectively aided
 Intellectual capital better deployed
 Business operations improved
 Customer service enhanced
 New opportunities identified

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The Concept of DSS
 DSS - interactive computer-based systems, which
help decision makers utilize data and models to
solve unstructured problems
(Gorry and Scott-Morton, 1971)
 Decision support systems couple the intellectual
resources of individuals with the capabilities of the
computer to improve the quality of decisions.
 DS as an Umbrella Term
 Evolution of DS into Business Intelligence

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A Framework for
Business Intelligence (BI)
 BI is an evolution of decision support concepts over
time
 Then: Executive Information System
 Now: Everybody’s Information System (BI)
 BI systems are enhanced with additional
visualizations, alerts, and performance measurement
capabilities
 The term BI emerged from industry

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The Architecture of BI
 A BI system has four major components
 a data warehouse, with its source data
 business analytics, a collection of tools for manipulating,
mining, and analyzing the data in the data warehouse
 business performance management (BPM) for
monitoring and analyzing performance
 a user interface (e.g., dashboard)

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A High-Level Architecture of BI
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

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Business Value of BI Analytical
Applications
 Customer segmentation
 Propensity to buy
 Customer profitability
 Fraud detection
 Customer attrition
 Channel optimization

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DSS-BI Connections
 Similarities and differences?
 Similar architectures, data focus, …
 Direct vs. indirect support
 Different target audiences
 Commercially available systems versus in-house
development of solutions
 Origination – Industry vs. Academia
 So, is DSS = BI ?

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The DSS–BI Connection
 First, their architectures are very similar because
BI evolved from DSS
 Second, DSS directly support specific decision
making, while BI provides accurate and timely
information, and indirectly support decision
making
 Third, BI has an executive and strategy
orientation, especially in its BPM and dashboard
components, while DSS, in contrast, is oriented
toward analysts

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The DSS–BI Connection – cont.
 Fourth, most BI systems are constructed with
commercially available tools and components,
while DSS is often built from scratch
 Fifth, DSS methodologies and even some tools were
developed mostly in the academic world, while BI
methodologies and tools were developed mostly by
software companies
 Sixth, many of the tools that BI uses are also
considered DSS tools (e.g., data mining and
predictive analysis are core tools in both)

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The DSS–BI Connection – cont.
 Although some people equate DSS with BI, these
systems are not, at present, the same
 some people believe that DSS is a part of BI—one of its
analytical tools
 others think that BI is a special case of DSS that deals
mostly with reporting, communication, and
collaboration (a form of data-oriented DSS)
 BI is a result of a continuous revolution and, as such,
DSS is one of BI's original elements
 In this book, we separate DSS from BI
 MSS = BI and/or DSS

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What is Business analytics?
 Analytics is an immense field with many subfields, so
it can be difficult to sort out all the buzzwords around
it.
 It goes beyond Business Intelligence by using
sophisticated modeling techniques to predict future
events or discover patterns which cannot be detected
otherwise.
 It can answer questions including “why is this
happening,” “what if these trends continue,” “what will
happen next” (prediction), “what is the best that can
happen” (optimization).
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BI vs BA
 Business Intelligence is needed to run the business while
Business Analytics are needed to change the business.
 BI is focused on creating operational efficiency through access to
real time data enabling individuals to most effectively perform their
job functions. BI also includes analysis of historical data from
multiple sources enabling informed decision making as well as
problem identification and resolution.
 Business Analytics relates to the exploration of historical data from
many source systems through statistical analysis, quantitative
analysis, data mining, predictive modelling and other technologies
and techniques to identify trends and understand the information
that can drive business change and support sustained successful
business practices.

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Size of the market
 According to a new market research report "Business
Intelligence and Analytics Software Market by
Segment (BI platforms, CPM Suite, Advanced and
 Predictive Analytics, Content Analytics, Analytics
Application), by Services, by Deployment Mode,
by Org. Size, by Verticals, by Regions – Global
Forecast to 2020", published by MarketsandMarkets,
Business Intelligence and Analytics Software Market is
expected to grow from $17.90 Billion in 2015 to $26.78
Billion by 2020, at a Compound Annual Growth Rate
(CAGR) of 8.4%.
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Why BI & A?
 BI & A software has rapidly gained traction in the
market and is considered to be the fastest growing
industry in IT.
 Organizations are in dire need of tools that streamline
their business process by quickly analyzing,
optimizing, and managing the exponential increase in
data.

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The BI & A workforce
 As “big data” continues to grow exponentially, businesses in
every industry are increasingly in need of analysts to
interpret and make use of it.
 However, the amount of data is growing faster than the
number of specialists trained to analyze it: According to
the McKinsey Global Institute, the U.S. is facing a shortage
of up to 190,000 analysts and 1.5 million managers within
the next four years.
 Thus, companies all across the board are seeking
professionals with backgrounds in BI, BA and data science.
 And this high demand means big employers are making
lucrative offers to students of business intelligence .
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The jobs
 Business Intelligence Developer
 Data Scientist
 Business Intelligence Analyst
 Business Intelligence Project Manager
 Business Intelligence Administrator, Manager,
Consultant
 Etc…

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Business Intelligence…examples
 A hotel franchise uses BI analytical applications to
compile statistics on average occupancy and average
room rate to determine revenue generated per room. It
also gathers statistics on market share and data from
customer surveys from each hotel to determine its
competitive position in various markets. Such trends
can be analyzed year by year, month by month and day
by day, giving the corporation a picture of how each
individual hotel is faring.

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  A bank bridges a legacy database with
departmental databases, giving branch managers
and other users access to BI applications to
determine who the most profitable customers are
or which customers they should try to cross-sell
new products to. The use of these tools frees
information technology staff from the task of
generating analytical reports for the departments
and it gives department personnel autonomous
access to a richer data source.
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  A telecommunications company maintains a
multiterabyte decision-support data warehouse
and uses business intelligence tools and utilities to
let users access the data they need without giving
them carte blanche to access hundreds of
thousands of mission-critical records. The tools set
boundaries around the data that users can access,
creating data "cubes" that contain only the
information that's relevant to a particular user or
group of users.
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BI Industry Scenario…
 Today's exciting BI market is ripe with opportunities to
hit strategic business targets.
 Gaining market share, keeping customers and
controlling costs remain key objectives. Mid-market
executives and big corporate department heads rush to
cost effectively meet these complex needs. How?
Through improved use of their existing database
systems.
 CFOs require 'business intelligence' systems that
permit reliable channel and store comparisons over
time. Improved forecasts are vital, too!
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  Data warehousing and analytical skills are combined
with an understanding of industry issues, as we refine
and implement your vision.
 According to Gartner survey of 1,400 CIOs, business
intelligence was ranked the top technology priority
surpassing security.

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Data, Information, Knowledge
 Data
 May or may not be correct
 Ex. Sales order at a restaurant included a large burger, medium fries
and milkshake
 Information
 Subset of data
 Data possessing context, relevance, and purpose
 Ex. The numbers indicating the daily sales (in dollars, quantity, etc.)
of burgers, fries, vanilla milkshakes
 Knowledge
 Justified beliefs about relationships among concepts
 Ex. The relationship between the quantity of bread that should be
ordered, the quantity of bread in inventory, and the daily sales of
burgers and other products that use bread.

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Data, Information, Knowledge, and Decisions

Raw facts, Data that has

observations, been processed
or perceptions so as to have Decisions
context,
relevance, and Justified beliefs
purpose about
relationships
relevant to the
decision

Information Knowledge
Data
Analyze Interpret Apply

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Factors that drive BI
 Exploding data volumes
 Cheaper storage
 More electronic connections (Internet,
intranet,…)
 Regulatory changes (Sarbanes Oxley Act
2002 for financial compliance, US)

BI solutions provide managers the

ability to more effectively utilize these
larger data volumes

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Factors that drive BI
Increasingly complicated decisions
 Multi-industry, global competition
 Decisions from structured and unstructured
data

BI solutions provide managers the ability to

make decisions that incorporate all the
important factors and are based on
integration across the information.

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Factors that drive BI
 Need for quick reflexes
 Faster pace of change (volatility)
 Windows of opportunity close rapidly
 Overcome processing delays
 Converting data from variety of sources
 Integrating information across sources
 Making the results available to the decision maker

BI solutions help address each of the three

types of delays.

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Factors that drive BI
Technological Progress
 Decision Support Systems (DSS)
 Enterprise Resource Planning Systems (ERPS)
 Data warehousing
 Data mining
 Text mining
BI vendors have the necessary inputs for
developing effective BI tools, and
organizations adopting them have the
platform to make BI solutions most effective
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BI is not KM
Knowledge Management Business Intelligence (BI)
(KM)
 Inputs  Inputs
 Information  Data
 Knowledge  Information
 Output  Output
 Creation of new  Information presented
knowledge in a friendly fashion
 Conversion to another  New knowledge or
form of knowledge insight
 Application of
knowledge in making a
decision
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Roles of Data, Information, and Knowledge in Business
Intelligence

Only Explicit (but

Business Intelligence not Tacit)
Knowledge
Decisions

Data Information Knowledge

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Roles of Data, Information, and Knowledge in
Knowledge Management

Knowledge discovery in data and information;

potential overlap between BI and KM
Knowledge
Management Both Explicit and
Tacit Knowledge
Decisions

Data Information Knowledge

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BI is not data warehousing, data mining nor
decision support systems
 Data warehouse
 A single logical repository for an organizations data

 Data mining
 The process of discovering hidden patterns from data
stored electronically (ex. in a data warehouse)
 Decision support systems
 Use data as input along with prior knowledge to create
rules that guide decisions
 Business Intelligence
 Presents information to individuals with little technical
expertise
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Roles of Data, Information, and Knowledge in Data
Warehousing

Structured
data, primarily
internal

Data Warehousing

Decisions
Data Information Knowledge

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Roles of Data, Information, and Knowledge in Data
Mining

Data Mining

Decisions
Data Information Knowledge

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Roles of Data, Information, and Knowledge in Decision
Support Systems

Either support for decision making (DSS) or automation of

decision making (Automated Decision Systems)
Decision Support
System

Decisions
Data Information Knowledge

Knowledge embedded as rules within the system

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Four Contributions of BI
 Dissemination of user-friendly, real-time
information
 Creation of new knowledge based on the past
 Responsive and anticipative decisions
 Decision-making based more closely on all the latest information
 Incorporate predictions regarding the future

 Improved planning for the future

 More effective use of information
 Use of past data for predictions about the future
 Development of knowledge based on information about the past

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Three Benefits of BI to Organizational Success
 Improvement in operational performance
 Provide real-time information on how performing
 Help make organizations more efficient

 Improvement in customer service

 Improve quality of customer service provided
 Identify problems and potential solutions quickly
 Reduce customer concerns and improve retention

 Identification of new opportunities

 Facilitate new insights through discover of unknown
patterns
 Track innovative projects more effectively
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The Benefits of BI
 The ability to provide accurate
information when needed, including a
real-time view of the corporate
performance and its parts
 A survey by Thompson (2004)
 Faster, more accurate reporting (81%)
 Improved decision making (78%)
 Improved customer service (56%)
 Increased revenue (49%)
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The Benefits of BI
 BI applications and technologies can help companies
analyze:
 changing trends in market share
 changes in customer behavior and spending patterns
 customers' preferences
 company capabilities
 market conditions

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BI: customers
 Having access to timely and accurate information
is an important resource for a company, which can
expedite decision-making and improve customers'
experience.
 In the competitive customer-service sector, companies
need to have accurate, up-to-date information on
customer preferences, so that the company can quickly
adapt to their changing demands.
 BI enables companies to gather information on the
trends in the marketplace and come up with
innovative products or services in anticipation of
customer's changing demands.
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BI: competitors and market
 BI applications can also help managers to be better
informed about actions that a company's competitors
are taking.
 BI systems can also be designed to provide managers
with information on the state of economic trends or
marketplace factors, or to provide managers with in
depth knowledge about the internal operations of a
business.

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BI: Guesswork
 BI can be used to help analysts and managers
determine which adjustments are most likely to
respond to changing trends.
 BI systems can help companies develop a more
consistent, data-based decision making process for
business decisions, which can produce better results
than making business decisions by "guesswork."

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BI: sharing of information…
 BI can help companies share selected strategic
information with business partners.
 Some businesses use BI systems to share information
with their suppliers like…..
 inventory levels
 performance metrics
 other supply chain data

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BI: improving performance
 BI applications can enhance communication among
departments, coordinate activities, and enable
companies to respond more quickly to changes (e.g., in
financial conditions, customer preferences, supply
chain operations, etc.).
 When a BI system is well-designed and properly
integrated into a company's processes and decision-
making process, it may be able to improve a company's
performance.

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Impacts of Business Intelligence
Dissemination of real- Enablement of
time information in responsive and Improved operational
user-friendly format anticipative performance
to a variety of users decisions

Business
Improved
Intelligence
customer service

Facilitation of new
knowledge based on Improved planning for Identification of
the new insights in the future new opportunities
information

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BI Technologies
 need to have a secure computer system which can
specify different levels of user access to the data
'warehouse',
 need to have sufficient data capacity, a plan for how
long data will be stored (data retention).
 BI analysts have developed software tools to gather and
analyze large quantities of unstructured data such as
 production metrics,
 sales statistics,
 attendance reports,
 customer attrition figures.
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BI Tools (non-exhaustive)
 AQL – Associatede  User/End-User Query
Query Logic and Reporting
 Balanced Scorecard  Enterprise Management
 Business Activity System
Monitoring  Executive Information
Business Performance System
Management  SCM – Supply Chain
 Business Planning Management
 Business Process Re-  Demand Chain
engineering Management, and
 Competitive Analysis  Finance and Budgeting
tools.
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BI Tools (non-exhaustive)
 Other BI applications are used to store and analyze data
 Data Mining & Warehousing;
 DSS;
 Knowledge Management Mapping,
 Information Visualisation and Dashboarding;
 Management Information System (MIS);
 Geographic Information System (GIS);
 Software As A Service (SaaS)
 Online Analytical Processing (OLAP);
 Real Time Business Intelligence
 Statastics and Technical Data Analysis
 Web Mining, Text Mining and Systems Intelligence

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BI Tools (non-exhaustive)
 Other BI applications are used to analyze or manage
the "human" side of businesses :
 Customer Relationship Management (CRM)
 Marketing Tools
 Human Resources applications.
 Web Personalisatiuon

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Recap
We have:
• Discussed some of the basics of BI
• Distinguished among data, information, and
knowledge
• Explained what BI is and how it differs from other
information technologies
• Discussed the factors driving the importance of BI
• Examined some direct effects of BI and looked at its
impacts on organizational performance

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Key Terms
 business intelligence
 data
 data mining
 data warehouse
 decision support systems
 Information
 Knowledge
 knowledge management
 organizational impacts
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End of the Lecture

 Questions / Comments…

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Videos/ Websites
 http://www.ssas-info.com/analysis-services-
webcasts/64-webcasts/1898-all-you-need-to-know-
about-microsoft-business-intelligence-4-video-
sessions
 http://www.youtube.com/watch?v=bYD7fatYUIU
 http://www.youtube.com/watch?v=LFnewuBsYiY
 www.bidw.org/interview-questions/what-is-business-
intelligence/

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Case study:Norfolk Southern Uses BI for
Decision Support to Reach Success
 Read attached document and listen to mp3 file
 Company background
 Problem
 Proposed solution
 Results
 Answer and discuss the case questions

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Case questions - I
 Provide detailed responses to the following items:
 Discuss the various types of BI systems that Norfolk
Southern Railroad has implemented.
 Describe how Norfolk Southern RR has used these BI
systems to turn raw data into "actionable" information.
 Search for “Norfolk Southern “ on the following
websites to get elements of answers:
 http://www.teradata.com/
 http://www.teradatauniversitynetwork.com/tun/

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Case questions - II
1. How are information systems used at Norfolk
Southern to support decision making?
2. What type of information is accessible through
the visualization application?
3. What type of information support is provided
through accessNS?
4. How does NS use the data warehouse for human
resource applications?
5. Can the same data warehouse be used for BI and
optimization application?
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