BUSINESS PLUG-IN
B18
Business Intelligence
McGraw-Hill/Irwin
© The McGraw-Hill Companies, All Rights Reserved
LEARNING OUTCOMES
1. Explain the problem associated with
business intelligence. Describe the
solution to this business problem
2. Describe the three common forms of
data-mining analysis?
3. Compare tactical, operational, and
strategic BI
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LEARNING OUTCOMES
4. Explain the organization-wide benefits of
BI
5. Describe the four categories of BI
business benefits
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BUSINESS INTELLIGENCE
• Business intelligence (BI) – applications
and technologies used to gather, provide
access to, and analyze data and information
to support decision-making efforts
• Parallels between the challenges in business
and challenges of war
– Collecting information
– Discerning patterns and meaning in the
information
– Responding to the resultant information
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The Problem: Data Rich, Information
Poor
• Businesses face a data explosion as
digital images, email in-boxes, and
broadband connections doubles by 2010
• The amount of data generated is doubling
every year
• Some believe it will soon double monthly
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The Solution: Business Intelligence
• Improving the quality of business
decisions has a direct impact on costs and
revenue
• BI systems and tools results in creating an
agile intelligent enterprise
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The Solution: Business Intelligence
• BI enables business users to receive data
for analysis that is:
– Reliable
– Consistent
– Understandable
– Easily manipulated
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The Solution: Business Intelligence
• BI can answer tough customer questions
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OPERATIONAL, TACTICAL, AND
STRATEGIC BI
• Claudia Imhoff, president of Intelligent
Solutions, divides the Spectrum of data
mining analysis and business intelligence
into three categories:
– Operational
– Tactical
– Strategic
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OPERATIONAL, TACTICAL, AND
STRATEGIC BI
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OPERATIONAL, TACTICAL, AND
STRATEGIC BI
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BI’s Operational Value
• Richard Hackathorn’s graph demonstrating
the value of operational BI
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BI’s Operational Value
• The key is to shorten the latencies so that
the time frame for opportunistic influences
on customers, suppliers, and others is
faster, more interactive, and better
positioned
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DATA MINING
•
•
Data mining – process of analyzing data to
extract information
Data-mining tools – use a variety of
techniques to find patterns and relationships in
large volumes of information
– Classification
– Estimation
– Affinity grouping
– Clustering
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DATA MINING
•
Common forms of data-mining analysis
capabilities include:
– Cluster analysis
– Association detection
– Statistical analysis
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Cluster Analysis
•
Cluster analysis – a technique used to divide
an information set into mutually exclusive
groups such that the members of each group
are as close together as possible to one
another and the different groups are as far
apart as possible
•
CRM systems depend on cluster analysis to
segment customer information and identify
behavioral traits
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Association Detection
•
Association detection – reveals the
degree to which variables are related
and the nature and frequency of these
relationships in the information
– Market basket analysis
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Statistical Analysis
•
Statistical analysis – performs such
functions as information correlations,
distributions, calculations, and variance
analysis
– Forecast – predictions made on the basis
of time-series information
– Time-series information – time-stamped
information collected at a particular
frequency
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BUSINESS BENEFITS OF BI
• Benefits of BI include:
– Single Point of Access to Information for All
Users
– BI across Organizational Departments
– Up-to-the-Minute Information for Everyone
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Four Primary Categories of
BI Benefits
• Four main categories:
1.
2.
3.
4.
Quantifiable benefits
Indirectly quantifiable benefits
Unpredictable benefits
Intangible benefits
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CLOSING CASE ONE
Intelligent Business
1. What is the problem of gathering business
intelligence from a traditional company? How
can BI solve this problem?
2. Choose one of the three common forms of
data-mining analysis and explain how
Travelocity could use it to gain BI
3. How will tactical, operational, and strategic BI
be different when applied to personal Google?
4. How is IBM’s search and analysis software an
example of BI?
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CLOSING CASE ONE
Intelligent Business
5. What does the term “pervasive business
intelligence” mean?
6. How could any business benefit from
technology such as Personal Google?
7. How could a company use BI to improve its
supply chain?
8. Highlight any security and ethical issues
associated with Biggle
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CLOSING CASE TWO
Big Bad Burger
1. What does business intelligence really
mean to a business? How did CPR save
millions for CKE?
2. What are the negative impacts of CKE’s
business intelligence?
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CLOSING CASE TWO
Big Bad Burger
3. Explain the three forms of data-mining
analysis and explain how CKE can use it
to gain BI?
4. How can CKE use tactical, operational,
and strategic BI?
5. What types of ethical and security issues
could CKE face from CPR?
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