Business Intelligence

Business Intelligence An Introduction to Business Intelligence http://www1.chihlee.edu.tw/teachers/chienhua/ Central Themes of the Lecture What is Business Intelligence? A Brief History of Business Intelligence The Architecture of Business Intelligence Major BI Tools and Techniques The Benefits of Business Intelligence Major BI Vendors Issues for Successful BI Slides developed by Chien-Hua Tsai 2 Why is BI getting hot? Why is BI getting hot? Demands from processing explosive information ERP/CRM/SCM Internet Gartner Says Business Intelligence Software Market to Reach $17.1 Billion in 2016 Gartner Says Worldwide Business Intelligence Software Revenue to Grow 7 Percent in 2013 Slides developed by Chien-Hua Tsai 3 Slides developed by Chien-Hua Tsai 4 1

Gartner: BI is #1 Priority for CIOs Explosion of Digitally Born Data Top 10 CIO Technology Priorities in 2015 Slides developed by Chien-Hua Tsai 5 Slides developed by Chien-Hua Tsai 6 Data Scale Big Data - Market Slides developed by Chien-Hua Tsai 7 "Big data" has increased the demand of information management specialists - major companies have spent more than $15 billion for this. This industry is worth more than $100 billion and growing at almost 10% a year. 4.6 billion mobile-phone subscriptions worldwide and between 1 billion and 2 billion people accessing the internet. The world's effective capacity to exchange information through telecommunication networks was 281 petabytes in 1986, 471 petabytes in 1993, 2.2 exabytes in 2000, 65 exabytes in 2007 It is predicted that the amount of traffic flowing over the internet will reach 667 exabytes annually by 2013. Slides developed by Chien-Hua Tsai 8 2

Business Philosophy Changing Business Environment & Computerized Decision Support Understand today s turbulent business environment and describe how organizations survive and even excel in such an environment (i.e., solving problems and exploiting opportunities) Understand the need for computerized support of managerial decision making in implementing business analytics Companies are moving aggressively to computerized support of their operations => Business Intelligence Business Pressures Responses Support Model Business pressures result of today's competitive business climate Responses to counter the pressures Support to better facilitate the process Slides developed by Chien-Hua Tsai 9 Slides developed by Chien-Hua Tsai 10 Business Pressures Responses Support Model Business Pressures Responses Support Model Increasing potential to support business decisions Decision Making Data Presentation Visualization Techniques Data Mining Information Discovery End User Business Analyst Data Analyst Data Exploration Statistical Summary, Querying, and Reporting Data Preprocessing/Integration, Data Warehouses Data Sources Paper, Files, Web documents, Scientific experiments, Database Systems DBA Slides developed by Chien-Hua Tsai 11 Slides developed by Chien-Hua Tsai 12 3

What is Intelligence in Business? Business Intelligence (BI) What is the current status of the business? What s going well? What needs improvement? What are the business strengths and weaknesses? Are there opportunities for innovation or competitive advantage? How do we improve our decision making? Slides developed by Chien-Hua Tsai 13 BI refers to skills, technologies, applications and practices used to help a business acquire a better understanding of its commercial context. Meaning of an evolution of decision support concepts over time BI's major objective is to enable easy access to data (and models) to provide business managers with the ability to conduct analysis BI helps transform data, to information (and knowledge), to decisions and finally to action Slides developed by Chien-Hua Tsai 14 BI Answers Business Questions BI Answers Business Questions Which Of My Customers Are Most Profitable? Or, Who Are My Customers? Slides developed by Chien-Hua Tsai 15 Slides developed by Chien-Hua Tsai 16 4

BI Answers Business Questions BI Answers Business Questions Which Products Cost The Most To Maintain? Where Can We Cut Costs? Slides developed by Chien-Hua Tsai 17 Slides developed by Chien-Hua Tsai 18 Half Of Our Marketing Efforts Earn Us A Fortune Business Intelligence Recipe Start with your legacy data Could Someone Please Tell Us Which Half That Is? leverage cloud data Slides developed by Chien-Hua Tsai 19 Slides developed by Chien-Hua Tsai 20 5

Turn That Data Into Intelligence Get The Information In Front Of The Right Group Slides developed by Chien-Hua Tsai 21 Slides developed by Chien-Hua Tsai 22 Think Through Some New Strategies Implement Changes In Your Business Slides developed by Chien-Hua Tsai 23 Slides developed by Chien-Hua Tsai 24 6

Watch For Results Adjust And Repeat As Needed Slides developed by Chien-Hua Tsai 25 Slides developed by Chien-Hua Tsai 26 Business Intelligence Done Right Central Themes of the Lecture Turns: Data Into Information Information Into Knowledge Knowledge Into Decisions Decisions Into Profits What is Business Intelligence? A Brief History of Business Intelligence The Architecture of Business Intelligence Major BI Tools and Techniques The Benefits of Business Intelligence Major BI Vendors Issues for Successful BI Slides developed by Chien-Hua Tsai 27 Slides developed by Chien-Hua Tsai 28 7

A Brief History of BI Evolution of Business Intelligence The term BI was coined by the Gartner Group in the mid-1990s However, the concept is much older 1970s MIS reporting static/periodic reports 1980s Executive Information Systems (EIS) 1990s OLAP, dynamic, multidimensional, ad-hoc reporting -> coining of the term BI 2005+ Inclusion of AI and Data/Text Mining capabilities; Web-based Portals/Dashboards 2011s Yet to be seen Slides developed by Chien-Hua Tsai 29 1 st Generation Traditional analytics (query and reporting) 2 nd Generation Traditional generation (OLAP, data warehousing) 2.5 nd Generation New traditional generation 3 rd Generation - Advanced analytics Rules, predictive analytics and real-time data mining Stream analytics Slides developed by Chien-Hua Tsai 30 Evolution of Business Intelligence Business Intelligence Use Cases Focus on what is happening RIGHT NOW Real-Time Threshold Stream Analytics* Real-time, continuous, sequential analysis (ranging from basic to advanced analytics) * In lieu of stream analytics, embedded analytics, although architecturally different, could potentially play the same role Advanced Analytics/Optimization Rules Predictive Analytics Real-time and traditional Data Mining Example Target Solutions: Fraud Detection / Risk CRM Analytic Supply Chain Optimization RFID / Spatial Data Other High-Volume Focus on what will happen Analytic applications that apply statistical relationships in the form of RULES Evolution of Business Intelligence Running Canned Reports Directly Against Operational DB Running Reports Against Nightly Copy of Operational DB (Reporting Server) Running Reports Against Real-time Copy of Operational DB (ODS) Composing and Running Ad hoc Reports Against Dimensionally Integrated Data (Relational Data Warehouse) Free Form Analysis Using Dimensionally Integrated and Pre- Aggregated Data (OLAP Data Mart) Focus on what did happen Turning data into information is limited by the relationships which the end-user already knows to look for. New Traditional Analytics 2.5-Gen Analytics (In-Memory OLAP, Search-Based) Traditional Analytics 1 st Generation Analytics (Query & Reporting) 2 nd Generation Analytics (OLAP, Data Warehousing) Data mining to determine why something happened by unearthing relationships that the end-user may not have known existed. Source: Bill O Connell IBM, Aug 2007 Slides developed by Chien-Hua Tsai 31 Slides developed by Chien-Hua Tsai 32 8

From Chaos to Structure Data Silos Coupling Cohesion Slides developed by Chien-Hua Tsai 33 Slides developed by Chien-Hua Tsai 34 A Preferred Situation The Evolution of BI Capabilities Slides developed by Chien-Hua Tsai 35 Slides developed by Chien-Hua Tsai 36 9

Retail Business Intelligence Applications Business Intelligence Applications 7 of the Top 10 Global Retailers 3 of Top 5 Global Food and Drug Stores Financial Services 7 of Top 10 Global Commercial Banks 4 of Top 5 Diversified FSI 4 of Top 5 Global Insurers Pharmaceuticals 9 of Top 10 Global Pharmaceutical Companies 8 of the Top 10 Healthcare Companies Communications 8 of Top 10 Global Telco Companies Manufacturing 7 of Top 10 Global Manufacturing Companies Consumer Packaged Goods 5 of Top 7 Global Consumer Packaged Goods Companies Governments Covering Federal, State, and Local Government Entities Other Major Companies Leading Internet, Travel and Transportation Companies Customer Analytics Customer profiling Targeted marketing Personalization Collaborative filtering Customer satisfaction Customer lifetime value Customer loyalty Sales Channel Analytics Marketing Sales performance and pipeline Slides developed by Chien-Hua Tsai 37 Slides developed by Chien-Hua Tsai 38 Business Intelligence Applications Central Themes of the Lecture Supply Chain Analytics Supplier and vendor management Shipping Inventory control Distribution analysis Behavior Analysis Purchasing trends Web activity Fraud and abuse detection Customer attrition Social network analysis Slides developed by Chien-Hua Tsai 39 What is Business Intelligence? A Brief History of Business Intelligence The Architecture of Business Intelligence Major BI Tools and Techniques The Benefits of Business Intelligence Major BI Vendors Issues for Successful BI Slides developed by Chien-Hua Tsai 40 10

The Architecture of BI A High-Level Architecture of BI A BI system has four major components: a data warehouse, with its source data business analytics, a collection of tools for manipulating, mining, and analyzing the data in the data warehouse; business performance management (BPM) for monitoring and analyzing performance a user interface (e.g., dashboard) Slides developed by Chien-Hua Tsai 41 Slides developed by Chien-Hua Tsai 42 Components in a BI Architecture Components in a BI Architecture The data warehouse is the cornerstone of any medium-to-large BI system. Originally, the data warehouse included only historical data that was organized and summarized, so end users could easily view or manipulate it. Today, some data warehouses include access to current data as well, so they can provide real-time decision support. Business analytics are the tools that help users transform data into knowledge (e.g., queries, data/text mining tools, etc.). Slides developed by Chien-Hua Tsai 43 Business Performance Management (BPM), which is also referred to as corporate performance management (CPM), is an emerging portfolio of applications within the BI framework that provides enterprises tools they need to better manage their operations. User Interface (i.e., dashboards) provides a comprehensive graphical/pictorial view of corporate performance measures, trends, and exceptions. Slides developed by Chien-Hua Tsai 44 11

The BI Platform is the Key Component of a Business Intelligence System A High-Level Architecture of BI Custom BI Applications Reporting Dashboards BI Applications OLAP Analysis Advanced Analysis Business Intelligence Platform Alerting Customer Analysis Customer Segmentation Customer Profitability Cross-sell / Up-sell Supply Chain Management Inventory Analysis Fulfillment Analysis Distribution Cost Analysis Financial Reporting Analysis P&L Reporting Profitability Analysis Financial Compliance Analysis Product Management Product Performance Analysis Market Basket Analysis Category Management Vendor Performance Analysis Service Level Agreement Chargeback Analysis Relative Sales Analysis Risk Analysis Risk Management Portfolio Risk Analysis Fraud Detection Sales Analysis Store / Geographic Analysis Sales Pipeline Reporting Sales Perf. / Quota Reporting Operations Analysis Productivity Reporting HR Reporting Web Commerce Analysis ERP Systems Web Systems CRM Systems Data Warehouse Data Warehouses and Operational Systems Data Marts Slides developed by Chien-Hua Tsai 45 Slides developed by Chien-Hua Tsai 46 A Taxonomy for Data Mining Tasks Central Themes of the Lecture What is Business Intelligence? A Brief History of Business Intelligence The Architecture of Business Intelligence Major BI Tools and Techniques The Benefits of Business Intelligence Major BI Vendors Issues for Successful BI Slides developed by Chien-Hua Tsai 47 Slides developed by Chien-Hua Tsai 48 12

Major BI Tools and Techniques Some Sample Reports Tool categories Data management Reporting, status tracking Visualization Strategy and performance management Business analytics Social networking & Web 2.0 New/advanced tools/techniques to handle massive data sets for knowledge discovery Slides developed by Chien-Hua Tsai 49 Slides developed by Chien-Hua Tsai 50 Data Visualization Example Sales Analysis Product Donut The Sales$ by Soda by West in Yr of 2001 Sandwich Milk Soda Beer Region North South East West 2011 2012 2013 2014 Time Slides developed by Chien-Hua Tsai 51 Slides developed by Chien-Hua Tsai 52 13

Social Network Analysis Dynamic Dashboards Slides developed by Chien-Hua Tsai 53 Slides developed by Chien-Hua Tsai 54 Web Mining Success Stories Central Themes of the Lecture Amazon.com, Ask.com, Scholastic.com, Website Optimization Ecosystem What is Business Intelligence? A Brief History of Business Intelligence The Architecture of Business Intelligence Major BI Tools and Techniques The Benefits of Business Intelligence Major BI Vendors Issues for Successful BI Slides developed by Chien-Hua Tsai 55 Slides developed by Chien-Hua Tsai 56 14

Implications of Business and Enterprise Social Networks Business oriented social networks can go beyond advertising and sales Emerging enterprise social networking apps: Finding and Recruiting Workers Management Activities and Support Training Knowledge Management and Expert Location e.g., innocentive.com; awareness.com; Caterpillar Enhancing Collaboration Using Blogs and Wikis Within the Enterprise Implications of Business and Enterprise Social Networks Survey shows that best-in-class companies use blogs and wikis for the following applications: Project collaboration and communication (63%) Process and procedure document (63%) FAQs (61%) E-learning and training (46%) Forums for new ideas (41%) Corporate-specific dynamic glossary and terminology (38%) Collaboration with customers (24%) Slides developed by Chien-Hua Tsai 57 Slides developed by Chien-Hua Tsai 58 The Benefits of BI The ability to provide accurate information when needed, including a real-time view of the corporate performance and its parts A survey by Thompson (2008) Faster, more accurate reporting (81%) Improved decision making (78%) Improved customer service (56%) Increased revenue (49%) The following are examples of highlighting companies that have successfully used BI applications, and the business value they bring. Slides developed by Chien-Hua Tsai 59 Improving Sales through Improved Customer Service and Employee Satisfaction Key BI Characteristics: INDUSTRY: Retail BUSINESS USERS: 10,000 and growing OPERATING ENV.: Linux DATABASE: Netezza (8+ TB); Oracle 10g (10+TB) CUSTOMER SINCE: 2005 APPLICATIONS: Customer Retention Customer Extranet Market Basket Analysis Sales Analysis Revenue Forecasting Customer Profitability Analysis Business Use: MicroStrategy used to monitor and analyze business performance at the corporate and divisional levels Corporate Express customers view purchase history and backlog using at-aglance dashboards and standard reports Business Benefits: Using BI, Corporate Express has seen that the average order size doubles when the appropriate, complementary product is offered to a customer. In June 2007, Corporate Express received the 2007 Best Practices Award for Predictive Analytics from The Data Warehousing Institute Slides developed by Chien-Hua Tsai 60 15

Enhancing Profitability and Expanding the Business Through Optimized Inventory and Sales Analysis Key BI Characteristics: INDUSTRY: Retail BUSINESS USERS: 2,000+ BI COMPONENTS: 33,500 Reports; 19,600 Business Metrics OPERATING ENV.: Windows 2000/2003 DATABASE: Oracle 9i; 6+ TB CUSTOMER SINCE: 2002 APPLICATIONS: Merchandise Analysis Transportation Management Warehouse Management Business Use: PetSmart uses MicroStrategy to manage daily operations at each of its stores across the United States. Every day, PetSmart executives, regional managers, marketers, and inventory managers use MicroStrategy dashboards to gauge the profitability of products and services and better manage inventory. PetSmart has reduced stock-outs, enhanced oversight of store performance, and increased revenue from PetSmart s services business. Business Benefits: Upper management has easy, constant access to key sales metrics, leading to faster, more informed decisions More efficient inventory control and management Substantial business growth attributed to better decision making and insight Applying BI to Many Aspects of the Business to Improve Profitability, Sales Performance, and Customer Experience Key BI Characteristics: INDUSTRY: Retail BUSINESS USERS: 10,000 and growing OPERATING ENV.: Linux DATABASE: Netezza (8+ TB); Oracle 10g (10+TB) CUSTOMER SINCE: 2005 APPLICATIONS: Customer Retention Customer Extranet Market Basket Analysis Sales Analysis Revenue Forecasting Customer Profitability Analysis Business Use: MicroStrategy used to monitor and analyze business performance at the corporate and divisional levels Corporate Express customers view purchase history and backlog using at-aglance dashboards and standard reports Business Benefits: Using BI, Corporate Express has seen that the average order size doubles when the appropriate, complementary product is offered to a customer. In June 2007, Corporate Express received the 2007 Best Practices Award for Predictive Analytics from The Data Warehousing Institute Slides developed by Chien-Hua Tsai 61 Slides developed by Chien-Hua Tsai 62 Analyzing Brand Costs and Sales Trends to Optimize Retail Purchasing and Enhance Revenue Key BI Characteristics: INDUSTRY: Retail BUSINESS USERS: 425+ BI COMPONENTS: 500 Reports/month; 1,120 Total Metrics OPERATING ENV.: Windows 2000 DATABASE: Oracle 9; 11+ TB CUSTOMER SINCE: 2001 APPLICATIONS: Retail Cost Analysis & Inventory Planning Store Performance Analysis Asset Protection & Loss Prevention Business Use: Planners, Merchandise Managers, and Buyers analyze Cost of Goods Sold (COGS) and Gross Margin to optimize merchandise purchasing, inventory allocation, and distribution Track and monitor retail sales at the store and product SKU levels, across all brands Analyze asset protection and loss prevention across the entire enterprise Business Benefits: Foot Locker is improving merchandise purchasing and inventory management by analyzing costs, sales forecasts, trends, and performance across each of its brands Easy access to reliable data is enabling Foot Locker to detect issues earlier and make informed business decisions every day. Central Themes of the Lecture What is Business Intelligence? A Brief History of Business Intelligence The Architecture of Business Intelligence Major BI Tools and Techniques The Benefits of Business Intelligence Major BI Vendors Issues for Successful BI 63 Slides developed by Chien-Hua Tsai 64 16

Major BI Vendors In recent years, the landscape of BI vendors has changed Cognos acquired by IBM in 2008 IBM also acquired SPSS in 2009 Hyperion acquired by Oracle in 2008 Business Objects acquired by SAP in 2009 Microstrategy May be the only independent large BI vendor Others include Microsoft, SAS, Teradata (mostly considered a DW vendor) http://www.youtube.com/watch?v=mabtc_pzojs Slides developed by Chien-Hua Tsai 65 Gartner Magic Quadrant Customer Survey: Survey of BI Customers in Support of the Gartner Magic Quadrant Analysis for BI Platforms Slides developed by Chien-Hua Tsai 66 BI Survey 7: BI Technology Rankings According to the BI Survey 7 The Largest Independent Survey of BI, Involving Over 1,900 Companies BI Product Survey: Evaluation and Survey Conducted by Passioned International, a Leading BI Analyst Firm in the Netherlands Slides developed by Chien-Hua Tsai 67 Slides developed by Chien-Hua Tsai 68 17

Gartner BI Platform Capability Evaluation: Comprehensive, Point-by-point Evaluation of all Major BI Products The BI Scorecard: Comprehensive Hands-on Evaluation of BI Products by Cindi Howson, Author, Industry Analyst, and President of ASK Slides developed by Chien-Hua Tsai 69 Slides developed by Chien-Hua Tsai 70 Central Themes of the Lecture Issues for Successful BI What is Business Intelligence? A Brief History of Business Intelligence The Architecture of Business Intelligence Major BI Tools and Techniques The Benefits of Business Intelligence Major BI Vendors Issues for Successful BI Developing vs. Acquiring BI systems Developing everything from scratch Buying/leasing a complete system Using a shell BI system and customizing it Use of outside consultants? Justifying via cost-benefit analysis It is easier to quantify costs Harder to quantify benefits Most of them are intangibles Slides developed by Chien-Hua Tsai 71 Slides developed by Chien-Hua Tsai 72 18

Issues for Successful BI Business Intelligence Trends Security and Privacy Still an important research topic in BI How much security/privacy? Integration of Systems and Applications BI must integrate into the existing IS Often sits on top of ERP, SCM, CRM systems Integration to outside (partners of the extended enterprise) via the Internet Customers, vendors, government agencies, etc. 1. Agile Information Management (IM) 2. Cloud Business Intelligence (BI) 3. Mobile Business Intelligence (BI) 4. Analytics 5. Big Data Slides developed by Chien-Hua Tsai 73 Slides developed by Chien-Hua Tsai 74 Business Intelligence Trends Business Intelligence 2.0 (BI 2.0) Web Intelligence Web Analytics Web 2.0 Social Networking and Microblogging sites Data Trends Big Data Platform Technology Trends Cloud computing platform Slides developed by Chien-Hua Tsai 75 Slides developed by Chien-Hua Tsai 76 19

Summary BI should help execute the business strategy and not be an impediment for it! Implementing and deploying a BI initiative is a lengthy, expensive and risky endeavor! Success of a BI system is measured by its widespread usage for better decision making. A successful BI system must be of benefit to the enterprise as a whole. Slides developed by Chien-Hua Tsai 77 Slides developed by Chien-Hua Tsai 78 Reading Assignment Business Intelligence Related materials are covered in the lecture slides. An Introduction to Business Intelligence End of the Lecture Slides developed by Chien-Hua Tsai 79 20