Business Intelligence, Analytics, and Data

Science: A Managerial Perspective

Fourth Edition

Chapter 1
An Overview of Business
Intelligence, Analytics, and
Data Science

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Learning Objectives

1.1 Understand the need for computerized support of

managerial decision making
1.2 Recognize the evolution of such computerized support
to the current state—analytics/data science
1.3 Describe the business intelligence (BI) methodology
and concepts
1.4 Understand the various types of analytics, and see
selected applications
1.5 Understand the analytics ecosystem to identify various
key players and career opportunities
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Opening Vignette (1 of 5)
Sports Analytics—An Exciting Frontier for Learning and
Understanding Applications of Analytics
• Sports analytics is becoming a specialty within analytics
• Sports is a big business
– Generating $145B in revenues annually
– Additional $100B in legal and $300B in illegal gambling
• Analytic in sports popularized by the Moneyball book by Michael
Lewis in 2003
– About Oakland A’s
– And the follow-on movie in 2011
• Nowadays, analytics is used in many facets of sports

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Opening Vignette (2 of 5)

Example 1: The Business Office

• Figure 1.1 Season Ticket Renewals—Survey Scores

Tier Highly Likely Likely Maybe Probably Not Certainly Not

1 92 88 75 69 45

2 88 81 70 65 38

3 80 76 68 55 36

4 77 72 65 45 25

5 75 70 60 35 25

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Opening Vignette (3 of 5)

Example 2: The Coach

• Figure 1.4 Heat Map Zone Analysis for Passing Plays

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Opening Vignette (4 of 5)
Example 3: The Trainer
• Figure 1.7 Single Leg Squat Hold Test – Core Body Strength Test

(Source: Wilkerson and Gupta).

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Opening Vignette (5 of 5)

Discussion Questions
1. What are three factors that might be part of a PM for
season ticket renewals?
2. What are two techniques that football teams can use to
do opponent analysis?
3. How can wearables improve player health and safety?
What kinds of new analytics can trainers use?
4. What other analytics applications can you envision in
sports?

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Changing Business Environments and Evolving
Needs for Decision Support and Analytics

• Increased hardware, software, and network capabilities

• Group communication and collaboration
• Improved data management
• Managing giant data warehouses and Big Data
• Analytical support
• Overcoming cognitive limits in processing and storing
information
• Knowledge management
• Anywhere, anytime support

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Evolution of Computerized Decision
Support to Analytics/Data Science

• Figure 1.8 Evolution of Decision Support, Business Intelligence,

and Analytics

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A Framework for Business Intelligence (1 of 3)

• DSS → EIS → BI
• Definition of Business Intelligence
– [Broad Definition] An umbrella term that combines
architectures, tools, databases, analytical tools,
applications, and methodologies
– [Narrow Definition] Descriptive analytics tools and
techniques (i.e., reporting tools)
• A Brief History of BI – 1970s → 1980s → 1990s …
• The Origins and Drivers of BI (See Figure 1.9)
• The Architecture of BI (See Figure 1.10)
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A Framework for Business Intelligence (2 of 3)

• Figure 1.9 Evolution of Business Intelligence (BI) →

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A Framework for Business Intelligence (3 of 3)

• The Architecture of BI
• Figure 1.10 A High-Level Architecture of BI

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Application Case 1.1

Sabre Helps Its Clients through Dashboards and

Analytics
Questions for Discussion
1. What is traditional reporting? How is it used in the
organization?
2. How can analytics be used to transform the traditional
reporting?
3. How can interactive reporting assist organizations in
decision making?

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A Multimedia Exercise in Business Intelligence

• TUN (TeradataUniversityNetwork.com)
– BSI Videos (Business Scenario Investigations)
▪ Analogues to CSI (Crime Scene Investigation)
• Go To
– www.youtube.com/watch?v=NXEL5F4_aKA
• See the
– www.slideshare.net/teradata/bsi-how-we-did-it-the-
case-of-the-misconnecting-passengers.slides
• Discuss the case presented in the video and in the slides

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Transaction Processing Versus Analytic
Processing

• Online Transaction Processing (OLTP)

– Operational databases
– ERP, SCM, CRM, …
– Goal: data capture
• Online Analytical Processing (OLAP)
– Data warehouses
– Goal: decision support
• What is the relationship between OLTP and OLAP?

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Appropriate Planning and Alignment with
the Business Strategy

• Planning and Execution → Business, Organization,

Functionality, and Infrastructure
• Functions served by BI Competency Center
– How BI is linked to strategy and execution of strategy
– Encourage interaction between the potential business
user communities and the IS organization
– Serve as a repository and disseminator of best BI
practices between and among the different lines of
business.
– Standards of excellence in BI practices can be
advocated and encouraged throughout the company
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Real-Time, On-Demand BI is Attainable

• Emergence of real-time BI applications

• Justifying the need
– Is there a need for real-time [is it worth the additional
expense]?
• Leveraging the enablers
– RFID
– Web services
– Intelligent agents

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Critical BI System Considerations

• Developing or Acquiring BI Systems

– Make versus buy
– BI shells
• Justification and Cost–Benefit Analysis
– A challenging endeavor, why?
• Security
• Protection of Privacy
• Integration to Other Systems and Applications

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Analytics Overview

• Analytics…a relatively new term/buzz-word

• Analytics…the process of developing actionable
decisions or recommendations for actions based on
insights generated from historical data
• According to the Institute for Operations Research and
Management Science (INFORMS)
– Analytics represents the combination of computer
technology, management science techniques, and
statistics to solve real problems.

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Business Analytics
• Figure 1.11 Three Types of Analytics

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Descriptive Analytics

• Descriptive or reporting analytics

• Answering the question of what happened
• Retrospective analysis of historic data
• Enablers
– OLAP / DW
– Data visualization
▪ Dashboards and Scorecards
– Descriptive statistics

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Application Case 1.2

Silvaris Increases Business with Visual Analysis and

Real-Time Reporting Capabilities
Questions for Discussion
1. What was the challenge faced by Silvaris?
2. How did Silvaris solve its problem using data
visualization with Tableau?

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Application Case 1.3

Siemens Reduces Cost with the Use of Data

Visualization
Questions for Discussion
1. What challenges were faced by Siemens’ visual analytics
group?
2. How did the data visualization tool Dundas BI help
Siemens in reducing cost?

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Predictive Analytics

• Aims to determine what is likely to happen in the future

(foreseeing the future events)
• Looking at the past data to predict the future
• Enablers
– Data mining
– Text mining / Web mining
– Forecasting (i.e., time series)

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Application Case 1.4

Analyzing Athletic Injuries

Questions for Discussion
1. What types of analytics are applied in the injury
analysis?
2. How do visualizations aid in understanding the data and
delivering insights into the data?
3. What is a classification problem?
4. What can be derived by performing sequence analysis?

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Prescriptive Analytics
• Aims to determine the best possible decision
• Uses both descriptive and predictive to create the alternatives,
and then determines the best one
• Enablers
– Optimization
– Simulation
– Multi-Criteria Decision Modeling
– Heuristic Programming
• Analytics Applied to Many Domains
• Analytics or Data Science?

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Application Case 1.5

A Specialty Steel Bar Company Uses Analytics to

Determine Available-to-Promise Dates
Questions for Discussion
1. Why would reallocation of inventory from one customer
to another be a major issue for discussion?
2. How could a DSS help make these decisions?

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Analytics Examples in Selected Domains (1 of 2)

• Analytics Application in HealthCare—Humana Examples

– Example 1: Preventing Falls in a Senior Population—
An Analytic Approach
– Example 2: Humana’s Bold Goal—Application of
Analytics to Define the Right Metrics
– Example 3: Predictive Models to Identify the Highest
Risk Membership in a Health Insurer

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Analytics Examples in Selected Domains (2 of 2)
• Analytics in Retail Value Chain
• Figure 1.12 Example of Analytics Applications in a Retail Value Chain

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Analytics Examples in Retail Value Chain
Table 1.1 Examples of Analytics Applications in the Retail Value Chain
Analytic
Application Business Question Business Value
Inventory 1. Which products have high demand? 1. Forecast the consumption of fast-moving products
Optimization 2. Which products are slow moving or and order them with sufficient inventory
becoming obsolete? to avoid a stock-out scenario.
2. Perform fast inventory turnover of slow-moving
products by combining them with one in high demand.
Price Elasticity 1. How much net margin do I have on the 1. Markdown prices for each product can be optimized
product? to reduce the margin dollar loss.
2. How much discount can I give on this 2. Optimized price for the bundle of products is
product? identified to save the margin dollar.
Market Basket 1. What products should I combine to 1. The affinity analysis identifies the hidden
Analysis create a bundle offer? correlations between the products, which can elp in
2. Should I combine products based on following values a) Strategize the product bundle
slow-moving and fast-moving offering based on focus on inventory or margin. b)
characteristics? Increase cross-sell or up-sell by creating bundle from
3. Should I create a bundle from the different categories or the same categories,
same category or different category line? respectively.

• For the complete table, refer to your textbook

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A Brief Introduction to Big Data Analytics

• What Is Big Data? (Is it just “big”?)

– Big Data is data that cannot be stored or processed
easily using traditional tools/means
– Big Data typically refers to data that comes in many
different forms: large, structured, unstructured,
continuous
▪ 3Vs – Volume, Variety, Velocity
– Data (Big Data or otherwise) is worthless if it does not
provide business value (and for it to provide business
value, it has to be analyzed)
• More on Big Data Analytics is in Chapter 7
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Application Case 1.6

CenterPoint Energy Uses Real-Time Big Data Analytics

to Improve Customer Service
Questions for Discussion
1. How can electric companies predict possible outage at a
location?
2. What is customer sentiment analysis?
3. How does customer sentiment analysis help provide a
personalized service to their customers?

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An Overview of the Analytics Ecosystem
• What are the key players in analytics industry?
• What do they do?
• Is there a place for you to be a part of it?
• There is a need to classify different industry participants in the
broader view of analytics to
– Identify providers (as an analytics consumer)
– Identify roles to play (as a potential provider)
– Identify job opportunities
– Identify investment/entrepreneurial opportunities
– Understand the landscape and the future of computerized
decision sport systems
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An Overview of the Analytics Ecosystem (1 of 3)

• Figure 1.13 Analytics Ecosystem

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An Overview of the Analytics Ecosystem (2 of 3)

• Data Generation Infrastructure Providers

• Data Management Infrastructure Providers
• Data Warehouse Providers
• Middleware Providers
• Data Service Providers
• Analytics Focused Software Developers
– Descriptive, Predictive, Prescriptive
• Application Developers: Industry Specific or General
• Analytics Industry Analysts and Influencers

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An Overview of the Analytics Ecosystem (3 of 3)
• Academic Institutions and
Certification Agencies
– Certificates
– Masters programs
– Undergraduate programs
– Offered by
▪ MIS, Engineering
▪ Marketing, Statistics
▪ Computer Science
▪ …
• Regulators and Policy Makers
• Analytics User Organizations
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Figure 1.15 Plan of the Book

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Resources

• Teradata University Network (TUN)

• TeradataUniversityNetwork.com

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End of Chapter 1

• Questions / Comments

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Copyright

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