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Business Intelligence, Analytics, and Data Science: A Managerial Perspective Fourth Edition Chapter 2 Descriptive Analytics I: Nature of Data, Statistical Modeling, and Visualization...

Business Intelligence, Analytics, and Data Science: A Managerial Perspective Fourth Edition Chapter 2 Descriptive Analytics I: Nature of Data, Statistical Modeling, and Visualization Chapter 3 Business Performance Management PP. 170-183 Copyright © 2018, 2014, 2011 Pearson Education, Inc. All Rights Reserved Learning Objectives 2.1 Understand the nature of data as it relates to business intelligence (BI) and analytics (BA) 2.2 Learn the methods used to make real-world data analytics ready 2.3 Describe statistical modeling and its relationship to BA 2.4 Learn about descriptive and inferential statistics 2.5 Define business reporting, and understand its historical evolution 2.6 Understand the importance of data/information visualization 2.7 Learn different types of visualization techniques 2.8 Appreciate the value that visual analytics brings to business analytics 2.9 Know the capabilities and limitations of dashboards Copyright © 2018, 2014, 2011 Pearson Education, Inc. All Rights Reserved The Nature of Data From data to actionable information Copyright © 2018, 2014, 2011 Pearson Education, Inc. All Rights Reserved Metrics for Analytics Ready Data Data source reliability – can we rely on / trust the source Data content accuracy – correct and matches the problem Data accessibility – can we easily get the data we need? Data security and data privacy - secured Data richness – all required data elements are included Data consistency – accurately collected and combined Data currency/data timeliness – up to date as needed Data granularity – lowest level of detail as needed Data validity - match between expected & actual Data relevancy – relevant to the study being conducted Copyright © 2018, 2014, 2011 Pearson Education, Inc. All Rights Reserved Data Taxonomy continued Categorical data – multiple classes (labels) to divide a variable into a specific group e.g., age group, educational level, etc… – Nominal – simple codes assigned to objects but are not numeric measures e.g. gender represented as 1 – female, 2 = male – Ordinal – codes assigned to objects that represent rank order e.g., 1 = freshmen, 2 = sophomores, etc… Numerical data –represents numeric values of specific variables e.g., age, income – Interval – variables measured on an interval scale with no absolute 0 and the intervals have no true mathematical meaning e.g., a 20-point scale of user satisfaction – Ratio – measurement variables found in nature where there is an absolute 0 value in the scale e.g., length, volume, height… Copyright © 2018, 2014, 2011 Pearson Education, Inc. All Rights Reserved  A Simple Taxonomy of Data (p 61) JSON stands for JavaScript Object Notation JSON is a lightweight format for storing and transporting data JSON is often used when data is sent from a server to a web page JSON is "self-describing" and easy to understand Copyright © 2018, 2014, 2011 Pearson Education, Inc. All Rights Reserved OK, what is XML and JSON? XML stands for eXtensible Markup Language XML is a markup language much like HTML XML was designed to store and transport data XML was designed to be self-descriptive JSON stands for JavaScript Object Notation JSON is a lightweight format for storing and transporting data JSON is often used when data is sent from a server to a web page JSON is "self-describing" and easy to understand Source: https://www.w3schools.com/ Copyright © 2018, 2014, 2011 Pearson Education, Inc. All Rights Reserved Application Case 2.1 Discussion Break-out rooms for 10 minutes Discuss your answers Identify a “spokesperson” We’ll discuss in the main room Copyright © 2018, 2014, 2011 Pearson Education, Inc. All Rights Reserved The Art and Science of Data Preprocessing The real-world data is dirty, misaligned, overly complex, and inaccurate – Not ready for analytics! Readying the data for analytics is needed – Data preprocessing (e.g., ETL)  Data consolidation  Data cleaning  Data transformation  Data reduction (more on next slide) Art – it develops and improves with experience Copyright © 2018, 2014, 2011 Pearson Education, Inc. All Rights Reserved The Art and Science of Data Preprocessing Data reduction 1. Variables – Dimensional reduction – Variable selection 2. Cases/samples – Sampling – Balancing / stratification Copyright © 2018, 2014, 2011 Pearson Education, Inc. All Rights Reserved Data Preprocessing Tasks and Methods Copyright © 2018, 2014, 2011 Pearson Education, Inc. All Rights Reserved Statistical Modeling for Business Analytics Copyright © 2018, 2014, 2011 Pearson Education, Inc. All Rights Reserved Statistical Modeling for Business Analytics Statistics – A collection of mathematical techniques to characterize and interpret data Descriptive Statistics – Describing the data (as it is) Inferential statistics – Drawing inferences about the population based on sample data Descriptive statistics for descriptive analytics Copyright © 2018, 2014, 2011 Pearson Education, Inc. All Rights Reserved Descriptive Statistics Measures of Centrality Tendency Arithmetic mean (or average) Median & Mode (most frequent value) Dispersion – Range – Variance & Standard Deviation – Mean Absolute Deviation (MAD) Skewness & Kurtosis (shape of distribution) Copyright © 2018, 2014, 2011 Pearson Education, Inc. All Rights Reserved Figure 2.9 Relationship between dispersion and shape Dispersion Kurtosis Skewness Copyright © 2018, 2014, 2011 Pearson Education, Inc. All Rights Reserved Regression Modeling for Inferential Statistics Regression – A part of inferential statistics – The most widely known and used analytics technique in statistics – Used to characterize relationship between explanatory (input) and response (output) variable It can be used for – Hypothesis testing (explanation) – Forecasting (prediction) Copyright © 2018, 2014, 2011 Pearson Education, Inc. All Rights Reserved Regression Modeling Correlation versus Regression – What is the difference (or relationship)? – Spurious correlation Simple Regression versus Multiple Regression – Based on number of input variables https://www.tylervigen.com/spurious-correlations Copyright © 2018, 2014, 2011 Pearson Education, Inc. All Rights Reserved Regression Modeling Copyright © 2018, 2014, 2011 Pearson Education, Inc. All Rights Reserved Time Series Forecasting Looks similar to regression, but focus is on time varying behavior (moving avg, cyclical trends, etc..) Copyright © 2018, 2014, 2011 Pearson Education, Inc. All Rights Reserved Business Reporting Definitions and Concepts Report = Information  Decision Report? – Any communication artifact prepared to convey specific information A report can fulfill many functions – To ensure proper departmental functioning – To provide information – To provide the results of an analysis – To persuade others to act – To create an organizational memory… Copyright © 2018, 2014, 2011 Pearson Education, Inc. All Rights Reserved What is a Business Report? A written document that contains information regarding business matters. Purpose: to improve managerial decisions Source: data from inside and outside the organization Format: text + tables + graphs/charts Distribution: in-print, email, portal/intranet Copyright © 2018, 2014, 2011 Pearson Education, Inc. All Rights Reserved Business Reporting (closed loop example p 99) Copyright © 2018, 2014, 2011 Pearson Education, Inc. All Rights Reserved Types of Business Reports Metric Management Reports – Help manage business performance through metrics (SLAs for externals; KPIs for internals) – Can be used as part of Six Sigma and/or TQM Dashboard-Type Reports – Graphical presentation of several performance indicators in a single page using dials/gauges Balanced Scorecard–Type Reports – Include financial, customer, business process, and learning & growth indicators Copyright © 2018, 2014, 2011 Pearson Education, Inc. All Rights Reserved Data Visualization “The use of visual representations to explore, make sense of, and communicate data.” Data visualization vs. Information visualization – Really the same things Information = aggregation, summarization, and contextualization of data Related to information graphics, scientific visualization, and statistical graphics Often includes charts, graphs, illustrations, … Copyright © 2018, 2014, 2011 Pearson Education, Inc. All Rights Reserved A Brief History of Data Visualization Data visualization can date back to the second century AD Most developments have occurred in the last two and a half centuries Until recently it was not recognized as a discipline Today’s most popular visual forms date back a few centuries Copyright © 2018, 2014, 2011 Pearson Education, Inc. All Rights Reserved The First Line Chart Created by William Playfair in 1801 William Playfair is widely credited as the inventor of the modern chart, having created the first line and pie charts. Copyright © 2018, 2014, 2011 Pearson Education, Inc. All Rights Reserved Decimation of Napoleon’s Army During the 1812 Russian Campaign By Charles Joseph Minard Arguably the most popular multi-dimensional chart Copyright © 2018, 2014, 2011 Pearson Education, Inc. All Rights Reserved Different Types of Charts and Graphs Which one to use? Where and when?  Basic Charts and  Specialized Charts and Graphs Graphs  Line Chart  Histogram  Gantt Chart  Bar Chart  PERT Chart  Pie Chart  Geographic Map  Scatter Plot  Bullet Graph  Bubble Chart  Heat Map / Tree Map  Highlight Table Copyright © 2018, 2014, 2011 Pearson Education, Inc. All Rights Reserved Which Chart or Graph Should You Use? Copyright © 2018, 2014, 2011 Pearson Education, Inc. All Rights Reserved Gapminder Chart: Wealth and Health of Nations http://www.gapminder.org/ (gapminder tools) See gapminder.org for Interesting animated examples Copyright © 2018, 2014, 2011 Pearson Education, Inc. All Rights Reserved  The Emergence of Data Visualization and Visual Analytics Magic Quadrant for Business Intelligence and Analytics Platforms (Source: Gartner.com) Many data visualization companies are in the 4th quadrant 2019 update More info on using Copyright © 2018, 2014, 2011 Pearson Education, Inc. All Rights Reserved The Emergence of Data Visualization and Visual Analytics Emergence of companies focused on visualization – Tableau, Tibco (Spotfire), QlikView, … Increased focus by the big players – MicroStrategy BI&A (Hyperintelligence) – SAP example of analytics including visualization – SAS Visual Analytics video toward bottom ‘Get to know SAS Visual analytics’ – Microsoft bolstered PowerPivot with Power View (walk through) – IBM Cognos Express  Another demo – Oracle visualization tools example Copyright © 2018, 2014, 2011 Pearson Education, Inc. All Rights Reserved Visual Analytics by SAS Institute SAS Visual Analytics Architecture – Big data + In memory + Massively parallel processing +.. Copyright © 2018, 2014, 2011 Pearson Education, Inc. All Rights Reserved Visual Analytics by SAS Institute At teradatauniversitynetwork.com, you can learn more about SAS VA, experiment with the tool Copyright © 2018, 2014, 2011 Pearson Education, Inc. All Rights Reserved Technology Insight 2.3 Telling Great Stories with Data and Visualization (p113-114) Copyright © 2018, 2014, 2011 Pearson Education, Inc. All Rights Reserved Performance Dashboards Performance dashboards are commonly used in BPM software suites and BI platforms Dashboards provide visual displays of important information that is consolidated and arranged on a single screen so that information can be digested at a single glance and easily drilled in and further explored Copyright © 2018, 2014, 2011 Pearson Education, Inc. All Rights Reserved Performance Dashboards Copyright © 2018, 2014, 2011 Pearson Education, Inc. All Rights Reserved Performance Dashboards Dashboard design – The fundamental challenge of dashboard design is to display all the required information on a single screen, clearly and without distraction, in a manner that can be assimilated quickly Three layers of information – Monitoring – Analysis – Management http://PerceptualEdge.com (Examples Tab) Dundas (data visualization gallery) Google Performance Dashboards Copyright © 2018, 2014, 2011 Pearson Education, Inc. All Rights Reserved Performance Dashboards What to look for in a dashboard – Use of visual components to highlight data and exceptions that require action – Transparent to the user, meaning that they require minimal training and are extremely easy to use – Combine data from a variety of systems into a single, summarized, unified view of the business – Enable drill-down or drill-through to underlying data sources or reports – Present a dynamic, real-world view with timely data – Require little coding to implement, deploy, and maintain Copyright © 2018, 2014, 2011 Pearson Education, Inc. All Rights Reserved Best Practices in Dashboard Design Benchmark KPIs with Industry Standards Wrap the Metrics with Contextual Metadata Validate the Design by a Usability Specialist Prioritize and Rank Alerts and Exceptions Enrich Dashboard with Business-User Comments Present Information in Three Different Levels Pick the Right Visual Constructs Provide for Guided Analytics Copyright © 2018, 2014, 2011 Pearson Education, Inc. All Rights Reserved Business Performance Management (from end of ch 3) Business Performance Management (BPM) is… A real-time system that alerts managers to potential opportunities, impending problems, and threats, and then empowers them to react through models and collaboration Also called corporate performance management (CPM by Gartner Group), enterprise performance management (EPM by Oracle), strategic enterprise management (SEM by SAP) Copyright © 2018, 2014, 2011 Pearson Education, Inc. All Rights Reserved Business Performance Management BPM refers to the business processes, methodologies, metrics, and technologies used by enterprises to measure, monitor, and manage business performance. BPM encompasses three key components – A set of integrated, closed-loop management and analytic processes, supported by technology … – Tools for businesses to define strategic goals and then measure/manage performance against them – Methods and tools for monitoring key performance indicators (KPIs), linked to organizational strategy Copyright © 2018, 2014, 2011 Pearson Education, Inc. All Rights Reserved A Closed-Loop Process to Optimize Business Performance Process Steps 1. Strategize 2. Plan 3. Monitor/analyze 4. Act/adjust Each with its own sub-process steps Copyright © 2018, 2014, 2011 Pearson Education, Inc. All Rights Reserved KPIs and Operational Metrics A KPI represents a strategic objective and metrics that measure performance against a goal Embody a strategic objective Measure performance against specific targets Have targets with performance ranges Performance ranges are encoded in s/w to enable a visual display of performance Targets have time frames for achievement Targets are measured against a baseline or benchmark Copyright © 2018, 2014, 2011 Pearson Education, Inc. All Rights Reserved Types of KPIs Outcome KPIs vs. Driver KPIs (lagging indicators (leading indicators e.g., revenues) e.g., sales leads) Operational areas covered by driver KPIs – Customer performance – Service performance – Sales operations – Sales plan/forecast Copyright © 2018, 2014, 2011 Pearson Education, Inc. All Rights Reserved Performance Measurement -- BSC  Most existing performance measurement systems focus largely on financial data  The most popular system in use is some variant of the balanced scorecard (BSC)  50-90% of all companies have implemented BSC  BSC methodology is a holistic vision of a measurement system tied to the strategic direction of the organization and based on a four-perspective view of the world:  Financial measures supported by customer, internal process, and learning and growth metrics  A performance measurement and management methodology that helps translate an organization’s financial, customer, internal process, and learning and growth objectives and targets into a set of actionable initiatives Copyright © 2018, 2014, 2011 Pearson Education, Inc. All Rights Reserved Balanced Scorecard The meaning of “balance” ? Copyright © 2018, 2014, 2011 Pearson Education, Inc. All Rights Reserved Balanced Scorecard not in book The meaning of “balance” ? Copyright © 2018, 2014, 2011 Pearson Education, Inc. All Rights Reserved End of Chapter 2 + a little of 3 Questions / Comments Copyright © 2018, 2014, 2011 Pearson Education, Inc. All Rights Reserved