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BUSINESS INTELLIGENCE

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Title: BUSINESS INTELLIGENCE


1
BUSINESS INTELLIGENCE
  • Paul Gray
  • CIO Breakfast Round Table
  • 1-8-04
  • NOTE Slides 33-46 are extras not used at Breafast

2
BI IS A FORM OF DSS
  • Business Intelligence (BI) is a form of DSS
  • It is a data driven DSS (Power)
  • Although BI is a relatively new name, its DSS
    components have been evolving since the 1960s

3
WHERE ARE WE?
  • The buzzwords changed faster than the technology
    DSS, EIS, OLAP, Business intelligence,
    competitive intelligence, Business Process
    Management.
  • The vendors always claimed they had the latest
    even when all they did was change their
    brochures.
  • Yet, when we look under the hood we see that the
    outputs look much the same

4
Where Are We?
  • The thesis of this talk is that, from a
    commercial point of view, the hottest area in
    2003 was business intelligence (BI)
  • The BI term was invented in 1989 by Gartner Group
  • The vendor community is pushing BI. The trade
    literature (Intelligent Enterprise, DM review,
    CIO) is full of it, but the academic literature
    is almost barren.

5
Aim Of This Talk
  • To tell you what the shouting is about
  • Help you decide whether business intelligence is
  • Simply a new name
  • A repackaging of DSS in a more appealing wrapper
  • The true future of decision support

6
Definition Of BI Systems
  • Business intelligence systems combine
  • Data gathering
  • Data storage and
  • Knowledge management with
  • analysis to evaluate complex corporate and
    competitive information and present the results
    to planners and decision makers.
  • Objective Improve timeliness and quality of the
    input to the decision process

7
Implicit In Definition
  • Business intelligence systems provide
  • actionable information and knowledge
  • at the right time
  • in the right location
  • in the right form

8
BI Relation to Other Software

OLAP
Data Warehouse
Visualization
CRM/dB Marketing
Data Mining
Business Intelligence
DSS/ EIS
Knowledge Management
GIS
9
EXAMPLE RELATION TO KNOWLEDGE
  • Initial efforts in KM focused on the decision,
    how it is made, and how it can be helped.
  • Over time, KM groups found that their real
    contribution comes from creating the knowledge
    and the knowledge climate in which decisions can
    be taken.
  • That is, KM involves analysts finding out what
    the situation is and presenting it to the people
    who make the choices.

10
RELATION TO KNOWLEDGE
  • We create knowledge about our own firm and about
    our competitors
  • Knowledge is intelligence about where we have
    been, where we are, where our competition is
  • Most important, the directions in which things
    are moving in
  • our firm -our competitors
  • the environment (global business and government)

11
Proactive BI
OLAP
Data Warehouse
Visualization
CRM/ Marketing
Data Mining
Business Intelligence
DSS/ EIS
Knowledge Management
GIS
  • real-time data warehousing
  • data mining
  • automated anomaly and exception detection
  • proactive alerting with automatic recipient
    determination,
  • seamless follow-through workflow,
  • automatic learning and refinement,
  • geographic information systems
  • data visualization

12
What BI does
  • Strategic use
  • Corporate performance management
  • Optimizing customer relations
  • Packaged standalone BI applications
  • Management reporting of BI
  • Tasks
  • Creating forecasts and estimates of future
    direction
  • What if analysis of alternative scenarios.
  • Ad hoc access to answer non-routine questions.
  • Strategic insight

13
Implications
  • Ordinary reports of a firms performance and
    competitor performance (what BI software gives)
    is not enough. Need analysis to put it in context
  • For too many firms, BI (like DSS and EIS before
    them) is still inward looking

14
BI Framework
Gather structured information Acquisition ?
Integrate ? Cleanup ? (ERP)
(ETL) (DW)
ACTION!
? Analysis ? Delivery ? User Interface
(DM) (OLAP) (WWW)
Gather unstructured information Acquisition
? Integrate ? Cleanup ? (e.g.,
spreadsheet, e-mail, conversation)
15
BI Application
  • Company that sells natural gas to homes
  • builds dashboard to support
  • Operational performance metric measurement
  • Real time decision making
  • Result No. of repeat repair calls reduced saving
    1.3 million


16
Return on Investment
  • Costs
  • Upfront cost and upkeep are high
  • Cost efficiencies in IT can be forecast
  • Benefits
  • Cost reductions dont pay cost
  • Get new opportunities and avoid difficulties

17
Return on Investment
  • Costs include
  • Additional hardware
  • Large amt. of software
  • Purchased external data
  • Establish dependent data mart for BI
  • Analysts and support staff
  • Hardware maintenance
  • Hardware, software update
  • User community time thinking about BI outputs
  • Benefits mostly soft
  • include
  • Hope for big bang returns in the future (but
    cant forecast them or their timing)
  • Better understanding of the business and the
    competitors business

18
Change BI for the Masses
  • BI tools are moving to the whole mass of
    knowledge workers, not just few specialists
  • A way of closing gap between analysis and
    operations, moving to multiple levels in the
    organization
  • Previously, typical analyst use is one-off
    study
  • Large deployments of BI include 70,000 at French
    Telecom, 50,000 at US Military health systems.
    Other examples at 20,000 users

19
Competitive Intelligence
  • No more sinister than keeping your eye on the
    other guy, albeit secretly Claudia Imhoff
  • More formal definition by Society of Competitive
    Intelligence Professionals (SCIP)

20
Definition Of CI
  • From SCIP
  • CI is a systematic and ethical program for
    gathering, analyzing, and managing external
    information that can affect your companys plans,
    decision and operations

21
Definition Of CI In Practice
  • CI is the process of
  • -ensuring marketplace competitiveness
  • Through
  • -understanding of competitors
  • -understanding over-all competitive environment
  • --------
  • Can use whatever you find in the public domain to
    make sure youre not surprised by your
    competitors.

22
Examples Of CI
  • Texas Instrument made 100m acquisition by
    knowing competitions potential bids
  • Merck, developed counter-strategy about
    competitors upcoming product, saving 200M
  • Comshare bought a competitor after monitoring the
    competitors hometown newspaper

23
Sources of CI
  • Government information
  • Online databases
  • Interviews and surveys
  • Special interest meetings such as SIM, AIS
  • Competitors, suppliers, distributors, customers
  • Media (journals, wire services, newspapers,
    financial reports, speeches by executives)

24
Notes on CI
  • Problem is not lack of information but too much
    information
  • Once you start CI, you try to find ways to make
    task of finding out about you more difficult.
  • Get CI, CCI, CCCI, CnI
  • Same game is played in politics, intl competition

25
BI Market
  • Market size (AMR Research)
  • 6 billion (current)
  • 12 billion (2006 forecast)
  • Trend in pre-built analytic applications because
    home-built systems take too long (gt6 mos.) and
    cost too much (2-3 million)

26
Managerial Issues
  • Is BI an oxymoron?
  • BI is really about understanding your own
    position, your customer, your competitor
  • An important part of planning and operations
  • Whats new?
  • Better data sources (DW), data cleansing (ETL),
    improved technology

27
Managerial Issues
  • What do I know once I deploy BI?
  • Capabilities available in firm
  • State of the art, trends and directions in the
    markets
  • The technologies and regulatory environment
  • Competitor actions and their implications

28
Managerial Issues
  • What capabilities do investments in BI create?
  • Complex corporate and competitive information for
    planners and decision makers
  • Improved timeliness and quality of input to the
    decision process
  • (Occasionally) major breakthrough

29
Managerial Issues
  • How do you gather, transfer BI?
  • BI a form of knowledge includes both explicit
    and tacit knowledge
  • Some knowledge bought (scanner data), other
    created internally from analysis of public and
    private data
  • Must disseminate to many people in firm
    customize by individual, group

30
Managerial Issues
  • Organization for BI?
  • Not necessarily both centralized and
    decentralized org. work
  • What technologies are available?
  • Specialized software packages, many still quite
    crude

31
CONCLUSIONS
  • Business Intelligence is a part of DSS but
    certainly not all of it.
  • BI name gives DSS a new skin. Semantics matter
  • The technology for BI and CI is getting better,
    broader, and more universally available
  • The capabilities of the DSS analyst in business
    improve as both structured and unstructured data
    grows

32
CONCLUSIONS
  • BI and CI are steps along the way. They are the
    short-term future of DSS in the commercial world.
  • In the long term, we will inevitably find new
    ways of thinking about and solving decision
    problems.

33
EXAMPLE Using BI For An Acquisition
  • Comshare, in Ann Arbor, Execucom in Austin
    rivals in 4GL
  • Comshare Pres. Gets Austin newspaper. Reads
    dissatisfaction
  • Buys major competitor on the cheap
  • THEN botches the acquisition

34
EXAMPLE BI for Strategic Insight (Dallas
Teachers Credit Union)
  • Started 2000. Wanted top 10 profitable customers
  • Looked at products used, branches patronized, how
    they interacted with Credit Union
  • Found drive time was related to profitability
  • Able to locate new branches, expand and contract
    others
  • Used for customer segmentation to get better
    response rate
  • Found ways to change charter to reach larger
    potential customer base.Now Credit Union of Texas
  • Now one of 100 top credit unions in USA

35
EXAMPLE Forecasting
  • Grocery chains sell barcode scanner data to IRI,
    who collates it and resells it
  • Firms want to find out how well their and their
    competitors special offers work in the
    marketplace
  • Try to find what works, what needs doing, where
    to match the competition.

36
EXAMPLE Natural Gas
  • Company sells natural gas to homes
  • builds dashboard to support
  • Operational performance metric measurement
  • Real time decision making
  • Result No. of repeat repair calls reduced saving
    1.3 million


37
Example Financial Analytics
  • A series of what if calculations to find
  • -trends, directions of growth decline
  • -environmental changes (interest rate, currency
    fluctuations)
  • -payable and receivable changes
  • -origins of revenues, operating expense
  • -variances between actual and budget
  • Use drilldown to check sources of variation

38
EXAMPLEROLE OF ANALYST
  • Food wholesaler finds regular customer (stores
    that serve Mexican-American population) suddenly
    has major drop in purchase
  • Upon investigation, found that they were not
    losing the customer.
  • Customer had sold a major store and was
    redistributing its inventory thereby reducing
    its purchases

39
Case Nygard
  • Canadian. 4th largest North American womens
    apparel manufacturer.
  • Use data to identify trends for next seasons
    designs
  • Can see what is in stores (10 min. vs. weeks)
  • Identify regional and store level peculiarities
    (fashion, material, color) improves inventory

40
POTENTIAL AND SHORTCOMINGS OF BI
Source DM Review July 2002 p. 56
41
Sample of 12 Vendors
42
Competitive Intelligence Cycle
  • 1. Determine intelligence needs of
  • Decision Makers
  • 2. Collect info. to meet these needs
  • 3. Analyze data, recommend action
  • 4. Present results to Decision Makers
  • 5. Use response to refine collection

43
Competitive Intelligence Tools
  • Simulations to test what if conditions
  • Data mining about competitor firm
  • Track patents to assess competitor technologies
  • Scan public record, Internet, press release, mass
    media
  • Talk with customers, suppliers, partners,
    industry experts, sales people

44
Competitive Intelligence Tools
SourceCompetitive Intelligence Review 9(4) pp
29-41
45
Competitive Intelligence
  • Software packages used include data mining, text
    retrieval and classification, patent searching,
    Web-page tracking, and Internet monitoring.
    However, software designed for competitive
    intelligence lags BI that focuses inside the
    firm.
  • Amount spent variesself reports from 100K to 1M
  • Companies also practice counter-intelligence,
    i.e., safeguard their data by using various
    security techniques

46
Examples Of CI
  • Texas Instrument made 100m acquisition by
    figuring out the competitions potential bids
  • Merck, developed counter-strategy about
    competitors upcoming product, saving 200M
  • Comshare example bought a competitor after
    monitoring the competitors hometown newspaper
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