ISQS 3358, Business Intelligence Anatomy of Business Intelligence Zhangxi Lin Texas Tech University 1 1

Learning Objectives \\cimarron\coba\d\isqs3358 Understand today’s turbulent business environment and describe how organizations survive and even excel in such an environment (solving problems and exploiting opportunities) Understand the need for computerized support of managerial decision making Describe the business intelligence (BI) methodology and concepts and relate them to DSS Understand the major issues in implementing business intelligence \\cimarron\coba\d\isqs3358

Case: Toyota Motor Sales USA Challenge: how to reduce vehicle transit cost Average: $8/day, $72-80/car, 9-10days/transit Total $144-160 million/year Problem: Inability to deliver cars to dealers timely Computers generated tons of directionless reports and data with little help Unable to make timely decisions Solution: Data warehouse Use right technologies provided by a right vendor following correct concepts – Oracle’s data warehouse + Hyperion’s BI platform Lesson learned: data cleansing is important Results Discovered that the company was billed twice in some occasions Increase the volume of cars by 40% between 2001-2005 In-transit time was reduced 5% Market share increased According to IDC Inc. the return on the BI investment was 506%

Changing Business Environments and Computerized Decision Support The Business Pressures-Responses-Support Model The business environment Organizational responses: be reactive, anticipative, adaptive, and proactive Computerized support Closing the Strategy Gap: One of the major objectives of BI 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 for achieving them

Changing Business Environments and Computerized Decision Support

A Framework for Business Intelligence (BI) A conceptual framework for decision support. It combines architecture, databases (or data warehouse), analytical tools and applications

A Framework for Business Intelligence

A Framework for Business Intelligence (BI) The Origins and Drivers of Business Intelligence Organizations are being compelled to capture, understand, and harness their data to support decision making in order to improve business operations Managers need the right information at the right time and in the right place

A Framework for Business Intelligence (BI) BI’s Architecture and Components Data Warehouse Business Analytics Automated decision systems Performance and Strategy

A Framework for Business Intelligence (BI)

A Framework for Business Intelligence (BI) BI’s Architecture and Components Data Mining A class of information analysis based on databases that looks for hidden patterns in a collection of data which can be used to predict future behavior

A Framework for Business Intelligence (BI) BI’s Architecture and Components business (or corporate) performance management (BPM) A component of BI based on the balanced scorecard methodology, which is a framework for defining, implementing, and managing an enterprise’s business strategy by linking objectives with factual measures

A Framework for Business Intelligence (BI) BI’s Architecture and Components User Interface: Dashboards and Other Information Broadcasting Tools Dashboards A visual presentation of critical data for executives to view. It allows executives to see hot spots in seconds and explore the situation

A Framework for Business Intelligence (BI) The Benefits of BI Time savings Single version of truth Improved strategies and plans Improved tactical decisions More efficient processes Cost savings Faster, more accurate reporting Improved decision making Improved customer service Increased revenue

A Framework for Business Intelligence (BI) The Business Value of BI How BI Can Help Assess their readiness for meeting the challenges posed by these new business realities Take a holistic approach to BI functionality Leverage best practices and anticipate hidden costs Key Issues and Framework for BI Analysis How can enterprises maximize their BI investments? What BI functionality do enterprises need, and what are they using today? What are some of the hidden costs associated with BI initiatives?

ISQS 3358 Business Intelligence Main BI Topics Data warehousing – Making historical data available for analytics Data preparation – Extraction, transformation and loading Query - a collection of specifications that enables you to focus on a particular set of data. Online Analytical Processing (OLAP) - a capability of information systems that supports interactive examination of large amounts of data from many perspectives. Reporting - generates aggregated views of data to keep the management informed about the state of their business. Data mining - extraction of knowledge by utilizing software that can isolate and identify previously unknown patterns or trends in large amounts of data. 16 ISQS 3358 Business Intelligence 16

Intelligence Creation and Use, and BI Governance

Business Intelligence Analytics BI Applications: Data warehousing Data mining BPM OLAP etc. Executives Managers Operators Data BI Users Business Environment Data Decisions

Intelligence Creation and Use and BI Governance The project prioritization process within organizations

Intelligence Creation and Use and BI Governance A typical set of issues for the BI governance team is to address Creating categories of projects (investment, business opportunity, strategic, mandatory, etc.) Defining criteria for project selection Determining and setting a framework for managing project risk Managing and leveraging project interdependencies Continually monitoring and adjusting the composition of the portfolio

Intelligence Creation and Use and BI Governance Intelligence Gathering How modern companies ethically and legally organize themselves to glean as much information as they can from their: Customers Business environment Stakeholders Business processes Competitors Other sources of potentially valuable information

Intelligence Creation and Use and BI Governance Intelligence Gathering In order to be useful in decision making and improving the bottom line, the data must be: Cataloged Tagged Analyzed Sorted Filtered

Case: AOL search data scandal (2006) On August 4, 2006, AOL Research released a compressed text file on one of its websites containing twenty million search keywords for over 650,000 users over a 3-month period, intended for research purposes, which was posted only three days before pulled down. While none of the records on the file are personally identifiable, the New York Times was able to locate an individual from the released and anonymized search records by cross referencing them with phonebooks or other public records. Questions: Is it ethically fine to collect data about the rivals? How to protect the confident data from the espionage of competing counterparts?

ISQS 3358 Business Intelligence BI Product Providers Microsoft SAS IBM Oracle SyBase Business Objects BI Tools Survey 24 ISQS 3358 Business Intelligence

ISQS 3358 Business Intelligence List of BI tools No. Tool Version Vendor 1. Oracle Enterprise BI Server 7.8 Oracle 2. Business Objects Enterprise XI r2 Business Objects (now SAP) 3. SAP NetWeaver BI 7.0 SAP 4. SAS Enterprise BI Server 9.1.3 SAS Institute 5. TM/1 & Executive Viewer 9.1 Applix (now IBM) 6. BizzScore Suite 7.2 EFM Software 7. WebFocus 7 Information Builders 8. Excel, Performance Point, Analysis Server 2007/2005 Microsoft 9. QlikView 8 QlikTech 10. Microstrategy 11. Hyperion System 9 Hyperion (now Oracle) 12. Actuate 13. Cognos Series 8 8.3 Cognos (now IBM) 25 ISQS 3358 Business Intelligence

ISQS 3358 Business Intelligence Microsoft SQL Server SQL Server is a client-server based, relational database engine. That puts it head-to-head with the likes of IBM’s DB2 and Oracle’s Oracle… or so Microsoft dearly wants us to believe. The problem is that, while DB2 and Oracle are unquestionably enterprise-level products, SQL Server has for years been dogged by the suspicion that it can’t really cut the mustard. SQL Server Products Microsoft SQL Server 2000 Microsoft SQL Server 2005 Microsoft SQL Server 2008 SQL Server 2005 Editions SQL Server Express SQL Server Workgroup SQL Server Developer SQL Server Standard SQL Server Enterprise SQL Server Compact 26 ISQS 3358 Business Intelligence

The Major Theories and Characteristics of Business Intelligence Some Theories of BI A factory and warehouse The information factory Data warehousing and business intelligence Teradata advanced analytics methodology Oracle BI system

The Major Theories and Characteristics of Business Intelligence The Corporate Information Factory

The Major Theories and Characteristics of Business Intelligence Teredata Advanced Analytics Methodology

The Major Theories and Characteristics of Business Intelligence

Toward Competitive Intelligence and Advantage Competitive Intelligence (CI) CI implies tracking what competitors are doing by gathering material on their recent and in-process activities Competitive strategy in an industry low-cost leader market niche Sustaining competitive advantage through building brand and customer loyalty using BI applications Case: MSI’s Netbook (http://en.wikipedia.org/wiki/Netbook)

Toward Competitive Intelligence and Advantage The Strategic Imperative of BI Barriers to entry of a new competitor are being significantly diminished Because of the Web revolution and increasing globalization, companies throughout the world are challenging major players in industries The ability to deliver goods worldwide is making it easier for potential competitors to get products and services to more customers almost anywhere Companies are finding better or less expensive suppliers all over the globe

The Different Users of Business Intelligence There are many different users who can benefit from business intelligence Executives – Those who focus on the overall business Business Decision Makers – Usually focused on single areas of the business (finance, HR, manufacturing, and so forth) Information Workers – Typically managers or staff working in the back office Line Workers – Employees who might use BI without knowing it Analysts – Employees who will perform extensive data analysis There are five major categories of business users who can benefit from BI. There can certainly be additional categories as well, but the five examined here are: Executives Business Decision Makers (Directors and Managers) Information Workers (Managers and Staff) Line Workers Analysts Executives and Business Decision Makers have a lot of overlap, but the primary difference is that Executives focus on the entire business and generally mean the President/CEO and the Vice Presidents. Business Decision Makers are often the directors who focus on vertical slices of the business, such as finance, sales and marketing, and so forth. Both these groups have the need for high-level information with limited analytic capabilities. Such people rarely have time to spend on complex analysis; rather, they need the results of complex analysis quickly and in a succinct format to help them make informed decisions. Information workers are those managers and non-managers who may need to perform some level of analysis. They are often asked to produce reports by pulling data together from multiple sources and providing the results and recommendations based on it. These workers typically need more analytic power than Executive and Business Decision Makers. Line Workers are those working in the factories or on the front lines in a retail organization. They have jobs to perform that have nothing to do with pulling data together and analyzing data. Therefore, BI must be a part of the tools they already use. If a sales clerk checks out a customer, the system might make suggestions on what the clerk can recommend as additional purchases. The system might also be watching for trends that would indicate fraud on the part of the customer or clerk. Analysts are often a special category of Information Workers that are focused on performing in-depth, detailed analysis of data. Analysts need powerful tools with which to explore data and construct complex models, often utilizing advanced mathematics and statistics. 33 33

Business Scorecards This screenshot shows a couple of simple scorecards. Scorecards can contain KPIs that can be expanded or collapsed, and they can contain different indicators to show the strength or health of a KPI. These scorecards can also be filtered to narrow down products, regions of the world, and so forth. 34 34

The Purpose of a Scorecard A scorecard should give an executive a visual representation of the health of an organization in a single glance The scorecard is of sufficiently high level to represent major business operations and their goals The data in a scorecard should be as recent as possible to make them more actionable When a student is in school, their parents probably don’t have a chance to examine every paper and every assignment which receives a grade. Instead, parents get periodic reports on their child’s progress through a report card. This report card shows a high level summary of all the assignments and tests given during a period of time; it is a single value rolled up from all the individual grades. Similarly, business executives don’t have time to look at all the details; they need a report card that summarizes the health of the business. This doesn’t mean that they don’t need to know the details at a more granular level if things are bad, but the scorecard’s purpose is to show that quick, high level summary. Generally scorecards are updated nightly or weekly so that they are as current as possible. This means that any indicators which are trending down or that move into yellow or red categories can be spotted quickly and acted upon. 35 35

Benefits to the Executive In a single glance, the executive can see a wide swath of the business (finance, manufacturing, sales, marketing, and more) Immediate value is gained without the need for the executive to perform analysis Executives see not just actual values, but comparisons to plans or prior results Business executives are busy people, and scorecards provide them with a single view that shows the overall health of the entire business. Executives don’t have time to wade through a 100 page report to decide if defect rates are improving or worsening. Instead, scorecards give the executive immediate feedback without him or her having to first perform complex analysis. Executives can now identify trouble spots much more quickly and work to act on those areas. 36 36

The Contents of a Scorecard Scorecards usually contain some or all of the following elements: Key Performance Indicators (KPIs) KPI actual values compared to historical values (for trend analysis) KPI actual values compared to a forecast or budget amount Rankings of different departments, locations, products, and so forth Scorecards generally report the Key Performance Indicators, or KPIs, of the business. KPIs are often thought of as financial indicators such as sales, expenses, profit margin, and so forth. However, KPIs may come from other areas of the business, such as defect rates, employee turnover, percentage of employees with a certain certification, and so on. KPIs are almost always compared to “planned” or “budget” numbers so that the health of the indicator can be determined. How close a number is to the plan indicates the strength and is usually used to determine the indicator to show for that KPI. KPIs are often compared to historical values so that trends can be generated. How the trend is determined is up to the business, but a “green” indicator that is trending down might cause an executive to investigate that paticular value. 37 37

Dashboards Dashboards may contain elements of scorecards, as seen on the left-hand side. Dashboards also often have more detailed reports in the form of charts or grids. This dashboard allows the user to slice by geography and look at KPIs for both Sales Growth and Gross Margin. Sales and gross margin are then shown in more detailed reports. Dashboards may also include non-BI views such as email, calendar, and so on. 38 38

The Purpose of a Dashboard A dashboard is designed to allow decision makers to see a variety of data that affects their divisions or departments This data may be in the form of scorecards, charts, tables, and so forth The dashboard is generally customized for each user More targeted and detailed than a scorecard A dashboard is a central location that can contain more than just BI data. For example, it may include email, news, stock quotes, and more. This way, decision makers can see data from a variety of sources on a single screen. One of the strengths of a dashboard is that it can be customized for each person so they see only the data that pertains to them. A dashboard is often more targeted to individuals. If the business decision maker is the head of manufacturing, the KPIs shown would focus on manufacturing and not include sales and marketing KPIs. 39 39

Benefits to Decision Makers Decision makers see a variety of information targeted to their department This allows decision makers to focus only on the items over which they have control Information is more detailed than that of a scorecard The tools in the dashboard often have better analytic capabilities than a scorecard Using dashboards, Business Decision Makers get information targeted for them and their specific functional area of the business. The information is often more detailed than what is shown in a scorecard, although a dashboard might well contain scorecard elements. A dashboard often mixes views from scorecards along with more detailed charts and grids. The dashboard may even allow a limited amount of interactivity so that the decision maker can drill down into lower levels of detail. 40 40

The Contents of a Dashboard A Dashboard generally contains a variety of different views of data The data is generally KPIs and shows trends, breakdowns, and comparisons against a forecast or historical data The dashboard often consists of charts and tables, and may include scorecard elements as well Dashboards often contain information targeted at a functional area. This means that the dashboard contains KPIs, charts, and grids focused on a functional area. There is often historical information so the executive can get a feel for what has really been happening over time. Dashboards can incorporate non-BI information as well, containing links to a person’s calendar, email, news sources, and more. 41 41

Reports Reports are appropriate for the vast majority of users. Reports may contain limited interactivity that allows users to drill down to see more detail or click on items to jump to other reports. By serving reports up in a thin client browser, reports can be consumed anywhere in the world with a wide variety of devices. 42 42

The Purpose of Reports Reports allow a much broader audience to benefit from the data in a BI solution Reports may be static, requiring no training Reports may also allow a limited amount of interactivity Reports can be presented in a variety of formats, allowing for easier distribution Reports are generally the easiest vehicle for distribution to a wide audience. Reports can be delivered throughout the organization and even to external clients. While reports are often static, they may allow some limited analytical capabilities. Reports have the advantage of being available in a variety of formats. While the default is often HTML, many reporting tools can produce Adobe Acrobat PDF files, Microsoft Office Excel spreadsheets, text files, and so forth. Reporting tools vary widely in how they are licensed. Some require one license per server, or per viewer, while others do not require any additional licensing costs. 43 43

The Purpose of Custom Application Integration An application used by line workers may include business intelligence without the worker realizing what is happening A sales clerk may get a list of targeted recommendations to make based on what the customer is buying A loan officer may be presented with the level of risk associated with granting a loan to a particular customer Analyzing BI data has often been a distinct phase of a dedicated BI process. Integrating BI with existing applications provides true benefits while workers perform their regular tasks. Custom applications can open up analytic capabilities in an easy to use fashion, meaning that the benefits of BI flow into the normal work done by people using those applications. These users may be unaware that they are using BI in any sense. 44 44

The Contents of Custom Application Integration Custom applications may include predictive output from data mining models Custom applications can show history and trends for the current customer, supplier, and so forth Custom applications may allow easy ways for users to explore the data for relationships Custom applications often use the output of data mining algorithms to do predictive analysis: predict what other products a customer might like to buy, predict their likelihood they can repay a loan, and more. However, BI can also be used to display trends over time for a customer so that a sales representative has a clear picture of the sales, margin, and more for a customer on which they are calling. 45 45

Analytic Applications Analytic applications are designed to present the user with full access to a cube. This screenshot shows ProClarity Desktop Professional, which allows users to choose from any dimension and measure and display it with a wide variety of visualizations. Here is a split view of a grid and chart, with a slicer at the top to change the measure. 46 46

The Purpose of Analytic Applications Analytic applications free analysts from building complex models and writing complex queries Analysts are free to focus on the data and discover relationships and drivers behind numbers Rich visualizations allow much easier understanding of trends and relationships Business analysts typically perform complex data analysis. Much of this analysis is ad hoc and built into large spreadsheets. Analytic applications make the retrieval and analysis of data easy, and many analytic applications include powerful visualization tools to make data easier to grasp. Analytic applications allow an analyst to construct complex models as needed. These applications provide basically unlimited abilities to drill into the data and slice and dice it in any way. 47 47

The Contents of Analytic Applications Analytic applications typically have no limits; analysts can see everything Analytic applications can view and analyze all of an organization’s data in a number of ways Analytic applications are powerful, but not as easy to use as other mechanisms There is nothing that you can’t put in the more powerful analytic applications; they were designed to utilize all features of the BI solution built by an organization. This may include KPIs or more basic measures. Many can create their own calculated measures or KPIs. As powerful as these applications are, there is often a learning curve associated with them; the increase in power also leads to an increase in complexity. 48 48

ISQS 3358 Business Intelligence OLTP vs. OLAP Online transaction processing systems (OLTP) Systems that handle a company’s routine ongoing business Online analytic processing (OLAP) An information system that enables the user, while at a PC, to query the system, conduct an analysis, and so on. The result is generated in seconds ISQS 3358 Business Intelligence 49

Successful Business Intelligence Implementation Appropriate Planning and Alignment with the Business Strategy Establish a BI Competency Center (BICC) within the Company Real-time, On-Demand BI Is Attainable Developing or Acquiring BI Systems Justification and Cost/Benefit Analysis Security and Protection of Privacy Integration of Systems and Applications

Conclusion: Business Intelligence Today and Tomorrow Today’s organizations are deriving more value from BI by extending actionable information to many types of employees, maximizing the use of existing data assets Visualization tools including dashboards are used by producers, retailers, governments, and special agencies More and more industry-specific analytical tools will flood the market to perform almost any kind of analysis and to facilitate informed decision making from the top level to the user level A potential trend involving BI is its possible merger with artificial intelligence (AI)

Application Cases in the Book Case 1.1 – Intelligence Price Setting Using Automated Decision Support http://www.longs.com Using Price-optimization programs by SAS Case 1.2 - Predictive Analytics Helps Texas Collect Taxes Using data mining software from SPSS Case 1.3 - France Telecom Business Intelligence “Business Intelligence Competence Center” http://www.intelligentsolutions.com http://www.dmreview.com