1. IMS3001 – BUSINESS INTELLIGENCE SYSTEMS – SEM 1, 2004 Introduction to Business Intelligent Systems Week 1 Dr. Jocelyn San Pedro School of Information Management & Systems Monash University

2. IMS3001 – BUSINESS INTELLIGENCE SYSTEMS – SEM 1, 2004 2 Staff- Dr. Jocelyn San Pedro  T1.28 Level 1, Building T, Caulfield Campus  Jocelyn.sanpedro@sims.monash.edu.au Jocelyn.sanpedro@sims.monash.edu.au  www.sims.monash.edu.au/staff/jsanpedro www.sims.monash.edu.au/staff/jsanpedro  Email correspondence:  Subject: IMS3001  Email enquiries anytime, but expect replies by Thursday PM  Consultation Hours: 2-3 PM Tu,Th,Fri (by appointment)

3. IMS3001 – BUSINESS INTELLIGENCE SYSTEMS – SEM 1, 2004 3 The Unit  2-Hour lecture per week  2-Hour tutorial per week  Tutorials begin in Week 2 (i.e. next week)  Please make sure you are assigned to a tutorial in Allocate+  no student will be admitted to a tutorial unless they are on the class list.

4. IMS3001 – BUSINESS INTELLIGENCE SYSTEMS – SEM 1, 2004 4 Synopsis  evolution and current state of the art of the theory and practice of business intelligence systems;  role of these business intelligence systems in providing intelligence information to business decision makers  d evelopment process and some key techniques that support it

5. IMS3001 – BUSINESS INTELLIGENCE SYSTEMS – SEM 1, 2004 5 Aim  provide students with introductory knowledge of concepts, development and use of business intelligence systems

6. IMS3001 – BUSINESS INTELLIGENCE SYSTEMS – SEM 1, 2004 6 Objectives At the completion of this unit the students will:  have knowledge of:  the scope and application of business intelligence systems  the role of business intelligence systems in supporting business decision making  the major approaches to the development of business intelligent systems  evolution of business intelligence systems

7. IMS3001 – BUSINESS INTELLIGENCE SYSTEMS – SEM 1, 2004 7 Objectives  have an understanding of:  the process of business intelligence systems development  current state of the art of the theory and practice of business intelligence systems  have the skills to:  organise, analyse and interpret data for the purpose of supporting business decision making  understand managerial problem solving activity as well as problem finding activity for supporting business decision making

8. IMS3001 – BUSINESS INTELLIGENCE SYSTEMS – SEM 1, 2004 8 Objectives have developed attitudes which enable them to:  identify and evaluate business intelligence opportunities  plan for business intelligence solution and implementation  work closely with business intelligence team

9. IMS3001 – BUSINESS INTELLIGENCE SYSTEMS – SEM 1, 2004 9 Assessment Class Participation Value 10%  in tutorials Assignment Value 30%  due Week 9, during tutorial Exam, Value 60% Overall Assessment 100%

10. IMS3001 – BUSINESS INTELLIGENCE SYSTEMS – SEM 1, 2004 10 Lecture 1 - Outline  What is Business Intelligence (BI)?  What is Business Intelligence System (BIS)?  What is the role of BIS in supporting business decision making?  How did BIS evolve?

11. IMS3001 – BUSINESS INTELLIGENCE SYSTEMS – SEM 1, 2004 11 Learning Objectives  Define business intelligence (BI) and business intelligence systems (BIS)  Explain the role of BIS in supporting business decision making;  Identify the different BIS that were introduced in the past and explain how such systems supported business decision making

12. IMS3001 – BUSINESS INTELLIGENCE SYSTEMS – SEM 1, 2004 12 What is Business Intelligence?

13. IMS3001 – BUSINESS INTELLIGENCE SYSTEMS – SEM 1, 2004 13 What is Business Intelligence? According to vendors:  a segment of information technology that comprises software systems that enable finding, storing, organising and supplying data; when incorporated into an information system, it enables company to utilise real-time analysis of information Information Technology Toolbox www.ITToolbox.com

14. IMS3001 – BUSINESS INTELLIGENCE SYSTEMS – SEM 1, 2004 14 What is Business Intelligence?  software that enables business users to see and use large amounts of complex data (e.g. multidimensional analysis, query tools, data mining tools) SDG Computing www.sdgcomputing.com

15. IMS3001 – BUSINESS INTELLIGENCE SYSTEMS – SEM 1, 2004 15 What is Business Intelligence?  a category of applications and technologies for gathering, storing, analysing, reporting on and providing access to data to help enterprise users make better business decisions Cognos (www.cognos.com)www.cognos.com

16. IMS3001 – BUSINESS INTELLIGENCE SYSTEMS – SEM 1, 2004 16 What is Business Intelligence?  markets business performance software, comprised of three subcategories that includes ad hoc query and analysis, reporting/OLAP, executive information systems and analytical applications Brio (www.brio.com )www.brio.com

17. IMS3001 – BUSINESS INTELLIGENCE SYSTEMS – SEM 1, 2004 17 What is Business Intelligence?  a set of concepts and methods to improve business decision making by using fact- based support systems (e.g. briefing books and executive information systems in the 1990s) Gartner Group www.gartner.com

18. IMS3001 – BUSINESS INTELLIGENCE SYSTEMS – SEM 1, 2004 18 What is Business Intelligence?  BI lets organisations access, analyse, and share information internally with employees and externally with customers, suppliers, and partners Business Objects www.businessobjects.com

19. IMS3001 – BUSINESS INTELLIGENCE SYSTEMS – SEM 1, 2004 19 What is Business Intelligence?  BI helps corporations transform their operational data into actionable information; helps meet query reporting and advanced analytical needs MicroStrategy www.microstrategy.com

20. IMS3001 – BUSINESS INTELLIGENCE SYSTEMS – SEM 1, 2004 20 What is Business Intelligence?  BI is a performance management framework, an ongoing cycle by which companies set their goals, analyze their progress, gain insight, take action, measure their success, and start all over again  It helps decision makers make better decisions faster at both strategic and operating levels Vitt, Luckevich and Misner (2002) Microsoft Corporation

21. IMS3001 – BUSINESS INTELLIGENCE SYSTEMS – SEM 1, 2004 21 What is Business Intelligence? According to non-vendors:  BI is processed information of interest to management about the present and future environment in which business is operating Greene (1966)

22. IMS3001 – BUSINESS INTELLIGENCE SYSTEMS – SEM 1, 2004 22 What is Business Intelligence?  Processed information vs. data  data - raw material that is composed of facts  intelligence information - information digested, analysed, and interpreted for the purpose of decision making  Management has crucial role in BI, determines  what will be in the domain of BI  what information if of interest or relevant to its decision  Company’s environment  Present environment (mostly for tactical intelligence)  Future environment (mostly for strategic intelligence) Greene (1966) (cont)

23. IMS3001 – BUSINESS INTELLIGENCE SYSTEMS – SEM 1, 2004 23  Operational Intelligence  Affects operational levels of organisation on daily, weekly, monthly basis  Tactical Intelligence  Affects a part of organisation for a limited time (i.e., coming year) into the future  Strategic Intelligence  Affects the entire organisation, or a major part of it for a long period of time (i.e., 2 - 5 years and beyond)  PURPOSE OF BI  Shift from reliance on short-term tactical decisions to better use of strategic intelligence in the decision- making process Greene (1966) (cont) What is Business Intelligence?

24. IMS3001 – BUSINESS INTELLIGENCE SYSTEMS – SEM 1, 2004 24 What is Business Intelligence?  BI results from full appraisal of information, past actions, and options; once sown, it tends to propagate itself across an organisation Liautuad and Hammond (2000)

25. IMS3001 – BUSINESS INTELLIGENCE SYSTEMS – SEM 1, 2004 25 What is Business Intelligence?  BI refers to the ability to understand the interrelationships of presented facts – whether they involve data, information and/or knowledge – in such a way to guide action toward one or more desired goals Thierauf (2001)

26. IMS3001 – BUSINESS INTELLIGENCE SYSTEMS – SEM 1, 2004 26 What is Business Intelligence?  Relationship of intelligence to various levels of summarisation  Data – unstructured data  Information – structured data useful for analysis  Knowledge - obtained from experts based on actual experience  Intelligence – keen insight into understanding important relationships Thierauf (2001)

27. IMS3001 – BUSINESS INTELLIGENCE SYSTEMS – SEM 1, 2004 27 What is Business Intelligence?  BI centers on computerised methods and processes to improve strategic, tactical and operational decisions using data, information, and knowledge from multiple sources as well as applying experience and assumptions to develop an accurate understanding of the dynamic surrounding decision making Thierauf (2001) (cont)

28. IMS3001 – BUSINESS INTELLIGENCE SYSTEMS – SEM 1, 2004 28 For this UNIT – IMS3001  We shall adopt the definition of BI by non- vendors – process, organisational function, product  Processing of information – collecting, organising, analysing, gaining insight, interpreting, reporting data, taking action, measuring the benefits of such actions for the purpose of supporting decision making  Generally in the context of decision support

29. IMS3001 – BUSINESS INTELLIGENCE SYSTEMS – SEM 1, 2004 29 What is a Business Intelligence System?

30. IMS3001 – BUSINESS INTELLIGENCE SYSTEMS – SEM 1, 2004 30 What is Business Intelligence System?  BIS is an information system that provides BI to business decision makers at different levels of organisation (operational, tactical, strategic levels)  BIS is an information system that turns selected data, information, and/or knowledge into desired intelligence for business gain (Thierauf, 2001)

31. IMS3001 – BUSINESS INTELLIGENCE SYSTEMS – SEM 1, 2004 31 What is the role of Business Intelligence System?

32. IMS3001 – BUSINESS INTELLIGENCE SYSTEMS – SEM 1, 2004 32 Role of BIS  Provide decision makers with the ability to understand (i.e., the intelligence to gain insights into) the relationships of presented facts in the form of data, information, and knowledge in order to guide action toward a desired actionable goal (Thierauf, 2001)

33. IMS3001 – BUSINESS INTELLIGENCE SYSTEMS – SEM 1, 2004 33 Role of BIS  Provide decision makers with timely data, information and knowledge for problem solving, and problem finding  Past : Decision making as Problem Solving activity  Reactive approach –use of appropriate management technologies to resolve current problems as they arise  Current: Business intelligence activity as problem solving, as well as problem finding  Proactive, preventive approach – anticipating future company problems; looking for future opportunities

34. IMS3001 – BUSINESS INTELLIGENCE SYSTEMS – SEM 1, 2004 34 How did Business Intelligence Systems evolve?

35. IMS3001 – BUSINESS INTELLIGENCE SYSTEMS – SEM 1, 2004 35 Evolution of BIS Computer-based Support Systems technologies  1950sTransaction Processing Systems (TPS)  1960sManagement Information Systems (MIS)  1970sOffice Automation Systems Decision Support Systems (DSS)  1980s DSS Expanded Commercial applications of Expert Systems Executive Information Systems (EIS)  1990s Group Support Systems Neural Computing Integrated, hybrid computer systems Turban and Aronson (2001 )

36. IMS3001 – BUSINESS INTELLIGENCE SYSTEMS – SEM 1, 2004 36 Attributes of Computer-based Support Systems (Turban and Aronson, 2001) Dimensio n Applications TPSPayroll, inventory, record keeping, production and sales information MISProduction control, sales forecasting, monitoring DSSLong-range strategic planning, complex integrated problem areas ESDiagnosis, strategic planning, internal control planning, maintenance strategies, narrow domain EISSupport to top management, decision, environmental scanning

37. IMS3001 – BUSINESS INTELLIGENCE SYSTEMS – SEM 1, 2004 37 Attributes of Computer-based Support Systems (Turban and Aronson, 2001) DimensionFocus TPSData transactions MISInformation DSSDecisions, flexibility, user-friendliness ESInferencing, transfer of expertise EISTracking, control “drill down”

38. IMS3001 – BUSINESS INTELLIGENCE SYSTEMS – SEM 1, 2004 38 Attributes of Computer-based Support Systems (Turban and Aronson, 2001) DimensionDecision Capabilities TPSNo decision, or simple decision models MISStructured routine problems using conventional operations research tools DSSSemi-structured problems, integrated operations research models, bled of judgment and structured support capabilities ESThe system makes complex decisions, unstructured; use of rules (heuristics) EISNone

39. IMS3001 – BUSINESS INTELLIGENCE SYSTEMS – SEM 1, 2004 39 Attributes of Computer-based Support Systems (Turban and Aronson, 2001) DimensionHighest Organisation Level served TPSSub-managerial, low management MISMiddle management DSSTop management ESTop management and specialists EISSenior executives

40. IMS3001 – BUSINESS INTELLIGENCE SYSTEMS – SEM 1, 2004 40 More BIS technologies  1990s Data warehouses  Enable decision makers to “pull” BI from a large centralised repository  created to support the information requirements of an organisation’s decision makers.  1990s OLAP (On-Line Analytical Processing) systems  Enable decision makers to build and work with analytical models easily and view the output in multiple dimensions  1990s Knowledge Management Systems (KMS)  Go beyond relationships found in information allowing decision makers to extract patterns, trends, correlations that underlie the interworkings of a company currently and over time

41. IMS3001 – BUSINESS INTELLIGENCE SYSTEMS – SEM 1, 2004 41 Summary  Vendors define BI according to what their products can do for the business enterprise  Limited in scope; mostly refers to data analysis, querying and reporting  Non-vendors refer to BI as a process, an organisational function, and a product  Process – of converting data into actionable information – from unstructured data to keen insight and understanding of interrelationships of presented facts  Organisational function – strategic management function that affects the entire or major part of organisation  Product – processed information for the purpose of supporting business decision making

42. IMS3001 – BUSINESS INTELLIGENCE SYSTEMS – SEM 1, 2004 42 Summary  BIS is an information system that provides BI to business decision makers  BIS evolved from the concept of Computer-based Support Systems decision support technologies  New BIS terminologies – data warehousing, OLAP, KMS

43. IMS3001 – BUSINESS INTELLIGENCE SYSTEMS – SEM 1, 2004 43 References  Vitt, E., Luckevich, M. and Misner, S. (2002) Business Intelligence, Microsoft Corporation.  Greene, R. (1966) Business Intelligence and espionage. Dow-Jones Irwin, Homewood, Ill.  Lintaud, B. (2000) e-Business Intelligence: Turning Information into Knowledge into Profit, McGraw Hill, New York.  Thierauf, R. (2001) Effective business intelligence systems, Quorum Books.  Turban, E. and Aronson, J. (2001) Decision Support and Intelligent Systems, 6th Ed, Prentice Hall.

44. IMS3001 – BUSINESS INTELLIGENCE SYSTEMS – SEM 1, 2004 44 Questions? Jocelyn.sanpedro@sims.monash.edu.au School of Information Management and Systems, Monash University T1.28, T Block, Caulfield Campus 9903 2735