Chapter 12 Business Analytics 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. Use a...

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. Use a decision support framework to demonstrate how technology supports managerial decision making at each phase of the decision-making process 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 predictive analytics 5. Provide a definition and an example for prescriptive analytics 6. Identify and discuss two examples of presentation tools Copyright ©2021 John Wiley & Sons Canada, Ltd. 2 Opening Case: Stitch Fix Think about: How many different types of data are Stitch Fix and the fashion industry using? How much of the data being disclosed by customers could be considered private or confidential? Why Copyright ©2021 John Wiley & Sons Canada, Ltd. 3 Introduction Business analytics (BA) Business intelligence (BI) Copyright ©2021 John Wiley & Sons Canada, Ltd. 4 12.1 Managers and Decision Making The Manager’s Job and Decision Making Why Managers Need IT Support A Framework for Computerized Decision Analysis Copyright ©2021 John Wiley & Sons Canada, Ltd. 5 The Manager’s Job and Decision Making Three basic roles of a manager according to Mintzberg (1973): o Interpersonal o Informational o Decisional Copyright ©2021 John Wiley & Sons Canada, Ltd. 6 FIGURE 12.1 The process and phases in decision making Copyright ©2021 John Wiley & Sons Canada, Ltd. 7 Why Managers Need IT Support Decision making is difficult due to the following trends: o The number of alternatives is constantly increasing o Most decisions must be made under time pressure o Increased uncertainty in the decision environment, making decisions more complex o Often necessary to rapidly access remote information, consult with experts, or conduct a group decision-making session Copyright ©2021 John Wiley & Sons Canada, Ltd. 8 A Framework for Computerized Decision Analysis Problem structure o Structured o Semi-structure o Unstructured Copyright ©2021 John Wiley & Sons Canada, Ltd. 9 A Framework for Computerized Decision Analysis Nature of decisions o Three broad categories of managerial decisions Operational control Management control Strategic planning The decision matrix Copyright ©2021 John Wiley & Sons Canada, Ltd. 10 FIGURE 12.2 Decision support framework Copyright ©2021 John Wiley & Sons Canada, Ltd. 11 Elbow-Partner Chat You will have 5 minutes to discuss and review the following questions with a partner or small group. Be prepared to share your answers and findings with the class. 1) Describe the decision-making process proposed by Simon. (think of the various stages) 2) Your company is considering opening a new factory in China. List several typical activities involved in each phase of the decision (intelligence, design, and choice). Copyright ©2021 John Wiley & Sons Canada, Ltd. 12 12.2 The Business Analytics (BA) Process Business analytics (BA): the process of developing actionable decisions or recommendations for actions based on insights from historical data using applications, technologies, and processes Three specific analytics targets represent different levels of enterprise-side change: o The development of one or a few related analytics applications o The development of infrastructure to support enterprise- wide analytics o Support for organizational transformation Copyright ©2021 John Wiley & Sons Canada, Ltd. 13 FIGURE 12.3 The Business Analytics Process Copyright ©2021 John Wiley & Sons Canada, Ltd. 14 Business Analytics Tools Excel Multidimensional analysis (also called OLAP) Data mining Decision-support systems Statistical procedures: descriptive statistics; affinity analysis; liner, multiple and logistic regression; and others Copyright ©2021 John Wiley & Sons Canada, Ltd. 15 12.3 Descriptive Analytics Descriptive analytics: summarizes what has happened in the past and enables decision-makers to learn from past behaviours 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. 16 12.4 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. 17 IT’s About Business 12.2: Analytics to Help Online Retail Consider: How was Aldo’s use of business analytics a win-win situation for the company, for customers, and for employees? How could business analytics help different functional areas at Aldo (sales, warehousing, accounting)? Copyright ©2021 John Wiley & Sons Canada, Ltd. 18 IT’s About Business 12.3: Analytics and Online Dating Consider: If you are (or were) single, would you use an online dating service? Why or why not? How much information would you be willing to share with such a service? What concerns (if any) would you have for the privacy of your data? Copyright ©2021 John Wiley & Sons Canada, Ltd. 19 IT’s About Business 12.4: The Los Angeles Police Department’s Use of Predictive Policing Consider: What are some other places where systematic biases could be an issue in our culture or society? How could predictive analytics algorithms be modified to reduce or eliminate systematic biases? Copyright ©2021 John Wiley & Sons Canada, Ltd. 20  12.5 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 Requires predictive analytics plus actionable data and a feedback system to track the outcome produced by the action taken BA tools in prescriptive analytics: o Statistical procedures include: optimization simulation decision trees Copyright ©2021 John Wiley & Sons Canada, Ltd. 21 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. 22 Elbow-Partner Chat You will have 3 minutes to discuss and review the following questions with a partner or small group. Be prepared to share your answers and findings with the class. 1) What are descriptive analytics and when would you use it? 2) What are predictive analytics and when would you use it? 3) Describe the purpose of prescriptive analytics. Copyright ©2021 John Wiley & Sons Canada, Ltd. 23 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. 24 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. 25 FIGURE 12.4 Sample performance dashboard Copyright ©2021 John Wiley & Sons Canada, Ltd. 26 FIGURE 12.5 Bloomberg terminal Copyright ©2021 John Wiley & Sons Canada, Ltd. 27 FIGURE 12.6 Management cockpit Copyright ©2021 John Wiley & Sons Canada, Ltd. 28 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. 29 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. 30 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. 31