Business Intelligence

Business Intelligence Alliance University 1

Changing Business Environment &
Computerized Decision Support
▪ Companies are moving aggressively to computerized support of their operations
• => Business Intelligence

▪ Business Pressures–Responses–Support Model

▪ Business pressures result of today's competitive business climate
▪ Responses to counter the pressures
▪ Support to better facilitate the process

Business Intelligence Alliance University 2

Business Pressures–Responses–Support Model

Business Intelligence Alliance University 3

The Business Environment
▪ The environment in which organizations operate today is becoming more and more complex,
creating:
▪ opportunities, and
▪ problems.
▪ Example: globalization.

▪ Business environment factors:

▪ markets, consumer demands, technology, and societal.

Business Intelligence Alliance University 4

 Business Environment Factors
FACTOR DESCRIPTION
Markets Strong competition
Expanding global markets
Blooming electronic markets on the Internet
Innovative marketing methods
Opportunities for outsourcing with IT support
Need for real-time, on-demand transactions
Consumer Desire for customization
demand Desire for quality, diversity of products, and speed of delivery
Customers getting powerful and less loyal
Technology More innovations, new products, and new services
Increasing obsolescence rate
Increasing information overload
Social networking, Web 2.0 and beyond
Societal Growing government regulations and deregulation
Workforce more diversified, older, and composed of more women
Prime concerns of homeland security and terrorist attacks
Necessity of Sarbanes-Oxley Act and other reporting-related
legislation Increasing social responsibility of companies
Greater emphasis on sustainability

Business Intelligence Alliance University 5

Organizational Responses
▪ Be Reactive, Anticipative, Adaptive, and Proactive
▪ Managers may take actions, such as:
▪ Employing strategic planning.
▪ Using new and innovative business models.
▪ Restructuring business processes.
▪ Participating in business alliances.
▪ Improving corporate information systems.
▪ Improving partnership relationships.
▪ Encouraging innovation and creativity. …cont…>

Business Intelligence Alliance University 6

Organizational Responses, continued
▪ Improving customer service and relationships.
▪ Moving to electronic commerce (e-commerce).
▪ Moving to make-to-order production and on-demand manufacturing and
services.
▪ Using new IT to improve communication, data access (discovery of
information), and collaboration.
▪ Responding quickly to competitors' actions (e.g., in pricing, promotions,
new products and services).
▪ Automating many tasks of white-collar employees.
▪ Automating certain decision processes.
▪ Improving decision making by employing analytics.

Business Intelligence Alliance University 7

Closing the Strategy Gap
▪ One of the major objectives of computerized decision support is to facilitate
closing the gap between the current performance of an organization and its
desired performance, as expressed in its mission, objectives, and goals, and the
strategy to achieve them.

Business Intelligence Alliance University 8

Business Intelligence (BI)
▪ BI is an evolution of decision support concepts over time.
▪ Meaning of EIS/DSS…
▪ 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 apps.

Business Intelligence Alliance University 9

Definition of BI
▪ BI is an umbrella term that combines architectures, tools,
databases, analytical tools, applications, and methodologies.
▪ 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.

Business Intelligence Alliance University 10

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

Business Intelligence Alliance University 11

The Evolution of BI Capabilities

Business Intelligence Alliance University 12

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)

Business Intelligence Alliance University 13

A High-level Architecture of BI

Business Intelligence Alliance University 14

Components in a BI Architecture
▪ The data warehouse is the cornerstone of any medium-to-
large BI system.
▪ Originally, the data warehouse included only historical data that
was organized and summarized, so end users could easily view or
manipulate it.
▪ Today, some data warehouses include access to current data as
well, so they can provide real-time decision support (for details
see lecture 2).
▪ Business analytics are the tools that help users transform
data into knowledge (e.g., queries, data/text mining tools, etc.).

Business Intelligence Alliance University 15

BI Examples
▪ Epagogix is an analytics based BI system that specializes in predicting success of
movies based on a detailed analysis of movie scripts.
▪ National Australia Bank uses data mining to aid its marketing initiatives.

▪ Hoyt Highland Partners, a marketing intelligence firm, assists health care

providers with growing their businesses.

Business Intelligence Alliance University 16

Components in a BI Architecture
▪ Business Performance Management (BPM), which is also
referred to as corporate performance management
(CPM), is an emerging portfolio of applications within the
BI framework that provides enterprises tools they need to
better manage their operations.
▪ User Interface (i.e., dashboards) provides a
comprehensive graphical/pictorial view of corporate
performance measures, trends, and exceptions.

Business Intelligence Alliance University 17

Styles of BI
▪ MicroStrategy, Corp. distinguishes five styles of BI and offers tools
for each:
1. report delivery and alerting
2. enterprise reporting (using dashboards and scorecards)
3. cube analysis (also known as slice-and-dice analysis)
4. ad-hoc queries
5. statistics and data mining

Business Intelligence Alliance University 18

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%)

▪ See Table in the next slide for a list of BI analytic applications, the business
questions they answer and the business value they bring.

Business Intelligence Alliance University 19