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Business Intelligence

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Objectives
 Discuss the role of BI in ERP systems  Define Business Intelligence (BI)  Discuss the components of BI:
Data Warehouses and Data Marts Access tools

 Benefits

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The Role of ERP Systems in Business Processes

1. Execute the steps in the process (includes instance monitoring)

Procurement Production Fulfillment

2. Capture the data resulting from executing the steps

3. Monitor / analyze process

Questions: 1. Why do we monitor/analyze processes? 2. How does an ERP system help monitor processes?
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How do ERP systems help monitor processes?

 Generate information in order facilitate decision making or to assist with other aspects of someone s job.  Examples:
Sales month to date vs. budget Profit margin month to date vs. budget Product hot seller report Product non-mover report nonBackorder over 30 days report Customer non-payment over 30 day report. non-

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ERP Information Output Capabilities

 Before
Functionally siloed systems Data not integrated Time consuming, manual process to assemble cross-functional data cross> How do you think it was done?

Issues with accuracy and validity Who s numbers are right?

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ERP Information Output Capabilities

 With ERP systems
Integrated data single version of the truth One database Information overload? How to effectively provide data to managers that need it

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ERP Information Output Capabilities

 Standard reports  Ad hoc query capabilities  Business Intelligence

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What is a report?
 It s a program that retrieves data from a database, formats and presents it to a user  Can allow filtering, sorting, aggregation

The report output

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What is a report?
 A report can be:
displayed online exported to excel or other software Emailed as an attachment printed

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ERP Standard Reports

 Standard report: prebuilt report supplied with the ERP software at no additional charge  Systems like SAP (and SYSPRO) provide hundreds of standard reports  Benefits
Free! They come packaged with the ERP software Some reports are really good for operational reporting:
> Instance level monitoring > Routine daily monitoring > Financial reports (Income statement, balance sheet)

ERP systems like SAP and SYSPRO are implemented in thousands of companies, so they have a pretty good understanding of what managers need .. But .
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ERP Standard Reports Issues

 ERP standard reports don t always meet the users needs (or likes) highly ineffective for supporting ad hoc/decision oriented processes
EVERY organization is different in its decision support needs. 80/20 rule . the 20 in this case is usually critical

 Reports are usually written in a programming language (or a reporting tool) that requires specialized technical skill
Means that when a manager needs a new report, need to go the IT department . numerous issues

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ERP Standard Reports Issues

 Can overload system / impact response time
Reports are generated from the Operational system the same system being used to execute Databases are tuned for:
> Execute: lots of transactions, not much data in each transaction (e.g., one purchase order) > Monitor process: lower levels of transactions, but lots of data in each transaction ( show me all sales this week by product and location)

When you execute and monitor process on the same database

> Reports take a long time to run > Execute transactions take longer to run . Why is this an issue?

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Ad hoc queries
 ERP systems like SAP and SYSPRO provide tools to build your own reports  Called ad hoc query tools  Benefits
Permit users to ask any question they like

 Issues
Still have the overload issue ERP databases are incredibly complicated .SAP has 8000 tables Ability to get the information needed depends on the technical skills of the Depends on skill level of user BIG issue user needs to be programmer.

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What is business intelligence?

 organized information that helps individuals in an organization make better, more informed decisions more quickly. quickly.  Business intelligence is generated from a data warehouse, warehouse, which collects, stores and presents data.  Business intelligence systems customize information output to be the most useful for the intended audience.  The overarching goal of business intelligence is:
to provide individuals within the organization with the right information, information, in the right format at the right time to facilitate faster, better decisions.

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How it all works

Business Intelligence Tools

Operational System (ERP) Data Warehouse Other Operational System (CRM)

Data Mart 1 (sales)

Data Mart 2 (marketing)

Reporting OLAP Data Mining

Data Mart 3 (finance)

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Why not just use operational database from ERP?

Operational Systems
Designed to handle thousands of transactions per days each dealing with a small amount of data

Data Warehouses / BI
Designed to handle tens or hundreds of queries per day each dealing with many thousands (or millions) of rows of data Provide tools that make it easy to view/ understand data

Data is very detailed and system is concerned mainly with current data (transactions that are happening now) Data is very complex: structured for update (SAP) Constantly being updated (as transactions are recorded) Used by operational personnel primarily (sales clerks, accounting staff, warehouse workers)

Data is historical and some may be summarized to make analysis easier. Recent data detail; old data summary Structured for access (lots of data at the same time); very simple for understandability Refreshed periodically Used by analysts and managers to help with decision making.

The bottom line:

Designed to execute a business process

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Designed to monitor/analyze a business process

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Complex vs simple data

dimensions

Customer
facts

Time Sales

Products

Unit price Quality sold Revenue Cost of Sales

Location

Operational databases are complicated They look like a spider web VERY difficult for users to understand SAP: 8000 tables
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Data mart data is simple Designed to mirror how people think and do analysis

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Case studies
 HP
What do you think a metric is? What would metrics be used for?

 RBC
What do you think a 360 degree view of a customer is? Why would this view be important? How do you think you get this view?

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Business Intelligence Tools

 Online Analytic Processing (OLAP)  User-Managed Reporting User Data Mining

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OLAP

Revenue: 2,000,000.

Measure

Time

OLAP or multidimensional analysis: Means you can analyze measures at the intersection of any combination of dimensions:

Customer

Show me the Revenue we made from Customer A for Product 1 in January 2007

Dimension
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OLAP Functions
 Drilling.
Change the level of aggregation. For example start with a view of sales by product, region and quarter.
> Drill down to sales by product, region and month (shorter timeframe) > Drill up to sales by product, region and year (longer timeframe)

 Slicing and Dicing.

Easily dimension to get another view of the data. For example, a report of Quarterly revenue by Location is easily changed to a quarterly report of Sales by Product Line.

 Different Views.
Numbers are nice, but often charts are better. You can view your multidimensional reports in the format you need.

 Example
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End User Reporting

 A type of tool that allows users to:
Run their own queries Generate their own reports Generate graphs and charts

 Tool designed to be used by non-technical business users: nonIsolates users from the complexities of the underlying database and presents data in business terms they understand Report building is drag and drop Access is web based Example

 Vendors:
Hyperion Business Objects (now owned by SAP) Cognos (now owned by IBM)
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Knowledge Discovery
 Data warehouses today can range in size into the terabytes more than 1,000,000,000,000 bytes of data.  Within these masses of data lies hidden information of strategic importance. But when there are so many trees, how do you draw meaningful conclusions about the forest?

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Knowledge Discovery
 Knowledge Discovery finds patterns and relationships in data by using sophisticated techniques to build models abstract representations of reality. A good model is a useful guide to understanding your business and making decisions.  There are two main kinds of models in knowledge discovery: predictive and descriptive. descriptive.

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Knowledge Discovery
 Predictive models future behavior based on historical behavior.
Propensity to purchase Attrition

 Descriptive models describe patterns in existing data, and are generally used to create meaningful subgroups such as demographic clusters.
Customer segments

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Data Mining
 Data Mining is a technique used to perform knowledge discovery.  Data Mining tools provide sophisticated techniques (including AI) to automate the process of creating predictive and descriptive model algorithms.  In addition to algorithms, data mining software usually has features to simplify the graphic representation of the data (visualization tools) plus interfaces to common database formats.  To use effectively, users must be highly skilled in statistical analysis Vendors: SAS Institute (Enterprise Miner); IBM (Intelligent Miner), Unica
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BI Benefits

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Benefits: Data integration

 To provide a complete picture, warehouses typically combine data from multiple sources such as a company's ERP, CRM and SCM systems. Thus, with a warehouse, it may be possible to track all interactions a company has with each customer - from that customer's first inquiry, through the terms of their purchase all the way through any warranty or service interactions.  This makes it possible for managers to have answers to questions like, "Is there a correlation between where a customer buys our product and the amount typically spent in supporting that customer?"

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Future vision from historical trends

 Effective business analysis frequently includes trend and seasonality analysis. To support this, warehouses typically contain multiple years of data  Also, warehouses are designed to do time-based time(temporal, longitudinal) analysis

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Tools for looking at data in new ways

 Instead of paper reports, warehouses give users tools for looking at data differently. They also allow those users to manipulate their data.  There are times when a color coded speedometer speaks volumes over a simple paper report.
Example

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Freedom from IS department resource limitations

 One of the problems with computer systems is that they usually require computer experts to use them.  When a report is needed, the requesting manager calls the IS department. IS then assigns a programmer to write a program to produce the report. The report can be created in a few days or, in extreme cases, in over a year.  With a warehouse, users create most of their reports themselves. Thus, if a manager needs a report for a meeting in half an hour, they, or their assistant, can create that report in a matter of minutes.  And view anywhere

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SAP offers its own data warehouse - BW

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