COIS13013 Business Intelligence Term 1, 2016 Assignment 1 – Part A, B and C Lecturer/Tutor: Indra Seher Course-coordinator: Santoso Wibowo Prepared by: Bikash Gurung s0261083 Sydney Campus Due Date: Friday, 6 May 2016, 11:00 PM Part A Question 1 Looking at the value of calculated NPV, the claim of NPV being over $2.5 million is incorrect. Question 2 As calculated NPV is $3171132. It is mentioned that company is not going to proceed if there is a 20% or greater chance that the value of NPV is less than $1million. Looking at the cumulative probabilities we can see that the value would be only $510357. It is less than the allocated value of $1million. Hence, I would recommend to reject the proposed production of the product. Question 3 Looking at the graph, CEO is likely to accept the proposal. Part B Business Intelligence implementation in Australian Recreation Club According to IBM (cited in Almeida et.al 1999), Business Intelligence (BI) means information resources and data assets to make better business choices/decisions. It is about accessibility, analysis, and discovering new possibilities. BI involves a variety of tools, programs and strategies which allow companies to gather data from inner systems and exterior sources, prepare it for analysis, create and run queries and prepare reports. The chosen company in brief Mingara Recreation Club Limited was established in 1971 on the central coast of NSW. Its goal is to encourage, promote and enhance recreation activities, games and sports. It also aims to provide playing, teaching, coaching and training facilities. The company has almost 50,000 members and its facilities comprises of a multi-million dollar gym and fitness centre alongside its ultramodern certified club, and a local sporting centre. The club has expanded to grow into a $100 million business. Need for Business Intelligence Solution Mingara Recreation club used to heavily depend on a wide variety of specialized software applications that cover the entire department such as human resources, gaming, restaurant management and finance. Independently, these applications kept a large amount of data about every part of the business. The issue that raised with this was that only handful of those applications communicated with each other hence the information obtained by each department continued to be closed in its own program silo. This resulted in significant amounts of physical work required whenever the management needed to develop a report. Before generating any reports, management were required to export data from every application, merge them together and eliminate any duplicate data, which was a huge and complex task. The monthly report took several weeks to produce. On top of that the manager of the particular system was required to assist for the adhoc reporting. If the manager happened to be absent, the report would be pending until their return. Due to this, Mingara was not able to retrieve the needed information and were also deprived of using data for improving its business. This proved to be intolerable for a company hence they decided to implement Business Intelligence solution within its systems. Tools and techniques for Implementation of Business Intelligence The company took several initiatives and strategies in order to tackle with the problem of report delays. The management developed plan. At first systems would be integrated, in second phase data warehouse would be built using data of all the systems and concentrate on business Intelligence (BI) and third year would see the mobilisation of data. Scribe Insight software tool was used for the integration of all the systems in first phase. After that, the club considered Microsoft SQL Server Business Intelligence Services as their BI solution since it gave an excellent fit for Mingara’s environment. Furthermore, the club was assured that they would not have to worry about the issues regarding the integration of the chosen BI solution with their existing BI system for finance Microsoft Dynamics GP. To set up the software and assist in developing the solution, the club decided to change Mingara’s past IT provider with a new supplier named Professional Advantage (PA). Over the second phase, Mingara and PA worked together to develop a BI methodology which clearly outlined the duties and responsibilities of different users in the company. The data warehouse was then made ready and data integrated from different systems of the club. The reports were developed and it was made possible for the authorised people to access and view the data query through web by the development of a portal. For the users who had a preference for spreadsheet to review information and those who needed additional reports, there was an option for using Microsoft Excel as an alternative. The BI not only solved the existing problem but also simplified and enhanced several other tasks. Benefits/improvements/values in the club after implementation of BI The club is now making very effective use of their Business Intelligence system. Microsoft SQL Server Business Intelligence Services has reduced their reporting time by six weeks. The staffs whose duty were to run profit and loss report and distribute to the managers are no longer required since the BI system provides live information on the web. Compared to other recreational centres who still rely on manual work for downloading the gaming information, Mingara has moved its data to the web form where it can be viewed and analysed in a fraction of time. This has proved to be crucial in attracting more customers to the club than their competitors. Another BI tool Microsoft Dynamics GP is used by the managers of the club to monitor and manage costs. With the help of this tool, they are analysing customer behaviours, buying patterns and sale trends and even to track the performance of their marketing campaigns. This BI system has been an excellent tool for reporting and analysing non-financial information as well. The club can now keep record of the club attendance numbers and identify the peak hours for the business along with gym and game statistics, food and beverage. Managers use this system to analyse behaviours of the club members like gym utilization, cafe or restaurant visit, free weekly and monthly rewards etc. The club members and visitors of the club also have experienced positive changes in the club. They don’t have to carry along with them the paper reward coupons. They now earn loyalty points which are transferred to their EFTPOS card. They can spend the points in any place where there is EFTPOS which means that the rewards are less restricted and are more valuable and convenient. Factors for successful BI Slevin and Pinto (1986) defines the idea of crucial success factor of Business Intelligence by identifying those aspects that brought about the effective implementation of information systems’ projects. Watson and Haley (1998) in market research of 111 companies found that Business Intelligence success factors involved support from management, sufficient resources, change control, and metadata management. The most common success factor for the Business Intelligence System is the commitment from senior management to support the project. In the case of Mingara club, managers were very enthusiastic about the idea and need of implementing BI and the great values and benefits it brought to the club. Executive support allowed the club to get sleek supply of required investment, recruiting, and accessibility and synchronisation of other related inner sources needed for Business Intelligence execution. Selecting right technology also has effect on the efficiency and performance of the BI project. Correct choice for hardware, software, programs and technique is very important. The provision of appropriate resources (people, time and money) is an important crucial success aspect. Inadequate resources will adversely affect the success of any Business Intelligence project (Eckerson 2005). Sufficient resources needs to be transferred to the team to attain organized goals. (Wixom and Watson 2001). References Almeida, M.S., Ishikawa, M., Reinschmidt, J. and Roeber, T 1999. ‘Getting Started with Data Warehouse and Business Intelligence.’ IBM redbooks. Slevin, D.P. & Pinto, J.K., 1987, ‘Balancing Strategy and Tactics in Project Implementation,’ Sloan Management Rev., pp. 33-44. Watson, HJ, & Haley, BJ 1998, 'MANAGERIAL CONSIDERATIONS', Communications of the ACM, vol. 41, no. 9, pp. 32-37. Wixom, BH, & Watson, HJ 2001, 'An Empirical Investigation of the Factors Affecting Data Warehousing Success', MIS Quarterly, no. 1, p. 17. Eckerson, WW 2005, 'What Are Performance Dashboards?', DM Review, vol. 15, no. 11, pp. 26-28. Part C Reasons for the development of Business Intelligence To Get Ideas of Customer Behaviour One of the main reasons for developing business intelligence software is to increase the ability of a business to evaluate the present consumer purchasing trend. Beyond the actual buys, multi-channel marketing includes all communications between retailers and clients, such as product research, evaluation, and queries. Many Customers research products through one supplier but buy through another. In the given case study, this produced many new possibilities for the RetailStore.com to achieve consumers, but it also contributed to adding complexity to their initiatives to comprehend behaviours of customers and successfully focus on their marketing strategies. They implemented BI so that they could understand what the clients were purchasing, and that information could be used to build up products that met the present consumption styles and accordingly enhance the productivity as the company would be able to draw in valuable clients and successfully focus on their marketing strategies. To Turn Data into Actionable Information Companies require appropriate access to precise information and an enterprise wide solution that allows them to evaluate and work together on the right decisions. Companies handle tremendous quantity of information from supply chains to sales details to store functions. This causes difficulty in maintaining record of essential information and identifying which information is useful. Since RetailStore had a strong presence in online world, a crucial CRM element like making offers to customers required a wide, integrated set of customer data; employees having exceptional analytical expertise; appropriate analytical programs and recurring analysis to learn what works best. So they selected Teradata’s retail industry data model. To turn the large amounts of information that RetailStore.com acquired into useful, actionable knowledge, they needed various tools and resources. Confronted with growing challenges to get in new sales programs, rising globalization and changing customer requirements, they needed information management solutions that would enable them to make better business choices. Developing BI gave them the ability to rationally incorporate information for research which saved both time and money, as it reduced the need for extra repetitive physical data storage dedicated to research and making decisions. To Enhance Efficiency Business intelligence system effectively broadens the company’s sales programs, by incorporating most of the internal systems and building a unified operational infrastructure with information systems that function across the retail outlet business. Retailstore.com implemented BI to improve efficiency in the company, which in turn increased performance and productivity. Outcomes on the implementation of BI Time Saving in Reporting and Scorcard Reporting and scorecards are now integrated into the structure of the way in which the RetailsStore.com runs. The company now uses a major BI tool MicroStrategy for running more than 300 reports hourly. More than 400 staffs are provided with MicroStrategy IDs to sign in for running their reports while others are sent reports by email. The reports have enabled managers to know the margins on all product along with the charge of providing the product into the factory, shipping cost to consumers, charges on credit card and cost of serving customers. MicroStrategy has allowed the recalculation of margins and revenues on half hour basis due to which it has been possible for the company to produce profit and loss statement every hour as required. Specialized Analysis of data and information Decision Support Analysts on RetailStore.com uses a web based BI tool named Teradata SQL Assistant Web Edition with which they are able to view query results, enter and store new queries, and even change the existing queries. They also make use of SAS and Teradata Warehouse Miner for accessing and performing statistical analyses. The analytics team works together with customers for estimating/ determining price elasticity. This application has enabled for the understanding the product sales speed which has been useful in bargaining with suppliers for the products that are not selling much. If the products are causing hassle, they are removed from the website by the application which has saved millions of dollars to the company from suppliers. This tool has allowed the company to analyse data of a company warehouse which has made it possible for forecasting the sales of product in future. Integrated Customer View The company’s enterprise data warehouse (EDW) gives manager the integrated view of their clients. It combines shopping, client support, logistics, and click flow information from sessions to provide exposure into every connections with RetailStore’s clients. For each client, it has incorporated information on the items viewed before buying, the items bought, the delivery, and any problems that ocurred during the entire process. RetailStore also categorizes clients according to their confirmed interest in specific kinds of products. Based on their purchase and click stream actions, customers who are most likely to respond to an offer determined.