McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved. Chapter 4 Analytics, Decision Support, and Artificial Intelligence: Brainpower for Your Business

4-2 DECISIONS AND DECISION SUPPORT Carry out the chosen solution and monitor the results Examine the merits of each solution and choose the best one Consider ways of solving the problem Find or recognize the problem, need, or opportunity

4-3 Decision Support Systems  Decision support system (DSS) – a highly flexible and interactive system that is designed to support decision making when the problem is not structured  Decision support systems help you analyze, but you must know how to solve the problem, and how to use the results of the analysis

4-4 GEOGRAPHIC INFORMATION SYSTEMS  Geographic information system (GIS) – DSS designed specifically to analyze spatial information  Spatial information is any information in map form  Businesses use GIS software to analyze information, generate business intelligence, and make decisions

4-5 Google Earth as a GIS

4-6 Predictive Analytics  Predictive analytics – highly computational data-mining technology that uses information and business intelligence to build a predictive model for a given business application  Insurance, retail, healthcare, travel, financial services, CRM, SCM, credit scoring, etc

4-7 Predictive Analytics

4-8 Text Analytics  Text analytics – uses statistical, AI, and linguistic technologies to convert textual information into structured information  Gaylord Hotels uses text analytics to make sense of customer satisfaction surveys

4-9 Lots of Analytics  Web analytics  HR analytics  Marketing analytics  CRM analytics  Social media analytics  Mobile analytics

4-10 ARTIFICIAL INTELLIGENCE  Artificial intelligence, the science of making machines imitate human thinking and behavior, can replace human decision making in some instances  Expert systems  Neural networks (and fuzzy logic)  Genetic algorithms  Agent-based technologies

4-11 Expert Systems  Expert (knowledge-based) system – an artificial intelligence system that applies reasoning capabilities to reach a conclusion  Used for  Diagnostic problems (what’s wrong?)  Prescriptive problems (what to do?)

4-12 Neural Networks and Fuzzy Logic  Neural network (artificial neural network or ANN) – an artificial intelligence system that is capable of finding and differentiating patterns  Fuzzy logic – a mathematical method of handling imprecise or subjective information, like “short” or “tall”

4-13 Genetic Algorithms  Genetic algorithm – an artificial intelligence system that mimics the evolutionary, survival-of-the-fittest process to generate increasingly better solutions to a problem  Take millions of solutions and determines the optimal one

4-14 AGENT-BASED TECHNOLOGIES Agent-based technology (software agent) - piece of software that acts on your behalf (or on behalf of another piece of software) performing tasks assigned to it

4-15 Biomimicry & Swarm Intelligence  Biomimicry – learning from ecosystems and adapting their characteristics to human and organizational situations  Swarm (collective) intelligence – the collective behavior of groups of simple agents that are capable of devising solutions to problems as they arise, eventually learning to coherent global patterns