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BUSINESS PLUG-IN B18

Business Intelligence

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LEARNING OUTCOMES

1. Explain the problem associated with business intelligence. Describe the solution to this business problem

2. Describe the three common forms of data-mining analysis?

3. Compare tactical, operational, and strategic BI

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LEARNING OUTCOMES

4. Explain the organization-wide benefits of BI

5. Describe the four categories of BI business benefits

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BUSINESS INTELLIGENCE

• Business intelligence (BI) – applications and technologies used to gather, provide access to, and analyze data and information to support decision-making efforts

• Parallels between the challenges in business and challenges of war– Collecting information– Discerning patterns and meaning in the

information– Responding to the resultant information

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The Problem: Data Rich, Information Poor

• Businesses face a data explosion as digital images, email in-boxes, and broadband connections doubles by 2010

• The amount of data generated is doubling every year

• Some believe it will soon double monthly

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The Solution: Business Intelligence

• Improving the quality of business decisions has a direct impact on costs and revenue

• BI systems and tools results in creating an agile intelligent enterprise

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The Solution: Business Intelligence

• BI enables business users to receive data for analysis that is:– Reliable– Consistent– Understandable– Easily manipulated

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The Solution: Business Intelligence

• BI can answer tough customer questions

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OPERATIONAL, TACTICAL, AND STRATEGIC BI

• Claudia Imhoff, president of Intelligent Solutions, divides the Spectrum of data mining analysis and business intelligence into three categories:– Operational– Tactical– Strategic

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OPERATIONAL, TACTICAL, AND STRATEGIC BI

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OPERATIONAL, TACTICAL, AND STRATEGIC BI

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BI’s Operational Value

• Richard Hackathorn’s graph demonstrating the value of operational BI

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BI’s Operational Value

• The key is to shorten the latencies so that the time frame for opportunistic influences on customers, suppliers, and others is faster, more interactive, and better positioned

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DATA MINING

• Data mining – process of analyzing data to extract information

• Data-mining tools – use a variety of techniques to find patterns and relationships in large volumes of information

– Classification – Estimation – Affinity grouping – Clustering

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DATA MINING

• Common forms of data-mining analysis capabilities include:

– Cluster analysis– Association detection– Statistical analysis

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Cluster Analysis

• Cluster analysis – a technique used to divide an information set into mutually exclusive groups such that the members of each group are as close together as possible to one another and the different groups are as far apart as possible

• CRM systems depend on cluster analysis to segment customer information and identify behavioral traits

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Association Detection

• Association detection – reveals the degree to which variables are related and the nature and frequency of these relationships in the information

– Market basket analysis

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Statistical Analysis

• Statistical analysis – performs such functions as information correlations, distributions, calculations, and variance analysis

– Forecast – predictions made on the basis of time-series information

– Time-series information – time-stamped information collected at a particular frequency

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BUSINESS BENEFITS OF BI

• Benefits of BI include:– Single Point of Access to Information for

All Users – BI across Organizational Departments– Up-to-the-Minute Information for

Everyone

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Four Primary Categories of BI Benefits

• Four main categories:1. Quantifiable benefits

2. Indirectly quantifiable benefits

3. Unpredictable benefits

4. Intangible benefits

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CLOSING CASE ONEIntelligent Business

1. What is the problem of gathering business intelligence from a traditional company? How can BI solve this problem?

2. Choose one of the three common forms of data-mining analysis and explain how Travelocity could use it to gain BI

3. How will tactical, operational, and strategic BI be different when applied to personal Google?

4. How is IBM’s search and analysis software an example of BI?

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CLOSING CASE ONEIntelligent Business

5. What does the term “pervasive business intelligence” mean?

6. How could any business benefit from technology such as Personal Google?

7. How could a company use BI to improve its supply chain?

8. Highlight any security and ethical issues associated with Biggle

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CLOSING CASE TWOBig Bad Burger

1. What does business intelligence really mean to a business? How did CPR save millions for CKE?

2. What are the negative impacts of CKE’s business intelligence?

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CLOSING CASE TWOBig Bad Burger

3. Explain the three forms of data-mining analysis and explain how CKE can use it to gain BI?

4. How can CKE use tactical, operational, and strategic BI?

5. What types of ethical and security issues could CKE face from CPR?