Decision Making and Business Intelligence

Information Policy

  • Firm's rules, procedures, roles for sharing, managing, standardizing data.
  • Data administration: Policies and procedures to manage data, tagging, and updating.
  • Data governance: Policies for managing data availability, usability, integrity, and security, especially regarding government regulations.
  • Database administration: Creating and maintaining databases.

Disaster Recovery and Business Continuity Planning

  • Disaster recovery planning: Plans for restoring disrupted services.
  • Business continuity planning: Focuses on restoring business operations after a disaster; includes alternatives.
  • Both plans identify critical systems via business impact analysis.
  • Management determines system restoration priority.

Knowledge Management and Collaboration Systems

  • Fastest-growing area of software investment.
  • Knowledge must be shared to be useful.
  • Enhanced decision-making at all business levels.
  • Routine, operational, tactical, and strategic decisions.

Types of Decisions

  • Unstructured: Requires judgment, evaluation, and insight.
  • Structured: Repetitive and routine with definite procedures.
  • Semistructured: Part of the problem has a clear-cut answer.

Decision Making Process

  • IT drives decision making to lower levels for structured decisions.
  • Better decisions provide monetary value (less waste) and intangible value (better customer service).

Business Value of Enhanced Decision Making

  • Allocate support to most valuable customers: estimate annual value: €1,200,000
  • Predict call center daily demand: estimate annual value: €600,000
  • Decide parts inventory levels daily: estimate annual value: €1,825,000

Decision-Making Groups in a Firm

  • Senior managers: Unstructured decisions.
  • Middle managers: Semistructured decisions.
  • Operational managers: Structured decisions.

The Decision-Making Process

  • Intelligence: Discovering and understanding the problem.
  • Design: Identifying and exploring solutions.
  • Choice: Choosing among alternatives (Cost vs. Benefit).
  • Implementation: Making the chosen alternative work and monitoring its effectiveness.

Moneyball

  • Sports analytics uses data to analyze player contribution and value.

Managerial Roles

  • Classical model: Planning, organizing, coordinating, deciding, and controlling.
  • Contemporary model: Fast-paced, fragmented work; prefers ad hoc information and oral communication.
  • Mintzberg’s Roles:
    • Interpersonal: Figurehead, leader, liaison.
    • Informational: Disseminator, spokesperson.
    • Decisional: Entrepreneur, disturbance handler, resource allocator, negotiator.

Real-World Decision Making

  • Reasons IT investments may not produce positive results:
    • Information quality.
    • Management filters.
    • Organizational inertia and politics.

High-Velocity Automated Decision Making

  • Computer algorithms for highly structured decisions.
  • Safeguards monitor and regulate.

Business Intelligence (BI)

  • Infrastructure for collecting, storing, and analyzing data.
  • Business analytics: Tools and techniques for analyzing data (OLAP, statistics, data mining).

The Business Intelligence Environment

  • Data from the business environment (structured and unstructured).
  • BI infrastructure to collect and store data.
  • Business analytics toolset for organization (reports, KPIs).
  • Managerial users and methods to measure performance.
  • Delivery platforms (MIS, DSS, ESS) and user interface.

Big Data Analytics

  • Massive datasets from social media and online sources.

Data Mining

  • Finds hidden patterns and relationships in datasets.
    • Associations: Occurrences linked to a single event.
    • Sequences: Events linked over time.
    • Classification: Recognizes patterns to describe group membership.
    • Clustering: Finds groupings within data.
    • Forecasting: Uses existing values to forecast future values.

Operational Intelligence and Analytics

  • Business activity monitoring using data from sensors (Internet of Things).

Location Analytics and Geographic Information Systems (GIS)

  • Location analytics gains insight from geographic data.
  • GIS ties location-related data to maps.

Management Strategies for Developing BI and BA Capabilities

  • One-stop integrated solution.
  • Multiple best-of-breed solution.

Business Intelligence Infrastructure

  • Data warehouse stores current and historical data.
  • Provides analysis and reporting tools.

Support for Semistructured Decisions

  • Decision-support systems use mathematical or analytical models.
    • “What-if” analysis.
    • Sensitivity analysis.
    • Backward sensitivity analysis.
    • Multidimensional analysis / OLAP.

Balanced Scorecard

  • Measures outcomes on four dimensions: financial, business process, customer, learning, and growth.
  • Key performance indicators (KPIs) measure each dimension.

Decision Support for Senior Management

  • Business performance management (BPM) translates strategies into operational targets.

Group Decision-Support Systems (GDSS)

  • Interactive system to facilitate solution of unstructured problems by a group.

Business Process Management (BPM)

  • Variety of tools, methodologies to analyze, design, optimize processes.
    • Identify processes for change.
    • Analyze existing processes.
    • Design the new process.
    • Implement the new process.
    • Continuous measurement.