Chapter 6: Business Intelligence

Business benefits of high-quality information
• Information is everywhere in an organization
• Employees must be able to obtain and analyze the many different levels, formats, and granularities of organizational information to make decisions
• Successfully collecting, compiling, sorting, and analyzing information can provide tremendous insight into how an organization is performing
4 Primary Traits that determine value of information
1) Info type: transactional or analytical
2) Info timeliness
3) Info quality
4) Info governance
Information Granularity
Refers to the extent of detail within the information
Transactional information
Encompasses all of the information contained within a single business process or unit of work, and its primary purpose is to support the performing of daily operational tasks
• Ex: Airline ticket, Sales receipt, Packing slip
Analytical information
Encompasses all organizational information, and its primary purpose is to support the performing of managerial analysis tasks
• Ex: Product statistics, Sales projections, future growth, trends
Information Timeliness
Timeliness is an aspect of information that depends on the situation/industry
Real-time information
Immediate, up-to-date information
Real-time system
Provides real-time information in response to requests
Information Quality
• Business decisions are only as good as the quality of the information used to make the decisions
• You never want to find yourself using technology to help you make a bad decision faster
Information inconsistency
Occurs when the same data element has different values
Information integrity issues
When a system produces incorrect, inconsistent, or duplicate data. Data integrity issues can cause managers to consider the system reports invalid and will make decisions based on other sources
5 characteristics common to high-quality information
Accuracy
Completeness
Consistency
Timeliness
Uniqueness
The four primary sources of low quality information
• 1. Online customers intentionally enter inaccurate information to protect their privacy
• 2. Different entry standards and formats
• 3. Operators enter abbreviated or erroneous information by accident or to save time
• 4. Third party and external information contains inconsistencies, inaccuracies, and errors
Potential business effects resulting from low quality information include
• Inability to accurately track customers
• Difficulty identifying valuable customers
• Inability to identify selling opportunities
• Marketing to nonexistent customers
• Difficulty tracking revenue
• Inability to build strong customer relationships
Understanding the Benefits of Good Information
• High quality information can significantly improve the chances of making a good decision
• Good decisions can directly impact an organization’s bottom line
Data governance
Refers to the overall management of the availability, usability, integrity, and security of company data
Database
Maintains information about various types of objects (inventory), events (transactions), people (employees), and places (warehouses)
Database management systems (DBMS)
Allows users to create, read, update, and delete data in a relational database while controlling access and security
Query-by-example (QBE) tool
Helps users graphically design the answer to a question against a database
Structured query language (SQL)
Asks users to write lines of code to answer questions against a database
Data element
The smallest or basic unit of information
Data model
Logical data structures that detail the relationships among data elements using graphics or pictures
Metadata
Provides details about data
Data dictionary
Compiles all of the metadata about the data elements in the data model
Relational Database Model
Stores information in the form of logically related two-dimensional tables
Entity
A person, place, thing, transaction, or event about which information is stored
o The rows in a table contain entities
Attribute (field, column)
The data elements associated with an entity
o The columns in each table contain the attributes
Record
A collection of related data elements
Primary Key
A field (or group of fields) that uniquely identifies a given entity in a table
Foreign key
A primary key of one table that appears an attribute in another table and acts to provide a logical relationship among the two tables
Benefits of relational databases
– increased flexibility (physical and logical view of info)
– increased scalability and performance
– reduced information redundancy
– increased information integrity
– increased information security
Increased Flexibility
o A well-designed database should
• Handle changes quickly and easily
• Provide users with different views
• Have only one physical view
Physical view – Deals with the physical storage of information on a storage device
• Have multiple logical views
Logical view – Focuses on how individual users logically access information to meet their own particular business needs
Increased Scalability and Performance
o A database must scale to meet increased demand, while maintaining acceptable performance levels
Scalability
Refers to how well a system can adapt to increased demands
Performance
Measures how quickly a system performs a certain process or transaction
Reduced Information Redundancy
o Databases reduce information redundancy
o Information redundancy – The duplication of data or storing the same information in multiple places
o Inconsistency is one of the primary problems with redundant information
Increase Information Integrity (Quality)
o Information integrity – measures the quality of information
o Integrity constraint – rules that help ensure the quality of information
• Relational integrity constraint
• Business-critical integrity constraint
Relational integrity constraint
Rules that enforce basic and fundamental information-based constraints
Business-critical integrity constraint
Enforce business rules vital to an organization’s success and often require more insight and knowledge that relational integrity constraints
Increased Information Security
o Information is an organizational asset and must be protected
o Databases offer several security features
o Password – Provides authentication of the user
o Access level – Determines who has access to the different types of information
o Access control – Determines types of user access, such as read-only access
Data-driven websites
An interactive website kept constantly updated and relevant to the needs of its customers using a database
Content creator
A person who writes original content for a Web site.
Content editor
A person who is responsible for editing and maintaining website content
Static information
Includes fixed data incapable of change in the event of a user action
Dynamic information
Data that changes based on user actions, i.e reservations and tickets, data stored in a dynamic catalog
Data-driven website advantages
o Easy to manage content
o Easy to store large amounts of data
o Easy to eliminate human errors
Data Warehouse
A logical collection of information – gathered from many different operational 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
• The data warehouse provided the ability to support decision making without disrupting the day-to-day operations
Benefits of Data Warehousing
– Developing customer profiles
– Identifying new product opportunities
– Improving business operations
– Identifying financial issues
– Analyzing trends
– Understanding competitors
– Understanding product performance
Extraction, transformation, and loading (ETL)
A process that extracts information from internal and external databases, transforms the information using a common set of enterprise definitions, and loads the information into a data warehouse
Data mart
Contains a subset of data warehouse information
Multidimensional Analysis
• Databases contain information in a series of two-dimensional tables
• In a data warehouse and data mart, information is multidimensional, it contains layers of columns and rows
Dimension
A particular attribute of information
Cube
Common term for the representation of multidimensional information
Information cleansing/scrubbing
A process that weeds out and fixes or discards inconsistent, incorrect, or incomplete information
Data quality audits
To determine the accuracy and completeness of its data
Data mining
The process of analyzing data to extract information not offered by the raw data alone
Data-mining activities
use a variety of techniques to find patterns and relationships in large volumes of information
o Classification: assigns records to one of a predefined set of classes
o Estimation: determines values for an unknown continuous variable behavior or estimated future value
o Affinity grouping: Determines which things go together
o Clustering: Segments a heterogeneous population of records into a number of more homogeneous subgroups
Structured data
Already in a database or spreadsheet, where data mining occurs
Unstructured data
Do not exist in a fixed location and can include text documents, PDF, voice message, emails, etc.
Text Mining
Analyzes unstructured data to find trends and patterns in words and sentences
Web Mining
Analyzes unstructured data associated with websites to identify customer behavior and website navigation
3 Most common forms of mining structured/unstructured
– Cluster analysis
– Association detection
– Statistical 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.
Association detection
Reveals the relationship between variables along with the nature and frequency of the relationships
Market basket analysis
Analyzes such items as websites and checkout scanner information to detect customers’ buying behavior and predict future behavior by identifying affinities among customers’ choices of products and services
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
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
The Solution: Business Intelligence
• Improving the quality of business decisions has a direct impact on costs and revenue
• BI enables business users to receive data for analysis that is: Reliable, Consistent, Understandable, Easily manipulated
Visual Business Intelligence
Informing, Infographics, Data visualization
Informing
Accessing large amounts of data from different management information systems
Infographics
Displays information graphically
Data visualization
Allows users to “see” or visualize data to transform information into a business perspective
Data visualization tools
Sophisticated analysis techniques such as pie charts, controls, instruments, maps, time-series graphs, and more
Business Intelligence Dashboards
Track corporate metrics such as critical success factors and key performance indicators and include advanced capabilities such as interactive controls allowing users to manipulate data for analysis.