Analytics, Data Science and AI:

Systems for Decision Support

Eleventh Edition

Chapter 1
Overview of Business Intelligence,
Analytics, Data Science, and
Artificial Intelligence: Systems for
Decision Support

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Introduction
• Business environment (climate) is constantly changing,
and it is becoming more and more complex. Organizations,
private and public, are under pressures that force them to
respond quickly to changing conditions and to be
innovative in the way they operate.
• Such activities require organizations to be agile and to
make frequent and quick strategic, tactical, and operational
decisions, some of which are very complex. Making such
decisions may require considerable amounts of relevant
data, information, and knowledge. Processing these, in the
framework of the needed decisions, must be done quickly,
frequently in real time, and usually requires some
computerized support.
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Introduction
• This book is about using business analytics and artificial
intelligence (AI) as a computerized support portfolio for
managerial decision making.
• It concentrates on the theoretical and conceptual
foundations of decision support as well as on the
commercial tools and techniques that are available. The
book presents the fundamentals of the techniques and the
manner in which these systems are constructed and used.
• We follow an EEE (exposure, experience, and exploration)
approach to introducing these topics.

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Learning Objectives (1 of 2)
1.1 Understand the need for computerized support of
managerial decision making.
1.2 Understand the development of systems for providing
decision-making support.
1.3 Recognize the evolution of such computerized support
to the current state of analytics/data science and
artificial intelligence.
1.4 Describe the business intelligence (BI) methodology and
concepts.
1.5 Understand the different types of analytics and review
selected applications.

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Learning Objectives (2 of 2)
1.6 Understand the basic concepts of artificial intelligence
(AI) and see selected applications.
1.7 Understand the analytics ecosystem to identify various
key players and career opportunities.

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Opening Vignette (1 of 2)
How Intelligent Systems Work for KONE
Elevators and Escalators Company

• The problem…
• The solution…
• The results…

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Opening Vignette (2 of 2)
How Intelligent Systems Work for KONE
Elevators and Escalators Company

Questions For The Opening Vignette

1. It is said that KONE is embedding intelligence across its
supply chain and enables smarter buildings. Explain.
2. Describe the role of IoT in this case.
3. What makes IBM Watson a necessity in this case?
4. Check IBM Advanced Analytics. What tools were
included that relate to this case?
5. Check IBM cognitive buildings. How do they relate to this
case?
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Changing Business Environments
And Evolving Needs For Decision
Support And Analytics
• Big-bet, high-risk decisions.
• Cross-cutting decisions, which are repetitive but high risk
that require group work.
• Ad hoc decisions that arise episodically.
• Delegated decisions to individuals or small groups.

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Decision Making Process (1 of 2)
The four step managerial process:
• Define the problem
• Construct a model
• Identify and evaluate possible solutions
• Compare, choose, and recommend a solution to the
problem

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Decision Making Process (2 of 2)
A more detailed process is offered by Quain (2018):
1. Understand the decision you have to make.
2. Collect all the information.
3. Identify the alternatives.
4. Evaluate the pros and cons.
5. Select the best alternative.
6. Make the decision.
7. Evaluate the impact of your decision.

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The process of decision making

• y= mx + c
• Total cost= variable cost per unit × production unit+
fixed cost
• Solution model for the problem of finding the minimum total
cost.

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The Influence of the External and
Internal Environments on the
Process
• Technology, IS, Internet, globalization, …
• Government regulations, compliance, …
– Political factors
– Economic factors
– Social and psychological factors
– Environment factors
• Need to make rapid decision, changing market conditions,
…

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Technologies for Data Analysis and
Decision Support
• Group communication and collaboration
• Improved data management
• Managing giant data warehouses and Big Data
• Analytical support
• Overcoming cognitive limits
• Knowledge management
• Anywhere, anytime support
• Innovation and artificial intelligence

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Decision-making Processes And
Computerized Decision Support
Framework
• What is “Decision making”?
• Simon’s Decision Making Process
– Proposed in 1977 by Herbert Alexander Simon (an
American economist and political scientist)
– Includes three phases:
1. Intelligence
2. Design
3. Choice
4. [+] Implementation
5. [+] Monitoring
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The Decision-Making Process

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Decision-making Processes (1 of 2)
Phase 1 - The Intelligence Phase: Problem (or Opportunity)
Identification
• Issues in data collection
• Problem classification
• Problem decomposition
• Problem ownership

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Application Case 1.1
Making Elevators Go Faster!
Questions for Discussion:
1. Why this is an example relevant to decision making?
2. Relate this situation to the intelligence phase of decision
making.

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Decision-Making Processes (2 of 2)
Phase 2 - The Design Phase
– Models
Phase 3 - The Choice Phase
– Evaluating alternatives
Phase 4 - The Implementation Phase
– Implementing the solution
Phase 5 – Monitoring
• Phase 4 and 5 were not part of Simons’ original model

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The Classical Decision Support
System Framework
• Degree of structuredness
– Structured, unstructured, semistructured problems
• Type of control
– Operational, managerial, strategic
• The decision Support matrix
• Computer support for …
– Structured decisions
– Unstructured decisions
– Semistructured problems

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Decision Support Framework

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Key Characteristics and Capabilities
of Decision Support System (DSS)

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Components of a DSS (1 of 2)
• The Data
Management
System
– DSS database
– Database
management
system (DBMS)
– Data directory
– Query facility

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Components of a DSS (2 of 2)
• The Model Management Subsystem
– Model base
– MBMS
– Modeling language
– Model directory
– Model execution, integration, and command
processor
• The User Interface Subsystem
• The Knowledge-Based Subsystem

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Evolution of Computerized Decision
Support to Business Intelligence,
Analytics, Data Science
Figure 1.5 Evolution of Decision Support, Business
Intelligence, Analytics, and AI.

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A Framework for Business
Intelligence
• Definitions of business intelligence (BI)
• A brief history of BI
• The architecture of BI
– Data warehousing (DW) [as a foundation of BI]
– Business performance management (BPM)
– User interface (dashboard)
• Data Warehouse as a Foundation for Business Intelligence
• Transaction processing versus analytics processing
• Appropriate planning and alignment of BI with the business
strategy
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 Definition of
Business Intelligence (BI)
• BI is an umbrella term that combines
architectures, tools, databases, analytical tools,
applications, and methodologies
• Like DSS, 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
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 Definition of
Business Intelligence (BI)
• Business intelligence (BI) is a set of theories,
methodologies, processes, architectures, and
technologies that transform raw data into
meaningful and useful information for business
purposes.
• BI can handle large amounts of information to
help identify and develop new opportunities.
• Making use of new opportunities and
implementing an effective strategy can provide a
competitive market advantage and long-term
stability.
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Evolution of Business Intelligence
(BI)

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The Origins and Drivers of BI
Figure 1.7 A High-Level Architecture of BI.

Source: Based on W. Eckerson. (2003). Smart Companies in the 21st Century:

The Secrets of Creating Successful Business Intelligent Solutions Seattle, WA:
The Data Warehousing Institute, p. 32, Illustration 5.
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A High-Level Architecture of BI
• A BI system has four major components
– Data warehouse
▪ The data warehouse is a large repository of well-
organized historical data
▪ Originally, included historical data that were
organized and summarize, so end users could
easily view or manipulate data and information
▪ Today, some data warehouses include current
data as well, so they can provide real time
decision support

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A High-Level Architecture of BI
• A BI system has four major components
– Business analytics
▪ business analytics, a collection of tools for
manipulating, mining, and analyzing the data in
the data warehouse;
▪ Business analytics are the tools that allow
transformation of data into information and
knowledge
▪ Reporting and queries

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A High-Level Architecture of BI
• A BI system has four major components
– Business analytics
▪ Data, text and Web mining and other
sophisticated mathematical and statistical tools
– Data mining
• A process of searching for unknown
relationships or information in large
databases or data warehouses, using
intelligent tools such as neural computing,
predictive analytics techniques, or
advanced statistical methods
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 A High-Level Architecture of BI
• A BI system has four major components
– Business performance management (BPM)
▪ business performance management (BPM) for
monitoring and analyzing performance
▪ (BPM) allows monitoring, measuring, and comparing
key performance indicators
▪ An advanced performance measurement and analysis
approach that embraces planning and strategy
▪ BPM extends the monitoring, measuring, and
comparing of sales, profit, cost, profitability, and other
performance indicators by introducing the concept of
“management and feedback
▪ BPM provides a top-down enforcement of corporate-
wide strategy
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A High-Level Architecture of BI
▪ A BI system has four major components
– User interface

• User interface (e.g., dashboards) allows access and

easy manipulation of other BI components
▪ The user interface- Dash boards and other
information broadcasting tools:
– Dashboard
• A visual presentation of critical data for
executives to view. It allows executives to see
hot spots in seconds and explore the situation
– Dashboards integrate information from multiple
business areas
▪ Visualization tools
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Dashboard

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Data Warehouse Framework

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A Multimedia Exercise in BI
• Teradata University Network (TUN)
• BSI (Business Scenario Investigations) [like CSI]
• Go to
https://www.teradatauniversitynetwork.com/Library/Items/
BSI-The-Case-of-the-Misconnecting-Passengers/ or
www.youtube.com/watch?v=NXEL5F4_aKA
• Watch the vide-
www.youtube.com/watch?v=NXEL5F4_aKA
• Analyze the video - www.slideshare.net/teradata/bsi-how-
we-did-itthe-case-of-the-misconnecting-passengers

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Analytics Overview (1 of 2)

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Analytics Overview (2 of 2)
• Three types of analytics
– Descriptive (or reporting) analytics …
– Predictive analytics …
– Prescriptive analytics …
• Analytics applied to different domains
• Analytics or data science?
• What is Big Data?

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Application Case 1.3
Silvaris Increases Business with Visual
Analysis and Real-Time Reporting Capabilities

Questions for Discussion:

1. What was the challenge faced by Silvaris?
2. How did Silvaris solve its problem using data
visualization with Tableau?

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Application Case 1.4
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?

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Application Case 1.5
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?

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Application Case 1.6
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?

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Analytics Examples in Selected
Domains (1 of 2)
• Sports Analytics—An Exciting Frontier for Learning and
Understanding Applications of Analytics
– Example 1: Business office
– Example 2: The Coach
• Healthcare—Humana Examples
– Example 1: Preventing Falls in a Senior Population
– Example 2: Define the Right Metrics
– Example 3: Predictive Models to Identify the Highest Risk
Membership in a Health Insurer
• Retail—Retail Value Chain …
• Image Analytics

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 Analytics Examples in Selected
Domains
• Sports Analytics—An Exciting Frontier for Learning and
Understanding Applications of Analytics
– Example 1: Business office

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Analytics Examples in Selected
Domains (2 of 2)
• Retail …

Figure 1.15 Example of Analytics Applications in a Retail Value Chain.

Source: Contributed by Abhishek Rathi, CEO, vCreaTek.com.

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Application Case 1.7
Image Analysis Helps Estimate Plant Cover
Questions for Discussion:
1. What is the purpose of knowing how much ground is
covered by green foliage on a farm? In a forest?
2. Why would image analysis of foliage through an app be
better than a visual check?
3. Explore research papers to understand the underlying
algorithmic logic of image analysis. What did you learn?
4. What other applications of image analysis can you think
of?

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Overview of Analytics Ecosystem

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Plan of the Book

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Video Link
• Decision-making Made Easier
– https://www.youtube.com/watch?v=0EDFvJb9WOA

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Resources Link
• sas.com/news/sascom/analytics_levels.pdf
• informs.org/Community/Analytics
• emc.com/collateral/about/news/emc-data-science-study-
wp.pdf
• barabasilab.neu.edu/networksciencebook/downlPDF.html

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Resources Link
• Resources and Links
– The Data Warehousing Institute (tdwi.org)
– Information Management (information-
management.com)
– DSS Resources (dssresources.com)
– Microsoft Enterprise Consortium
(enterprise.waltoncollege.uark.edu/mec.asp)

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Resources
• Vendors, Products, and Demos
– Most vendors provide software demos of their products
and applications.
– Informationabout products, architecture, and software
is available at dssresources.com.

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Resources Link
• Periodicals
– Decision Support Systems
– CIO Insight (cioinsight.com)
– Technology Evaluation (technologyevaluation.com)
– Baseline Magazine (baselinemag.com)

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