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492 Part Three Key System Applications for the Digital Age

12.2 BUSINESS INTELLIGENCE IN THE ENTERPRISE

Chapter 2 introduced you to the different types of systems used for support-
ing management decision making. At the foundation of all of these decision
support systems are a business intelligence and business analytics infrastruc-
ture that supplies the data and the analytic tools for supporting decision making.
In this section, we want to answer the following questions:

• What are business intelligence (BI) and business analytics (BA)
• Who makes business intelligence and business analytics hardware and
software?
• Who are the users of business intelligence?
• What kinds of analytical tools come with a BI/BA suite?
• How do managers use these tools?
• What are some examples of firms who have used these tools?
• What management strategies are used for developing BI/BA capabilities?

WHAT IS BUSINESS INTELLIGENCE?

When we think of humans as intelligent beings we often refer to their ability to
take in data from their environment, understand the meaning and significance
of the information, and then act appropriately. Can the same be said of business
firms? The answer appears to be a qualified “yes.” All organizations, includ-
ing business firms, do indeed take in information from their environments,
attempt to understand the meaning of the information, and then attempt to act
on the information. Just like human beings, some business firms do this well,
and others poorly.
“Business intelligence (BI)” is a term used by hardware and software
vendors and information technology consultants to describe the infrastructure
for warehousing, integrating, reporting, and analyzing data that comes from
the business environment, including big data. The foundation infrastructure
collects, stores, cleans, and makes relevant information available to managers.
Think databases, data warehouses, data marts, Hadoop, and analytic platforms,
which we described in Chapter 6. “Business analytics (BA)” is also a vendor-
defined term that focuses more on tools and techniques for analyzing and
understanding data. Think online analytical processing (OLAP), statistics,
models, and data mining, which we also introduced in Chapter 6.
So, stripped to its essentials, business intelligence and analytics are about
integrating all the information streams produced by a firm into a single, coher-
ent enterprise-wide set of data, and then, using modeling, statistical analy-
sis tools (like normal distributions, correlation and regression analysis, Chi
square analysis, forecasting, and cluster analysis), and data mining tools (pat-
tern discovery and machine learning), to make sense out of all these data so
managers can make better decisions and better plans, or at least know quickly
when their firms are failing to meet planned targets.
One company that uses business intelligence is Hallmark Cards. The
company uses SAS Analytics software to improve its understanding of buying
patterns that could lead to increased sales at more than 3,000 Hallmark Gold
Crown stores in the United Sates. Hallmark wanted to strengthen its relation-
ship with frequent buyers. Using data mining and predictive modeling, the com-
pany determined how to market to various consumer segments during holidays

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