Chap. 12: Business Intelligence

3 BI Targets that Represent Different Levels of Change

-The developing of one or a few related BI applications. -The developing of the infrastructure to support enterprise-wide BI applications -The developing of support for organizational transformation.

Why do Managers Need IT Support?

-The number of alternatives to be considered constantly increases. -Decisions must be made under time pressure. -Decisions are more complex. -Decision makers can be in different locations and so is the information.

Two types of BI applications

-Those that provide data analysis tools: Multidimensional data analysis (or online analytical processing) Data mining Decision support systems -Those that provide information in structured format: Digital dashboards

Digital Dashboard

A BI application that: Provides rapid access to timely information. Provides direct access to management reports. Is very user friendly and supported by graphics.

Decision Room

A face-to-face setting for a group DSS, in which terminals are available to the participants.

MGMT

A process by which organizational goals are achieved through the use of resources (people, money, energy, materials, space, time).

The Nature of Decisions

All managerial decisions fall into one of 3 broad categories: Operational control Management control Strategic planning

Digital Dashboard

An executive information system user interface that (similar to a car's dashboard) is designed to be easy to read. For example, a product might obtain information from the local operating system in a computer, from one or more applications that may be running, and from one or more remote sites on the Web and present it as though it all came from the same source.

Business Intelligence

Applications and technologies for consolidating, analyzing, and providing access to vast amounts of data to help users make better business and strategic decisions.

Decision support systems (DSS)

Computer-based information systems that combine models and data in an attempt to solve semi-structured and some unstructured problems with extensive user involvement.

Digital Dashboard Capabilities

Drill down Critical success factors (CSFs) Key performance indicators (KPIs) Status success Trend analysis Exception reporting

Unstructured

Fuzzy, complex problems for which there are no cut-and-dried solutions. e.i. Building new plant. -Planning new service offerings, hiring an executive, and choosing a set of research & development (R&D) projects for the coming year.

3 Roles of Managers

Interpersonal, informational & decisional roles.

Management control

Involves decisions concerning acquiring and using resources efficiently in accomplishing organizational goals.

Strategic planning

Involves decisions concerning the long range goals and policies for growth and resource allocation.

Operational control

Involves executing specific tasks efficiently and effectively.

Semi-structured

Problems in which only some of the decision process phases are structured. e.i. Loan approval. -Evaluating employees, setting marketing budgets for consumer products, performing capital acquisition analysis, and trading bonds.

Structured

Routine and repetitive problems for which standard solutions exist. e.i. Order entry.

Data mining

Searching for valuable business information in a large database or data warehouse. Performs two basic operations: -Predicting trends and behaviors. -Identifying previously unknown patterns and relationships.

DSS capabilities

Sensitivity analysis, What-if analysis, & Goal-seeking analysis.

Corporate performance management

The monitoring and managing of an organization's performance using key performance indicators.

Multidimensional data analysis

The process of performing complex, multidimensional analysis of stored data, typically using graphical software tools. Provides users with a look at what is happening or what has happened. Allows users to analyze data in such a way that they can quickly answer business questions. Also called Online Analytical Processing (OLAP).

Data Visualization

The process of presenting data to users in visual formats, thereby making IT applications more attractive and understandable to users.

Lower-level Managers

Usually perform the structured and operational-control oriented tasks in: - Accounts receivable, order entry. (Operational Control) -Production scheduling, inventory control. (Operational Control) -Budget analysis, short-term forecasting, personnel reports, make-or-buy analysis. (MGMT Control)

Senior executives

Usually perform the tasks in: - Negotiating, recruiting an executive, buying hardware, lobbying. (MGMT Control) - Building new plant, mergers & acquisitions, new product planning, compensation planning, quality assurance planning. (Strategic Planning) - R&D planning, new tech development, social responsibility planning. (Strategic Planning)

Middle Managers and Staff

Usually perform the tasks in: - Selecting a cover for a mag, buying software, approving loans. (Operational Control) - Credit evaluation, budget preparation, plant layout, project scheduling, reward systems design. (MGMT Control) - Financial mgmt (investment), warehouse location, distribution systems. (Strategic Planning)

Decision

a choice that individuals and group make among two or more alternatives.

Geographical Information System

a computer-based system for capturing, integrating, manipulating, and displaying data using digitized maps. e.i. GISMO is a geographic information system developed for the city of Corvallis, Oregon.

Management cockpit

a strategic management room that enables top-level decision makers to pilot their businesses better. -The environment encourages more efficient management meetings and boosts team performance via effective communication. -Key performance indicators and information relating to critical success factors are displayed graphically on the walls of the meeting room. -External information can be easily imported to the room to allow competitive analysis.

Decision Making

a systematic process composed of three major phases: intelligence, design and choice (Simon 1977), with the implementation phase added later.

Group decision support system (GDSS)

an interactive computer-based system that supports the process of finding solutions by a group of decision makers.

Decisional

entrepreneur, disturbance handler, resource allocator, negotiator.

Interpersonal roles

figurehead, leader, liaison.

Informational roles

monitor, disseminator, spokesperson.

What-if analysis

the study of the impact of a change in the assumptions (input data) on the proposed solution.

Sensitivity analysis

the study of the impact that changes in one (or more) parts of a model have on other parts.

Goal-seeking analysis

the study that attempts to find the value of the inputs necessary to achieve a desired level of output.

Problem Structure

where decision-making processes fall along a continuum ranging from highly structured to highly unstructured.