Chapter 4: Business Intelligence, knowledge management and specialised systems.

Principles: Business Intelligence, Customer relationship management systems, knowledge management, artificial intelligence systems, expert systems and virtual reality systems. An Overview of Business Intelligence: Business Intelligence (BI): is the process of gathering enough of the right info in a timely manner and a usable form and analysing it so that it can have a positive impact on business strategy, tactics, or operations. BI turns data into useful information that is then distributed through an enterprise. BI involves analysing info to shine a spotlight on the orgs performance. BI has become recognised as an essential component of an organisations ERP system. In retail BI can enable retailers to gain customer knowledge and improve sales visibility so the firm can react to and better predict customer demand and maximise sales. Competitive Intelligence: is one aspect of BI and is limited to information about competitors and the ways that knowledge affects strategy, tactics and operations. Competitive Intelligence is a critical part of a companys ability to see and respond quickly and appropriately to the changing marketplace. Competitive Intelligence is NOT espionage. Counter Intelligence: describes the steps and organisation takes to protect information sought by hostile intelligence gatherers. One of the most effective counter-intelligence measures is to define trade secret information relevant to the company and control its dissemination. Knowledge Management: is the process of capturing a companys collective expertise wherever it resides, in computers, on paper or in peoples heads, and distributing it wherever it can help produce the biggest payoff. The goal of knowledge management is to get people to record knowledge (as opposed to data) and then share it. It is really about changing peoples behaviour to make their experience and expertise available to others Data Mining: Data Mining is an information analysis tool that involves the automated discovery of patterns and relationships in a data warehouse. Data minings objectives is to extract patterns, trends and rules from data warehouses to evaluate proposed business strategies, which in turn will improve competitiveness, improve profits, and transform business processes. It is used extensively in marketing to improve customer retention. Data mining tools help end users find answers to questions they never even thought to ask. Predictive Analysis: is a form of data mining that combines historical data with assumptions about future conditions to predict outcomes of events such as future product sales or the probability that a customer will default on a loan. Retailers use predictive analysis to upgrade occasional customers into frequent purchasers by predicting what products they will buy if offered the appropriate incentive. Table 4.1 Common data mining applications.

Customer Relationship Management: Customer Relationship Management (CRM) system: helps a company manage all aspects of customer encounters, including marketing and advertising, sales, customer service after the sale, and programs to keep and retain loyal customers. The goal of CRM is to understand and anticipate the needs of current and potential customers to increase customer retention and loyalty while optimising the way that products and services are sold. Used primarily by people in sales, marketing, and service organisations. By implementing CRM systems businesses receive benefits such as improved customer satisfaction, increased customer retention, reduced operating costs and the ability to meet customer demand. The key features of a CRM system include the following: Contact management: The ability to track data on individual customers and sales leads and access that data from any part of the organisation. Sales management: The ability to organise data about customers and sales leads and then to prioritise the potential sales opportunities and identify appropriate next steps. Customer support: The ability to support customer service reps so that they can quickly, thoroughly, and appropriately address customer requests and resolve customers issues while at the same time collecting and storing data about those interactions. Market automation: The ability to capture and analyse all customer interactions, generate appropriate responses, and gather data to create and build effective and efficient marketing campaigns. Analysis: The ability to analyse customer data to identify ways to increase revenue and decrease costs, identify the source of the firms best customers, and determine how to retain them and find even more of them.

Moving from a culture of simply selling products to placing the customer first is essential to a successful CRM deployment. Knowledge Management Systems: Data: consists of raw facts. Information: organised data. Knowledge: the awareness and understanding of a set of information and the ways that information can be made useful to support a specific task or reach a decision. Knowledge Management Systems (KMS): is an organised collection of people, procedures, software, databases, and devices used to create, store, share, and use the organisations knowledge and experience. Overview of knowledge management systems: Knowledge management systems attempt to help organisations achieve their goals. A KMS can involve different types of knowledge. This includes:

Explicit knowledge: is objective and can be measured and documented in reports, papers and rules. Eg. Knowing which road will minimise driving time is explicit knowledge. Tacit knowledge: is hard to measure and document and typically is not objective or formalised. Knowing the best way to negotiate with a foreign government often requires a lifetime of experience and a high level of skill.

Data and knowledge management workers and communities of practice: The personnel who work with KMS include data workers and knowledge workers. Data workers include secretaries, bookkeepers, and similar data-entry personnel. Knowledge workers are people who create, use and disseminate knowledge. Chief Knowledge Officer (CKO): a top level executive who helps the org work with a KMS to create, store, and use knowledge to achieve organisational goals. The CKO is responsible for the organisations KMS, and usually works with other senior executives, including the CEO and CFO. Communities of practice (COP): Orgs and professions use COP to create, store and share knowledge. A COP is a group of people dedicated to a common discipline/practice, such as open-source software, auditing, medicine, or engineering. Obtaining, storing, sharing, and using knowledge: Obtaining, storing, sharing and using knowledge is the key to any KMS. Business academics often conduct research in marketing strategies, mgmt. practices, corporate and individual investments and finance, effective accounting and auditing practices, etc. After knowledge is created, it is often stored in a knowledge repository that includes documents, reports, files and databases. The knowledge repository can be located both inside and outside the organisation. Some types of software can store and share knowledge contained in documents or reports e.g. Adobe Acrobat. Traditional databases, data warehouses, and data marts often store the organisations knowledge. Knowledge workers often work collaboratively through software and group support systems to share knowledge, such as groupware, meeting software, and collaboration tools. Because knowledge can be critical in maintaining a competitive advantage, businesses should be careful I how they share knowledge. They need to protect knowledge from competitors, hackers and others who shouldnt obtain the orgs knowledge. As a result, many businesses use patents, copyrights, trade secrets, Internet firewalls, and other measures to hide information. Using a KMS begins with locating the orgs knowledge. This is done using a knowledge map/directory that points the knowledge worker to the needed knowledge. Technology to support knowledge management: An effective KMS is based on learning new knowledge and changing procedures and approaches as a result. ERP planning tools, such as SAP, include knowledge mgmt. features. Groupware could improve decision making and collaboration, as well as be used to help

capture, store and use knowledge. Hardware, software, databases, telecommunications, and the Internet are important technologies used to support most KMS. An Overview of Artificial Intelligence: Artificial Intelligence (AI): describes computers with the ability to mimic or duplicate the functions of a human brain. Artificial intelligence in perspective: Artificial Intelligence systems: include the people, procedures, hardware, software, data and knowledge needed to develop computer systems and machines that demonstrate characteristics of intelligence. Researchers, scientists, and experts on how human beings think are often involved in developing these systems. The nature of intelligence: Intelligence behaviour: research emphasis is on developing machines with intelligent behaviour. Machine intelligence is hard to achieve. The Turing Test attempts to determine whether the responses from a computer with intelligent behaviour are indistinguishable from responses from a human being. Some of the specific characteristics of intelligent behaviour include the ability to do the following: Learn from experience and apply the knowledge acquired from experience: Being able to learn from past events is a key component of intelligent behaviour and is a natural ability of humans, who learn by trial and error. Handle complex situations: Humans are often in complex situations. Developing computer systems that can handle perplexing situations requires careful planning and elaborate computer planning. Solve problems when important information is missing: The essence of decision making is dealing with uncertainty. Quite often, decisions must be made even when we lack information, because obtaining complete information is too costly or impossible. Determine what is important: Knowing what is truly important is the mark of a good decision maker. Reacting quickly and correctly to a new situation: Example: knowing when and when not to do something. Understand visual images: Interpreting visual images can be difficult even for sophisticated computers. Such machines require an extension of understanding visual images, called a perceptive system. Having a perceptive system allows a machine to approximate the way a human sees, hears, and feels objects. Process and manipulate symbols: People see, manipulate, and process symbols every day. Computers have difficulty handling symbolic processing and reasoning. Be creative and imaginative: Developing new and exciting products and services from an existing (possibly negative) situation is a human characteristic. Use heuristics: For some decisions, people use heuristics (rules of thumb arising from experience)or even guesses.

The difference between natural and artificial intelligence: While it is often confusing, one of the driving forces behind AI research is an attempt to understand how human beings actually reason and think. By creating machines that can reasons we could possibly understand humans ability to do so as well. The major branches of artificial intelligence: AI includes several specialty areas, and many of these areas are related. Expert systems: consists of hardware and software that stores knowledge and makes inferences, similar to those of a human expert. Robotics: involves developing mechanical or computer devices for eg. Painting cars, making welds etc. Although robots are essential components of todays automated manufacturing, future robots will fond wider applications in banks, restaurants, homes, doctors offices, and hazardous working environments such as nuclear stations. Microbiotics, also called micro-electro-mechanical systems (MEMS) that are the size of a grain of salt, are also being developed. Vision systems: include hardware and software that permit computers to capture, store, and manipulate visual images and pictures. Vision systems can also be used in conjunction with robots to give these machines sight. Natural language processing: allows a computer to understand and react to statements and commands made in a natural language, such as English. The natural language processing system corrects spelling mistakes, converts abbrev into words and commands, and allows people to ask questions in English. There are 3 levels of voice recognition; command (recognition of dozens to hundreds of words), discrete (recognition of dictated speech with pauses between words), and continuous (recognition of natural speech). Learning systems: A combination of software and hardware that allows a computer to change how it functions or reacts to situations based on feedback it receives. Learning systems software requires feedback on the results of actions/decisions. It is then used to alter what the system will do in the future. Neural networks: Is a computer system that can act like or simulate the functioning of a human brain. The systems use massively parallel processers in an architecture based on the human brains mesh like structure. Neural networks can process many pieces of data at once, and learn to recognise patterns. Specific features of a neural network include: -The ability to retrieve info even if some of the neural nodes fail. -Fast modification of stored data as a result of new info. -The ability to discover relationships and trends in large databases. -The ability to solve complex problems for which all the info is not present. Neural networks excel at pattern recognition. They are also particularly useful when it comes to analysing detailed trends. Businesses are firing up neural networks to help them navigate increasing amounts of data and make sense of myriad customer traits and buying habits. Intelligent Agents: Also called an intelligent robot or bot. It consists of programs and a knowledge base used to perform a specific task for a person, a process, or another program. The programs used by an intelligent agent can search through large amounts

of data while the knowledge base refines the search or accommodates user preferences. They can help people find information on important topics, make travel arrangements, or coordinate meetings. An overview of expert systems: An expert system behaves similarly to a human expert in a particular field. Computerised expert systems have been developed to diagnose problems, predict future events and solve energy problems. Theyve also been used to design new products and systems. The research conducted in AI during the past 2 decades is resulting in expert systems that explore new business possibilities, increase overall profitability, reduce costs, and provide superior service to customers/clients. When to use expert systems: Expert systems can be difficult, expensive and time-consuming to create. Factors that make an expert system worth the time and money include: Provide a high potential payoff or significantly reduce downside risk. Capture and preserve irreplaceable human expertise. Develop a system more consistent than human experts. Provide expertise needed at a number of locations at the same time or in a hostile environment that is dangerous to human health. Provide expertise that is expensive or rare. Develop a solution faster than human experts can Provide expertise needed for training and development to share the wisdom and experience of human experts with a large number of people.

Components of an expert system: An expert system consists of a large collection of integrated and related components, including a knowledge base, and inference engine, an explanation facility, a knowledge base acquisition facility, and a user interface. The knowledge base: The knowledge base stores all relevant information, data, rules, cases, and relationships used by the expert systems. A knowledge base is a natural extension of a database and an information and decision support system. Raw facts can be used to perform basic business transactions but are seldom used without manipulation in decision making. With a knowledge base, we try to understand patterns and relationships in data as a human expert does in making intelligent decisions. A knowledge base must be developed for each unique application. Knowledge bases go far beyond simple facts, storing relationships, rules or frames, and cases. Rules suggest certain conclusions, based on a set of given facts. These rules are stored in knowledge bases as ifthen statements. The inference engine:

The overall purpose of an inference engine is to seek info and relationships from the knowledge base and to provide answers, predictions, and suggestions the way a human expert would. The inference engine is the component that delivers the expert advice. The inference engine must make logical sense out of the information contained in the knowledge base. The inference engine has a number of ways of accomplishing its tasks, including backwards and forwards chaining: Backward chaining: is the process of starting with conclusions and working backwards to the supporting facts. If the facts do not support the conclusion, another conclusion is selected and tested. This process is continued until the correct conclusion is identified. Forward chaining: starts with the facts and works forward to the conclusion. With the forward approach, the expert system searches for rules that contain a reference to product demand. It continues to narrow its searches until it comes to a conclusion.

The explanation facility: An explanation facility allows a user/decision maker to understand how the expert system arrived at certain conclusions/results. The expert system, using the explanation facility, can indicate all the facts and rules that were used in reaching the conclusion. The knowledge acquisition facility: The overall purpose is to provide a convenient and efficient means for capturing and storing all components of the knowledge base. After filling in the appropriate attributes, the knowledge acquisition facility stores info and relationships in the knowledge base, making the knowledge base easier and less expensive set up and maintain. The user interface: Specialised user interface software is used for designing, creating, updating, and using expert systems. The main purpose if the user interface is to make the development and use of an expert system easier for users/decision makers. Because expert systems place more emphasis on directing user activities than other types of systems do, text-oriented user interfaces (eg. Menus, forms and scripts) may be more common in expert systems than the graphical interfaces often used by DSSs. Applications of expert systems and artificial intelligence: Applications of expert systems and AI include: Credit granting and loan analysis: Banks employ expert systems to review an individuals credit application and credit history data from credit bureaus to decide whether or not to approve a loan/transaction. Stock picking: Some expert systems are used to help investment professionals pick stocks and other investments. Budgeting: Automotive companies can use expert systems to help budget, plan, and coordinate prototype testing programs to save hundreds of millions of dollars. Games: Some expert systems are used for entertainment.

Info management and retrieval: Expert systems can aid the growth of information available through the use of bots. AI and expert systems embedded in products: AI researchers finding ways to use neural networks and robotics in everyday devices. Hospitals and medical facilities: Some hospitals use expert systems to determine a patients likelihood of catching cancer/other diseases. Virus detection: Using neural network technology to help create more advances software for eradicating computer devices. Shipping: CARGEX is a cargo expert system used to help determine the best shipping routes. Marketing: CoverStory is an expert system that extracts marketing info from a database and automatically writes marketing reports.

Virtual Reality: Refers to immersive virtual reality, in which the user becomes fully immersed in an artificial, 3D world that is completely generated by a computer. A Virtual Reality System enables one or require special interface devices that transmit the sights, sounds, and sensations of the simulated world to the user. Interface devices: Devices used for interaction in a virtual world. The haptic interface relays the sense of touch and other physical sensations. The user can reach into the virtual world and handle objects. Forms of virtual reality: Aside from IVR, virtual reality can also refer to applications that are not fully immersive, such as mouse-controlled navigation through a 3D environment. Some virtual reality applications allow views of real environments with superimposed virtual objects. Virtual Reality Applications: A few applications of virtual reality include: Medicine: used virtual reality to create a test of what might actually happen. Education and Training: Virtual environments are used in education to bring new resources into the classroom. Real estate marketing and tourism: Has been used to increase real estate sales. From web publishing to laptop display to a potential buyer, virtual reality provides exposure for properties and attracts potential clients. Entertainment: Used to play games.

Other specialised systems: One special application of virtual reality is game theory. Game theory involves the use of info systems to develop competitive strategies for people, orgs or even countries.

Informatics, another specialised system, combines, traditional systems such as science and medicine, with computer systems and technology.