Business Intelligence CHAPTER 12 Business Intelligence

CHAPTER OUTLINE 12.1 Managers and Decision Making 12.2 What Is Business Intelligence? 12.3 Business Intelligence Applications for Data Analysis 12.4 Business Intelligence Applications for Presenting Results 12.5 Business Intelligence in Action: Corporate Performance Management

LEARNING OBJECTIVES 1. Identify the phases in the decision-making process, and use a decision-support framework to demonstrate how technology supports managerial decision making. 2. Describe and provide examples of the three different ways in which organizations use business intelligence.

LEARNING OBJECTIVES (continued) 3. Specify the BI applications available to users for data analysis, and provide examples of how each might be used to solve a business problem at your university. 4. Describe three BI applications that present the results of data analyses to users, and offer examples of how businesses and government agencies can use each of these technologies.

LEARNING OBJECTIVES (continued) 5. Describe corporate performance management, and provide an example of how your university could use CPM.

Chapter Opening Case: Quality Assurance at Daimler AG Source: Alperium/Shutterstock

12.1 Managers and Decision Making Management Management is a process by which organizational goals are achieved through the use of resources (people, money, energy, materials, space, time). © Sigrid Olsson/Photo Alto/Age Fotostock

The Manager’s Job and Decision Making Managers have three basic roles (Mintzberg 1973) Interpersonal roles Informational roles Decisional roles Managers have three basic roles: Interpersonal roles: figurehead, leader, liaison Informational roles: monitor, disseminator, spokesperson Decisional roles: entrepreneur, disturbance handler, resource allocator, negotiator.

The Manager’s Job & Decision Making (continued) Decisions and Decision making Decision refers to a choice that individuals and group make among two or more alternatives. Decision making is a systematic process composed of three major phases: intelligence, design and choice (Simon 1977), with the implementation phase added later. Source: Image Source Limited

Decision Making Process

Why Managers Need IT Support The number of alternatives to be considered constantly increases. Decisions must be made under time pressure. Decisions are more complex. Decision makers can be in different locations and so is the information.

A Framework for Computerized Decision Analysis Lower-level managers usually perform the structured and operational-control oriented tasks in cells 1, 2, and 4. (Blue color above). Middle managers and staff usually perform the tasks in cells 3, 5, and 7. (Orange color above). Senior executives usually perform the tasks in cells 6, 8, and 9. (Yellow color above.)

Problem Structure The first dimension deals with the problem structure, where the decision making processes fall along the continuum ranging from highly structured to highly unstructured decisions. Highly structured Higly unstructured Semistructured Structured problems are routine and repetitive problems for which standard solutions exist. Unstructured problems are fuzzy, complex problems for which there are no cut-and-dried solutions. Semistructured problems are problems in which only some of the decision process phases are structured. Order entry Loan approval Building new plant

The Nature of Decisions The second dimension of decision support deals with the nature of decisions Operational control Management control Strategic planning Operational control involves executing specific tasks efficiently and effectively. Management control involves decisions concerning acquiring and using resources efficiently in accomplishing organizational goals. Strategic planning involves decisions concerning the long range goals and policies for growth and resource allocation.

12.2 What Is Business Intelligence? Business Intelligence (BI) refers to applications and technologies for consolidating, analyzing, and providing access to vast amounts of data to help users make better business and strategic decisions. Clicking on the logos above will take you to each company’s home page. Source: Angela Waye/Shutterstoc

The Scope of Business Intelligence Larger organizations: Data mining, predictive analytics, dashboards Smaller organizations: Excel spreadsheets Source: Dundas Software, www.dundas.com/ dashboard/online-examples/ screenshots/Marketing-Dashboard.aspx

How Organizations Use BI Develop few, related BI applications Data mart Develop infrastructure to support enterprisewide BI Enterprise data warehouse Support organizational transformation

12.3 Business Intelligence Applications for Data Analysis Multidimensional Analysis or Online Analytical Processing (OLAP) Data Mining Decision Support Systems © Toh Kheng Ho/Age Fotostock America, Inc.

Multidimensional Analysis or Online Analytical Processing (OLAP) (1) Provides users with a look at what is happening or what has happened. (2) Allows users to analyze data in such a way that they can quickly answer business questions. Source: Angela Waye/Shutterstoc

Data Mining Data mining refers to the process of searching for valuable information in a large database, data warehouse, or data mart. Data mining performs two basic operations: Predicting trends and behaviors; Identifying previously unknown patterns and relationships. Source: Corbis/Image Source Limited

How Business Intelligence Works © Aydin/Age Fotostock America, Inc.

Decision Support Systems (DSS) DSS capabilities Sensitivity analysis What-if analysis Goal-seeking analysis Decision support systems (DSSs) are computer-based information systems that combine models and data in an attempt to solve semistructured and some unstructured problems with extensive user involvement. Sensitivity analysis is the study of the impact that changes in one (or more) parts of a model have on other parts. What-if analysis is the study of the impact of a change in the assumptions (input data) on the proposed solution. Goal-seeking analysis is the study that attempts to find the value of the inputs necessary to achieve a desired level of output. © STOCKBROKERXTRA/Age Fotostock America, Inc.

12.4 Business Intelligence Applications for Presenting Results Dashboards Data Visualization Technologies Geographic Information Systems Real-Time BI

Digital Dashboard (example) Digital Dashboards: Provide rapid access to timely information. Provide direct access to management reports. Are very user friendly and supported by graphics. Source: MicroStrategy

Digital Dashboard (example) Source: Dundas Software, www.dundas.com/ dashboard/online-examples/ screenshots/Marketing-Dashboard.aspx

Digital Dashboard Demo http://www.informationbuilders.com/rfr/qtdemo/AdvVis_ExecDash/AdvVis_ExecDash.html

A Bloomberg Terminal Source: Carlos Osario/Zuma Press

Management Cockpit The management cockpit is a strategic management room that enables top-level decision makers to pilot their businesses better. The environment encourages more efficient management meetings and boosts team performance via effective communication. Key performance indicators and information relating to critical success factors are displayed graphically on the walls of the meeting room. External information can be easily imported to the room to allow competitive analysis. Source: The Management Cockpit is a registered trademark of SAP,created by Professor M.Georges.

Data Visualization Systems The Power of Visualization Even though a picture is “worth a thousand words,” we have to be very careful about just what we are seeing. Remember, on the Internet, it is “user beware!” Data visualization is the process of presenting data to users in visual formats, thereby making IT applications more attractive and understandable to users. The link above takes you to a short video from Dove.

Example of data visualization Hans Rosling at the TED Talks This is an outstanding 21-minute video that illustrates data visualization.

GISMO GISMO is a geographic information system developed for the city of Corvallis, Oregon. Clicking on the link above will present an interactive demonstration of GISMO.

12.5 Business Intelligence in Action: Corporate Performance Management Corporate performance management is involved with monitoring and managing an organization’s performance according to key performance indicators. FIGURE 12.7 1-8000 CONTACTS customer service agent dashboard.

Chapter Closing Case The Business Problem The IT Solutions The Results