Business AI

Emerging Trends
Master Information Management 2024
Course objectives

• General knowledge about Business Analytics/AI

• General knowledge about technical developments in
data science and AI
• Being able to evaluate the current trends in a critical
way
• Being able to assess the value of Business AI for
some business domain
• Some useful skills, with Process Mining and Prompt
Engineering

Tunc Ma Weigand
Schedule

Week Lectures Lab work

1 HW Course overview + Introduction (self-study Python)
Data Management & Knowledge Graphs

2 HW Process Mining Start assignment Process Mining

3 HW Smart Auditing Finish Process Mining

Start group assignment GenAI
4 TM Blockchain

5 TM Social Network Analysis

Digital Platforms (Ma)

6 TM Managing AI

7 HW Responsible AI Finish group assignment

Wrap-up
Course information

Contents
In this course we want to address the current
developments in this field by studying recent research
papers from relevant journals.

Exam
• Assignment (20%), written exam (80%),
minimum grade 5
Assignment part – new 2024

For IM and DS&S students, same structure

1) Process mining assignment (no grade)

2) Optional Datacamp modules Python (Python for Data Science)
(extra, self-study)
3) Group paper (3-4 people) on prompt engineering (graded)
• Experiment with Chat-GPT on small dataset
• Critically analyze the result
Hype Cycle
Gartner Hype Cycle AI 2024
 Lecture1
Introduction
Business Analytics/AI Trends
Hans Weigand
TiSEM
Overview

• Big Data and Analytics

• Why is Big Data important for the business?
• How did Big Data arise?
• What has Big Data to do with AI?
• AI in Business: example research paper

• Data Science
• What is the role of Data Science in business?
• How to do Data Science Research?
The appeal of Big Data
5V’s of Big Data

5v’s: Volume, Variety. Velocity, Plus Value.

Veracity

• Impose technical and managerial challenges

• Represent opportunities and threats for the
business

Chen, Hsinchun, Roger HL Chiang, and Veda C. Storey. "Business Intelligence and
Analytics: From Big Data to Big Impact." MIS Quarterly 36.4 (2012).
Business value

In a recent report, Nucleus Research found that for every dollar a

company spends on analytics, it gets back $10.66.

• Global bio-agronomic and colorant producer Becker Underwood

increased inventory turnover by 50 percent and achieved other
savings that yielded a 383 percent ROI on its investment in analytics.
• By using analytics to more efficiently allocate its marketing
resources, First Tennessee Bank realized a 600 percent ROI on its
investment in analytics
• South Africa-based insurer Santam identified a major fraud ring less
than 30 days after implementing an analytic solution emphasizing
decision management. In addition to saving more than $2.5 million in
payouts for fraudulent claims, Santam reduced claims processing
time on low-risk claims by nearly 90 percent, cutting costs while
boosting customer loyalty.
Tom Davenport

• (…) “Peter Drucker, who noted almost 20 years ago that

one of the risks of corporate IT lay in the fact that because
it relies only on internal data, it encourages a “degenerative
tendency…to focus inward on costs and efforts, rather than
outward on opportunities, changes, and threats.” One of
the great advances of big data is that so much of the data
now comes from external sources”
• “Of all you can do with big data, developing new products
and services is the most valuable”
Caveat 1: Big Data and Thick Data

There are many reasons for Nokia’s downfall, but one of the
biggest reasons that I witnessed in person was that the company
over-relied on numbers. They put a higher value on quantitative
data, they didn’t know how to handle data that wasn’t easily
measurable, and that didn’t show up in existing reports.”
Tricia Wang 2016
• Message
• Beware of Quant Bias or Quant Addiction
• Big Data in many cases needs to be supported with Thick Data
• Thick Data (Emotion, Context, Meaning,..)
• Ethnography – people’s way of living, culture
• Improve the use of big data or analytics by seeing the whole
picture of decision making.

14
Caveat 2: Relate to business challenges!
Business Strategies for
Data Monetization:
Deriving Insights from
Practice
Julius Baecker
Martin Engert
Matthias Pfaff
Helmut Krcmar
WIS March 2020
How to create value – what you need

Verhoef, P. et al Creating value with big data (2016)

How to create value –Buss Model Innovation

Kanbach, D.K., Heiduk, L., Blueher, G. et al. The GenAI is out of the
bottle: generative artificial intelligence from a business model
innovation perspective.
What caused “big data” to arise?

• Availability of massive amounts of digital data

• Combination of technical developments and societal
needs
• A philosophical view
• Rationalism vs empiricism
• The discovery of the power of data
Because it’s there…
Why Big Data now: Technical developments

Radical changes in:

• The way elementary data are captured
• Sensors (automated) vs keyboard (human)
• The way data is stored
• Main memory and cloud vs hard disk
• The way data is analyzed
• Data-driven methods vs sampling
• The way data is provided to users
• Data logistics vs data integration
• The way data is presented
• Graphical interactive visualizations vs management reports
• The way knowledge (business rules, models) is created
• Learning/mining vs (labor-intensive) knowledge acquisition
 Why Big Data Now:
Information Culture The philosopher’s
view

“
When you two
have finished
arguing your
opinions, I
actually have
© timoelliott.com data!

Rationalism vs empiricism
Why Big Data Now: The researcher’s view
Example1
Example 2: Google Flu trends

not without criticism ...

From Big Data to AI

Big Data Succeeded! Big Data Failed!

Data became the problem

The problem empowered the solution

The new AI
technologies are
driven by data and
analytics

Machine Learning is
at the fore of most
of them
 Three types of learning

• Labeled data
• Focused
outcomes
• Assess/Predict
Supervised

• No initial • Action/Results
focus • Reward
Learning
• No feedback function
• Clustering • Learning for
Unsupervised Reinforcement
planning or
action
But we don’t solve
problems with
Machine Learning

We solve problems
with the rules and
knowledge that ML
builds
Each step supports the next

Partnership
Interaction

Reasoning

Machine Learning

Data and Analytics

AI-enabled Enterprise

• Decision Making in the face of uncertainty and change

• Builds on RPA, Hyperautomation – thinking and doing
• Assumes an Industry 4.0 view (IoT sensors, digital twins, simulation)
Organization as system of systems

33
Decision making: from current situation to AI-enabled

The AI-enabled enterprise continuously monitors the

system, updates its models, does what-if analyses, and
34
intervenes in the system
 Moving AI tools to the use context (Lebovitz et al, 2021)

• We conducted an 11-month qualitative study investigating how managers formed evaluations of

AI tools across multiple sections of a department of diagnostic radiology at a tertiary hospital in
the United States (Urbanside). (…) The AI tools being evaluated at Urbanside were ML-based
classification models based on image recognition technologies; they analyzed medical imaging
files as inputs and generated outputs in the form of disease classifications or image
segmentation files.
• As each study concluded, managers were quite surprised by the internal results, as many results
conflicted with the accuracy measures reported by tool developers. For instance, when
segmentation results of the Brain Tumor Segmentation tool were projected on the screen
against the ground truth label, managers gazed at them in disbelief, “The segmentation is
atrocious! It takes half the scalp with it. That makes no sense … Not only is it highlighting
stuff in the brain that is totally irrelevant, but it doesn’t actually highlight the important parts of
the tumor!” (Vivian). Desperate to understand these conflicting results, managers searched for
explanations, “The results were far more discrepant than I expected, and I don’t know why”
(Anthony).

WHAT HAS GONE WRONG???

Data Science principles
Data & Information

monitor
contextualize
DATA INFORMATION

learn decide ACTION

KNOWLEDGE
 Business
analytics

Provost 2012
Definitions (Provost)

• Data science is a set of fundamental principles that

support and guide the principled extraction of
information and knowledge from data.
• Sometimes referred to as “Applied AI”
• Data mining is the actual extraction of knowledge from
data, via technologies that incorporate these principles
• Data-driven Decision Making (DDD) is the practice of
basing decisions on the analysis of data, rather than
purely on intuition
Data Science Principles

• Extracting useful knowledge from data to solve

business problems can be treated systematically by
following a process with reasonably well-defined
stages. The Cross-Industry Standard Process for Data
Mining (CRISP-DM7) is one codification of this
process.
CRISP-DM7
(see e.g., Wikipedia)
More Data Science Principles

• If you look too hard at a set of data, you will find

something—but it might not generalize beyond the
data you’re looking at (problem of overfitting)

• To draw causal conclusions, one must pay very close

attention to the presence of confounding factors,
possibly unseen ones (observation vs intervention)

• When using AI heuristics to find some optimum you

may end up in a local maximum.
Business Analytics not only about numbers!

• For business, often the purpose of data analysis is to

improve business processes

• Business process data consists of events

• Process mining

• Many systems can be represented by graphs

• Social network mining
• Knowledge graphs
Data Science
Research Methodology
 Types of Business Analytics research

1. Applying analytics to answer a business question

• Problem-oriented. Management Science. Result is an insight with practical
value
• Scientific value depends on genericity
• Example: “analyze effects of social media intensity on program item
redemption”
2. Developing an analytics-based tool/ process/ method
• Design Science research (DSR): result is an IS application
• Example: “association rule-based anomaly detection for event logs”
• DSR typically aims at middle-range theory development
3. Improving upon analytical techniques/tools
• Technical Design research (CS): result is new or improved algorithm
4. Other types of research: identify and address legal challenges,
economic consequences, …
Example DSR project in DS

Furtak, Szymon; Avital, Michel; and Pedersen, Rasmus U.,

"Sensing the Future: Designing Predictive Analytics with Sensor
Technologies" (2015). ECIS 2015 Completed Research Papers.
Paper 54.
Final remarks

• Data Science makes use of AI technology to respond

to the challenges of Big Data
• AI is making big steps because of Big Data.
• This is also true for GenAI.
• A data science solution must be embedded in the
operational business. This is not simple.
• The increasing use of AI in business imposes new
challenges:
• Responsible AI
• Human-centered and hybrid AI: how to make best use of
humans and machines
• AI governance