Bi 1

Business Intelligence
Between IT and Management
Isabelle Linden
Department of Business Administration

University of Namur
[email protected]
BI & Management
Learning Outcomes
Ø Understand BI as a process
Ø Position the key concepts
Ø Identify the key challenges
Ø Business Performance Management

Ø Describe BPM closed-loop process
Ø Describe the difference between performance
management and measurement
Ø Understand the role of methodologies in BPM
Ø Define the notion of KPI
Ø Introduce Balanced Scorecard (BSC) methodologies
Business Intelligence - BAGI BI & Management 2

BI PROCESS
BI & Management
The lecture slides in this section are adapted from SAP University
Alliance Program.
Business Intelligence Process
Business Issue
Wisdom
Knowledge
Information
Data

Business Issue
Wisdom
Business Question
Knowledge
Information
Data

Diverse Business Issues
Marketing Manager
Supply Chain Manager “I need to predict the
“I need to optimise the outcomes of
processes” The latest campaign”
CFO
“I need to measure
our
financial
performance”
CEO
“I need to measure our Customer Service Manager
Performance against our “I need to discover what is
objectives” happening with my
customers”
© SAP University Alliance Program

Business Issue
Wisdom
Business Question
Knowledge
Information Need
Information
Data

Business Issue
Wisdom
Business Question
Knowledge
Information Need
Information
Data Need
Data

Too much information…
“Technology is so much fun but we can drown in our
technology. The fog of information can drive out
knowledge” Daniel J. Boorstin

Diverse Sources of Information
Surveys ERP Application

Back of (standard reports)
napkins
Operations Marketing
Benchmark CEO & Board
studies Sales Finance Business Intelligence

applications
LOB EXECUTIVES
(Strategic)
MID-MANAGERS
(Operational)
EXECUTION LEVEL
(Tactical)
Application
(standard reports) Excel/Access
Discussion

Diverse types of data
– « no greater barrier to effective data management will exist
than the variety of incompatible data formats, non-aligned
data structures, and inconsistent data semantics »
Doug Laney, « 3-D Data Management: Controlling Volume, Velocity and Variety », Gartner, 2001.

Business Issue
Wisdom
Business Question
Knowledge
Information Need
Information
Data Need
Data
Data Retrieval

ETL - metadata
Packaged Transient
application data source
Data
warehouse
Legacy
Extract Transform Cleanse Load
system
Data mart
Other internal
applications
Copyright © Pearson Education, Inc. Publishing as Prentice Hall):

Business Issue
Wisdom
Business Question
Knowledge
Information Need
Information
Data Need Data integration

Data
Data Retrieval

Business Intelligence Evolution
Evolution Phase Business Question Enabling Technology
Data Collection “What was my total revenue

Data Processing Applications
(1960s) for the day?”
Data Access “What were sales quantity Relational Databases

(1980s) in Australia last March?” (OLTP)
Data Warehousing & “What were sales quantity

Decision Support On-Line Analytical Processing
in Europe? Drill down to
(OLAP)
(1990s) Germany”
Data Mining “What is likely to happen to

Advanced algorithms,
sales in Europe in fuel prices
& Machine Learning increased computing power
increase? Why?”

Operational versus Informational Processing
Operational (OLTP) Informational (OLAP)

Detailed Summarised
Can be updated Snapshot records, no updates allowed
Accurate up to the second Timestamp on each record

Used for clerical purposes Used by management
Built based on requirements Built without knowing requirements
Supports small uniform transactions Supports mixed workload
Data designed for optimal storage Data designed for optimal access
Very current data Mainly historical data

Data is application oriented Data is integrated
Referential Integrity is useful Referential integrity is not useful
High availability is normal High availability is nice to have
Product
Dimension
Customer
Sales Dimension
Dimension
Quantities
Revenues
Costs
Taxes
Competition
Time Dimension
Dimension

Data Warehouse - Definitions
Ø A data warehouse is a subject

oriented, integrated, time-
variant, non-volatile collection of
data in support of
management‘s decision-making
process. (W. H. Inmon, 1994).
Ø A copy of transaction data

specifically structured for query
and analysis
(R. Kimball, “The Data
Warehouse Toolkit” 1996)

Data Warehousing
Tran
sacti
OLTP onal Month Customer Invoice
Data
$
Mast June Jones $2000
er Da
ta June Roseman $4000
n
June Nygung $1400
OLTP
June Ramp $5000
July Jovanovic $340
OLTP Data Warehouse

OLAP

Business Issue
Wisdom
Business Question
Knowledge
Information Need Reporting & Analytics

Information

Data
Data Retrieval

Multidimensional model
East
Customer
group
South
Region
Dept. Stores
North
Wholesale
Retail
Glass- Ceramics Plastics Pottery Copper
Pewter
ware
Division
OLAP Queries
slicing = set dimension to a value in order to reduce the
cube dimensionality

Dicing= set constraints on dimensional attributes in order
to reduce the size of the cube

Roll up= cells are merged to create bigger categories to
answer to the user’s need

Drill-down = add a new level of detail and reduce data
aggregation

Pivot = change the layer : turn the cube to rearrange the cells
with a new perspective

Example
Example : contracts
with dimensions: time, country and type
Stefan Urbanek
http://okfnlabs.org/blog/2014/01/20/olap-cubes-and-logical-model.html
The cube
Spending 2010….
contracts in Estonia
Stefan Urbanek
The cube
IT Contracts….
contracts in Estonia in 2010
Stefan Urbanek
Slice and Dice
IT Contracts in Estonia in 2010
Stefan Urbanek
Data Mining

Data mining functionalities
Descriptive multidimensional analysis

• Generalize, summarize, and contrast data
characteristics,
• Association rules discovery
• Cluster analysis
• Anomaly detection
Predictive analysis
• Construct models (functions) that describe and
distinguish classes or concepts for future prediction
• “Predict” some unknown or missing values

Data mining functionalities
Multidimensional concept description:

Characterization and discrimination
• Generalize, summarize, and contrast data characteristics,
e.g., dry vs. wet regions
Association rules discovery
• Diaper à Beer [0.5%, 75%] (Correlation or causality?)
Classification and prediction
• Construct models (functions) that describe and
distinguish classes or concepts for future prediction
– E.g., classify countries based on (climate), or classify cars
based on (gas mileage)
• Predict some unknown or missing values

Data Mining Functionalities (2)
Cluster analysis
• Class label is unknown: Group data to form new classes,
e.g., cluster houses to find distribution patterns
• Maximizing intra-class similarity & minimizing interclass
similarity
Outlier analysis
• Outlier: Data object that does not comply with the general
behavior of the data
• Noise or exception? Useful in fraud detection, rare events
analysis

Data Mining Functionalities (3)
Trend and evolution analysis

• Trend and deviation: e.g., regression analysis
• Sequential pattern mining: e.g., digital camera à large
SD memory
• Periodicity analysis
• Similarity-based analysis
Etc

Business Issue
Wisdom
Business Question
Knowledge

Information

Data
Data Retrieval

Information Delivery Tools
(KPIs)

Business Intelligence Users
High
•Determine query definitions
Analytical
Capability Query
Developers
•Carry out Ad Hoc reporting
10%
•Require multi dimensional
Experienced
query analysis options
Users
20% •Use predefined navigation
steps
One Time •Use predefined datasets
Users
70% •Carry out static reports
Low

Business Issue
Wisdom
Business Question Action

Knowledge

Information

Data
Data Retrieval

Business Issue Evaluation

Wisdom
Business Question Action

Knowledge

Information

Data
Data Retrieval

Further Reading
[1]Davenport T.H.(2006), Competing on Analytics, HBR,
January 2006
[2]EIU (2006), BI-Putting Information to work, Economist
Intelligence Unit
[3]Golfarelli et. al (2004), Beyond Data Warehousing:
What’s Next in Business Intelligence?, DOLAP’04
[4]Garber L (1999), Profile: Katherine Glassey: Business
Intelligence Is a Smart Move, IT Pro, Sept/Oct 1999.
[5]Knightbridge (2005), Top 10 trends in Business
Intelligence and Data Warehousing for 2005 (white
paper)

OLAP vs OLTP
Wooclap
https://www.wooclap.com/BIDSUN

OLTP OLAP
Business Use Operational needs Bsiness Analysis

OLAP vs OLTP Operators, office employees
User type Managers, Executives
Usage Predictable, repetitive Ad hoc non structured
Data content Current, detailed data Historical, summarised data
Transaction type Read, Insert, Udate, Delete Read
Number of record per access Few MAny
Response time Short Can be long
Updates Frequent and small Infrequent in batch
Concurrency Level High Low
Transactional recovery Necessary Not necessary
Lock utilisation Needed Not needed
Optimized for Update operation Query operation

/ small transaction / complexe read queries
Data redundancy Low (normalised tables) High (denormalised tables)
Model ER model Multidimensional model
Language SQL,… No standard, MDX,…

Adapted from VZ 2014
BUSINESS PERFORMANCE MANAGEMENT
BI & Management
The slides in this section are built following

Turban et al., Business Intelligence, a Managerial Approach,
Pearson, 2011, chapter 3.

BPM : overview
Ambition :
performance improvement through
the alignment of strategies / plans / analytical systems /actions
Mean :
business processes, methodologies, metrics and technologies used
to measure, monitor and manage business performance
Three key components
– A set of integrated, closed-loop management and analytic
processes, supported by technology
– Methods for businesses to define strategic goals and then
measure/manage performance against them
– Methods and tools for monitoring key performance indicators
(KPIs), linked to organizational strategy

BPM : overview
Synonyms
– CPM : Corporate Performance Management (Gartner)
– EPM : enterprise Performance Management (Oracle)
– SEM : Enterprise Strategic Management (SAP)
BPM vs BI
BPM = BI + Planning

The Closed-Loop BPM Process
Process Steps
1. Strategize
2. Plan
3. Monitor/analyze
4. Act/adjust
Each with its own

process steps…

1. Strategize
“Where do we want to go?”
Strategic Planning:
1. Conduct a current situation analysis
2. Determine the planning horizon
3. Conduct an environment scan
4. Identify critical success factors
5. Complete a gap analysis
6. Create a strategic vision
7. Develop a business strategy
8. Identify strategic objectives and goals

1. Strategize
The strategy gap
– 90% of organizations fail to execute their strategy
successfully
Four reasons
1. Communication
2. Alignment of rewards and incentives
3. Focus
4. Resources

2. Plan
“How to get there?”
Operational Planning
– Portfolio of well-defined tactics and initiatives
– Directly linked to key objectives and targets in Strategic Plan
– Tactic-centric vs Budget-centric
Financial Planning and Budgeting

– What are the expected financial results?
– Strategic objectives and key metrics serve as top-down drivers for
the allocation of an organization’s assets
– Resource allocations alignment with the organization’s strategic
objectives and tactics

3. Monitor / Analyze
“How are we doing?”

– What to monitor? (CSF, strategic goals and targets)
– How to monitor?
Diagnostic Control Systems

4. Act and adjust
“What do we need to do better?”

based on
– the right indicators according to
strategic goals
– external and future information,
not only internal historical data
– ties between strategy, tactics, and expected outcomes

Performance Measurement
– Goal : tracking implementations of business strategy
– COMPARE actual results against strategic goals and
objective
Key Performance Indicator (KPI)
– Strategically aligned metric (<> operational metric)
– Features : Strategy, Targets, Ranges, Encodings, Time
Frames, Benchmarks
!!!
Performance Measurement
≠
Performance Management

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

BPM Methodologies
Goals: support
– Align top-level strategic objectives and bottom-level initiatives
– Identify opportunities and problems in a timely fashion
– Determine priorities and allocate resources based on them
– Change measurements when the underlying processes and strategies
change
– Delineate responsibilities, understand actual performance relative to
responsibilities, and reward and recognize accomplishments
– Take action to improve processes and procedures when the data warrant
it
– Plan and forecast in a more reliable fashion
Performance measurement framework:

• Balanced Scorecards
• Six Sigma
• Lean Management,…

Key Performance Indicators
What are KPIs ? Following
ECKERSON WW., Performance Management Strategies. How to
create and Deploy Effective Metrics, TDWI Best Practices Report,
First quarter 2009.
«KPIs represent a set of measures focusing on those

aspects of organizational performance that are the most
critical for the current and future success of the
organization», Wayne W. Eckerson

Identify metrics
Metrics versus KPIs
“Metric” refer to measurements of a business activity

In performance management system, we want to measure
performance aligned with business strategy
àThe difference is that a KPI embodies a strategic

objective and measure performance against a goal

Characteristics of KPI
ØNon-financial measures
ØMeasured frequently
ØActed on by the CEO and senior management team
ØClearly indicate what action is required by staff
ØTies responsibility to the individual or team
ØHave a significant effect on the organization
ØPositive impact
David Parmenter, Key performance indicators, Developing, implementing and using winning KPIs,
2010, p.6 sqq
The description of a KPI
Defining a KPI
üStatus
üTrend
üKPI name
üActual value
üTarget value
üVariance
üVariance percentage
=> A KPI is specific to a company at a given time

=> No standard KPI!

1. Balanced Scorecards
1996 2000 2004 2008
– BSC to communicate and implement strategies

– Performance measurement and management methodology
– Linking strategic objectives to operational tactics and initiatives
Balanced:
– Financial / non-financial indicators
– Leading / lagging indicators
– Internal /external indicators
– Quantitative / qualitative indicators
– Short-term / long-term indicators
Translating Vision & Strategy : 4 perspectives
Source :Adapted from Robert S Kaplan, David

P Norton. The Balanced Scorecard. Harvard
Business School Press 1996.

Strategy map and balanced scorecard

Aligning strategies and actions:
A six-stage process (Kaplan and Norton 2008)
1. Developing and formulating a strategy
2. Planning the strategy
3. Aligning the organization
4. Planning the operations
5. Monitoring and learning
6. Testing and adapting the strategy

Dashboard
Dashboard Operational
Operational Tactical
Tactical Strategic
Strategic
Focus
Focus Control
Control operations
operations Optimize
Optimize process
process Execute
Execute Strategy
Strategy
Use
Use Monitoring
Monitoring Analysis
Analysis Management
Management
User
User Staff
Staff Managers
Managers Executives
Executives
Scope
Scope Operational
Operational Departmental
Departmental Enterprise
Enterprise
Metrics
Metrics Driver
Driver KPI
KPI Outcome
Outcome and
and driver
driver KPI
KPI Outcome
Outcome KPI
KPI
Data
Data Detailed
Detailed Detailed/Summary
Detailed/Summary Summary
Summary
Sourcing
Sourcing Trans. System
Core Systems DW
Manual/ Core System DW
Manual External
Refresh
Refresh cycle
cycle Intraday
Intraday Daily/weekly
Daily/weekly Monthly/quarterly
Monthly/quarterly
Looks
Looks like
like Dashboard
Dashboard /Alert Portal
Portal (DB+OLAP) Scorecard
Scorecard
Operational Dashboard DB :tool that supports the

is it BI? BScMethod
ECKERSON WW., Performance Management Strategies. How to create and Deploy Effective Metrics,
TDWI Best Practices Report, First quarter 2009.
BI 2021-2022 BI & Management - 3 63
Learning Outcomes
Ø Position the key concepts
Ø Identify the key challenges
Ø Business Performance Management

Ø Describe BPM closed-loop process
Ø Describe the difference between performance
management and measurement
Ø Understand the role of methodologies in BPM
Ø Define the notion of KPI
Ø Introduce Balanced Scorecard (BSC) methodologies

OLAP vs OLTP
Wooclap
https://www.wooclap.com/BIDSDEUX
(Q1-5)

OLTP OLAP
Business Use Operational needs Bsiness Analysis

OLAP vs OLTP Operators, office employees
User type Managers, Executives
Usage Predictable, repetitive Ad hoc non structured
Data content Current, detailed data Historical, summarised data
Transaction type Read, Insert, Udate, Delete Read
Number of record per access Few MAny
Response time Short Can be long
Updates Frequent and small Infrequent in batch
Transactional recovery Necessary Not necessary
Lock utilisation Needed Not needed
Optimized for Update operation Query operation

/ small transaction / complexe read queries
Data redundancy Low (normalised tables) High (denormalised tables)
Model ER model Multidimensional model
Language SQL,… No standard, MDX,…

Adapted from VZ 2014
TAKE AWAY

Conclusion
Ø Challenges:
• The right info to the right user at the right time…
• Data / Information / Knowledge /…
• Multiplicity and diversity of sources
• Logical / Conceptual / Physical Integration
Ø Means:
• Methodology
• Data warehouse, ETL, apps
Ø BPM vs BI?
KPI – Dashboard – Scorecards

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Business Intelligence

Between IT and Management

Department of Business Administration

Ø Business Performance Management

Business Intelligence - BAGI BI & Management 2

Business Intelligence - BAGI BI & Management 4

Business Intelligence - BAGI BI & Management 5

© SAP University Alliance Program

Business Intelligence - BAGI BI & Management 6

Business Intelligence - BAGI BI & Management 7

Business Intelligence - BAGI BI & Management 8

Business Intelligence - BAGI BI & Management 9

Surveys ERP Application

Benchmark CEO & Board

studies Sales Finance Business Intelligence

Business Intelligence - BAGI BI & Management 10

Business Intelligence - BAGI BI & Management 11

Business Intelligence - BAGI BI & Management 12

Copyright © Pearson Education, Inc. Publishing as Prentice Hall):

Data Need Data integration

Business Intelligence - BAGI BI & Management 14

Evolution Phase Business Question Enabling Technology

Data Collection “What was my total revenue

Data Access “What were sales quantity Relational Databases

Data Warehousing & “What were sales quantity

Data Mining “What is likely to happen to

Business Intelligence - BAGI BI & Management 15

Operational (OLTP) Informational (OLAP)

Accurate up to the second Timestamp on each record

Supports small uniform transactions Supports mixed workload

Very current data Mainly historical data

Business Intelligence - BAGI BI & Management 16

Ø A data warehouse is a subject

Ø A copy of transaction data

Business Intelligence - BAGI BI & Management 17

OLTP Data Warehouse

Business Intelligence - BAGI BI & Management 18

Information Need Reporting & Analytics

Data Need Data integration

Business Intelligence - BAGI BI & Management 19

Business Intelligence - BAGI BI & Management 21

Business Intelligence - BAGI BI & Management 22

Business Intelligence - BAGI BI & Management 23

Business Intelligence - BAGI BI & Management 24

Business Intelligence - BAGI BI & Management 25

contracts in Estonia in 2010

Business Intelligence - BAGI BI & Management 30

Descriptive multidimensional analysis

Business Intelligence - BAGI BI & Management 31

Multidimensional concept description:

Business Intelligence - BAGI BI & Management 32

Business Intelligence - BAGI BI & Management 33

Trend and evolution analysis

Business Intelligence - BAGI BI & Management 34

Information Need Reporting & Analytics

Data Need Data integration

Business Intelligence - BAGI BI & Management 35

Business Intelligence - BAGI BI & Management 36