Introduction to Business Intelligence

 

 ® 

IBM Software Group

Introduction to Business Intelligence

Vince Leat  ASEAN SW Group 

 © 2007 IBM IBM Corporation Corporation

 

IBM Software Group

Discussion 

What is Business Intelligence



BI Vision Evolution



Business Intelligence Environment



Characteristics of Successful Business Intelligence

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IBM Software Group

What is Business Intelligence? Business Intelligence (BI) is:

“The processes, technologies and tools needed to turn data into information and information into knowledge and knowledge into plans that drive profitable business action. BI encompasses data warehousing, business analytics and knowledge management.”  The Data Warehouse Institute, Q4/2002

Businessthe Intelligence is defined as "knowledge technologies gained about abo utwhich a business through use of various hardware/software enable organizations to turn data into information”. Data Management Review

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IBM Software Group

According to a recent CEO survey, responding efficiently to market conditions & differentiated products are their key priorities. Key CEO Priorities Rapid Response Differentiated Products Business Model Operational Efficiency

Capture and utilize customer infor i nformation mation for swi swift ft decisions

New Products / Services

Vehicles to capture c apture customers / consumers needs/preferences

Organization Create adaptable processes that allow real time response

IT Performance Employee Needs

Track competitor trends and actions

Strategic Partners

Empower front-line employees

… strategi c usag usage e of customer stomer … with with st strategic strateg rategic ic usage usage of cu cust omer information information & & processes processes as as the the key enabler… enabler…

Sourcing

Im Implement/ plement/leverage leverage CRM process processes es and a applicatio pplications ns

Disaster Management

Other

0%

20%

40 %

60 %

80 %

10 0% 0%

25%

50%

75%

Source: IBM Business Business Consulting Services, Services, The Global CEO Study 2004

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IBM Software Group

Another er recent recent survey survey by “The “The Asian Banke Banker” r” rate rates s Anoth customer knowledge knowledge as key capabilities for competitive advantage. What are the key capabilities capabilities to achieve a co mpetit mpetitive ive advantange in over the next 5 years?

    e     c     n     a      t     r     o     p     m      I

If you could only have one competitive advantage what would it be? 60.00% 50.00%    t   r   e   n    /    e   g   e    d   m   e    M  m    k    l   o   e    t   s    R  s   w    i   g

  e   r   u    t    l   u    C

   i   s    C   C   u   n   o    R  a   n   a    K    D    M

  s   e    l   a    S

  n   o    i    t   u    b    i   r    t

  e   s   v   t    i    t   c   a   u   v   d   o   o   n   r    I   n   P

  e    /   n    t    &   n   y   e   s   e   o   c   e   c   r    t   o    i   g   r   e   i   n   o   e   r    t 40.00%   o   n    t   u   i   o   k   a   n   t   e   a    C  e    t   c   t   a   a   r   s    i    t   a   r   s   s   c   s   n   a    i    l   o   n   o  e   l   w  a   e   a   l   e   m   v   i   p   p   r   u   e   c   r   e   v   o   r   g    i   s   M  g   e   m   n   M    L   B    I   m   o 30.00%   e   t   r   o    S    l    i   o   o   v   o   e   f    d    R   C    C   G    t   s    A   n   n   I   u    I    C20.00%

   d   e   s   g   a   i   n    B   i   c    k   r    i   s   P    R

  p   o   p   h   o    S    t    l    S   i   a   e   n   c   n    O  a   n    i    F

   d   s   n   n   a   i   o    t   s   r    i   s   e   i   u   g   r   e   q   c    A    M

10.00% 0.00%

A Low Cost Cost Base Innovat Innovative ive Produc Products ts Service Customisation Cu stomisationCRM / Customer Knowledge

“Survey on strategic information challenges faced by the best retail banks in Asia”, May 2005

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IBM Software Group

Intelligence e (BI) allows us to use data Business Intelligenc strategically in responses to challenges and drive profitable business actions. Efficiency “minimize the cost of selling/servicing the customer …”

Effectiveness

“real-time access to customer information across every point of contact… contact… at the line-o line-offbusiness…”

Differentiation

“ability to proactively manage opportunity and risk at every point of customer customer contact… at the enterprise… at the affinity affinity partner...”

Business Drivers Business Strategies

Business Initiatives

Business Intelligence (BI)

“The processes, technologies and tools needed to turn data into information and information into knowledge and knowledge into  plans that drive profitable business action. BI encompasses data warehousing, business business analytics and knowledge management.”  The Data Warehouse Institute, Q4/2002

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IBM Software Group

The Business Intelligence : Business Imperatives

Revitalizing Value Growth  

Understand Customer Needs

Revenue Revenu e Creatio Creation n



Creating a single customer view business intelligence platform to enable analysis of customer needs Develop a series of customer analytical applications to understand and identify customer needs

Cost Optimization



tactical campaigns thatcost meets customer needs to drive revenue growth and optimization objectives

Enterprise Transformation

Technology Transformation

Use the insights derived from the analytical applications to create new or customized products, services and





Revitalized value growth with improved customer experience Operationalize Operationa lize the strate strategic gic usage usage of data as part of business as usual 7

 

IBM Software Group

BI can be thought of as a data refinery that turns data into actions and business value. value

 actions insights operational systems

 knowledge

review, measure, refine

experience rules & model

analytical tools

 data investment

information

data warehouse

The Data Refinery

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IBM Software Group

BI requires cross functional data Effective decision making requires information that crosses organizational and functional boundaries. Business Information Needs Supplier/ Supply Chain Information

Financial and Business Performance Information

·

How tightly is customer satisfaction related to business unit performance and profitability?

·

Are the most satisfied customers the most profitable?

·

Are incentive systems achieving the desired results?

·

How effective is the company’s strategy?

·

Which parts of the business are creating value and what parts are destroying value?

·

Regional compensation differences may be driving some of the business unit performance variances

·

What is the ratio of customer profitability to

Customer Information

Employee Information

employee incentives, by business unit, by region?

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IBM Software Group

Evolutionary steps to achieving the BI vision. Level 2

Level 1

Level 3

Segmentation based on

   t   n   e   m   p   o    l   e   v   e    D   n   o    i   s    i    V   e   c   n   e    i   g    l    l   e    t   n    I   s   s   e   n    i   s   u    B

• Multi Multiple ple segmentations

profitability and behavioral data, some predictive modeling.

Simple lifestyle or profitability segments

Level 4

• pricing and service levels of all touchpoints.

Integrated data collection and enhanced predictive modeling.

Partial organizational alignment, but conflicts with traditional silos.

Full integration of organization with customer functions.

• Single, corpor corporate ate data data warehouse with solid data management practices

• Preemp Preemptive tive re retention tention

No organizational alignment.

response using 1 to 1 multi-step marketing initial.

triggers

• Direct m marketing arketing content and workflow Segmentation confined to marketing organization.

Recognize, anticipate and

Real time event

• Close Closed-l d-loop oop campaign management

Segmentation drives:

Level 5

• Access of all all custom customer er

Differentiatesbased based on on Differentiates business intelligence capabilities. business intelligence capabilities.

LEVE LE VEL 4: OP OPTIMI OPT TIM IMIZ IZIN ING G LE LEVE VEL LL4: OPTI MIZI ZING NG Integrates business intelligence Integrates business intelligence practicesinto into dailyoperations. operations. practices daily

LEVEL 3: 3: PRACTICING PRACTICING LEVEL Implementsbasic basicbusiness businessintelligence intelligence Implements capabilities. capabilities.

touchpoints • Dyna Dynamic mic ana analysis lysis

• Basic re report port & ad-hoc analysis

LEVEL LEVEL 5: 5: LEADING LEADING

• Numerou Numerouss data ma marts rts with  “clean data”  data” 

LEVEL 2: 2: DEVELOPING DEVELOPING LEVEL Basic, non-integrated non-integrated Basic, business intelligence capabilitiesininplace. place. business intelligence capabilities

• Some to touchpoint uchpoint access

• Num Numerou erouss data sources • Data ac access cess limite limited d to IT and marketing

Ability to Actualize Vision

LEVEL 1: 1: AWARE AWARE LEVEL Showsfew fewbusiness businessintelligence intelligence Shows capabilities. capabilities.

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IBM Software Group

Evolutionary steps in adoption of BI analytical techniques. 0%

50% 

100%

 

Integrated modeling and event-based environment

LEVEL 5: LEADING LEVEL 5: LEADING Differentiates basedon on Differentiates based businessintelligence intelligencecapabilities. capabilities. business

Adopts event-based analysis and triggering

LEVE LE VEL 4: OP OPTIMI OPTI TIMI MIZI ZING NG LE LEVE VEL LL4: OPTI MIZI ZING NG Integratesbusiness businessintelligence intelligence Integrates practices into daily operations. practices into daily operations.

Analytical and predictive modeling and mining grows

LEVEL3: 3: PRACTICING PRACTICING LEVEL Implementsbasic basicbusiness businessintelligence intelligence Implements capabilities. capabilities.

Increase in ad-hoc queries and start st art analytical data mining

2: DEVELOPING DEVELOPING LEVEL2: LEVEL Basic, non-integrated non-integrated Basic, business intelligence capabilities ininplace. place. business intelligence capabilities

Primarily batched reports

1: AWARE AWARE LEVEL1: LEVEL Showsfew fewbusiness businessintelligence intelligence Shows capabilities. capabilities.

batched reports

OLAP

predictive modeling & data mining

event-based triggering 11

 

IBM Software Group

ROI $ returns starts negative but grows exponentially with constant evolution of data and business capabilities. The World of Reporting

Information Access

The Intelligent, Agile Enterprise

Performance Management

Enterprise Information

   )    $    (    I    O    R

events detection  risk management  segmentation  financial management  reports 

KPIs 

data quality  manual spreadsheets 

data marts 

relationship optimization 

enterprise dashboard 

propensity modeling 

Time

OLAP  profitability  enterprise data warehouse  12

 

IBM Software Group

A typical enterprise BI environment consists of a warehouse and an analytical environment. Enterprise BI Environment Technical Team

ERP 

Extract Clean Model Transform Transfer Load

CRM 

Legacy 

Business Users  

Enterprise enterprise-wide single view of the customer

Data Warehouse

Query Report Analyze Mine Visualize Act

Others 

Data Warehousing Environment

Analytical Environment

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IBM Software Group

There are key differences in transaction vs. BI data warehousing environment. Transaction vs. BI Systems Data Warehousing Environment

Transaction vs. BI Data

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IBM Software Group

Building and managing a data warehouse is a continuous iterative process… Data Warehousing Environment Business Discovery Services

Data Warehouse Information Discovery

Knowledge Discovery Model Dev.

Data Warehouse Workshop

DW Logical Data Modeling

DW Physical DB Design Data Warehouse Solution Readiness

C/S Application Dev. (Full Cycle)

Data Mining Analytical Application

Data Warehouse Solution Integration

DW Architecture Design DW Data Transformation

Enterprise System Support

Data Warehouse Management

DW Logical Data Model Review

DW Physical DB Design Rev.

DW Tuning

DW Capacity Planning

DW Audit

( Process and Operations )

Data Warehouse Planning

Data Warehouse Design & Implementation

Data Warehouse Usage, Support, and Enhancement 15

 

IBM Software Group

… with new data sou sources rces or or applicati applications ons adde added d incrementally with new or changing business requirements. Data Warehousing Environment

Legacy 

ERP

PLAN

PLAN

D&I

use

Time X

Others 

CRM  

D&I

PLAN

PLAN

use

Time X+Y

D&I

use

Time X+Y+Z

D&I

use

…… 16

 

IBM Software Group

New data or applications for the EDW should be prioritized and approved by a central governance committee. Projects Projects Sent Sent to to CIO CIO for for Exception Exception

Data Warehousing Environment

Approved Approved Project Project on on EDW EDW or or Other Other

External External Vendor Vendor Develops Develops & & Implements Implements

If business case is not approved or EDW resources are not available & business unit wants to fund & develop project outside IT

Identify Identifyw Projects Projects w DSS DSS Rqrmnts Rqrmnts

Prioritize Prioritize Projects by Projects by Business Business Benefit Benefit

Complete Complete Business Business Case Case

Prioritize Prioritize

Plan Plan & &

IT IT

Projects w w Projects Approved Approved Business Business Case Case

Schedule Schedule Approved Approved EDW EDW Projects Projects

Develop & & Develop Implement Implement EDW EDW Projects Projects

Business case includes strategic objectives for business & IT architectures

Business Units 

EDW Steering Committee  17

 

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The landscape for analytical tools. tools.

Analytical Environment

Strategic & Tactical Analysis

REPORTING

ANALYZING

What happened?

Operational Analysis   OPERATIONAL

PREDICTING

Why did it happen?

What will happen?  

Operational Reports Web Reports Exception Reports Scorecards

OLAPs Planning Forecasting

Statistical models Affinity Analysis Optimization Simulation

75% of usage

20% of usage

What is happening? 

Dashboards Alerts Decision Engines Events detection 75% of usage 

5% of usage  

Historical Data (Data Warehouse/Marts)

Real-Time Data (OS/EAI)

Business Performance

Data Mining &

Business Process

Management 

Predictive Modeling 

Monitoring 

analytical & operational sophistication 

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IBM Software Group

ollows The adoption of analytical tools typically also ffollows an evolution process of increasing complexity. Analytical Environment STAGE 1 STAGE 2 STAGE 3 STAGE 4 STAGE 5 REPORTING ANALYZING PREDICTING OPERATIONALIZING ACTIVE WAREHOUSIN W AREHOUSING G WHAT happened? WHY did it happen? WHAT will happen? What IS happening? What do I WANT to happen?

Primarily Batch with Pre-defined

Increase in Ad Hoc Queries

Data Mining & Continuous Update & Analytical Modeling Time Sensitive Queries

Queries and reports

Early Data Mining

Capability Grows

Batch

Ad Hoc

Analytics

Event Based Triggering takes hold

Gain Importance

Continuous Update/Short Queries

Event-Based Triggering

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IBM Software Group

Different exist, that require different analyticaluser toolstypes and access.

Analytical Environment

Needs

Decision Makers 



Analysts & Specialists

BU managers and leaders Fast access to KPI scores and click and point reports based on their subject area of interest

Users



Predefined scorecards



Reporting Tools



10s users



Support decision makers



Specialist applications eg. risk



Detailed data across full



Statistical Modelling



Ad Hoc query tools



100s users

spectrum of enterprise – the freedom to ask any question to find the root causes and breakthrough insights Operational

Tools





Frontline and processing staff Fast access to profiles of customers in order to make the right service, sales, approval decisions



Look up access screens



Web or operational system based



1000s Users

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IBM Software Group

What do the best BI solution and system looks like? The systems that support BI solutions are very different from other systems in the company. Well-designed BI systems are adaptive by nature; they continually change to answer new and different business questions. And the best way to adapt effectively is to start small and grow organically. Each new increment refines and extends the solution, adjusting to user feedback and new requirements. requir ements. Like a sprawling redwood forest, the best BI solutions take years to mature, expanding in breadth and depth over time. It is no coincidence that the value of a BI solution grows exponentially with the number of users and applications it supports. TDWI Report Series: “Smart Companies in the 21st Century: The Secrets of Creating Successful Business Intelligence Solutions”

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IBM Software Group

Characteristics of successful BI 









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Business sponsors are highly committed and actively involved in the project.

Business users and the BI technical team work together closely. The BI system is viewed as an enterprise resource and given adequate funding and guidance to ensure long-term growth and viability. Organization provide users both static and interactive online views of data. The BI team has prior experience with BI and is assisted by vendor and independent consultants in a partnership arrangeme arrangement. nt.

The company’s organizational culture reinforces the BI solution.

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Guidelines for successful BI

Step 1: Establish a BI Vision and Evangelize it Step 2: Develop a BI Roadmap to Prioritize Initiatives Step 3: Establish BI Governance & Funding Process Step 4: Establish BI Competency Centre (BICC) Step 5: Align Business and IT for the Long Haul Step 6: Measure and Track ROI/Benefits from BI Step 7: Build Trust in the System

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IBM Software Group

Guidelines for successful BI Step 1: Establish a BI Vision and Evangelize it 



Determine the overall role that BI will play in driving business strategy, which drives the base vision technology state and configuration Determine the vision and key ke y business drivers, which drives the scope (business units) breadth (data subject areas)



Determine the business initiatives, which will drive the applications and knowledge assets required

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IBM Software Group

Guidelines for successful BI Step 2: Develop a BI Roadmap to Prioritize BI Initiatives 





Prioritize business initiatives by ROI, strategic value and ease of execution Overlay the cost savings from data mart consolidation and centralization

Develop a roadmap for f or integration with minimum costs (funded through centralization benefits) and maximum benefits generation (through enabling business initiatives)

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IBM Software Group

Guidelines for successful BI Step 3: Establish BI Governance & Funding Process 





Establish governance structures, executives, data governance board and teams

Establish business intelligence communities and support structures Business sponsors need to secure initial funding to launch the project. More important, they need to sustain funding over the life of the BI portfolio and allocate funds to build and maintain an enterprise BI infrastructure. 26

 

IBM Software Group

Guidelines for successful BI Step 4: Establish BI Competency Centre (BICC) 

The enterprise wide data warehouse creates a need for new skills skill s in data analysis. A BICC is a central pool of skilled resources and specialists which can be shared by all business units.





The BICC acts as a champion driving the EDW initiatives & awareness The BICC is full-time team dedicated to the data warehouse, and develops full full knowledge and expertise in the data, analysis techniques and models

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IBM Software Group

Guidelines for successful BI Step 5: Align Business and IT for the Long Haul 

Extraordinarily successful BI projects all have an enterprise scope that took years to implement. The journey requires by a close-

knit team of developers and business people who work hand in hand to deliver actionable information to the users who need it. 

Ensure alignment between the business and technical development teams by use joint application development sessions to bring the two groups together to gain a common understanding.

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IBM Software Group

Guidelines for successful BI Step 6: Measure and Track ROI/Benefits from BI 







BI is a journey and not a short term project. Many a times, organizations loose sight and confidence of the original objectives. The way to overcome this is to start small and expand with this baseline. At the same time, make conscious effort effo rt to measure and track any ROI/benefits that is derived from BI (tangible or intangible) The clear demonstration of success brings confidence to progress while the loses indicates opportunities for improvements.

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IBM Software Group

Guidelines for successful BI Step 7: Build Trust in the System 





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There are very few ways to directly increase the credibility of a system, but hundreds of ways to undermine it. The only way to build trust in a new BI solution is to have the business team own the solution and make all the decisions dec isions within predefined technical boundaries (design, data model, sourcing & validation). Business sponsors need to make sure that, in their eagerness to build the BI solution, they don’t set arbitrary deadlines. The technical team needs to provide a bulletproof technical environment that adapts rapidly to changes in business requirements. 30

 

IBM Software Group

In short, BI can help us become more intelligent about the way we do business. Smart companies in the 21st century use business intelligence (BI) solutions to gain a clearer picture of their internal operations, customers, supply chain, and financial performance. They also derive significant ROI by using BI to t o devise better tactics and plans, respond more effectively to emergencies, and capitalize more quickly on new opportunities. In short, they are using BI to become intelligent about the way they do business.

Organisation Business Units / Departments Employee

TDWI Report Series: “Smart Companies in the 21st Century:

The Secrets of Creating Successful Business Intelligence Solutions”

Customer o w   F F l  o  .    o o n f  I  n

Info.

Analysis

Interpretation

Action

D e  c i   s i   o n   P   r o  c e  s s  Planning Decision