Business Intelligence Putting together all of the pieces of the puzzle Business intelligence (BI) refers to all of the applications and technologies used to , provide access to, and information to efforts

Chapter 5: Business Intelligence

Business Intelligence vs Business Analytics Querying, reporting, online analytical processing, business analytics Business Analytics A subset of BI based upon statistics, prediction and organization. BI answers W ? How many? How ? Where the problem is What actions are needed BA answers W is this happening? What if these trends continue? What will happen next? What is the best (or worst) that can happen?

That is what we are trying to solve using business intelligence. Sun Tzu in The Art of War To succeed in war, one should have full of one’s own and and full knowledge of the enemy’s strengths and weaknesses. Lack of either one might result in defeat. Many businesses today say “how can I understand my competitor when I can’t even understand myself. That is what we are trying to solve using business intelligence.

The Problem: With all of the data being captured and generated by SCM, CRM and ERP systems, as well as the other digital data being created and transmitted (spreadsheets, fields in database files, word processing documents, video clips, email and text messages, voice mail, etc.), businesses are facing a digital explosion. The amount of data generated is doubling every year Some believe it will soon double monthly Data is a for a business, and if the asset is not used, the business is As businesses increase their reliance on enterprise systems such as CRM, they are rapidly accumulating vast amounts of data. Every interaction between departments or with the outside world, historical information on past transactions, as well as external market information, is entered into information systems for future use and access.

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An Ideal Business Scenario An account manager, on her way to a client visit, looks up past proposals, as well as the client’s ordering, payment, delivery, support and marketing history. At a glance, she can tell that the client’s ordering volumes have dropped lately. A few queries later, she understands that the client had support issues with a given product. She calls her support department and learns that the defective product will be replaced within 24 hours. In addition, the marketing records show that the client recently attended a user conference and expressed interest in a new product line. With this information, she is prepared for a constructive sales call. She understands all aspects of a client’s relationship with her firm, understands the client’s issues and can confidently address new sales opportunities. For all of this to happen, an organization needs to make sure that it has information systems that can speak to each other using the same language, even if they are in different departments, buildings or geographic locations. If I have systems that can speak to each other and if I have the tools necessary to analyze this data and if I understand how to use those tools, then I can go from being in a situation where I am data rich and information poor into a situation where I am both data rich and an information millionaire

To improve the quality of business decisions, business intelligence tools and systems are used to make better, more informed decisions Predict sales and distribution schedules Determine correct inventory levels Forecast levels of bad loans and fraudulent credit card use Forecast credit card spending by new customers Predict machinery failures Determine key factors that control optimization of manufacturing capacity Predict when bond prices might change Determine when to buy or sell stocks Predict hard drive failures Predict potential security violations A few examples of using BI to make informed business decisions include: Retail and sales: Predict sales and distribution schedules Determine correct inventory levels Banking Forecast levels of bad loans and fraudulent credit card use Forecast credit card spending by new customers Operations Management Predict machinery failures Determine key factors that control optimization of manufacturing capacity Investments and Securities Trading Predict when bond prices might change Determine when to buy or sell stocks Information Technology Predict hard drive failures Predict potential security violations

Forecast claim amounts and medical coverage costs. Classify the most important elements that affect medical coverage. Track crime patterns, locations and criminal behavior Forecast the cost of moving military equipment Testing strategies for potential military engagements Capture data on where customers are flying and the ultimate destination of passengers who change airlines in hub cities: is there a new route that should be added? Predict what type of show is best to air during prime time and how to maximize returns by interjecting commercials Develop insights on symptoms and causes that result in illness and how to provide proper treatments. Insurance: Forecast claim amounts and medical coverage costs. Classify the most important elements that affect medical coverage. Law Enforcement Track crime patterns, locations and criminal behavior Government and Defense Forecast the cost of moving military equipment Testing strategies for potential military engagements Airlines Capture data on where customers are flying and the ultimate destination of passengers who change airlines in hub cities: is there a new route that should be added? Broadcasting Predict what type of show is best to air during prime time and how to maximize returns by interjecting commercials Health Care Develop insights on symptoms and causes that result in illness and how to provide proper treatments.

Having BI promotes understanding: Asking WHY? Organizations can use Business Intelligence to find the root causes to problems and provide solutions simply by asking “Why?” Once an organization has a clear understanding of root causes, it can then take effective action. Where the business has been. Historical perspective is always important in determining trends and patterns of behavior. Where it is now. Current situations are critical to either modify if not acceptable or encourage if they are trending in the right direction. And where it will be in the near future. Being able to predict with surety the direction of the company is critical to sound planning and to creating sound business strategies. W ? (historical perspective) W ? (modify or encourage to continue) Where (predict future direction)

DATA MINING The center of any business intelligence effort is data mining. BI tells you . Data mining tells you . Data mining: the use of advanced statistical techniques to analyze large amounts of data in order to find patterns, relationships and infer rules that might be used to predict future behavior. Uses query tools, multidimensional analysis, intelligent agents and various statistical tools Algorithms are applied to data sets to inherent and in the data.

Data Mining Operations P trends and behaviors I unknown patterns Determine how things fit together W ? I patterns Attempting to characteristics

Pivot Tables can help you see The business intelligence tool used by most organizations is and its data analysis functionality, especially By adding a Page Field to a Pivot Table, you can add another dimension of information: 3-D (rows and columns and layers). Creating a 3-dimensional Pivot Table in Excel is a means of conceptually building a data warehouse. Page fields represent the depth layer Pivot Tables can help you see