Introduction to Information Systems Chapter 12 PDF

Introduction to Information Systems Rainer, Prince, Sanchez-Rodriguez, Splettstoesser Hogeterp, Ebrahimi Fifth Canadian Edition Chapter 12 Business Analytics Copyright ©2021 John Wiley & Sons Canada, Ltd. Learning Objectives 1. Deci...

Introduction to Information Systems Rainer, Prince, Sanchez-Rodriguez, Splettstoesser Hogeterp, Ebrahimi Fifth Canadian Edition Chapter 12 Business Analytics Copyright ©2021 John Wiley & Sons Canada, Ltd. Learning Objectives 1. Decision and IT 2. Describe each phase of the business analytics process 3. Provide a definition and an example for descriptive analytics 4. Provide a definition and an example for diagnostic analytics 5. Provide a definition and an example for predictive analytics 6. Provide a definition and an example for prescriptive analytics 7. Identify and discuss examples of presentation tools Copyright ©2021 John Wiley & Sons Canada, Ltd. 2  Outline 1. Definitions and Concepts 2. Business Analytics Tools 3. Business Analytics Process 4. Descriptive Analytics 5. Diagnostic Analytics 6. Predictive Analytics 7. Prescriptive Analytics 8. Presentation Tools Copyright ©2021 John Wiley & Sons Canada, Ltd. 3  THE MANAGER’S JOB AND DECISION MAKING Managers perform three basic roles (Mintzberg 1973) : Interpersonal: figurehead, leader, liaison Informational: monitor, disseminator, spokesperson, analyzer Decisional: entrepreneur, disturbance handler, resource allocator, negotiator Copyright ©2021 John Wiley & Sons Canada, Ltd. 4 THE MANAGER’S JOB & DECISION MAKING (CONTINUED) A Decision is a choice among two or more alternatives that individuals and groups make. Decision making is a systematic process. Economist Herbert Simon (1977) described decision making as composed of three major phases: intelligence, design, and choice, followed by implementation and evaluation. Copyright ©2021 John Wiley & Sons Canada, Ltd. 5  WHY MANAGERS NEED IT SUPPORT The number of alternatives is constantly increasing. Most decisions must be made under time pressure. Decisions are becoming more complex. Decision makers, as well as the information, can be situated in different locations. Copyright ©2021 John Wiley & Sons Canada, Ltd. 6 A FRAMEWORK FOR COMPUTERIZED DECISION ANALYSIS Copyright ©2021 John Wiley & Sons Canada, Ltd. 7  PROBLEM STRUCTURE The first dimension deals with the problem structure, where the decision making processes fall along the continuum ranging from highly structured to highly unstructured decisions. Structured Semi-structured Unstructured Example: Example: Example: Inventory Control Evaluating Employees New Services Copyright ©2021 John Wiley & Sons Canada, Ltd. 8  THE NATURE OF DECISIONS The second dimension of decision support deals with the nature of decisions. Three categories of managerial decision making: Operational control: involves executing specific tasks efficiently and effectively. 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 Copyright ©2021 John Wiley & Sons Canada, Ltd. 9 BUSINESS INTELLIGENCE TOOLS Some Examples of BI tools: SAS: analytics software IBM: SPSS software SAP: SAP BI software Microsoft: Power BI software Copyright ©2021 John Wiley & Sons Canada, Ltd. 10  Concepts Business analytics (BA) - refers to the skills, technologies, and practices used for exploring and investigating past business performances to gain insight and drive business opportunities. Business intelligence (BI) - refers to the procedural and technical infrastructure that collects, stores, and analyzes the data produced by a company's activities. BI is a broad term encompassing business analytics, process analysis, text mining, performance management, and benchmarking. Copyright ©2021 John Wiley & Sons Canada, Ltd. 11 Business Intelligence (BI) Business intelligence - Information collected from multiple sources such as suppliers, customers, competitors, partners, and industries that are analyzed for patterns, trends, and relationships that can enhance strategic decision making. Copyright ©2021 John Wiley & Sons Canada, Ltd. 12 Business Analytics Tools Multidimensional analysis (also called OLAP) Data mining Decision support systems (e.g., MS Excel) Statistical procedures: descriptive statistics; affinity analysis; liner, multiple and logistic regression; and others Copyright ©2021 John Wiley & Sons Canada, Ltd. 13 Business Analytics Tools - OLAP Online analytical processing (OLAP) is a technology that organizes large business databases and supports complex analysis. It can be used to perform complex analytical queries without negatively affecting transactional systems. Copyright ©2021 John Wiley & Sons Canada, Ltd. 14 Business Analytics Tools – Data Mining Data mining is the process of finding anomalies, patterns and correlations within large data sets to predict outcomes. Data mining has several types, including pictorial data mining, text mining, social media mining, web mining, audio, and video mining amongst others. Copyright ©2021 John Wiley & Sons Canada, Ltd. 15 Figure 6.20 How BI Can Answer Tough Customer Questions Copyright ©2021 John Wiley & Sons Canada, Ltd. 16  Business Analytics Tools – DSS DSS are computerized programs used to support judgments and courses of action in an organization. DSS sifts through and analyzes massive amounts of data, compiling comprehensive information that can be used to solve problems and in decision- making. Copyright ©2021 John Wiley & Sons Canada, Ltd. 17 Business Analytics Tools – Statistical procedures Statistical procedures involve the use of data to test relationships between two or more statistical data sets. Some statistical techniques: - Estimation analysis (determine some unknown variable) - Cluster analysis (divide data into mutually exclusive groups) - Classification analysis (organize data into categories for effective use) Copyright ©2021 John Wiley & Sons Canada, Ltd. 18 FIGURE 12.3 The Business Analytics Process Copyright ©2021 John Wiley & Sons Canada, Ltd. 19 Business Intelligence Copyright ©2021 John Wiley & Sons Canada, Ltd. 20 Descriptive Analytics Descriptive analytics: summarizes what has happened in the past and enables decision makers to learn from past behaviors BA tools in descriptive analytics: o Online analytical processing (OLAP) (i.e., multidimensional analysis) o Data mining o Decision-support systems Sensitivity analysis What-if analysis Goal-Seeking analysis Copyright ©2021 John Wiley & Sons Canada, Ltd. 21 Predictive Analytics Predictive analytics: examines recent and historical data to detect patterns and predict future outcomes and trends Examples of fields where data mining (predictive analytics) applications are used: o Retailing and sales, banking o Manufacturing and production o Insurance, police work o Health care o Marketing, politics o Weather, social good Copyright ©2021 John Wiley & Sons Canada, Ltd. 22  Prescriptive Analytics Prescriptive analytics: goes beyond descriptive and predictive models by recommending one or more courses of action and identifying the likely outcome of each decision BA tools in prescriptive analytics: o Statistical procedures include: optimization simulation decision trees Copyright ©2021 John Wiley & Sons Canada, Ltd. 23 Diagnostic analytics This analytics form examines data or content to answer the question of “Why did it happen?” It is characterized by techniques such as drill-down, data discovery, data mining and correlations. Example: An Airline tries to understand why sales values were low in a particular country during a period. Copyright ©2021 John Wiley & Sons Canada, Ltd. 24 Descriptive Analytics Techniques that describe past performance and history Example: An Airline creates a report that includes charts and graphs explaining business activities over 2 months. Predictive Analytics Techniques that extract information from data and use it to predict future trends and identify behavioral patterns Example: An Airline uses past sales data to predict future sales data Prescriptive Analytics Techniques that create models indicating the best decision to make or course of action to take Example: An Airline uses past purchasing data as inputs into a model that recommends the best pricing strategy across all flights thereby allowing the company to maximize revenues. Copyright ©2021 John Wiley & Sons Canada, Ltd. 25 IT’s About Business 12.5: United Parcel Service’s Three Types of Analytics Consider: How did the use of IT (the BA systems) help to integrate the UPS operations? How did wireless technologies such as GPS and hand-held devices enable UPS to implement its operational improvements? Copyright ©2021 John Wiley & Sons Canada, Ltd. 26 12.6 Presentation Tools Dashboards provide easy access to timely information and direct access to management reports Characteristics include: o User-friendly, supported by graphics o Enables management to examine exception reports and drill down into detailed data Copyright ©2021 John Wiley & Sons Canada, Ltd. 27 TABLE 12.1 The Capabilities of Dashboards Capability Description Drill down The ability to go to details at several levels; it can be done by a series of menus or by clicking on a drillable portion of the screen. Critical success factors The factors most critical for the success of a business. These can be organizational, (CSFs) industry, departmental, or for individual workers. Key performance indicators The specific measures of CSFs Status access The latest data available on KPI or some other metric, often in real time Trend analysis Short-, medium-, and long-term trend of KPIs or metrics, which are projected using forecasting methods Exception reporting Reports highlighting deviations larger than certain thresholds. Reports may include only deviations. Copyright ©2021 John Wiley & Sons Canada, Ltd. 28 FIGURE 12.4 Sample performance dashboard Copyright ©2021 John Wiley & Sons Canada, Ltd. 29 FIGURE 12.5 Bloomberg terminal Copyright ©2021 John Wiley & Sons Canada, Ltd. 30 FIGURE 12.6 Management cockpit Copyright ©2021 John Wiley & Sons Canada, Ltd. 31 Geographic Information Systems Geographic information systems provide computer- based systems for capturing, manipulating, and displaying data using digitized maps. They enable geocoding; every record has an identified geographical location Copyright ©2021 John Wiley & Sons Canada, Ltd. 32 Geographic Information Systems Copyright ©2021 John Wiley & Sons Canada, Ltd. 33 Closing Case: Dark Analytics Think about: How can dashboards facilitate the analysis of unstructured data? What types of dark data do you provide to the Internet and to other IT systems? Copyright ©2021 John Wiley & Sons Canada, Ltd. 34 Copyright Copyright © 2021 John Wiley & Sons Canada, Ltd. or the author. All rights reserved. Students and instructors who are authorized users of this course are permitted to download these materials and use them in connection with the course. No part of these materials should be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, except as permitted by law. Advice on how to obtain permission to reuse this material is available at http://www.wiley.com/go/permissions. Copyright ©2021 John Wiley & Sons Canada, Ltd. 35