MIS470 3

Chapter 4: Business Reporting, Visual Analytics, and Business Performance Management

1

Learning Objectives

• Define business reporting and understand its historical evolution

• Recognize the need for and the power of business reporting

• Understand the importance of data/information visualization

• Learn different types of visualization techniques

• Appreciate the value that visual analytics brings to BI/BA

• …

(Continued…)

Learning Objectives

• Know the capabilities and limitations of dashboards

• Understand the nature of business performance management (BPM)

• Learn the closed-loop BPM methodology

• Describe the basic elements of balanced scorecards

Business Reporting Definitions and Concepts

• Report = Information  Decision

• Report? • Any communication artifact prepared to convey specific

information

• A report can fulfill many functions • To ensure proper departmental functioning

• To provide information

• To provide the results of an analysis

• To persuade others to act

• To create an organizational memory…

What is a Business Report?

• A written document that contains information regarding business matters.

• Purpose: to improve managerial decisions

• Source: data from inside and outside the organization (via the use of ETL)

• Format: text + tables + graphs/charts

• Distribution: in-print, e-mail, portal/intranet

Data acquisition  Information generation  Decision making  Process management

Business Reporting

Data Repositories

Business Functions

UOB 1.0 X

UOB 2.2

UOB 2.1 X UOB 3.0

1 Machine Failure

Symbol Count Description

Exception Event

Transactional Records

PHASE 5

DEPT 4

DEPT 3

DEPT 2

DEPT 1

PHASE 4PHASE 3PHASE 2PHASE 1

DEPLOYMENT CHART

1 2 3 4

5

Information (reporting)

Decision Maker

Action (decision)

Data

Key to Any Successful Report

• Clarity …

• Brevity …

• Completeness …

• Correctness …

• Report types (in terms of content and format) • Informal – a single letter or a memo

• Formal – 10-100 pages; cover + summary + text

• Short report – periodic, informative, investigative

Types of Business Reports

• Metric Management Reports • Help manage business performance through metrics (SLAs for

externals; KPIs for internals) • Can be used as part of Six Sigma and/or TQM

• Dashboard-Type Reports • Graphical presentation of several performance indicators in a

single page using dials/gauges

• Balanced Scorecard-Type Reports • Include financial, customer, business process, and learning &

growth indicators

Components of Business Reporting Systems • Common characteristics

• OLTP (online transaction processing) • ERP, POS, SCM, RFID, Sensors, Web, …

• Data supply (volume, variety, velocity, …)

• ETL

• Data storage

• Business logic

• Publication medium

• Assurance

Data and Information Visualization

“The use of visual representations to explore, make sense of, and communicate data.”

• Data visualization vs. Information visualization

• Information = aggregation, summarization, and contextualization of data

• Related to information graphics, scientific visualization, and statistical graphics

• Often includes charts, graphs, illustrations, …

A Brief History of Data Visualization

• Data visualization can date back to the second century AD

• Most developments have occurred in the last two and a half centuries

• Until recently it was not recognized as a discipline

• Today’s most popular visual forms date back a few centuries

The First Pie Chart Created by William Playfair in 1801

William Playfair is widely credited as the inventor of the modern chart, having created the first line and pie charts.

Decimation of Napoleon’s Army During the 1812 Russian Campaign

• Arguably the most popular multi-dimensional chart

By Charles Joseph Minard

A Brief History of Data Visualization

• 1900s – • more formal attitude toward visualization

• focus on color, value scales, and labeling

• Publication of the book Semiologie Graphique

• 2000s – • Emergence of Internet as the medium for information

visualization  raising visual literacy

• Incorporate interaction, animation, 3D graphics-rendering, virtual worlds, real-time data feed

• 2010s and beyond – ?

Different Types of Charts and Graphs

• Which one to use? Where and when?

 Specialized Charts and Graphs  Histogram

 Gantt Chart

 PERT Chart

 Geographic Map

 Bullet Graph

 Heat Map / Tree Map

 Highlight Table

 Basic Charts and Graphs

 Line Chart

 Bar Chart

 Pie Chart

 Scatter Plot

 Bubble Chart

A Gapminder Chart Wealth and Health of Nations

See gapminder.org for interesting animated examples

The Emergence of Data Visualization And Visual Analytics Magic Quadrant for Business Intelligence and Analytics Platforms (Source: Gartner.com) • Many data visualization companies

are in the 4th quadrant • There is a move toward visualization

The Emergence of Data Visualization And Visual Analytics

• Emergence of new companies • Tableau, Spotfire, QlikView, …

• Increased focus by the big players • MicroStrategy improved Visual Insight

• SAP launched Visual Intelligence

• SAS launched Visual Analytics

• Microsoft bolstered PowerPivot with Power View

• IBM launched Cognos Insight

• Oracle acquired Endeca

Visual Analytics

• A recently coined term • Information visualization + predictive analytics

• Information visualization • Descriptive, backward focused • “what happened” - “what is happening”

• Predictive analytics • Predictive, future focused • “what will happen” - “why will it happen”

• There is a strong move toward visual analytics

Visual Analytics by SAS Institute

• SAS Visual Analytics Architecture • Big data + In memory + Massively parallel processing + ..

Visual Analytics by SAS Institute

• At teradatauniversitynetwork.com, you can learn more about SAS VA, experiment with the tool

Performance Dashboards

• Performance dashboards are commonly used in BPM software suites and BI platforms

• Dashboards provide visual displays of important information that is consolidated and arranged on a single screen so that information can be digested at a single glance and easily drilled in and further explored

Performance Dashboards

Performance Dashboards

• Dashboard design • The fundamental challenge of dashboard design is to display all the required

information on a single screen, clearly and without distraction, in a manner that can be assimilated quickly

• Three layer of information • Monitoring

• Analysis

• Management

Application Case 4.6

Saudi Telecom Company Excels with Information Visualization Questions for Discussion 1. Why do you think telecommunication

companies are among the prime users of information visualization tools?

2. How did Saudi Telecom use information visualization?

3. What were their challenges, the proposed solution, and the obtained results?

Application Case 4.6

Performance Dashboards

• What to look for in a dashboard • Use of visual components to highlight data and exceptions

that require action.

• Transparent to the user, meaning that they require minimal training and are extremely easy to use

• Combine data from a variety of systems into a single, summarized, unified view of the business

• Enable drill-down or drill-through to underlying data sources or reports

• Present a dynamic, real-world view with timely data

• Require little coding to implement/deploy/maintain

Best Practices in Dashboard Design

• Benchmark KPIs with Industry Standards

• Wrap the Metrics with Contextual Metadata

• Validate the Design by a Usability Specialist

• Prioritize and Rank Alerts and Exceptions

• Enrich Dashboard with Business-User Comments

• Present Information in Three Different Levels

• Pick the Right Visual Constructs

• Provide for Guided Analytics

Business Performance Management (BPM)

• Business Performance Management (BPM) is…

A real-time system that alerts managers to potential opportunities, impending problems and threats, and then empowers them to react through models and collaboration.

• Also called corporate performance management (CPM by Gartner Group), enterprise performance management (EPM by Oracle), strategic enterprise management (SEM by SAP)

Business Performance Management (BPM)

• BPM refers to the business processes, methodologies, metrics, and technologies used by enterprises to measure, monitor, and manage business performance.

• BPM encompasses three key components • A set of integrated, closed-loop management and analytic

processes, supported by technology …

• Tools for businesses to define strategic goals and then measure/manage performance against them

• Methods and tools for monitoring key performance indicators (KPIs), linked to organizational strategy

A Closed-Loop Process to Optimize Business Performance

• Process Steps 1. Strategize

2. Plan

3. Monitor/analyze

4. Act/adjust

Each with its own process steps

Strategize: Where Do We Want to Go? • Strategic planning

• Common tasks for the strategic planning process: 1. Conduct a current situation analysis

2. Determine the planning horizon

3. Conduct an environment scan

4. Identify critical success factors

5. Complete a gap analysis

6. Create a strategic vision

7. Develop a business strategy

8. Identify strategic objectives and goals

Plan: How Do We Get There?

• Operational planning • Operational plan: plan that translates an organization’s

strategic objectives and goals into a set of well-defined tactics and initiatives, resources requirements, and expected results for some future time period (usually a year).

• Operational planning can be • Tactic-centric (operationally focused)

• Budget-centric plan (financially focused)

Monitor/Analyze: How Are We Doing?

• A comprehensive framework for monitoring performance should address two key issues: • What to monitor?

• Critical success factors

• Strategic goals and targets

• …

• How to monitor? • …

Act and Adjust: What Do We Need to Do Differently?

• Success (or mere survival) depends on new projects: creating new products, entering new markets, acquiring new customers (or businesses), or streamlining some process.

• Many new projects and ventures fail!

• What is the chance of failure? • 60% of Hollywood movies fail

• 70% of large IT projects fail, …

Performance Measurement

• Performance measurement system

A system that assists managers in tracking the implementations of business strategy by comparing actual results against strategic goals and objectives • Comprises systematic comparative methods that indicate progress (or lack

thereof) against goals

KPIs and Operational Metrics

• Key performance indicator (KPI)

A KPI represents a strategic objective and metrics that measure performance against a goal

• Distinguishing features of KPIs

 Strategy

 Targets

 Ranges

 Encodings

 Time frames

 Benchmarks

Performance Measurement

• Key performance indicator (KBI)

Outcome KPIs vs. Driver KPIs

(lagging indicators (leading indicators

e.g., revenues) e.g., sales leads)

• Operational areas covered by driver KPIs • Customer performance

• Service performance

• Sales operations

• Sales plan/forecast

Performance Measurement System

• Balanced Scorecard (BSC)

A performance measurement and management methodology that helps translate an organization’s financial, customer, internal process, and learning and growth objectives and targets into a set of actionable initiatives

"The Balanced Scorecard: Measures That Drive Performance” (HBR, 1992)

Balanced Scorecard

The meaning of “balance” ?

Six Sigma as a Performance Measurement System

• Six Sigma

A performance management methodology aimed at reducing the number of defects in a business process to as close to zero defects per million opportunities (DPMO) as possible

Six Sigma as a Performance Measurement System

• The DMAIC performance model

A closed-loop business improvement model that encompasses the steps of defining, measuring, analyzing, improving, and controlling a process

• Lean Six Sigma

• Lean manufacturing / lean production • Lean production versus six sigma?

Comparison of Balanced Scorecard and Six Sigma