Chapter 8 Business Intelligence ERP offers opportunity to

Chapter 8 Business Intelligence & ERP offers opportunity to store vast volumes of data This data can be data mined Customer Relationship Management

Data Storage Systems • Data Warehousing – Orderly & accessible repository of known facts & related data – Subject-oriented, integrated, time-variant, non-volatile – Massive data storage – Efficient data retrieval • CRM one data mining application – Can use all of this data – Common ERP add-on

Granularity • Definition – level of detail – Most granular – each transaction stored – Averaging & aggregation loses granularity • Data warehouses usually store data at fine levels of granularity – You can’t undo averages & aggregates

Data Marts • Different definitions 1. Small version of data warehouse 2. Temporary storage of data – possibly from multiple sources – for a specific study

On-Line Analytic Processing • OLAP • Multidimensional databases • Display data on selected dimensions – – – Time Region Product Department Customer Etc.

Data Quality • Problem causes – Data corrupted or missing – Failure of software transferring data into or out of data warehouse – Failure of data cleansing process

Data Integrity • No meaningless, corrupt, or redundant data • Part of data warehousing function to clean data • Data standardization – Remove ambiguity (different ways to abbreviate) • Matching – Associating variables (unique mapping)

Database Product Comparison Product Use Duration Granularity Data warehouse Repository Permanent Finest Data mart Specific study Temporary Aggregate OLAP Report & Analysis Repetitive Summary

Data Mining • Analysis of large quantities of data by computer • Micromarketing • Versatile – Apply to a wide variety of models • Scalable – Can analyze very large data sets

Types of data mining • Hypothesis Testing – Traditional statistics • Knowledge Discovery – No predetermined expectation of relationships

Business Data Mining Applications Area Applications Retailing Market basket analysis, cross-sell Banking Customer relationship mgmt Credit Card Mgmt Lift, churn Insurance Fraud detection Telecommunications Churn (customer turnover) Telemarketing On-line caller information Human Resource Mgmt Churn (employee turnover)

Customer Relationship Management • Determine value of customer • Identify what they want – Package products (services) to keep them • Maximize expected net present value of customer

Summary • Customer Relationship Management very promising – Has not reached all expectations as ERP add-on • Quite expensive to get needed data storage capability • Still an opportunity to use all the data generated by an ERP