Identifying Key Components Of Business Intelligence .

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Presented to the InterdisciplinaryStudies Program:Applied Information Managementand the Graduate School of theUniversity of Oregonin partial fulfillment of therequirement for the degree ofMaster of ScienceIdentifying KeyComponents of BusinessIntelligence Systems andTheir Role in ManagerialDecision makingJohn LloydSr. Physical Design EngineerIntel CorporationFebruary 2011CAPSTONE REPORTUniversity of OregonApplied InformationManagementProgramContinuing Education1277 University of OregonEugene, OR 97403-1277(800) 824-2714

Approved byDr. Linda F. EttingerSenior Academic Director, AIM Program

Running head: KEY COMPONENTS OF BUSINESS INTELLIGENCE SYSTEMSIdentifying Key Components of Business Intelligence Systemsand Their Role in Managerial Decision MakingJohn LloydIntel Corporation1

KEY COMPONENTS OF BUSINESS INTELLIGENCE SYSTEMS2

KEY COMPONENTS OF BUSINESS INTELLIGENCE SYSTEMS3AbstractBusiness intelligence systems by definition are used to create knowledge to enable businessdecision-making (Olszak & Ziemba, 2006). This study examines literature published between2001 to 2010 and identifies the four most common components of a business intelligence system;ETL tools, data warehouses, OLAP techniques, and data-mining. Functions that each componentperforms are detailed. How each component is used to facilitate managerial decision-making atthree levels of organizational management (operational, tactical and strategic) is described.Keywords: business intelligence systems, OLAP, ETL, data-mining, data warehouse,decision-making

KEY COMPONENTS OF BUSINESS INTELLIGENCE SYSTEMS4

KEY COMPONENTS OF BUSINESS INTELLIGENCE SYSTEMS5Table of ContentsAbstract . 3Table of Contents. 5List of Tables . 8List of Figures . 9Introduction to the Literature Review. 11Purpose. 11Problem . 12Significance. 14Audience . 15Outcome. 16Delimitations. 16Focus . 16Time frame. 17Collection and selection criteria. 17Data Analysis Plan Preview. 17Writing Plan Preview. 18Definitions. 19Research Parameters . 22Research Questions. 22Search Strategy Report . 22Selected databases and search engines. Searches are performed using the followingdatabases . 23Search Terms . 24Evaluation Criteria . 25Documentation Approach . 25Data Analysis Plan. 26Writing Plan . 28Annotated Bibliography. 31Review of Literature . 49

KEY COMPONENTS OF BUSINESS INTELLIGENCE SYSTEMS6Definitions of the Four Most Common Components of a Business Intelligence System. 51Data warehouses . 51ETL tools . 52OLAP techniques . 54Data mining. 55The Specific Role of Each Component in a Business Intelligence System. 56Acquiring/gathering information . 57Searching information. 57Analyzing information . 57Delivery of information . 58Managerial Level of Decision-making .Error! Bookmark not defined.Operational level decisions . 61Tactical level decisions . 62Strategic level decisions. 62Conclusions. 64References. 67

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KEY COMPONENTS OF BUSINESS INTELLIGENCE SYSTEMS8List of TablesTable 1: Database Index Search Results. 24Table 2: Definitions of Business Intelligence Systems. 51Table 3: Component vs. Action. . 58Table 4: Component utilization within the decision-making process. 67

KEY COMPONENTS OF BUSINESS INTELLIGENCE SYSTEMS9List of FiguresFigure 1: The Role of BI in decision making. . 16Figure 2: Organizational decision flow overview. 61

KEY COMPONENTS OF BUSINESS INTELLIGENCE SYSTEMS10

KEY COMPONENTS OF BUSINESS INTELLIGENCE SYSTEMS11Introduction to the Literature ReviewPurpose"Business intelligence is designed to support the process of decision-making" (Arnott,Gibson, & Jagielska, 2004, p. 296). Arnott et al. (2004) define the role of business intelligence"to extract the information deemed central to the business, and to present or manipulate that datainto information that is useful for managerial decision support" (p. 296). Negash (2004) notesthat business intelligence is "used to understand the capabilities available in the firm; the state ofthe art, trends, and future directions in the markets, the technologies, and the regulatoryenvironment in which the firm competes; and the actions of competitors and the implications ofthese actions" (p. 177).Business intelligence systems combine operational data with analytical tools to presentcomplex and competitive information to planners and decision makers, in order to improve thetimeliness and quality of the decision-making process (Negash, 2004). A business intelligencesystem is a set of tools, technologies and programmed products that are used to collect, integrate,aggregate and make data available (Koronios &Yeoh, 2009). Business intelligence systemsprovide actionable information delivered at the right time (Negash, 2004) when decisions need tobe made.The beginning point of this study is to identify the key components that are common toall business intelligence systems. Business intelligence systems, as the term is typically used, isoften confused with a specific "off the shelf" piece of hardware and with a software solution thatbusinesses can simply purchase, turn on and utilize to create business intelligence to facilitate thedecision-making process; but business intelligence systems is really just an umbrella term(Levinson, 2006). In reality, business intelligence systems refers to a vast collection of tools and

KEY COMPONENTS OF BUSINESS INTELLIGENCE SYSTEMS12techniques that can consist of dozens of hardware solutions with expensive software at one endof the spectrum and as little as one server with specialized software on the other end. Whilebusiness needs dictate the necessity for different components and complexity for a businessintelligence system, all business intelligence systems require, at a minimum, four specificcomponents to produce business intelligence. These components are described throughout thelarger literature to the degree that they are now taken-for-granted and they include (a) datawarehouses, (b) ETL tools, (c) OLAP techniques and (d) data mining (Olszak & Ziemba, 2006).Business intelligence system components are used to support a set of managerialdecision-making actions (Cella, Golfarelli & Rizzi, 2004). Actions are described as: (a) acquire(e.g. supported by the data warehousing component), (b) gather (e.g. supported by the extracttransform-load component), (c) analyze (e.g., supported by the use of on-line analytical products)and (d) report (e.g., supported by the data-mining component) data that come from different anddispersed sources (Olszak & Ziemba, 2007). The purpose of this study is framed in two stages.Stage One involves identification and description of aspects of each of the four most commoncomponents of a BI system. Once aspects are identified and described, they are aligned with therelevant managerial decision-making action of (a) acquiring, (b) searching/gathering, (c)analyzing, and (d) delivery of information. The goal of the study is to propose ways to betterfacilitate the managerial decision-making process.ProblemThe ability of a corporation to take advantage of all available information through thedecision-making process is a critical component for its success (Cody, Kreulen, Krishna &Spangler, 2002). Corporations use business intelligence systems mainly for corporate

KEY COMPONENTS OF BUSINESS INTELLIGENCE SYSTEMS13management, monitoring of business activities, reporting, planning and decision-making support,as well as optimization of customer relations (Olszak & Ziemba, 2007). More than ever,information supports all critical business decisions (Matei, 2010). Business intelligence seeks toprovide the capability to access and analyze information (Matei, 2010), so that massive data frommany different sources of a large enterprise can be integrated into a coherent group to provide a 360 view of its business (Koronios & Yeoh, 2009).Business intelligence is a relatively new term, coined in the early 1990's by HowardDressner (Watson & Wixom, 2007). Business intelligence can be defined as "a broad collectionof software platforms, applications, and technologies that aim to help decision makers performmore effectively and efficiently" (Arnott, Gibson, & Jagielska, 2004, p. 295). At seniormanagerial levels, business intelligence systems provide the input to strategic and tacticaldecisions and "at the lower managerial levels. helps individuals do their day-to-day job(operational)" (Negash, 2004, p. 189). On a strategic level business intelligence systems createthe information used in the forecasting of future results based on historical results; on the tacticallevel, they provide a basis for decision making to optimize actions for overall companyperformance; and on an operational level, business intelligence systems provide just-in-timeanalysis of departmental performance (Olszak & Ziemba, 2007).Business intelligence systems can be used to guide and improve decision making at alllevels, strategic, tactical and operational (Coman, Duica, Radu, & Stefan, 2010). According to a2007 Gartner survey of 1,400 CIOs, business intelligence projects were the number onetechnology priority (Watson & Wixom, 2007), due to their ability to facilitate improved decisionmaking through the delivery of information based on data analysis. A critical component for thesuccess of the modern enterprise is the ability to take advantage of all available information andthrough the use of analytics such as On-Line Analytical Processing (OLAP) ( Cody et al., 2002).

KEY COMPONENTS OF BUSINESS INTELLIGENCE SYSTEMS14OLAP refers to the techniques of performing complex analysis over the information stored in adata warehouse to transform it into decision information (Shi, Wang, Wu, Xu, & Zeng, 2006).Although business intelligence systems are widely used in business, research about themis limited (Negash, 2004). It is important for businesses to understand the value of businessintelligence systems because such systems support decision making at all levels of management:strategic, tactical and operational through data analysis and delivery (Olszak & Ziemba, 2007).SignificanceAccording to Arnott et al. (2004), the role of business intelligence is to extract theinformation deemed central to the business and to present or manipulate that data intoinformation that is useful for the managerial decision support through the use of businessintelligence systems. Understanding business intelligence systems enables any organization toimplement an analytical approach that transforms data into information, information intoknowledge and then knowledge into decisions as illustrated in Figure 1, as shown by Olszak andZiemba (2007). Factors such as an ever increasing number of very diverse internal and externaldata sources, the sheer volume of data generated and used in everyday business, complexity ofbusiness processes as well as various compliance, privacy and other data related issues, havemade cross-organizational data integration and analysis more complex (Marjanovic, 2009).

KEY COMPONENTS OF BUSINESS INTELLIGENCE SYSTEMS15Figure 1. The Role of BI in decision making (Olszak & Ziemba, 2007, Figure 2, p.137)The use of business intelligence systems has become popular in recent years as anapproach to gather and analyze data for business use (Anderson, Fries, & Johansson, 2008).Koronios and Yeoh (2009) believe that this is because business intelligence systems can delivermeaningful data at the right time (when decisions need to be made) to the right location (the areaof business that is to be affected) in the right form (the reporting tool that supports the decisionbeing made) (p. 23).AudienceThis study is designed to inform organizational decision makers of the following levels oforganizational decision-making: (a) operational, (b) strategic, and (c) tactical. These decisionmakers are IT professionals, CIOs and CTOs alike who require the efficient and effectiveanalysis of data "in order to better understand the situation of their business and improv[e] the

KEY COMPONENTS OF BUSINESS INTELLIGENCE SYSTEMS16decision making process" (Cella, Golfarelli, & Rizzi, 2004, p. 1). According to Watson andWixom (2007) "business intelligence is currently the top-most priority of many chief informationofficers" (p. 96).OutcomeThe outcome of this study is structured as a set of set guidelines to enable ITprofessionals (up to and including CIOs) to better utilize their business intelligence systems. Theguide describes the key components of a business intelligence system in three areas: (a) adefinition of each of the four most common components (data warehouses, ETL tools, OLAPtechniques, and data mining) including identification of detailed aspects; (b) the specific role inthe business intelligence system in relation to the relevant managerial decision-making actions,including acquiring/gathering, searching, analyzing, and delivery of information; and (c) howeach component can be used to better facilitate business decision making associated with eachlevel of organizations: operational, strategic, and tactical.DelimitationsFocus. This study details the four most commonly identified components used inbusiness intelligence systems (ETL tools, data warehouses, OLAP techniques, and data mining)that support managerial decision making with a focus in four pre-selected areas: (a)acquiring/gathering (e.g. data warehousing), (b) searching (e.g. extract-transform-load), (c)analyzing (using on-line analytical products) and (d) reporting (data mining) in order to build anunderstanding of business intelligence systems. This study does not present the best knownmethods for decision making or detail the different types, brands, or vendors of businessintelligence systems as this goes beyond the scope of the purpose of this study.

KEY COMPONENTS OF BUSINESS INTELLIGENCE SYSTEMS17Time frame. Business intelligence was born within the industrial world in the early 90sand a decade's worth of research has seen naive techniques transform into mature tools (Cella,Golfarelli, & Rizzi, 2004). In order to keep the information relevant to today's business climateand technology only sources published with the last ten years are used in this literature review.Collection and selection criteria. The sources of literature for this study are primarilyderived from academic online databases as well as business journal databases. These databaseshave a high concentration of peer-reviewed scholarly sources and journal articles that areauthored by recognized experts in their respective field of study. Generalized search engines arenot used for this study as preliminary searches provided content of little academic value. The oneexception to this rule is Google Scholar, a site that searches academic and scholarly databasesand provides results with a high degree relevance to the search string provided.All sources selected for this study are either focused on business intelligence or rooted inthe technologies or processes related to the development of information creation for the purp

relevant managerial decision-making action of (a) acquiring, (b) searching/gathering, (c) analyzing, and (d) delivery of information. The goal of the study is to propose ways to better facilitate the managerial decision-making process. Problem The ability of a corporation t

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