DB2 UDB's High-Function Business Intelligence in e-business

Chapter 1. Business Intelligence overview 7

1.1.2 Importance of BI

In today’s tough and competitive business climate, managers know that no

matter what their core business, they are in the “information business”. They

must drive decisions that directly influence results, and realize that businesses

that effectively use information to manage and impact decision making will have

the greatest competitive edge.

Powerful transaction-oriented information systems are now commonplace in

every major industry, effectively leveling the playing field for corporations around

the world.

Industry leadership now requires analytically oriented systems that can

revolutionize a company's ability to rediscover and utilize information they

already own. These analytical systems derive insight from the wealth of data

available, delivering information that's conclusive, fact-based and actionable. i.e.

Business Intelligence.

Business intelligence can improve corporate performance in any

information-intensive industry. Companies can enhance customer and supplier

relationships, improve the profitability of products and services, create

worthwhile new offerings, better manage risk, and pare expenses dramatically,

among many other gains. Through business intelligence applications such as

target marketing, customer profiling, and product or service usage analysis,

businesses can finally begin using customer information as a competitive asset.

Having the right intelligence means having definitive answers to such key

questions as these:

򐂰 Which of our customers are most profitable, and how can we expand

relationships with them?

򐂰 Which of our customers provide us minimal profit, or cost us money?

򐂰 Which products and services can be cross-sold most effectively, and to

whom?

Important: Of particular relevance to our upcoming discussion on BI is the

unpredictability of the number and complexity of interactions from a user

community that can test the most powerful servers (hardware and database)

available.

Scalability is a critical requirement — both the ability for existing servers

(hardware and database) to cope with spikes and workload growth, as well as

the ability to painlessly augment existing server resources with more powerful

servers or clusters of servers.

8 High-Function Business Intelligence in e-business

򐂰 Which marketing campaigns have been most successful?

򐂰 Which sales channels are most effective for which products?

򐂰 How can we improve the caliber of our customers' overall experience?

Most companies have the raw data to answer these questions, since operational

systems generate vast quantities of product, customer and market data from

point-of-sale, reservations, customer service, and technical support systems.

The challenge is to extract this information and reap its full potential.

Many companies take advantage of only a small fraction of their data for strategic

analysis. The remaining untapped data, often combined with data from external

sources like government reports, trade associations, analysts, the Internet, and

purchased information, is a gold mine waiting to be explored, refined, and

shaped into vital corporate knowledge. This knowledge can be applied in a

number of ways, ranging from charting overall corporate strategy to

communicating personally with employees, vendors, suppliers, and customers

through call centers, kiosks, billing statements, the Internet, and other touch

points that facilitate genuine one-to-one marketing on an unprecedented scale.

e-business impact on BI

Early business information systems were viewed as being standalone strategic

decision making applications separate from operational systems that manage

day to day business operations and supply data to the data warehouse and data

marts.

However, the information and analyses provided by these systems have become

vital to tactical day-to-day decision making as well, and are being integrated into

the overall business processes.

In particular, e-business is:

򐂰 Encouraging this integration since organizations need to be able to react

faster to changing business conditions in the e-business world than they do in

the brick and mortar environment. The integration of business information

systems into the overall business process can be achieved by building a

closed loop decision making system in which the output of BI applications is

routed to operational systems in the form of recommended actions such as

product pricing changes for addressing specific business issues.

򐂰 Causing organizations to consider extending this closed loop process to the

real-time automatic adjustment of business operations and marketing

campaigns based on the decisions made by the BI system. Such a real-time

closed loop system would deliver on-demand analytics for decision making

capable of providing a significant competitive edge.