Chapter 12 Business Analytics

Business Intelligence (BI)

A broad category of applications, technologies, and processes for gathering, storing, accessing, and analyzing data to help business users make better decisions Can be used interchangeably with BA

Geographic Information System (GIS)

A computer-based system for capturing, integrating, manipulating, and displaying data using digitized maps

Affinity Analysis

A data mining application that discovers co-occurrence relationships among activities performed by specific individuals or groups

Management

A process by which an organization achieves its goals through the use of resources (people, money, materials, and information) These resources are considered to be inputs Achieving the organization's goals is the output of the process

The Nature of Decisions

All managerial decisions fall into one of three broad categories: Operational control: Executing specific tasks efficiently and effectively Management control: Acquiring and using resources efficiently in accomplishing organizational goals Strategic planning: The long-range goals and policies for growth and resource allocation

Decision Support Systems (DSS)

Combine models and data to analyze semistructured problems and some unstructured problems that involve extensive user involvement

Structured Decisions

Deal with routine and repetitive problems for which standard solutions exist, such as inventory control

Problem Structure

Decision-making processes fall along a continuum ranging from highly structured to highly unstructured

Geocoding

Enables users to generate information for planning, problem solving, and decision making

Predictive Analytics

Examine recent and historical data to detect patterns and predict future outcomes and trends Predictive analytics provide estimates about the likelihood of a future outcome

Prescriptive Analytics

Go beyond descriptive and predictive models by recommending one or more courses of action and showing the likely outcome of each decision Prescriptive analytics attempt to quantify the effect of future decisions in order to advise on possible outcomes before the decisions are actually made Prescriptive analytics require predictive analytics with two additional components: actionable data and a feedback system that tracks the outcome produced by the action taken

Decision-Making Process

Intelligence phase, in which managers examine a situation and then identify and define the problem or opportunity Design phase, decision makers construct a model for addressing the situation Managers then validate the model by using test data Decision makers set criteria for evaluating all of the potential solutions that are proposed Choice phase involves selecting a solution or course of action that seems best suited to resolve the problem

Roles of Managers

Interpersonal roles: Figurehead, leader, liaison Informational roles: Monitor, disseminator, spokesperson, analyzer Decisional roles: Entrepreneur, disturbance handler, resource allocator, negotiator

Online Analytical Processing (OLAP) (or Multidimensional Analysis)

Involves "slicing and dicing" data stored in a dimensional format, "drilling down" in the data to greater detail, and "rolling up" the data to greater summarization (less detail)

Data Visualization

Makes results more attractive and understandable to users Dashboards are the most common BA presentation tool

Dashboard

Provides easy access to timely information and direct access to management reports It is user friendly, supported by graphics, and, most importantly, enables managers to examine exception reports and drill down into detailed data

Decision

Refers to a choice among two or more alternatives that individuals and groups make Decision making is composed of three major phases: intelligence, design, and choice

Data Mining

Refers to the process of searching for valuable business information in a large database, data warehouse, or data mart Data mining can perform two basic operations: (1) identifying previously unknown patterns and (2) predicting trends and behaviors

Semistructured Decisions

Require a combination of standard solution procedures and individual judgment

Descriptive Analytics

Summarize what has happened in the past and allow decision makers to learn from past behaviors BA tools in descriptive analytics applications include online analytical processing, data mining, decision support systems, and a variety of statistical procedures

Data Reduction

The conversion of raw data into a smaller amount of more useful information

Business Analytics (BA)

The process of developing actionable decisions or recommendations for actions based on insights generated from historical data Business analytics examines data with a variety of tools, formulates descriptive, predictive, and prescriptive analytics models, and communicates these results to organizational decision makers

Unstructured Decisions

These decisions are intended to deal with "fuzzy," complex problems for which there are no cut-and-dried solutions