Table Of ContentB I
USINESS NTELLIGENCE
A M A
ANAGERIAL PPROACH
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SECOND EDITION
B I
USINESS NTELLIGENCE
A M A
ANAGERIAL PPROACH
Efraim Turban
University of Hawaii
Ramesh Sharda
Oklahoma State University
Dursun Delen
Oklahoma State University
David King
JDA Software Group, Inc.
With contributions by
Janine E. Aronson
The University of Georgia
Prentice Hall
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Library of Congress Cataloging-in-Publication Data
Business intelligence: a managerial approach/Efraim Turban . . . [et al.].—2nd ed.
p. cm.
Includes bibliographical references and index.
ISBN-13: 978-0-13-610066-9
ISBN-10: 0-13-610066-X
1. Business intelligence. 2. Industrial management. I. Turban, Efraim.
HD38.7.B8714 2011
658.4'72—dc22 2010018459
10 9 8 7 6 5 4 3 2 1
ISBN 10: 0-13-610066-X
ISBN 13: 978-0-13-610066-9
Dedicated to our spouses and children with love
—The authors
ABOUT THE AUTHORS
Efraim Turban (M.B.A., Ph.D., University of California, Berkeley) is a visiting scholar at
the Pacific Institute for Information System Management, University of Hawaii. Prior to
this, he was on the staff of several universities, including City University of Hong Kong;
Lehigh University; Florida International University; California State University, Long
Beach; Eastern Illinois University; and the University of Southern California. Dr. Turban is
the author of more than 100 refereed papers published in leading journals, such as
Management Science, MIS Quarterly, and Decision Support Systems. He is also the author
of 20 books, including Electronic Commerce: A Managerial Perspective and Information
Technology for Management. He is also a consultant to major corporations worldwide.
Dr. Turban’s current areas of interest are Web-based decision support systems, the use of
intelligent agents in e-commerce systems, and collaboration issues in global e-commerce.
Ramesh Sharda (M.B.A., Ph.D., University of Wisconsin–Madison) is director of the
Institute for Research in Information Systems (IRIS), ConocoPhillips Chair of Management
of Technology, and a Regents Professor of Management Science and Information Systems
in the Spears School of Business Administration at Oklahoma State University (OSU).
More than 100 papers describing his research have been published in major journals,
including Management Science, Information Systems Research, Decision Support Systems,
INFORMS Journal on Computing, Production Operations Management, Journal of
Management Information Systems, Interfaces, and many others . He cofounded the AIS
SIG on Decision Support Systems and Knowledge Management (SIGDSS). Dr. Sharda
serves on several editorial boards, including those of INFORMS Journal on Computing,
Decision Support Systems, and ACM Transactions on Management Information Systems.
He also is coeditor of Annals of Operations Research and series editor of Integrated
Information Systems Series and Operations Research Computer Science Interfaces book
series with Springer. His current research interests are in decision support systems, collab-
orative applications, and technologies for managing information overload. He has con-
sulted with many organizations and has taught in international executive education
programs. Dr. Sharda is also a cofounder of iTradeFair.com, a company that produces
virtual trade fairs.
Dursun Delen (Ph.D., Oklahoma State University) is an associate professor of manage-
ment science and information systems in the Spears School of Business at Oklahoma
State University (OSU). Prior to his appointment as an assistant professor at OSU in
2001, he worked for Knowledge Based Systems, Inc., in College Station, Texas, as a
research scientist for five years, during which he led a number of decision support and
other information systems–related research projects funded by federal agencies such as
DoD, NASA, NIST, and DOE. His research has appeared in major journals including
Decision Support Systems, Communications of the ACM, Computers and Operations
Research, Computers in Industry, Journal of Production Operations Management,
Artificial Intelligence in Medicine, and Expert Systems with Applications, among others.
With Prof. David Olson, he recently published a book on advanced data mining
techniques. He is an associate editor for the International Journal of RF Technologies:
Research and Applications, and he serves on the editorial boards of the Journal
of Information and Knowledge Management, International Journal of Intelligent
Information Technologies, Journal of Emerging Technologies in Web Intelligence,
and International Journal of Service Sciences. His research and teaching interests are in
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About the Authors vii
decision support systems, data and text mining, knowledge management, business
intelligence, and enterprise modeling.
Dave King (Ph.D.) has over 25 years of experience leading the development of decision
support, performance management, and enterprise system software. Currently, he is the
senior vice president of New Product Development at JDA Software, Inc., in Scottsdale,
Arizona. He joined JDA in 2004 after serving a number of years as the senior vice presi-
dent of Product Development and CTO for Comshare, Inc. Dr. King has authored a num-
ber of articles and books and is the coauthor of Electronic Commerce: A Managerial
Perspective (Prentice Hall). He also serves on a variety of industrial advisory and univer-
sity boards including the MIS Advisory Board at the University of Georgia and the
Technopolis Advisory Board at Arizona State University.
BRIEF CONTENTS
Preface xv
Chapter 1 Introduction to Business Intelligence 3
Chapter 2 Data Warehousing 29
Chapter 3 Business Performance Management 81
Chapter 4 Data Mining for Business Intelligence 131
Chapter 5 Text and Web Mining 189
Chapter 6 Business Intelligence Implementation: Integration
and Emerging Trends 231
Glossary 275
Index 283
viii
CONTENTS
Preface xv
Chapter 1 Introduction to Business Intelligence 3
Opening Vignette:Norfolk Southern Uses Business Intelligence
for Decision Support to Reach Success 4
1.1 Changing Business Environments and Computerized
Decision Support 6
The Business Pressures–Responses–Support Model 6
1.2 A Framework for Business Intelligence (BI) 8
Definitions of BI 8
A Brief History of BI 9
The Architecture of BI 10
Styles of BI 12
The Benefits of BI 12
Event-Driven Alerts 15
1.3 Intelligence Creation and Use and BI Governance 16
A Cyclical Process of Intelligence Creation and Use 16
Intelligence and Espionage 17
1.4 Transaction Processing versus Analytic Processing 17
1.5 Successful BI Implementation 18
The Typical BI User Community 18
Appropriate Planning and Alignment with the Business Strategy 19
Real-Time,On-Demand BI Is Attainable 20
Developing or Acquiring BI Systems 20
Justification and Cost–Benefit Analysis 20
Security and Protection of Privacy 21
Integration of Systems and Applications 21
1.6 Major Tools and Techniques of Business Intelligence 21
The Tools and Techniques 21
Selected BI Vendors 21
1.7 Plan of the Book 22
1.8 Resources, Links, and the Teradata University Network
Connection 23
Resources and Links 23
Cases 23
Vendors,Products,and Demos 24
Periodicals 24
The Teradata University Network Connection 24
The Book’s Web Site 24
ix
