Business Intelligence and

Analytics: Systems for Decision

Support
(10th Edition)
 Business Intelligence and
Analytics: Systems for Decision
Support
(10th Edition)
PART I Decision Making and
Analytics: An Overview

 Chapter 1: An Overview of Business

Intelligence, Analytics, and Decision
Support
 Chapter 2 : Foundations and
Technologies for Decision Making...

(Continued…)
 PART II Descriptive Analytics

 Chapter 3 Data Warehousing

 Chapter 4 Business Reporting, Visual
Analytics, and Business Performance
Management

(Continued…)
PART Ill Predictive Analytics

 Chapter 5 : Data Mining

 Chapter 6 : Techniques for Predictive
Modeling
 Chapter7: Text Analytics, Text Mining, and
Sentiment Analysis
 Chapter 8: Web Analytics, Web Mining, and
Social Analytics

(Continued…)
PART IV Prescriptive Analytics

 Chapter 9 : Model-Based Decision Making:

Optimization and MultiCriteria Systems
 Chapter 10: Modeling and Analysis:
Heuristic Search Methods and Simulation
 Chapter 11: Automated Decision Systems
and Expert Systems
 Chapter 12: Knowledge Management and
Collaborative Systems
(Continued…)
PART V Big Data and Future
Directions for Business Analytics

 Chapter 13 : Big Data and Analytics

 Chapter14: Business Analytics:
Emerging Trends and Future Impacts

(Continued…)
 What is a Decision Support
System (DSS)?
Decision Support Systems (DSS) are tools that
help people make better decisions by giving
them important information and analysis. A DSS
is either human-powered, automated, or a
combination of both.
Theoretically, a DSS can be employed in various
knowledge domains from an organization to
forest management
 Here are some
examples:
• Personal Finance: DSS helps with budgeting and
planning investments.
• Healthcare: DSS assists doctors in diagnosing and
treating patients.
• Retail: DSS helps retailers with inventory and pricing
decisions.
• Transportation: DSS improves routes and schedules
for public transportation.
• Emergency Management: DSS helps manage
resources and make decisions during emergencies and
disasters.
 Business Intelligence
An Overview and
of Business
Analytics: Systems
Intelligence, Analytics,for
andDecision
Decision
Support
Support

CHAPTER -1
(10 th
Edition)
 Learning Objectives

 Understand today’s turbulent business

environment and describe how
organizations survive and even excel in
such an environment (solving problems
and exploiting opportunities)
 Understand the need for computerized
support of managerial decision making
 Understand an early framework for
managerial decision making (Continued…)
 ...
 Learning Objectives

 Learnthe conceptual foundations of the

DSS methodology
 Describe the BI methodology and
concepts and relate them to DSS
 Understand the various types of analytics
 List the major tools of computerized
decision support
 Opening Vignette…

Magpie Sensing Employs Analytics to

Manage a Vaccine Supply Chain
Effectively and Safely
Company background
Problem
Proposed solution and results
Answer & discuss the case questions...
 Opening Vignette…

Questions for the Opening Vignette

1. What information is provided by the descriptive
analytics employed at Magpie Sensing?
2. What type of support is provided by the predictive
analytics employed at Magpie Sensing?
3. How does prescriptive analytics help in business
decision making?
4. In what ways can actionable information be reported in
real time to concerned users of the system?
5. In what other situations might real-time monitoring
applications be needed?
 Changing Business Environment &
Computerized Decision Support

Why are Companies moving aggressively to computerized

support of their operations ?
 Business environment/ Pressures–>
Responses–> Support Model
• Business environment/ pressures : result of today's
competitive business
• Responses : Action taken to counter the pressures
• Support : Computerized support to facilitate the process
 The Business
Environment
 The environment in which organizations operate
today is becoming more and more complex,
creating
opportunities, and problems.
Example: globalization, competitions
 Business environment factors can be divided
into four categories
markets, consumer demands, technology, and
societal…
Business Environment Factors that create
pressure on organization
FACTOR DESCRIPTION
Markets Strong competition
Expanding global markets
Blooming electronic markets on the Internet
Innovative marketing methods
Opportunities for outsourcing with IT support
Need for real-time, on-demand transactions
Consumer Desire for customization
Demand Desire for quality, diversity of products, and speed of delivery
Customers getting powerful and less loyal
Technology More innovations, new products, and new services
Increasing obsolescence rate
Increasing information overload
Social networking, Web 2.0 and beyond
Societal Growing government regulations and deregulation
Workforce more diversified, older, and composed of more women Prime
concerns of homeland security and terrorist attacks Necessity of Sarbanes-
Oxley Act and other reporting-related legislation Increasing social
responsibility of companies Greater emphasis on sustainability
 Organizational Responses
 Organization uses different actions to counter the
pressure
 Be Reactive, Anticipative, Adaptive, and Proactive
 Managers may take actions, such as
 Employ strategic planning.
 Use new and innovative business models.
 Restructure business processes.
 Participate in business alliances.
 Improve corporate information systems.
 … more [in your book]
 Closing the Strategy Gap

One of the major objectives of computerized

decision support is to facilitate closing the gap
between the current performance of an
organization and its desired performance, as
expressed in its mission, objectives, and goals,
and the strategy to achieve them.
In order to understand why Computerized support
systems is needed and how it is provided ,
especially for decision making support , lets look
at managerial decision making
 Managerial Decision Making
 Management is a process by which
organizational goals are achieved by using
resources.
 Inputs: resources
 Output: attainment of goals
 Measure of success: outputs / inputs
 Management  Decision Making ( Managers
engage in a continuous process of making
decision. Decision making: selecting the best
solution from two or more alternatives )
 Decision-Making Process

Managers usually make decisions by following a

four-step process (scientific approach)

1. Define the problem (or opportunity)

2. Construct a model that describes the real-world
problem.
3. Identify possible solutions to the modeled problem
and evaluate the solutions.
4. Compare, choose, and recommend a potential
solution to the problem.
 Information Systems Support for
Decision Making
Analytics and BI tools such as data warehousing, data
mining, online analytical processing (OLAP), dashboards
etc.. These developments have clearly contributed to
facilitating growth of decision support and analytics in a
number of ways, including the following:
 Group communication and collaboration
 Improved data management
 Managing data warehouses and Big Data
 Analytical support
 Overcoming cognitive limits in processing and storing
information
 Knowledge management
An Early Decision Support Framework (by Gory
and Scott-Morten, 1971)
 An Early Decision Support Framework
 Degree of Structuredness (Simon, 1977)
 Decisions are classified as
Highly structured ( programmed)
Semi-structured
Highly unstructured (i.e., nonprogrammed)
 Types of Control (Anthony, 1965)
 Strategic planning (top-level, long-range)
 Management control (tactical planning)
 Operational control
 THE DECISION SUPPORT MATRIX
Nine-cell decision support matrix was to suggest different types of
computerized support to different cells in the matrix
 Computer Support for Structured Decisions : Structured
problems, which are encountered repeatedly, have a high level of
structure. It is therefore possible to abstract, analyse, and classify
them into specific categories. Computers have historically
supported structured and some semi-structured decisions,
especially those that involve operational and managerial
control.
 Computer Support for Semistructured Problems : Solving
semistructured problems may involve a combination of standard
solution procedures and human judgment. Management science
can provide models for the portion of a decision-making problem
that is structured. For the unstructured portion, a DSS can
improve the quality of the information on which the decision is
based by providing, for example, not only a single solution but also
a range of alternative solutions, along with their potential impacts.
 THE DECISION SUPPORT MATRIX
 Computer Support for Unstructured Decisions :
Unstructured problems can be only partially supported
by standard computerized quantitative methods. It is
usually necessary to develop customized solutions.
However, such solutions may benefit from data and
information generated from corporate or external data
sources. Intuition and judgment may play a large
role in these types of decisions, as may computerized
communication and collaboration technologies, as well
as knowledge management
 The Concept of DSS

In the early 1970s, Scott-Morton first articulated the major

concepts of DSS. He defined decision support systems
(DSS) as "interactive computer-based systems, which help
decision makers utilize data and models to solve
unstructured problems.
The term decision support system, like management
information system (MIS) and other terms in the field of IT,
is a content-free expression. Therefore, there is no
universally accepted definition of DSS.
Actually, DSS can be viewed as a conceptual methodology-
that is, a broad, umbrella term.
 28
DSS as a Specific Application

 In a narrow sense DSS refers to a process for

building customized applications for unstructured
or semi-structured problems
 Components of the DSS Architecture
 Data, Model, Knowledge/Intelligence, User,
Interface.
 DSS often is created by putting together
loosely coupled instances of these components
 High-Level Architecture of
DSS
29

Data can come from many sources. Data are the first
component of DSS and relate to specific situation manipulated by
Models.
Knowledge is the third components.
User are the vital fourth components interfacing with the
systems.
Interfacing with the system via a user interface is the fifth
 Definition of BI
 BI is an umbrella term that combines architectures, tools,
databases, analytical tools, applications, and
methodologies
 BI is a content-free expression, so it means different things
to different people
 Bi's major objective is to enable interactive access
(sometimes in real time) to data, to enable manipulation of
data, and to give business managers and analysts the
ability to conduct appropriate analyses. By analysing
historical and current data, situations, and performances,
decision makers get valuable insights that enable them to
make more informed and better decisions. The process of
BI is based on the transformation of data to information,
then to decisions, and finally to actions.
 A Brief History of BI
 The term BI was coined by the Gartner Group in
the mid-1990s
 However, the concept is much older
 1970s - MIS reporting - static/periodic reports
 1980s - Executive Information Systems (EIS)
 1990s - OLAP, dynamic, multidimensional, ad-
hoc reporting -> coining of the term “BI”
 2010s - Inclusion of AI and Data/Text Mining
capabilities; Web-based Portals/Dashboards,
Big Data, Social Media, Analytics
 2024s - yet to be seen
The Evolution of BI
Capabilities
 A High-Level Architecture of
BI
Data Warehouse Business Analytics Performance and
Environment Environment Strategy
Data Technical staff Business users Managers / executives
Sources Built the data warehouse Access
Data
ü Organizing Warehouse BPM strategy
ü Summarizing Manipulation
ü Standardizing Results

User Interface
Future component - browser
intelligent systems - portal
- dashboard
Components in a BI
Architecture 34
 The data warehouse is a large repository of well-
organized historical data
 Business analytics are the tools that allow
transformation of data into information and
knowledge
 Business performance management (BPM) allows
monitoring, measuring, and comparing key
performance indicators like sale, profit, cost, and
others. It embraces process planning, forecasting
etc.
 User interface (e.g., dashboards) allows access
and easy manipulation of other BI components
 The Benefits of BI 35
 The ability to provide accurate
information when needed, including a
real-time view of the corporate
performance and its parts
A survey by Thompson (2004)
 Faster, more accurate reporting (81%)
 Improved decision making (78%)
 Improved customer service (56%)
 Increased revenue (49%)
Business Value of BI Analytical Applications

 Customer segmentation
 Propensity to buy
 Customer profitability
 Fraud detection
 Customer attrition
 Channel optimization
The DSS–BI Connection 37

 First, their architectures are very similar because BI

evolved from DSS
 BI implies the use of a Data Warehouse, Where DSS
may or may not
 Second, DSS directly support specific decision
making, while BI provides accurate and timely
information, and indirectly support decision making
 Third, BI has an executive and strategy orientation,
especially in its BPM and dashboard components,
while DSS, in contrast, is oriented toward analysts
 The DSS–BI Connection – cont.
38
 Fourth, most BI systems are constructed with
commercially available tools and components,
while DSS is often built from scratch
 Fifth, DSS methodologies and even some tools
were developed mostly in the academic world,
while BI methodologies and tools were
developed mostly by software companies
 Sixth, many of the tools that BI uses are also
considered DSS tools (e.g., data mining and
predictive analysis are core tools in both)
 The DSS–BI Connection –
39
cont.
 Although
some people equate DSS with BI,
these systems are not, at present, the
same
 some people believe that DSS is a part of BI—
one of its analytical tools
 others think that BI is a special case of DSS that
deals mostly with reporting, communication,
and collaboration (a form of data-oriented DSS)
 BI is a result of a continuous revolution and, as
such, DSS is one of BI's original elements
 In this book, we separate DSS from BI
 BUSINESS ANALYTICS OVERVIEW
40
Analytics represents the combination of computer technology, management
science techniques, and statistics to solve real problems. to understand what is
happening, what will happen, and how to make the best of it has also been
encapsulated by INFORMS in proposing three levels of analytics. These three
levels are identified as descriptive, predictive, and prescriptive.
BUSINESS ANALYTICS OVERVIEW

Descriptive or reporting analytics refers to knowing what is

happening in the organization and understanding some
underlying trends and causes of such occurrences.

Predictive analytics aims to determine what is likely to happen

in the future. This analysis is based on statistical techniques as
well as other more recently developed techniques that fall under
the general category of data mining.

Prescriptive analytics. The goal of prescriptive analytics is to

recognize what is going on as well as the likely forecast and make
decisions to achieve the best performance possible. This group of
techniques has historically been studied under the umbrella of
operations research or management sciences and has generally
been aimed at optimizing the performance of a system.