Chapter 1 Business Driven Technology

hesitantdoubtfulAI and Robotics

Oct 29, 2013 (4 years and 6 months ago)


Business Intelligence

Business intelligence (BI)

refers to all of the
applications and technologies used to

provide access to, and
information to


Putting together all of the pieces of the puzzle

Business Plug
In B18 pages 466

Sun Tzu in
The Art of War

To succeed in war, one should have full

of one’s own



full knowledge of the enemy’s strengths and

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
fields in database files, word processing documents, video clips, email and text
messages, voice mail, etc.)
, businesses are facing a digital

The amount of data generated is doubling every

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


and distribution schedules

Determine correct inventory levels


levels of bad loans and fraudulent credit card use

Forecast credit card spending by new customers

Predict machinery failures


key factors that control optimization of
manufacturing capacity


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.


the most important elements that affect medical


crime patterns, locations and criminal behavior

Forecast the cost of moving military equipment


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


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

Having BI promotes understanding: Asking WHY?


(historical perspective)


(modify or encourage to continue)


(predict future direction)


The center of any business intelligence effort is

Data mining: the use of


large amounts of

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



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



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

CRM systems depend on cluster analysis to segment
customer information and identify behavioral traits

Segment by

, best customers or one
time customer.

Association Detection

Association detection

reveals the degree to

and the nature
and frequency of these relationships in the

Market basket analysis:
trying to understand

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

Information correlations

Distributions, calculations, and variance analysis


(most common form of statistical analysis)




The business intelligence tool used by most
organizations is

and its data
analysis functionality, especially

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