An Overview of Business Intelligence,

Analytics, and Data Science

Chapter 1
 Learning Objectives

1.1 Understand the need for computerized support of

managerial decision making
1.2 Recognize the evolution of such computerized support
to the current state—analytics/data science
1.3 Describe the business intelligence (BI) methodology
and concepts
1.4 Understand the various types of analytics, and see
selected applications
1.5 Understand the analytics ecosystem to identify various
key players and career opportunities
Changing Business Environments and Evolving
Needs for Decision Support and Analytics

• Increased hardware, software, and network capabilities

• Group communication and collaboration
• Improved data management
• Managing giant data warehouses and Big Data
• Analytical support
• Overcoming cognitive limits in processing and storing
information
• Knowledge management
• Anywhere, anytime support
 Related Terminology
• Business Intelligence
• Business Analytics
• Decision Support Systems

• Is BI = DSS??
Evolution of Computerized Decision
Support to Analytics/Data Science

• Figure 1.8 Evolution of Decision Support, Business Intelligence,

and Analytics
DSS (Decision Support Systems)
• DSS defined
• Decision making process
• Decision support framework
• Components
 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
• BI is an evolution of decision support concepts
over time
 Phases of
Decision-Making Process

• Humans consciously or subconsciously follow a

systematic decision-making process
- Simon (1977)
1) Intelligence (Define the problem or opportunity)
2) Design (Construct a model that describes the real-world
problem and Identify possible solutions)
3) Choice (Compare, choose, and recommend a potential
solution to the problem)
4) Implementation (putting a recommended solution to
work)
5) (?) Monitoring (a part of intelligence?)
An Early Decision Support Framework (by
Gory and Scott-Morten, 1971)
A Framework for Business Intelligence (1 of 3)

• DSS → BI, Definition of Business Intelligence

– [Broad Definition] An umbrella term that combines
architectures, tools, databases, analytical tools,
applications, and methodologies
– BI is 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

• A Brief History of BI
• The Origins and Drivers of BI (See Figure 1.9)
• The Architecture of BI (See Figure 1.10)
Components of DSS
 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, DSS
– 1980s - Executive Information Systems (EIS)
– 1990s - OLAP, dynamic, multidimensional, ad-hoc
reporting -> coining of the term “BI”
– 2010s - Inclusion of AI and Data/Text Mining
capabilities; Web-based Portals/Dashboards, Big
Data, Social Media, Analytics
– 2020s - yet to be seen
A Framework for Business Intelligence (2 of 3)

• Figure 1.9 Origins and Drivers of Business Intelligence (BI)

A Framework for Business Intelligence (3 of 3)

• The Architecture of BI
• Figure 1.10 A High-Level Architecture of BI
The Architecture of BI

• A BI system has four major components

– Data warehouse, with its source data
– Business analytics, a collection of tools for
manipulating, mining, and analyzing the data in the
data warehouse
– Performance and strategy, business performance
management (BPM) for monitoring and analyzing
performance
– a user interface (e.g., dashboard)
– AND future intelligent component
 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 ?
 BI Analytical Applications
• Customer segmentation
• Propensity to buy
• Customer profitability
• Fraud detection
• Customer attrition
• Channel optimization
Application Case 1.1

Sabre Helps Its Clients through Dashboards and

Analytics
Questions for Discussion
1. What is traditional reporting? How is it used in the
organization?
2. How can analytics be used to transform the traditional
reporting?
3. How can interactive reporting assist organizations in
decision making?
A Multimedia Exercise in Business Intelligence

• TUN (TeradataUniversityNetwork.com)
– BSI Videos (Business Scenario Investigations)
▪ Analogues to CSI (Crime Scene Investigation)
• Go To
– www.youtube.com/watch?v=NXEL5F4_aKA
• See the
– www.slideshare.net/teradata/bsi-how-we-did-it-the-
case-of-the-misconnecting-passengers.slides
• Discuss the case presented in the video and in the slides
Transaction Processing Versus Analytic
Processing

• Online Transaction Processing (OLTP)

– Operational databases
– ERP, SCM, CRM, …
– Goal: data capture
• Online Analytical Processing (OLAP)
– Data warehouses
– Goal: decision support
• What is the relationship between OLTP and OLAP?
Appropriate Planning and Alignment with
the Business Strategy

• Planning and Execution → Business, Organization,

Functionality, and Infrastructure
• Functions served by BI Competency Center
– How BI is linked to strategy and execution of strategy
– Encourage interaction between the potential business
user communities and the IS organization
– Serve as a repository and disseminator of best BI
practices between and among the different lines of
business.
– Standards of excellence in BI practices can be
advocated and encouraged throughout the company
Real-Time, On-Demand BI is Attainable

• Emergence of real-time BI applications

• Justifying the need
– Is there a need for real-time [is it worth the additional
expense]?
• Leveraging the enablers
– RFID
– Web services
– Intelligent agents
Critical BI System Considerations

• Developing or Acquiring BI Systems

– Make versus buy
– BI shells
• Justification and Cost–Benefit Analysis
– A challenging endeavor, why?
• Security
• Protection of Privacy
• Integration to Other Systems and Applications
What is analytics?
 Analytics Overview

• Analytics…a relatively new term/buzz-word

• Analytics…the process of developing actionable
decisions or recommendations for actions based on
insights generated from historical data
• According to the Institute for Operations Research and
Management Science (INFORMS)
– Analytics represents the combination of computer
technology, management science techniques, and
statistics to solve real problems.
 Business Analytics
• Figure 1.11 Three Types of Analytics
 Descriptive Analytics

• Descriptive or reporting analytics

• Answering the question of what happened
• Retrospective analysis of historic data
• Enablers
– OLAP / DW
– Data visualization
▪ Dashboards and Scorecards
– Descriptive statistics
Application Case 1.3

Siemens Reduces Cost with the Use of Data

Visualization
Questions for Discussion
1. What challenges were faced by Siemens’ visual analytics
group?
2. How did the data visualization tool Dundas BI help
Siemens in reducing cost?
-interactive dashboards to detect issues
Predictive Analytics

• Aims to determine what is likely to happen in the future

(foreseeing the future events)
• Looking at the past data to predict the future
• Enablers
– Data mining
– Text mining / Web mining
– Forecasting (i.e., time series)
Application Case 1.4

Analyzing Athletic Injuries

Questions for Discussion
1. What types of analytics are applied in the injury
analysis?
2. How do visualizations aid in understanding the data and
delivering insights into the data?
3. What is a classification problem?
4. What can be derived by performing sequence analysis?
Prescriptive Analytics
• Aims to determine the best possible decision
• Uses both descriptive and predictive to create the alternatives,
and then determines the best one
• Enablers
– Optimization
– Simulation
– Multi-Criteria Decision Modeling
– Heuristic Programming
• Analytics Applied to Many Domains
• Analytics or Data Science?
Application Case 1.5

A Specialty Steel Bar Company Uses Analytics to

Determine Available-to-Promise Dates
Questions for Discussion
1. Why would reallocation of inventory from one customer
to another be a major issue for discussion?
2. How could a DSS help make these decisions?
Analytics Examples in Selected Domains (1 of 2)

• Analytics Application in HealthCare—Humana Examples

– Example 1: Preventing Falls in a Senior Population—
An Analytic Approach
– Example 2: Predictive Models to Identify the Highest
Risk Membership in a Health Insurer
Analytics Examples in Selected Domains (2 of 2)
• Analytics in Retail Value Chain
• Figure 1.12 Example of Analytics Applications in a Retail Value Chain
Analytics Examples in Retail Value Chain
Table 1.1 Examples of Analytics Applications in the Retail Value Chain
Analytic
Application Business Question Business Value
Inventory 1. Which products have high demand? 1. Forecast the consumption of fast-moving products
Optimization 2. Which products are slow moving or and order them with sufficient inventory
becoming obsolete? to avoid a stock-out scenario.
2. Perform fast inventory turnover of slow-moving
products by combining them with one in high demand.
Price Elasticity 1. How much net margin do I have on the 1. Markdown prices for each product can be optimized
product? to reduce the margin dollar loss.
2. How much discount can I give on this 2. Optimized price for the bundle of products is
product? identified to save the margin dollar.
Market Basket 1. What products should I combine to 1. The affinity analysis identifies the hidden
Analysis create a bundle offer? correlations between the products, which can elp in
2. Should I combine products based on following values a) Strategize the product bundle
slow-moving and fast-moving offering based on focus on inventory or margin. b)
characteristics? Increase cross-sell or up-sell by creating bundle from
3. Should I create a bundle from the different categories or the same categories,
same category or different category line? respectively.
A Brief Introduction to Big Data Analytics

• What Is Big Data? (Is it just “big”?)

– Big Data is data that cannot be stored or processed
easily using traditional tools/means
– Big Data typically refers to data that comes in many
different forms: large, structured, unstructured,
continuous
▪ 3Vs – Volume, Variety, Velocity
– Data (Big Data or otherwise) is worthless if it does not
provide business value (and for it to provide business
value, it has to be analyzed)
• More on Big Data Analytics is in Chapter 7
Application Case 1.6

CenterPoint Energy Uses Real-Time Big Data Analytics

to Improve Customer Service
Questions for Discussion
1. How can electric companies predict possible outage at a
location?
2. What is customer sentiment analysis?
3. How does customer sentiment analysis help provide a
personalized service to their customers?
An Overview of the Analytics Ecosystem
• What are the key players in analytics industry?
• What do they do?
• Is there a place for you to be a part of it?
• There is a need to classify different industry participants in the
broader view of analytics to
– Identify providers (as an analytics consumer)
– Identify roles to play (as a potential provider)
– Identify job opportunities
– Identify investment/entrepreneurial opportunities
– Understand the landscape and the future of computerized
decision sport systems
An Overview of the Analytics Ecosystem (1 of 3)

• Figure 1.13 Analytics Ecosystem

An Overview of the Analytics Ecosystem (2 of 3)

• Data Generation Infrastructure Providers

• Data Management Infrastructure Providers
• Data Warehouse Providers
• Middleware Providers
• Data Service Providers
• Analytics Focused Software Developers
– Descriptive, Predictive, Prescriptive
• Application Developers: Industry Specific or General
• Analytics Industry Analysts and Influencers
An Overview of the Analytics Ecosystem (3 of 3)

• Academic Institutions and

Certification Agencies
– Certificates
– Masters programs
– Undergraduate programs
– Offered by
▪ MIS, Engineering
▪ Marketing, Statistics
▪ Computer Science
▪ …
• Regulators and Policy Makers
• Analytics User Organizations
Figure 1.15 Plan of the Book
Resources

• Teradata University Network (TUN)

• TeradataUniversityNetwork.com
 End of Chapter 1

• Questions / Comments