Business Intelligence

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Business Intelligence

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Business Intelligence

Business intelligence (BI) refers to all of the applications and technologies used to , provide access to, and information to efforts

Putting together all of the pieces of the puzzle

Business Plug-In B18 pages 466-482


Sun Tzu in The Art of War

To succeed in war, one should have full of one’s own and and full knowledge of the enemy’s strengths and weaknesses. Lack of either one might result in defeat.

Many businesses today say “how can I understand my competitor when I can’t even understand myself.

That is what we are trying to solve using business intelligence.


The Problem:

With all of the data being captured and generated by SCM, CRM and ERP systems, as well as the other digital data being created and transmitted

(spreadsheets, fields in database files, word processing documents, video clips, email and text messages, voice mail, etc.)

, businesses are facing a digital explosion.

The amount of data generated is doubling every year

Some believe it will soon double monthly

Data is a for a business, and if the asset is not used, the business is


An Ideal Business Scenario

An account manager, on her way to a client visit, looks up past proposals, as well as the client’s ordering, payment, delivery, support and marketing history. At a glance, she can tell that the client’s ordering volumes have dropped lately.

A few queries later, she understands that the client had support issues with a given product. She calls her support department and learns that the defective product will be replaced within 24 hours.

In addition, the marketing records show that the client recently attended a user conference and expressed interest in a new product line.

With this information, she is prepared for a constructive sales call. She understands all aspects of a client’s relationship with her firm, understands the client’s issues and can confidently address new sales opportunities.


To improve the quality of business decisions, business intelligence tools and systems are used to make better, more informed decisions

P and distribution schedules

Determine correct inventory levels

F levels of bad loans and fraudulent credit card use

Forecast credit card spending by new customers

Predict machinery failures

D key factors that control optimization of manufacturing capacity

P when bond prices might change

Determine when to buy or sell stocks

Predict hard drive failures

Predict potential security violations


Forecast claim amounts and medical coverage costs.

C the most important elements that affect medical coverage.

T crime patterns, locations and criminal behavior

Forecast the cost of moving military equipment

T strategies for potential military engagements

Capture data on where customers are flying and the ultimate destination of passengers who change airlines in hub cities: is there a new route that should be added?

Predict what type of show is best to air during prime time and how to maximize returns by interjecting commercials

D on symptoms and causes that result in illness and how to provide proper treatments.


Having BI promotes understanding: Asking WHY?

W ? (historical perspective)W ? (modify or encourage to continue)Where (predict future direction)



The center of any business intelligence effort is

Data mining: the use of

to large amounts of in order to

that might be used to predict future behavior.

Uses query tools, multidimensional analysis, intelligent agents and various statistical tools

Algorithms are applied to data sets to

inherent and in the data.


Goals of Data Mining


Trying to assign records to one of a predetermined set of classes.


Determine values for an unknown continuous variable or estimate future values.

Affinity grouping



Segment a diverse/differing population of records into groupings with common characteristics


Most common forms of Data Mining

Cluster analysis

Association detection

Statistical analysis


Cluster Analysis

Cluster analysis – a technique used to into mutually exclusive 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 possibleCRM systems depend on cluster analysis to segment customer information and identify behavioral traitsSegment by , best customers or one-time customer.


Association Detection

Association detection

– reveals the degree to


the nature and frequency of these relationships in the information

Market basket analysis:

trying to


Applications include :


products and services



Statistical Analysis

A wide range of statistical tools that can be used to build various statistical models, examine the model’s assumptions and validity, as well as compare and contrast the various models to determine the best one to use for a particular business issue

Various types of statistical analysis that might be performed include:

Information correlations

Distributions, calculations, and variance analysis


(most common form of statistical






The business intelligence tool used by most organizations is


its data analysis functionality,


By adding a Page Field to a Pivot Table, you can add another dimension of information: 3-D (rows and columns and layers).

Creating a 3-dimensional Pivot Table in Excel is a means of conceptually building a data warehouse. Page fields represent the depth layer

Pivot Tables can help you






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