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 information1) Info type: transactional or analytical
2) Info timeliness
3) Info quality
4) Info governance
Information GranularityRefers to the extent of detail within the information
Transactional informationEncompasses 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 informationEncompasses 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 TimelinessTimeliness is an aspect of information that depends on the situation/industry
Real-time informationImmediate, up-to-date information
Real-time systemProvides 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 inconsistencyOccurs when the same data element has different values
Information integrity issuesWhen 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 informationAccuracy
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 governanceRefers to the overall management of the availability, usability, integrity, and security of company data
DatabaseMaintains 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) toolHelps 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 elementThe smallest or basic unit of information
Data modelLogical data structures that detail the relationships among data elements using graphics or pictures
MetadataProvides details about data
Data dictionaryCompiles all of the metadata about the data elements in the data model
Relational Database ModelStores information in the form of logically related two-dimensional tables
EntityA 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
RecordA collection of related data elements
Primary KeyA field (or group of fields) that uniquely identifies a given entity in a table
Foreign keyA 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 Flexibilityo 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 Performanceo A database must scale to meet increased demand, while maintaining acceptable performance levels
ScalabilityRefers to how well a system can adapt to increased demands
PerformanceMeasures how quickly a system performs a certain process or transaction
Reduced Information Redundancyo 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 constraintRules that enforce basic and fundamental information-based constraints
Business-critical integrity constraintEnforce business rules vital to an organization’s success and often require more insight and knowledge that relational integrity constraints
Increased Information Securityo 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 websitesAn interactive website kept constantly updated and relevant to the needs of its customers using a database
Content creatorA person who writes original content for a Web site.
Content editorA person who is responsible for editing and maintaining website content
Static informationIncludes fixed data incapable of change in the event of a user action
Dynamic informationData that changes based on user actions, i.e reservations and tickets, data stored in a dynamic catalog
Data-driven website advantageso Easy to manage content
o Easy to store large amounts of data
o Easy to eliminate human errors
Data WarehouseA 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 martContains 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
DimensionA particular attribute of information
CubeCommon term for the representation of multidimensional information
Information cleansing/scrubbingA process that weeds out and fixes or discards inconsistent, incorrect, or incomplete information
Data quality auditsTo determine the accuracy and completeness of its data
Data miningThe process of analyzing data to extract information not offered by the raw data alone
Data-mining activitiesuse 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 dataAlready in a database or spreadsheet, where data mining occurs
Unstructured dataDo not exist in a fixed location and can include text documents, PDF, voice message, emails, etc.
Text MiningAnalyzes unstructured data to find trends and patterns in words and sentences
Web MiningAnalyzes 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 AnalysisA 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 detectionReveals the relationship between variables along with the nature and frequency of the relationships
Market basket analysisAnalyzes 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 analysisPerforms such functions as information correlations, distributions, calculations, and variance analysis
ForecastPredictions made on the basis of time-series information
Time-series informationTime-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 IntelligenceInforming, Infographics, Data visualization
InformingAccessing large amounts of data from different management information systems
InfographicsDisplays information graphically
Data visualizationAllows users to “see” or visualize data to transform information into a business perspective
Data visualization toolsSophisticated analysis techniques such as pie charts, controls, instruments, maps, time-series graphs, and more
Business Intelligence DashboardsTrack 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.