Winter 2014 – Term 1 - University of British...

COMM 391Introduction to Management Information Systems

Winter 2014 – Term 1

BUSINESS INTELLIGENCE AND ANALYTICS

Learning Objectives

1. Describe the decision-support framework.

2. Describe business intelligence (BI).3. Describe the fundamental concepts of

data warehouses, data marts, OLAP and data mining.

© 2014 – Y.M. Cheung 3COMM 391 - W2014 Term 1

Case 10.1 Quality Assurance at Daimler AG

Read the “Case 10.1 Quality Assurance at Daimler AG”

What do we learn from this case?

© 2014 – Y.M. CheungCOMM 391 - W2014 Term 1 4

Case 10.1 Quality Assurance at Daimler AG – The Problem

Dating back to the 1980s, German automaker Daimler AG housed warranty data on its Quality Information System (QUIS), a mainframe-based platform and the diagnostic and warranty data were located in different information silos.


The organization was unable to take full advantage of the data and the diagnosis database had reached the limits of its capacity.

Case 10.1 Quality Assurance at Daimler AG – The IT Solution Over a three-year period, Daimler consolidated

its data on a data warehouse, making these data available to users through a shared interface.

The new system is called Advanced Quality Analysis (AQUA).

AQUA provides support for two strategic goals: (1) to increase customer satisfaction; and

(2) to reduce costs.


Case 10.1 Quality Assurance at Daimler AG – The Results AQUA has enabled Daimler to achieve deeper

insights into how to optimize its production processes.

Defects can be detected more quickly, resolved, and eliminated from future models.

AQUA supports Daimler’s strategic goals of quality leadership, customer satisfaction and profitability.


What we learned from this case. BI enables decision makers to quickly ascertain

the status of a business enterprise by examining key information.

BI systems provide business intelligence that you can act on in a timely fashion.

Users will decide what data should be stored in their data warehouses, how they want to analyze the data (user-driven analysis), and what data they want to see and in which format.


Learning Objective 1

• Describe the decision-support framework


The Manager’s Job and Decision Making Management is a process by which an organization

achieves its goals through the use of resources(people, money, materials, and information).

Managers have three basic roles (Mintzberg 1973) : Interpersonal Informational Decisional

A decision is a choice among two or more alternatives that individuals and groups make.

Decision making is a systematic process.


Decision Making Process


Decision Making Process (cont’d)

Intelligence Phase Managers examine a situation and identify and

define the problem or opportunity.

Design Phase Decision makers construct a model that

simplifies the problem and set criteria for evaluating potential solutions.

Choice Phase A solution is selected.


Why Managers Need IT Support?

The number of alternatives is constantly increasing.

Most decisions must be made under time pressure.

Decisions are becoming more complex. Decision makers, as well as the information, can

be situated in different locations.


An Obvious Question

What Information Technologies Are Available to Support Managers?


Decision Support Framework


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.


Structured Semi-structured Unstructured

Example:Inventory Control

Example:Evaluating Employees

Example:New Services

Problem Structure

• Deal with routine and repetitive problems for which standard solutions exist.

Structured

• Require a combination of standard solution procedures and individual judgement.

Semi-Structured

• Deal with complex problems for which there are no cut-and-dried solutions.

Unstructured


Nature of Decision

• Executing specific tasks efficiently and effectively.

Operational Control

• Acquiring and using resources efficiently in accomplishing organization goals.

Management Control

• The long-range goals and policies for growth and resource allocation.

Strategic Planning


For discussion …

You are registering for classes next term. Apply the decision-making process to your decision about how many and which courses to take.

Is your decision structured, semi-structured, or unstructured?


For discussion …

Consider your decision-making process when registering for classes next term.

Explain how Information Technology supports (or does not support) each phase of this process.



• Describe business intelligence (BI)


What is Business Intelligence? Business Intelligence (BI) is a broad

category of applications, technologies and processes for gathering, storing, accessing and analyzing data to help business users make better decisions.

BI applications enable decision makers to quickly ascertain the status of a business enterprise by examining key information.


Why Business Intelligence? Data are business

assets. Unused data are wasted business resources.

The challenge is to make decisions in an environment that is data rich andinformation poor.


Source: http://www.economist.com/node/15557443

The Solution: Business Intelligence

Too much data not enough information Business intelligence supports decision-

making by analysing business information. Provides information about the past Monitors current operations Predicts and forecasts future trends

BI systems can assist in better decisions.


How BI can Provide Answers?


Where the business has

been?

Where it is now?

Where it will be in the

near future?

Scope of Business Intelligence

Three specific BI targets that represent different levels of change:Development of one or a few related BI

applications. o E.g. campaign management in marketingDevelopment of infrastructure to support

enterprise-wide BI. o E.g. enterprise data warehouse Support for organizational transformation

o E.g. support for new business model


Strategic, Operational and Tactical BI The three forms of BI must work towards a

common goal.


Strategic, Operational and Tactical BI (cont’d)


BI’s Operational ValueTime needed to make transactional

data ready for analysis.

Time from which data is made available and

analysis of it is completed.

Time it takes a human to comprehend the analysis and take appropriate action.


What is Business Intelligence? –Learn from the Leaders


(Source: http://learn-leaders.teradata.com/)Please click this link to watch the video !

Enterprise BI Platforms and Tools


(Source: http://www.forrester.com/pimages/rws/reprints/document/108103/oid/1-M6RP7E)

Source: Forrester


• Describe the fundamental concepts of data warehouses, data marts, OLAP and data mining.


What is a Data Warehouse? Data warehouse – a logical collection of

information – gathered from many differentoperational databases – that supports business analysis activities and decision-making tasks.

The primary purpose of a data warehouse is to aggregate information throughout an organization into a single repository for decision-making purposes.

A repository of historical data that are organized by subject, e.g. by customer, product, vendor, etc.


A Typical Data Warehouse

ExtractTransform

External Sources

Operational Databases Serve

Analysis

Query/ Reporting

Data Mining

Data Warehouse

e.g. interest rate, stock prices, crude oil price, competitors’ product price

e.g., At P&G, each of product divisions (beauty, baby care, snacks and beverage) may have a DB in each of sales offices throughout the world


ETL – Extract/Transform/Load

Extraction, Transformation, and Loading (ETL) – a process that extractsinformation from internal and external databases, transforms the information using a common set of enterprise definitions, and loads the information into a data warehouse.


What is a Data Mart?

Data mart – contains a subset of data warehouse information extracted to be analyzed for specific business units.

A low-cost, scaled-down version of a data warehouse.

Can be implemented more quickly than data warehouses.


Databases, Data Warehouses, Data Marts in an Organization


An Obvious Question

Would it be possible that certain valuable information is indeed in the data but we cannot easily discover the information?


What is OLAP?

Online Analytical Processing (OLAP) or Multidimensional Analysis “slices & dices” data stored in a

dimensional format drills down in the data to greater detail aggregates the data


What is a Multidimensional Database? A multidimensional database (MDB)

is a type of database that is optimized for data warehouse and online analytical processing (OLAP) applications.

Multidimensional databases are frequently created using input from existing relational databases.


Relational Databases

Two dimensional.


Multidimensional Databases

Three dimensional matrix or data cube.


Databases Databases

What is Data Mining? Data mining – the process of searching and

analyzing data to extract valuableinformation not offered by the raw data alone. Drilling Down – increasing levels of detail. Drilling Up – increasing summarization.

Perform two basic operations: Predicting trends and behaviors. Identifying previously unknown patterns.


Examples of Data Mining Application

Retailing and sales – predicting sales, preventing theft and fraud

Banking – forecasting levels of bad loans and fraudulent credit card use, predicting credit card spending by new customers

Insurance – forecasting claim amounts and medical coverage costs

Marketing – classifying customer demographics that can be used to predict which customers will respond to a mailing or buy a particular product.


Decision Support Systems Decision Support Systems (DSS) combine

models and data in an attempt to analyze semistructured and some unstructuredproblems with extensive user involvement.

Models are simplified representations, or abstractions, of reality.

DSS enable business managers and analysts to access data interactively, to manipulate these data, and to conduct appropriate analyses, e.g. sensitivity analysis, what-if analysis, goal-seeking analysis.


SAP Business One Sales Monitoring Dashboard

What are BI Dashboards? A dashboard

shows not only BI analysis results, but also when business performance variables reach critical threshold levels.

Evolved from EIS.


Bloomberg Terminals Bloomberg provides a

subscription service that sells financial data, software to analyze these data, trading tools, and news.

All of this information is accessible through a colour-coded Bloomberg keyboard that displays the desired information on a computer screen.


Bloomberg Charts

Conclusion Business Intelligence (BI) leverages the information

stored in data warehouses for strategic advantage and more effective business practice.

Data warehouses (and data marts) contain summarized, analytical information sourced from transactional relational databases.

Raw transactional data from different operational relational databases are extracted, transformed and loaded (ETL) into data warehouses.

Data mining is the process of searching for valuable business information in a large data warehouse or data mart.


Winter 2014 – Term 1 - University of British...

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