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Using MIS Chapter 9 Business Intelligence Systems 10th Edition
This chapter considers business intelligence (BI) systems: information systems that can produce patterns, relationships, and other information from organizational structured and unstructured social data as well as from external, purchased data.
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Wants to match users to personal trainers in same locale.
“Data Analysis, Where You Don’t Know the Second Question to Ask Until You See the Answer to the First One.” Having great success with employers interested in tracking exercise data. Wants to match users to personal trainers in same locale. Earn referral fee. How to track them? Mailing address? IP address? Got data and Excel to start. Serious data mining needs a data mart. GOALS: Use the ARES system to: Illustrate a practical application for business intelligence systems, specifically reporting. Provide a setting to teach standard reporting terminology. Illustrate advantages of storing data in the cloud.
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Study Questions Q9-1 How do organizations use business intelligence (BI) systems? Q9-2 What are the three primary activities in the BI process? Q9-3 How do organizations use data warehouses and data marts to acquire data? Q9-4 How do organizations use reporting applications? Q9-5 How do organizations use data mining applications? Q9-6 How do organizations use Big Data applications? Q9-7 What is the role of knowledge management systems? Q9-8 What are the alternatives for publishing BI? Q ? This chapter considers BI systems to identify patterns, relationships, and other information in organizational structured and unstructured social data, as well as purchased external data. In addition to this data, another rich source of knowledge is employees themselves. Vast amounts of collective knowledge exist in every organization’s employees. How can that knowledge be shared? As you will learn, business intelligence is the key technology supporting such marketing technology.
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Components of Business Intelligence (BI) Systems
Q9-1 How do organizations use business intelligence (BI) systems? BI systems are information systems that process operational and other data to identify patterns, relationships, and trends for use by business professionals and other knowledge workers. Five standard IS components are present in BI systems: hardware, software, data, procedures, and people. The boundaries of BI systems are blurry. Figure 9-1 Components of a Business Intelligence System
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How Do Organizations Use BI?
Q9-1 How do organizations use business intelligence (BI) systems? Task ARES Example Falcon Security Example Project Management Create partnership programs between ARES users and local health clubs. Expand geographically. Problem Solving How can we increase revenue from health clubs? How can we save money by rerouting drone flights? Deciding Which health club is closest to each user? Refer users to local trainers. Which drones and related equipment are in need of maintenance? Informing In what ways are clients using the new system? How do sales compare to our sales forecast? Use BI for all of the collaborative tasks described in Chapter 2. Falcon Security could use BI to determine whether it could save costs by rerouting its drone flights. Figure 9-2 Example Uses of Business Intelligence
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What Are Typical Uses for BI?
Q9-1 How do organizations use business intelligence (BI) systems? Identifying changes in purchasing patterns Important life events change what customers buy. Entertainment Netflix has data on watching, listening, and rental habits. Classify customers by viewing patterns. Predictive policing Analyze data on past crimes - location, date, time, day of week, type of crime, and related data. Typical uses involve classification or prediction.
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Just-in-Time Medical Reporting
Q9-1 How do organizations use business intelligence (BI) systems? Example of real time data mining and reporting. Injection notification services Software analyzes patient’s records; if injections needed, recommends as exam progresses. Blurry edge of medical ethics.
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Three Primary Activities in the BI Process
Q9-2 What are the three primary activities in the BI process? These activities directly correspond to the BI elements in Figure 9-1. The four fundamental categories of BI analysis are reporting, data mining, Big Data, and knowledge management. Push publishing delivers business intelligence to users without any request from the users; the BI results are delivered according to a schedule or as a result of an event or particular data condition. Pull publishing requires the user to request BI results. Figure 9-3 Three Primary Activities in the BI Process
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Using Business Intelligence to Find Candidate Parts at Falcon Security
Q9-2 What are the three primary activities in the BI process? Identify parts that might qualify. Provided by vendors who make part design files available for sale. Purchased by larger customers. Frequently ordered parts. Ordered in small quantities. Used part weight and price surrogates for simplicity. Obtained an extract of sales data from its IS department and stored it in Microsoft Access.
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Acquire Data: Extracted Order Data
Q9-2 What are the three primary activities in the BI process? Query Sales (CustomerName, Contact, Title, Bill Year, Number Orders, Units, Revenue, Source, PartNumber) Part (PartNumber, Shipping Weight, Vendor) IS department extracted the data. Actually wouldn’t need all of the data columns in the Sales table. Data was divided into different billing years, which wouldn’t affect analysis. Figure 9-4a Sample Extracted Data: Order Extract Table Source: Microsoft Corporation
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Sample Extracted Data: Part Data Table
Q9-2 What are the three primary activities in the BI process? Actually wouldn’t need all of the data columns in the Sales table. Data was divided into different billing years; that division wouldn’t affect analysis. Figure 9-4b Sample Extracted Data: Part Data Table Source: Microsoft Corporation
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Analyze Data Q9-2 What are the three primary activities in the BI process? First step was to combine the data in the two tables into a single table that contained both the sales and part data. Figure 9-5 Joining Orders Extract and Filtered Parts Tables Source: Microsoft Corporation
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Sample Orders and Parts View Data
Q9-2 What are the three primary activities in the BI process? Data in Figure 9-6 has been filtered for their first criterion, to consider parts only from particular vendors. Notice some missing and questionable values. Numerous rows have missing values of Contact and Title, and a few rows have value of zero for Units. Missing contact and title data isn’t a problem. Figure 9-6 Sample Orders and Parts View Data Source: Microsoft Corporation
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Creating Customer Summary Query
Q9-2 What are the three primary activities in the BI process? Sums the revenue, units, and average price for each customer. Figure 9-7 Creating the Customer Summary Query Source: Microsoft Corporation
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Customer Summary Q9-2 What are the three primary activities in the BI process? Figure 9-8 Customer Summary Source: Microsoft Corporation
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Qualifying Parts Query Design
Q9-2 What are the three primary activities in the BI process? Filtered by customers having more than $200,000 in total revenue. Figure 9-9 Qualifying Parts Query Design Source: Microsoft Corporation
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Publish Results: Qualifying Parts Query Results
Q9-2 What are the three primary activities in the BI process? Publish results is the last activity in the BI process. Figure 9-10 Qualifying Parts Query Results Source: Microsoft Corporation
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Publish Results: Sales History for Selected Parts
Q9-2 What are the three primary activities in the BI process? Judging just by the results, there seems to be little revenue potential in selling designs for these parts. It is possible they chose the wrong criteria. Might find themselves changing criteria until they obtain a result they want, which results in a very biased study. Importance of the human component of an IS. Business intelligence is only as intelligent as the people creating it! Figure 9-11 Sales History for Selected Parts Source: Microsoft Corporation
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MIS-Diagnosis Ethics Guide Doctors are relying more and more on artificial intelligence (AI)-driven expert systems to select the most appropriate medications and treatments. Ordered to improve the system’s “perception” of the company’s drugs. Minor modifications to the drug’s profile made a big difference. But some of the numbers he used to modify the profile were not accurate. The changes would warrant a regulatory review. GOAL Sensitize students to the use of data generated and processed about them. Illustrate some of the uses of frequent-buyer data.
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MIS-Diagnosis (cont’d)
Ethics Guide Suppose the company alters the drug profile. Would the company be liable if something happened to a patient who took the drug based on altered information? Do you think that manipulating the recommendation of an AI system even though the new recommendation may be for the better drug is ethical according to the categorical imperative, and utilitarian perspective? Help students understand the importance not just of what data is being gathered about them, but what analyses and conclusions are being made from that data, behind their back.
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Using Data Warehouses and Data Marts to Acquire Data
Q9-3 How do organizations use data warehouses and data marts to acquire data? Functions of a data warehouse Obtain data from operational, internal and external databases. Cleanse data. Organize and relate data. Catalog data using metadata. For a small organization, the extraction may be as simple as an Access database. Larger organizations, however, typically create and staff a group of people who manage and run a data warehouse, which is a facility for managing an organization’s BI data.
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Components of a Data Warehouse
Q9-3 How do organizations use data warehouses and data marts to acquire data? This figure shows the components of a data warehouse. Programs read operational and other data and extract, clean, and prepare that data for BI processing. An organization might use Oracle for its operational processing, but use SQL Server for its data warehouse. Other organizations use SQL Server for operational processing, but use DBMSs from statistical package vendors such as SAS or SPSS in the data warehouse. Figure 9-12 Components of a Data Warehouse
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Examples of Consumer Data That Can Be Purchased
Q9-3 How do organizations use data warehouses and data marts to acquire data? Purchase of data about other organizations is not unusual or particularly concerning from a privacy standpoint. However, some companies choose to buy personal, consumer data (like marital status) from data vendors like Acxiom Corporation. Figure 9-13 Examples of Consumer Data That Can Be Purchased
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Possible Problems with Source Data
Q9-3 How do organizations use data warehouses and data marts to acquire data? Most operational and purchased data have problems that inhibit their usefulness for BI analysis. Problematic data is termed dirty data. Examples are a value of B for customer gender and of 213 for customer age. Other examples are a value of 999–999–9999 for a U.S. phone number, a part color of “gren,” and an address of The value of zero for Units in Figure 9-6 is dirty data. Figure 9-14 Possible Problems with Source Data
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Data Warehouses Versus Data Marts
Q9-3 How do organizations use data warehouses and data marts to acquire data? The data analysts who work with a data warehouse are experts at data management, data cleaning, data transformation, data relationships, and the like. However, they are not usually experts in a given business function. A data mart is a subset of a data warehouse. A date mart addresses a particular component or functional area of the business. Figure 9-15 Data Mart Examples
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Reporting Applications
Q9-4 How do organizations use reporting applications? Create meaningful information from disparate data sources. Deliver information to user on time. Basic operations: Sorting Filtering Grouping Calculating Formatting A reporting application is a BI application that inputs data from one or more sources and applies reporting operations to that data to produce business intelligence.
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RFM Analysis: Example RFM Scores
Q9-4 How do organizations use reporting applications? How recently (R) a customer has ordered How frequently (F) a customer ordered How much money (M) the customer has spent RFM considers how recently (R) a customer has ordered, how frequently (F) a customer ordered, and how much money (M) the customer has spent. Figure 9-16 Example RFM Scores
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RFM Analysis Classification Scheme
Q9-4 How do organizations use reporting applications? To produce an RFM score: Sort customer purchase records by date of most recent (R) purchase. Divide sorts into quintiles. Give customers a score of 1 to 5. Process is repeated for Frequently and Money. Top 20% Bottom 20% 1 2 3 4 5 Middle 20% To produce an RFM score, a program sorts customer purchase records by date of most recent (R) purchase, divides sorts into quintiles, and gives customers a score of 1 to 5. Process is repeated for Frequently and Money.
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Example of Grocery Sales OLAP Report
Q9-4 How do organizations use reporting applications? OLAP Product Family by Store Type Two dimensions: Product Family and Store Type. Report shows how net store sales vary by product family and store type. Figure 9-17 Example Grocery Sales OLAP Report Source: Microsoft Corporation
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Example of Expanded Grocery Sales OLAP Report
Q9-4 How do organizations use reporting applications? Drilling down Four dimensions. User added dimensions Store (Country) and State. Product-family sales broken out by location of stores. Sample data include only stores in US western states of California, Oregon, and Washington. Figure 9-18 Example of Expanded Grocery Sales OLAP Report Source: Microsoft Corporation
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Example of Drilling Down into Expanded Grocery Sales OLAP Report
Q9-4 How do organizations use reporting applications? User drilled down into stores located in California. Report shows sales data for four cities in California that have stores. User also changed the order of the dimensions. All this flexibility comes at a cost. If the database is large, doing the necessary calculating, grouping, and sorting for such dynamic displays will require substantial computing power. Figure 9-19 Example of Drilling Down into Expanded Grocery Sales OLAP Report Source: Microsoft Corporation
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Convergence of Disciplines
Q9-5 How do organizations use data mining applications? Sometimes people use the term knowledge discovery in databases (KDD) as a synonym for data mining. There are many interesting and rewarding careers for business professionals who are knowledgeable about data mining techniques. Figure 9-20 Source Disciplines of Data Mining
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Unsupervised Data Mining
Q9-5 How do organizations use data mining applications? No a priori hypothesis or model. Findings obtained solely by data analysis. Hypothesized model created to explain patterns found. Example: Cluster analysis. Cluster analysis: Statistical technique to identify groups of entities with similar characteristics; used to find groups of similar customers from customer order and demographic data.
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Supervised Data Mining
Q9-5 How do organizations use data mining applications? Uses a priori model. Prediction, such as regression analysis. Ex: CellPhoneWeekendMinutes = (12 + (17.5*CustomerAge)+(23.7*NumberMonthsOfAccount) = * *6 = minutes Predict number of minutes of weekend cell phone use.
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Market-Basket Analysis
Q9-5 How do organizations use data mining applications? Market-basket analysis Identify sales patterns in large volumes of data. Identify what products customers tend to buy together. Computes probabilities of purchases. Identify cross-selling opportunities. Customers who bought fins also bought a mask. Association analysis important part in shopping basket data analysis.
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Market-Basket Example: Dive Shop Transactions = 400
Q9-5 How do organizations use data mining applications? Hypothetical sales data First row of numbers under each column is total number of times an item sold. For example, 270 in third row under Mask means that 270 of the 400 (.67) transactions included masks. 280 under Fins means that 280 of 400 (.700) transactions included fins. Figure 9-21 Market-Basket Analysis at a Dive Shop Source: Microsoft Corporation
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Decision Trees Unsupervised data mining technique.
Q9-5 How do organizations use data mining applications? Unsupervised data mining technique. Hierarchical arrangement of criteria to predict a value or classification. Basic idea Select attributes most useful for classifying “pure groups.” Creates decision rules. Basic idea of a decision tree is to select attributes most useful for classifying entities.
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Credit Score Decision Tree
Q9-5 How do organizations use data mining applications? An institution considering the purchase of a loan portfolio can use the results of a decision tree program to evaluate the risk of a given portfolio. Figure 9-22 Credit Score Decision Tree Source: Used with permission of TIBCO Software Inc. Copyright © TIBCO Software Inc. All rights reserved.
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Decision Rules for Accepting or Rejecting Offer to Purchase Loans
Q9-5 How do organizations use data mining applications? If percent past due is less than 50 percent, then accept loan. If percent past due is greater than 50 percent and If CreditScore is greater than and If CurrentLTV is less than .94, then accept loan. Otherwise, reject loan.
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BI for Securities Trading?
So What? Quantitative applications using Big Data and BI. Analyze immense amounts of data over a broad spectrum of sources. Build and evaluate investment strategies. Two Sigma ( Analyzes financial statements, developing news, Twitter activity, weather reports, other sources. Develops and tests investment strategies.
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Two Sigma’s Five-Step Process
Q9-5 How do organizations use data mining applications? Acquire data Create models Evaluate models Analyze risks Place trades Does it work? Two Sigma and other firms claim it does. Individual investors competing in the stock markets against Two Sigma, with its hundreds of PhDs and massive computing power, and with a slew of similar companies.
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Using Big Data Applications
Q9-6 How do organizations use Big Data applications? Huge volume – petabyte and larger. Rapid velocity – generated rapidly. Great variety Structured data, free-form text, log files, graphics, audio, and video. Big Data is a term used to describe data collections that are characterized by huge volume, rapid velocity, and great variety.
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MapReduce Processing Summary
Q9-6 How do organizations use Big Data applications? Map Phase: Google search log broken into thousands of pieces Technique for harnessing power of thousands of computers working in parallel. Big Data collection is broken into pieces, and hundreds or thousands of independent processors search these pieces for something of interest. Figure 9-23 MapReduce Processing Summary
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Google Trends on the Term Web 2.0
Q9-6 How do organizations use Big Data applications? Reduce phase: results combined This trend line supports contention that “Web 2.0” is fading from use. Figure 9-24 Google Trends on the Terms Web 2.0 and Hadoop Source: Google and the Google logo are registered trademarks of Google Inc., Used with permission.
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Hadoop Open-source program supported by Apache Foundation2.
Q9-6 How do organizations use Big Data applications? Open-source program supported by Apache Foundation2. Manages thousands of computers. Implements MapReduce. Written in Java. Amazon.com supports Hadoop as part of EC3 cloud. Query language entitled Pig (platform for large dataset analysis). Easy to master. Extensible. Automatically optimizes queries on map-reduce level. Big Data has volume, velocity, and variation characteristics that far exceed those of traditional reporting and data mining. Experts are required to use it; you may be involved, however, in planning a Big Data study or in interpreting results.
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Knowledge Management Systems
Q9-7 What is the role of knowledge management systems? Knowledge Management (KM) Creating value from intellectual capital and sharing knowledge with those who need that capital. Preserving organizational memory Capturing and storing lessons learned and best practices of key employees. Scope of KM same as SM in hyper-social organizations.
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Benefits of Knowledge Management
Q9-7 What is the role of knowledge management systems? Improve process quality. Increase team strength. Goal: Enable employees to use organization’s collective knowledge.
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What Are Expert Systems?
Q9-7 What is the role of knowledge management systems? Expert systems Rule-based IF/THEN Encode human knowledge Process IF side of rules Report values of all variables Knowledge gathered from human experts Expert systems shells Expert systems are rule-based systems that encode human knowledge as If/Then rules. Expert systems shells – programs that process a set of rules.
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Example of IF/THEN Rules
Q9-7 What is the role of knowledge management systems? Figure 9-25 Example of If/Then Rules
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Drawbacks of Expert Systems
Q9-7 What is the role of knowledge management systems? Difficult and expensive to develop. Labor intensive. Ties up domain experts. Difficult to maintain. Changes cause unpredictable outcomes. Constantly need expensive changes. Don’t live up to expectations. Can’t duplicate diagnostic abilities of humans. The few expert systems that have been successful have addressed more restricted problems than duplicating a doctor’s diagnostic ability. They address problems such as checking for harmful prescription drug interactions and configuring products to meet customer specifications. These systems require many fewer rules and are therefore more manageable to maintain. However, unless expert systems technology gets a boost from massively parallel computing (think MapReduce and Hadoop), their problems will cause them to fade from use.
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What Are Content Management Systems (CMS)?
Q9-7 What is the role of knowledge management systems? Support management and delivery of documents, other expressions of employee knowledge. Challenges of Content Management Huge databases. Dynamic content. Documents refer to one another. Perishable contents. In many languages. Content management system functions are huge and complex.
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What are CMS Application Alternatives?
Q9-7 What is the role of knowledge management systems? In-house custom development Customer support develops in-house database applications to track customer problems. Off-the-shelf Horizontal market products (SharePoint). Vertical market applications. Public search engine Google, Bing. Horizontal market: An accounting firm, for example, may license a vertical market application to manage document flow for the processing of tax returns or the management of audit documents.
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How Do Hyper-Social Organizations Manage Knowledge?
Q9-7 What is the role of knowledge management systems? Hyper-social knowledge management Social media, and related applications, for management and delivery of organizational knowledge resources. Hyper-organization theory Framework for understanding KM. Focus shifts from knowledge and content to fostering authentic relationships among knowledge creators and users. Progressive organizations encourage their employees to Tweet, post on Facebook or other social media sites, write blogs, and post videos on YouTube and any of the other sites.
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Hyper-Social KM Media Media Public or Private Best for: Blogs Either
Q9-7 What is the role of knowledge management systems? Media Public or Private Best for: Blogs Either Defender of belief Discussion groups (including FAQ) Problem solving Wikis Surveys Rich directories (e.g. Active Directory) Private Standard SM (Facebook, Twitter, etc.) Public YouTube A rich directory is an employee directory that includes not only the standard name, , phone, and address but also organizational structure and expertise. Rich directories are particularly useful in large organizations where people with particular expertise are unknown. Figure 9-27 Hyper-Social KM Media
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Resistance to Knowledge Sharing
Q9-7 What is the role of knowledge management systems? Employees reluctant to exhibit their ignorance. Employee competition. Remedy Strong management endorsement. Strong positive feedback. “Nothing wrong with praise or cash especially cash.” Strong management endorsement can be effective in encouraging knowledge sharing, especially if that endorsement is followed by strong positive feedback.
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BI Publishing Alternatives
Q9-8 What are the alternatives for publishing BI? Server Report Type Push Options Skill Level Needed or collaboration tool Static Manual Low Web server Static/Dynamic Alert/RSS Low for static High for dynamic SharePoint Alert/RSS Workflow BI server Dynamic Alert/RSS Subscription High In the BI context, most static reports are published as PDF documents. Dynamic reports are BI documents that are updated at the time they are requested. A sales report that is current at the time the user accessed it on a Web server is a dynamic report. Figure 9-28 BI Publishing Alternatives
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What Are the Two Functions of a BI Server?
Q9-8 What are the alternatives for publishing BI? Management and delivery A BI server extends alert/RSS functionality to support user subscriptions, which are user requests for particular BI results on a particular schedule or in response to particular events. For example, a user can subscribe to a daily sales report, requesting that it be delivered each morning. Management and delivery. The management function maintains metadata about the authorized allocation of BI results to users. The BI server tracks what results are available, what users are authorized to view those results, and the schedule upon which the results are provided to the authorized users. It adjusts allocations as available results change and users come and go. Figure 9-29 Elements of a BI System
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Business Intelligence Systems in 2027
Q ? Exponentially more information about customers, better data mining techniques. Companies buy and sell your purchasing habits and psyche. Singularity Computer systems adapt and create their own software without human assistance. Machines will possess and create information for themselves. Will we know what the machines will know?
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Semantic Security Security Guide Unauthorized access to protected data and information. Physical security Passwords and permissions. Delivery system must be secure. Unintended release of protected information through reports and documents. What, if anything, can be done to prevent what Megan did? GOALS Discuss trade-off between information availability and security. Introduce, explain, and discuss ways to respond to semantic security. Megan is able to combine data in various reports to infer protected information about company employees. She was not supposed to see this information, but only used reports she was authorized to see.
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Manager, Data and Analytics
Career Guide Lindsey Tsuya at American Express Company Q. What attracted you to this field? A. “As a college student, I worked in the service industry. When I was selecting my degree, I knew I wanted two things. First, I wanted a degree that made money. Second, I wanted a job that did not involve direct provision of service to the public. By choosing information systems, I knew I would be doing more of a behind-the- scenes job.” Q. What advice would you give to someone who is considering working in your field? A. “No matter what field you choose, make sure it is something you are passionate about because if you are not passionate about it, work will feel like… work.”
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Active Review Q9-1 How do organizations use business intelligence (BI) systems? Q9-2 What are the three primary activities in the BI process? Q9-3 How do organizations use data warehouses and data marts to acquire data? Q9-4 How do organizations use reporting applications? Q9-5 How do organizations use data mining applications? Q9-6 How do organizations use Big Data applications? Q9-7 What is the role of knowledge management systems? Q9-8 What are the alternatives for publishing BI? Q ?
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Hadoop the Cookie Cutter
Case Study 9 Third-party cookie created by site other than one you visited. Most commonly occurs when a Web page includes content from multiple sources. DoubleClick IP address where content was delivered. DoubleClick instructs your browser to store a DoubleClick cookie. Records data in cookie log on DoubleClick’s server.
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Hadoop the Cookie Cutter (cont’d)
Case Study 9 Third-party cookie owner has history of what was shown, what ads you clicked, and intervals between interactions. Cookie log shows how you respond to ads and your pattern of visiting various Web sites where ads placed. Firefox Lightbeam tracks and graphs cookies on your computer.
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FireFox Lightbeam: Display on Start Up
Case Study 9 No cookies on startup. FireFox has an optional feature that tracks and graphs all the cookies on your computer. Figure 9-30a Third-Party Cookie Growth Source: © Mozilla Corporation
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After Visiting MSN.com After MSN.com and Gmail. Case Study 9
Who are these companies that are gathering my browser behavior data? If you hold your mouse over one of the cookies, Lightbeam will highlight it in the data column on the right. Figure 9-30b Third-Party Cookie Growth Source: © Mozilla Corporation
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5 Sites Visited Yields 27 Third Parties
Case Study 9 Five sites visited yield 27 third parties. Figure 9-30c Third-Party Cookie Growth Source: © Mozilla Corporation
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Sites Connected to DoubleClick
Case Study 9 Sites connected to DoubleClick. Figure 9-30d Third-Party Cookie Growth Source: © Mozilla Corporation
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