CHAPTER 1

AN OVERVIEW OF BUSINESS INTELLIGENCE,

ANALYTICS, AND DATA SCIENCE

LO 1 Understand the need for computerised support of managerial decision making.

The business environment is constantly changing and it is becoming more and more
complex. Private and public organisations are under pressure to respond quickly to
changing conditions and become innovative in the way they operate. Such activities
require organisations to be agile and to make frequent and quick strategic, tactical, and
operational decisions. Making such decisions requires considerable amounts of relevant
data, information, and knowledge. Processing these must be done quickly, frequently in
real time, and often requires some computerised support. Understanding data analytics is
becoming a vital skill for every manager to have in the business world.
Data can only tell you what people have liked before not what they will like in the future.
Data can only take us to a point but it does not make the decision for us – but it can
inform our decision, hence why we often call it decision support systems.

DATA-DRIVEN BUSINESS puts data and analytics front and centre in its business strategy
and throughout all levels. A data driven business differentiates itself from competition by
making data-driven optimisation part of daily operations. Data-driven business do not use
data to support decisions it has already made, it uses the data to inform and help it find
decisions it needs to make.
Example: Netflix is a data-driven business. They use data and information to form decisions
in terms of where it wants to go and what programs it wants to put together.

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Capabilities of information systems that can facilitate managerial decision making:
►group communication and collaboration – information systems can improve the
collaboration process of a group and enable its members to be at different locations
which will save travel costs
►improved data management – information systems can search, store, and transmit
needed data quickly, economically, securely, and transparently
►managing giant data warehouses and big data – special methods are available to
organise, search, and mine the humongous amounts of data
►analytical support – decision makers can perform complex simulations, check many
possible scenarios, and assess diverse impacts quickly and economically using information
system tools
►overcoming cognitive limits in processing and storing information – computer systems
enable people to overcome their cognitive limits by quickly accessing and processing
vast amounts of stored information
►knowledge management – information systems can help organisations gather and store
vast information about their own operations, customers, internal procedures, employee
interactions, etc
►anywhere, anytime support – managers can access information anytime and from any
place, analyse and interpret it and communicate with those involved
LO 2 Recognise the evolution of such computerised support to the current state—
analytics/data science.

enterprise/
decision
executive business
support analytics big data
information intelligence
systems
systems

MANAGEMENT INFORMATION SYSTEMS (MIS) are systems that provide a variety of reports
at different levels to better understand and address changing needs and challenges of
the business. A MIS gathers data from multiple online systems, analyses the information,
and reports data to aid in management decision-making.

DECISION SUPPORT SYSTEMS (DSS) are computerized programs used to support

determinations, judgments, and courses of action in an organization or a business. A DSS
sifts through and analyses massive amounts of data, compiling comprehensive
information that can be used to solve problems and in decision-making. DSS are
interactive computer-based systems that help decision makers utilise data and models to
solve unstructured problems. These systems couple the intellectual resources of individuals
with the capabilities of the computer to improve the quality of decisions.
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ENTERPRISE EXECUTIVE INFORMATION SYSTEMS/ EXECUTIVE INFORMATION SYSTEMS are
computer-based systems that provide top managers with the capability to attain easy
access to internal and external information which is relevant to strategic decision making
and other executive responsibilities.

BUSINESS INTELLIGENCE (BI) is an umbrella term that combines architectures, tools,

databases, analytical tools, applications, and methodologies.

BUSINESS ANALYTICS refers to the skills, technologies, practices for continuous iterative
exploration, and investigation of past business performance to gain insight and drive
business planning.
BIG DATA is data that contains greater variety arriving in increasing volumes and with
ever-higher velocity. It is data that cannot be stored in a single storage unit, or is too
unstructured to fit into a row-and-column database, or too continuously flowing to fit into
a static data warehouse.
Sources of Big Data:
►clickstreams from web sites
►postings on social media sites such as Facebook
►data from traffic, sensors, or weather
Four Vs of Big Data:
►variety – types and forms of data
►veracity – bias, noise, and abnormality in data; how accurate and truthful data is
►value – big data is worthless if it does not provide business value
►volume – size of data
LO 3 Describe the business intelligence (BI) methodology and concepts.

BUSINESS INTELLIGENCE (BI) is framework designed to support decision-making process. It is

an umbrella term that combines architectures, tools, databases, analytical tools,
applications, and methodologies to help organisations make more data-driven decisions.
Business Intelligence aims to enable interactive access to data, to enable manipulation of
data, and to give business managers and analysts the ability to conduct appropriate
analyses.
The process of BI is based on the transformation of data to information, then to decisions,
and finally to actions. Business intelligence combines data warehousing, business
analytics, performance, strategy and user interface. Business receives data from various
sources. This data is capture in the data warehouse where it is stored, organized and
summarized as per further utilization. Authorized users can access this data and work on it
to get desired results. This result than are shared to executives for decision-making
process. These data results can be published through dashboards or share points.

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Major components of Business Intelligence (BI):
►Data Warehouse (DW) – holds data obtained from internal sources as well as external
sources.
►business analytics – creates a report as and when required through queries and rules
(data mining is also another important aspect of business analytics).
►Business Performance Management (BPM) – is a linkage of data with business objectives
for efficient tracking. This business performance is then broadcasted to an executive
decision-making body through dashboards and share-point.
►user interface
LO 4 Understand the different types of analytics and see selected applications.

ANALYTICS is the process of developing actionable decisions or recommendations for

actions based on insights generated from historical data. It represents the combination of
computer technology, management science techniques, and statistics to solve real
problems. Data analytics creates a summary of historical data to yield useful information
and prepare data for further analysis.

Data analytics steps:

(1) data mining – collecting the information and putting it all together
(2) data cleaning – cleaning up all the information and getting it ready for analysis
(3) descriptive analytics
(4) predictive analytics
(5) prescriptive analytics

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 business
analytics

descriptive predictive prescriptive

LEVELS OF ANALYTICS
Business can employ one or all of these forms of analytics,
but not necessarily out of order.
DESCRIPTIVE PREDICTIVE PRESCRIPTIVE
questions what happened? what will happen? what should I do?
what is happening? why will it happen? why should I do it?
enablers ►business reporting ►data mining ►optimisation
►dashboards ►text mining ►stimulation
►scorecards ►web/media mining ►decision modelling
►data warehousing ►forecasting ►expert systems w
outcomes well-defined business accurate projections of best possible business
problems and future events and decisions and actions
opportunities outcomes
tools used ►data aggregation ►statistical modelling ►optimisation models
►data mining ►simulation ►heuristics
limitations ►snapshot of the past ►guess at the future ►most effective where
►limited ability to ►helps inform low you have more control
guide decisions complexity decisions over what is being
modelled
when to when you want to when you want to when you have
use summarise results for all/ make an educated important, complex, or
part of your business guess at likely results time-sensitive decisions
to make

DESCRIPTIVE/ REPORTING ANALYTICS refers to knowing what is happening in the

organisation and understanding underlying trends and causes of such occurrences.
Examples: cash flow analysis, sales, revenue reports, performance analyses, etc
PREDICTIVE ANALYTICS aims to determine what is likely to happen in the future by looking
at the past data to predict the future.
Example: credit score analysis
PRESCRIPTIVE / DECISION/ NORMATIVE ANALYTICS aims to recognise what is going on as
well as the likely forecast and make decisions to achieve the best performance possible.
The goal is to provide a decision or a recommendation for a specific action.
Example: Google self-driving cars
LO 5 Understand the analytics ecosystem to identify various key players and career
opportunities.
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ANALYTICS ECOSYSTEM is a collection of infrastructure, analytics, and applications used to
capture and analyse data. Data ecosystems provide companies with data that they rely
on to understand their customers and to make better pricing, operations, and marketing
decisions.

The outer six petals can be broadly termed as the technology providers. Their primary
revenue comes from providing technology, solutions, and training to analytics user
organisations so they can employ these technologies in the most effective and efficient
manner. The inner petals can be generally defined as the analytics accelerators. The
accelerators work with both technology providers and users. The core of the ecosystem
comprises of the analytics user organisations. This is the most important component,
because of there were no users, there would be no analytics industry. The multiple
components of the ‘flower’ overlap each other as they affect one another and work
together.

Categories of players in the analytics ecosystem:

►data generation infrastructure providers – this group includes all the traditional point-of-
sale systems, inventory management systems, technology providers for every step in a
company’s supply/ value chain and operations, and companies creating the
infrastructure for collecting data from different sources
►data management infrastructure providers – this group includes all of the major
organisations that provide hardware and software targeting the basic foundation for all
data management solutions

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►data warehouse providers – this group includes companies with a data warehousing
focus who provide technology and services aimed toward integrating data from multiple
sources and thus enabling organisations to derive and deliver value from its data assets
►middleware providers – this group aims to provide easy-to-use tools for reporting or
descriptive analytics, which forms a core part of BI or analytics employed at organisations
►data service providers – this group includes companies who provide external data
sources that play a major role in any organisation’s decision making such as
demographic data, weather data, data collected by third parties, etc
►analytics-focused software developers – this group includes companies that have
developed analytics software for general use with data that has been collected in a data
warehouse, as well as inventors and researchers in universities and other organisations
that have developed algorithms for specific types of analytics applications
►application developers: industry specific or general – organisations in this group use
their industry knowledge, analytical expertise, solutions available from the data
infrastructure, data warehousing, middleware, data aggregators, and analytics software
providers to develop custom solutions for a specific industry
►analytics industry analytics and influencers – this group includes professional
organisations that provide advice to the analytics industry providers and users,
professional societies or organisations that provide some of the same services but are
membership-based and organised, and analytics ambassadors, influencers, or evangelists
►academic institutions and certification agencies – this groups includes the academic
programs that prepare professionals for the industry, such as universities
►regulators and policy makers – this group includes organisations that are responsible for
defining rules and regulations for protecting employees, customers, and shareholders of
the analytics organisations
►analytics user organisations – this group includes organisations in every industry
because every organisation uses or explores the use of analytics in their operations

REFERENCES – the above summary is made using the following textbook:

R. Sharda, et el. 2018. Business Intelligence, Analytics, and Data Science: A Managerial
Perspective. Fourth Edition. Pearson.

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