Advances in BI

1.

Why Data Mining?

2.

Expert Systems: A Tool for Sifting Through Mountains of Data

- Case Example: Ocean Spray Cranberries

3.

Data Mining Models:

- Association, Sequential Patterns, Classification, Clustering and
Predictive Models

4.

Data Mining Techniques:

- Decision Trees, Rules Induction, Regression & Neural Networks

5.

Text Mining for Unstructured Data

6.

Business Activity Monitoring: A Priority Today

Dr. Lakshmi Mohan

Why Data Mining ?

Now that we have gathered so much data, what do we do with it?

The datasets are of little direct value themselves. What is of value is the
knowledge that can be inferred from the data and put to use.
Data volumes are TOO BIG for traditional DSS Query/ Reporting and
OLAP tools.
Organizations have to get value from the huge investments of time
and money made in building data warehouses.

Dr. Lakshmi Mohan

Discover the Diamonds in Your

Data Warehouse
Maximize your ROI on data warehousing & data marts by enabling your decision makers to exploit your customer data for competitive advantage
This web-enabled, point-and-click approach lets you employ OLAP, neutral networks, churn analysis, and many other visualizations and analytical
techniques to improve

Customer retention
Target key prospect
Profile market segments
Detect fraud
Analyze customer response, and much more

Source: Ads of BI vendors

Without BI, your DW is..

.. Well, a warehouse full of data

Dr. Lakshmi Mohan

The Economics of Attention

A wealth of information creates a poverty of attention.
- Nobel prize- winning economist, Herbert Simon

Problem: NOT Information Access

BUT Information Overload
Challenge: Locating , Filtering & Communicating
What is useful to the user
Dr. Lakshmi Mohan

Why is Data Mining a Hot Topic

Today?
1.

Implementation of ERP, CRM & SCM systems have resulted in vast stores of
operational data.

2.

Emergence of global competition has put the pressure on companies to be datadriven i.e., make informed decisions based on facts and not hunches.

3.

The speed of change in the marketplace demands that the pearls of actionable
information have to be found faster in the ocean of data, for companies to be one
step ahead of competition.

4.

The hardware needed to store and process a ton of data was prohibitively
expensive until recently You would have had to have NASA at your disposal.
Today, the technology makes it feasible to apply complex models to ferret out
patterns previously left to rot in data jails.

Dr. Lakshmi Mohan

The Payoff from Data Mining

- Two Examples
1.

Farmers Insurance

2.

Based on traditional data analysis, drivers of sports cars were determined

to be at higher risk for collisions than drivers of safe cars such as Volvos
Hence charged them more for car insurance
Data mining discovered a pattern that changed the pricing policy.
.. As long as the sports car was not the only car in the household, the
driver fit the profile of the safe family car driver, not the risky sports car
driver.

Walgreen (A large Retailer)

In the past, success of promotional offers such as 2-for-1 sales was

measured primarily by product sales..
.. With data mining, Walgreen can see what other items are selling with its
promotional offers
.. Tuned its programs to put things on sale that people tend to buy in
tandem with high-margin items.

Dr. Lakshmi Mohan

What are Expert Systems?

A technology that enables expertise to be distributed throughout a firm
without the presence of the human expert

Rule-Based System
If This, Then That
Rules are determined from expert knowledge and programmed in the
software

An HR Application
Screening a large number of resumes for relatively low-level positions with
well-defined and precise skill requirements
- e.g., Call Center Agents
Expert System can weed out applicants who do not meet the requirements

Dr. Lakshmi Mohan

Applying Expert Systems

To Extract News from Scanner Data
The Promise: Better Data for Tracking Market Shares
Compared to Retail Store Audits
Frequency: Weekly vs. Bimonthly
Level of Detail: UPCs vs. Brands
Scope: Top 50 Markets vs. Regions
The Problem: Too Much Data
At least 100 times more data
The Result: Impossible to Use the Quality Data
Dr. Lakshmi Mohan

"CoverStory"- An Expert System:

Replaced the Human Analyst
Before...

Companiescirculatedtoplinereports,includingtablesand
chartsfromtheretailstoreauditdata.Ananalyst
preparedthecovermemohighlightingimportantnewsin
thedata.

Now...

Notfeasibletohaveanarmyofanalyststosiftthroughthe
mountainofscannerdata.Instead,"CoverStory"
automaticallywritesthismemo!
a model-imbedded expert system extracts the news
includes a built-in thesaurus to eliminate repetitious
wording
Dr. Lakshmi Mohan

Case Example:
Ocean Spray
Cranberries
A $1 billion grower-owned agricultural cooperative
Lean IS staff
Only one marketing professional for analyzing the
tracking data
Scanner data for juices is imposing
-- 400 M numbers covering up to 100 data
measures, 10,000 products, 125 weeks and 50
geographic markets
-- Grows by 10 million new numbers every four
weeks
Dr. Lakshmi Mohan

10

Impact of
CoverStory
Enables a department of one to alert all Ocean
Spray marketing and sales managers to key
problems and opportunities and provide problemsolving information
Being done across 4 business units handling scores
of company products in dozens of markets
representing hundreds of millions of dollars of sales
System is totally integrated into business operations
because it delivers information of competitive value
in running the business

Dr. Lakshmi Mohan

11

Tools to Get Value from Data Warehouses

Business Intelligence Tools
To enable users without programming skills to analyze
the raw data in the data warehouse.
Ad Hoc Query / Reporting
OLAP Tools to slice and dice data.

Data Mining Tools

Automate the detection of patterns in the data warehouse
Build models to predict behavior through statistical and
machine-learning techniques.

Dr. Lakshmi Mohan

12

Data Mining Not Limited to

Discovery
i.e., finding an existing nugget of gold in the
mountain of data,
Data Mining used for Prediction also
Telling you not just where the gold is today, but
where the gold might be tomorrow
Predict what is going to happen next based on what we
have found.
From the moment I signed up for my Total Rewards card in the casino
lobby and filled in my name, address, date of birth and drivers
license number, Harrahs had a pretty good hunch that my long term
potential was already low I was a 32- year old man from the distant
state of Montana did not fit the profile of a high- value customer!
Age, gender and distance from the casino were identified through data
mining as critical predictors of frequency of visiting casinos.
Dr. Lakshmi Mohan

13

Knowledge Discovery in
Databases
- Steps in KDD process
Data Warehouse
Selection

Target Data
Cleaning

Pre - processed Data

Data reduction

Transformed Data
DATA MINING

Patterns
Evaluation & Interpretation

Knowledge
Source: Communications of the ACM, 1996
Dr. Lakshmi Mohan

14

Data Mining is One Step in the KDD

Process
Determine patterns from observed data to solve a business problem.
Step 1: Identify the Business Problem
- e.g., Who are good customers?
Which customers are likely to leave?
Step 2: Choose Model or Goal for Data Mining
- Some models are better for predictions while others are better for
describing behavior
Step 3: Choose Technology to Build Model
Step 4: Apply the Algorithm (Computation process) to Data. Review the results
and refine the Model
Step 5: Validate the Model on New Data (the hold-out dataset)
Dr. Lakshmi Mohan

15

Data Mining
Models
1. Association
-

If customer buys spaghetti, also buys red wine in 70% of cases

2. Sequential Patterns time or event based

-

A customer orders new sheets and pillow cases followed by drapes in

75% of the cases

3. Classification
-

Opera ticket buyers are usually young urban professionals with high
income while country music concert ticket purchasers are typically
blue collar workers

4. Clustering
-

Discovers different groups in the data whose members are very

similar

5. Predictive Models
-

Relate behavior of customers (dependent variable) to predictors

(independent variables felt to be responsible for the dependent
one)

Dr. Lakshmi Mohan

16

Association Models for

MarketBased Analysis

Model finds items that occur together in a given event or

record

Discovers rules of the form:

If item A is part of an event, then X% of the time (confidence
factor), Item B is part of the event.

Used to discover patterns of items bought together from the

mountain of scanner data

Example:
If a customer buys corn chips, then 65% of the time, also buys
cola
Unless there is a promotion, in which case buys cola 85% of the
time.

Dr. Lakshmi Mohan

17

Sequential
Patterns

Similar to Association Models, except that the relationships

among items are spread over time.
Sequences are associations in which events are linked by time

Require data on the identity of the transactors in addition

to details of each transaction.

Example:
If surgical procedure X is performed, then 45% of the time
infection Y occurs within 5 days
But after 5 days, the likelihood of infection Y drops to 4%
Dr. Lakshmi Mohan

18

Classification Models
- Most Common Data Mining
Model

Describe the group that a member belongs to by

examining existing cases that already have been
classified, and inferring a set of rules

These IF-THEN rules are often depicted in a tree like

structure

Examples:
- What are the characteristics of customers who are likely to switch to a
rival telecom service provider?
- Which kinds of promotions have been effective in keeping which types
of customers so that you can target the right promotion to the right
customer?

Dr. Lakshmi Mohan

19

Clustering Models

Segment a database into different groups whose members are very

similar
-

Similar to Classification except that no groups have yet been defined

The Clustering model discovers groupings within the data

-

You do not know what the clusters will be when you start, or on what attributes the data
will be clustered.
Hence, a user who is knowledgeable in the business needs to interpret the clusters.

Example:
-

Xerox has developed predictive models using clusters for analyzing usage profile history,
maintenance data, and representations of knowledge from field engineers to predict
photocopy component failure.
An email is sent to the repair staff to schedule maintenance PRIOR to the breakdown
Root Cause Analysis enables a prescription for what to do about a problem

Dr. Lakshmi Mohan

20

Predictive Models

Combine predictors (or independent variables) in a model relating them to

the variable to be predicted (dependent or predictive variable) using
historical data on the predictors and the predictive variable training data
set
-

Resulting model is used to predict the value for new data that does not include the
predictive variable.

Example 1: Predefined Predictors

-

If the customer is rural and her monthly usage is high, then the customer will
probably renew.
If the customer is urban and new feature exploration is high, then the customer
will probably not renew.

Example 2: Customer Profiling

-

We can tell the profile of someone who is about to have a baby by what purchases
they make
We can then compare that profile with those of others who are moving into baby
space to predict needs. For instance, such a customer may be a good target for a
life insurance sales pitch.
Dr. Lakshmi Mohan

21

Data Mining Techniques

- Decision Trees
Derives rules from patterns in data to create a hierarchy of
IF-THEN statements, called a Decision Tree, to classify the data.
Segments the original data set:
Each segment is one of the leaves of the tree
Records in each segment are similar with regard to the variable of interest

Example: Classification of Credit Risks

Dr. Lakshmi Mohan

22

Pros & Cons of Decision Trees

1.

How to handle continuous sets of data, like age or sales?

2.

Crux of the Tree- Growing Process:

3.

Ranges have to be created such as 25-34 years, 35-44 years, etc.

This grouping of ages could inadvertently hide patterns
e.g., a significant break at 30 could be concealed

What is the best possible question to ask at each branch point of the tree?
e.g., The question are you over 35? may not distinguish between churners and
those who are not if the spilt of people over 35 is 40% for churners & 60% for
others. The goal is to get a 90%-10% (10%- 90%) spilt in the segment of people
over 35 years.

The algorithms look at all possible distinguishing questions and the sequence of
asking them that could break up the training data set into segments that are
nearly homogeneous with respect to the variable to be predicted. They stop growing
the tree when the improvement is not substantial to warrant asking the question.
Dr. Lakshmi Mohan

23

CART: Classification and Regression Trees

- A Popular Statistical Package for Decision Trees

CART begins by trying all the questions for grouping the population and
picks the best one that splits the data into two or more organized
segments that decrease the disorder of the original population as much
as possible.

Then, CART repeats the process on each of these new segments

individually.

The algorithm not only discovers the optimally generated tree but also has
the validation of the model on new test data (holdout sample) built in.

The most complex tree rarely fares the best on the holdout sample because
it has been over-fitted to the training data set. The tree is pruned back
based on the performance of the various pruned versions on the test data.
Dr. Lakshmi Mohan

24

CHAID: Another Statistical Tool for Decision Trees

Chi-Square Automatic Interaction Detector

Relies on the Chi-Square test used in contingency tables obtained by

cross-tabulating the data on say, churners and non-churners by predictors,
which have to be categorical such as age groups:
Less than 20, 20-29, 30-39, etc.

It determines which categorical predictor is furthest from independence

with the prediction values of churners and non-churners.

Problem: Continuous variables such as age have to be coerced into a

categorical form how many categories? where should the splits be?
Dr. Lakshmi Mohan

25

Decision Tree for Segmenting Customers

- Who Responded to a Marketing
Campaign
Overall : 7% of Customers Responded

Segment of Customers Who Rent with High Family Income

and No Savings A/c : 45% response
Target this segment for Future Direct Marketing Campaign
Dr. Lakshmi Mohan

26

Data Mining Techniques

- Rule Induction
Most common form of knowledge discovery in unsupervised learning systems
Rule IF this and this and this, THEN that
- Accuracy or Confidence: How often is this rule correct?
- Coverage: How many records does this rule apply to
High Coverage means that the rule can be used often and is less likely to be an
idiosyncrasy of the data set
Examples:
Rule
Accuracy
Coverage
85%
20%
If cereal purchased, Then milk is purchased
If bread, Then Swiss Cheese

15%

6%

If 40-45 yrs and purchased, pretzels and peanuts,

Then beer purchased

95%

0.01%

Left Side of Rule (before THEN) Antecedent (Can Have Multiple Conditions)
Right Side of Rule (after THEN) Consequent (Only ONE Condition)
Dr. Lakshmi Mohan

27

Rule Coverage vs Accuracy

Accuracy Low

Accuracy High

Coverage High

Rule is rarely correct,

BUT can be used often

Rule is often correct

AND can be used often

Coverage Low

Rule is rarely correct

Rule is often correct
AND can only rarely be used BUT can only rarely be used

Total # of baskets in database = 100

# with eggs = 30
# with milk = 40
# with both eggs and milk = 20
Rule: IF Milk, THEN Eggs
Accuracy = 20/40 = 50%
Coverage = 40/100 = 40%
Dr. Lakshmi Mohan

Rule: IF Eggs, THEN Milk

Accuracy = 20/30 = 67%
Coverage = 30/100 = 30%

28

What To Do With A Rule?

1.

Target the Antecedent:

- All rules with a certain value for the antecedent, e.g., nails, bolts and screws, are
presented to a retailer
- Would discontinuing the sale of these low-margin items have any effect on sales of
higher margin products, e.g., expensive hammers?
- Example:
A British supermarket was about to discontinue a line of expensive French
Cheeses which were not selling well.
But data mining showed that the few people who were buying the cheeses were
among the supermarkets most profitable customers so it was worth keeping
the cheese to retain them.

2.

Target the Consequent:

- Understand what affects the consequent, say, purchase of coffee
- Put those items near the coffee on the store shelves to increase sales of coffee and
those items
- Example:
Sales of diapers and beer were found to be highly correlated in shopping
transactions between 5pm and 7pm young fathers dropped in at the stores to
pick up diapers, and decided to stock up the latter at the same time hence put
the beer display near the diapers
Dr. Lakshmi Mohan

29

Rule Induction vs. Decision Trees

Decision Trees: One AND ONLY One Rule for a Record
- All records in training data set will be mutually exclusive (non-overlapping) segments
- Supervised learning where the outcome is known for each record in the training data
set. e.g., Was the person a good risk or a bad risk?
- Process trains the algorithm to recognize key variables and values that will be
used for predictions with new data.
Rule Induction: May be Many Rules for a Record
- Not guaranteed that a rule will exist for every possible record in the training data set
- Will not partition the data into mutually exclusive segments
a particular record may match any number of rules, including no rules at all
- More commonly used for knowledge discovery in unsupervised learning than
prediction
- Rules are generally created by taking a simple high-level rule, and then adding
new constraints to it until the coverage gets so small that it is not meaningful
Dr. Lakshmi Mohan

30

When to Use What?

Decision Trees:
- Create the smallest possible set of rules for a predictive model
- work from a prediction target downward in what is known as greedy search
look for the best possible split on the next step, greedily picking the best one without
looking any further than the next step
- If there is overlap between two predictors, the better of the two would be picked.
e.g., height might be used instead of shoe-size as a predictor whereas both could
be used as antecedents in a rule induction system
- Traditionally used for exploration to determine the useful predictors to be
fed on the second pass of data mining into prediction models using statistical
techniques or neural networks
Rule Induction:
- Yields a variety of rules with different predictors even if some are redundant.
- Even though height and shoe size are highly correlated, both could be preset as
antecedents in two different rules in contrast, the decision tree would pick the
better of the two predictors
- Mainly used to discover interesting patterns in the data
Dr. Lakshmi Mohan

31

Data Mining Techniques

- Regression Models
Statistical models which link predictors or independent variables to the
variable to be predicted or dependent variable
User has to select the predictors and define the structure of the linkage
e.g., a linear model linking the predictor, Customers Annual Income (Y)
to the variable to be predicted, Average Customer Bank Balance, (X)
Y = a + b*X
The constants, a and b in the above model, are called parameters
that specify the shape of the line relating X and Y.
The parameters are calculated so as to minimize the sum of squares of
the forecast errors when the model is applied to the training or modelfitting data set of X values and corresponding actual Y values
The least squares method uses calculus to derive the formulas for
the parameters a and b.
Dr. Lakshmi Mohan

32

Validation and Refinement of Regression Models

R-Squared value is calculated to show the goodness of fit of the
predicted Y values from the model to the actual Y values in the data set.
e.g., a value of 0.87 means than 87% of the variation in y was explained by the model

Acid test of the model is to apply the fitted model to new data not used to
calculate the parameters (a and b) of the model the hold-out or
validation data set
Refine the model, if necessary, to make better predictions:
Add multiple predictors (multiple regression models)
Transform predictors by squaring, taking logarithms etc (non-linear models)
Combine predictors by multiplying or taking rations
(e.g., ratio of annual household income to family size)

If dependent variable is a response variable with just Yes/No or 0/1 values,

a different model called logisitic regression model is used.
Dr. Lakshmi Mohan

33

Data Mining Techniques

- Neural Networks
Based on the concept of the human brain in that it learns
- originally developed for military applications to tell whether a speck on
a screen is a bomber or a bird, and discriminate between decoys and
genuine mistakes
- now, the same technology can separate good customers from bad
ones
Network composed of a large number of neurons (or processing
elements) tied together with weighted connections (synapses)
- A collection of connected notes, each having an input and an output,
and arranged in layers.
- Between the visible Input Layer and final Output Layer, there could be
a number of hidden processing layers
Dr. Lakshmi Mohan

34

Structure of a Neural
Network

A neural network uses a training data set to produce outputs from

inputs, which are then compared with the known output. A correction
is then calculated for the discrepancy in the output and applied to the
processing in the nodes in the network
The process is repeated until its stopping condition such as
deviations being less than a prescribed amount is reached
Dr. Lakshmi Mohan

35

A Simple Example

No Default

vs Actual value of 0
0.47(0.7) + 0.65(0.1) = 0.39

Link weights (0.7 & 0.1 in the above example) are adjusted to correct for the
deviation between the output of the processing (0.39 in this case) and the
actual value (0 in this case)
Large errors are given greater attention in the correction than small errors

How do Neural Networks Learn?

Compute
Output

Adjust
Weights

No

Desired
Output
Achieved?
Yes

Stop
Dr. Lakshmi Mohan

37

Pros and Cons of Neural Nets

Pros
Data-driven
Used when expertise is hard to codify, but good results are known
Works well when the technique is customized for a well-defined problem
such as:
- Credit Cards Fraud Detection (HNC Softwares Falcon System)
- Direct Marketing Campaigning (ASAs ModelMAX)
After the technique has proven to be successful, it can be used over and
over again without a deep understanding of how it works
Cons:
Hard to interpret weights and neuron relationships
Not easy to use:
- All the predictors must have numeric values
- Output is also numeric and needs to be translated if the final output
variable is categorical such as the purchase of blue or white or black jeans
Dr. Lakshmi Mohan

38

How to Evaluate a Data Mining Product

1.

What kind of business problem does it address?

2.

What technique does it use to model the data?

3.

How does it handle categorical data and continuous data?

4.

How sensitive is it to noise data?

5.

How does it avoid the problem of overfitting the model?

6.

Does it have a built-in process for validating the model on the

holdout data?

7.

Is the user interface easy to understand and use?

8.

How long does it take to get useful answers from the data?

9.

How clear are the results to interpret?

10. ABOVE ALL, TEST DRIVE THE PRODUCT ON YOUR DATA!

Dr. Lakshmi Mohan

39

Text Mining: An Imperative Today

We are drowning in information,
but are starving for knowledge

Unstructured data, most of it in the form of text

files, typically accounts for 85% of an
organization's knowledge stores, but its not
always easy to find, access, analyze or use.
Dr. Lakshmi Mohan

40

New Generation of Text Mining

Tools
to extract key elements from large unstructured data
sets, discover relationships and summarize the
information
Categorization:
Presents the search results in categories, rather than an
undifferentiated mass.
Clustering:
Grouping similar documents based on their content.
Extraction:
Extracting relevant information from a document
e.g., pulling out all the company names from a data set.
Dr. Lakshmi Mohan

41

New Generation of Text Mining

Tools
Keyword Search:
Searching documents for the occurrence of a particular word or set
of words.
Natural-Language processing:
Determining the meaning of written words taking into account their
context, grammar, etc.
Visualization:
Graphically presenting the mined data as relationships are easier
to spot and understand.
Dr. Lakshmi Mohan

42

Case Example of Text Mining

- Dow Chemicals BI Center
Using ClearResearch software to extract data from a centurys worth
of chemical patent abstracts, published research papers and the
companys own files.
By eliminating the irrelevant, weve been able to reduce the time it
takes for researchers to find what they need to read.
ClearResearch uses a proprietary pattern-matching technology to
search for information, categorize it and show its relationship to other
data.
The software can see, discover and extract concepts, not just words.
It gives us a pictorial representation of the text in the document in an
easy-to-understand chart
Dr. Lakshmi Mohan

43

Case Example of Text Mining

- Air Products & Chemicals Knowledge Management
System
Company has over 18,000 employees in 300 countries, and more than 600 intranet and
extranet sites.
Its file servers contain 9TB of unstructured data, excluding email or anything stored on
local drives.
Using SmartDiscovery to generate a catalog and index of the data repository so that it
can be more easily accessed by MS SharePoint Portal Document Management System.
Also using the software for Sarbanes-Oxley compliance and e-learning since by
correctly categorizing the data, business rules can be applied to a category of
documents rather than to individual documents:
e.g., if a document relates to operations covered by SOX, then the appropriate dataretention policies are applied to it.

I call it the central nervous system for what we are doing with
knowledge management.
Dr. Lakshmi Mohan

44

Text Mining Tools

Come either as stand-alone products or embedded as part of a larger software
system:
Database vendors: Oracle, IBM,
-

Incorporating pattern-matching algorithms into their database products

Data Mining vendors: SAS, SPSS,

-

Added text mining to their portfolios.

Enterprise Search Engine Vendors: Autonomy, Verily,

Specialized Text Mining Firms: Inxight Software, Stratify

Installing SAS Text Miner is a simple process- just needed to load 6 CDs on my
workstation

Hard part:: Get meaningful results

- Depends on the skill and knowledge of user to properly interrogate text repositories
We are getting an increasing understanding of what things are possible with text
mining. But there is a huge skills problem in this area, which is why it hasnt gotten
much traction so far- Gartner
Dr. Lakshmi Mohan

45

Dec 2003 Report of Gartner

Text Mining Will revolutionize CRM Strategies by 2008
Companies will retire older technologies such as IVR, and redesign
customer-facing processes.
Text Mining has not been well coupled with clearly recognized pain points in the
organisation. Customer service has been mainly handled in call centers, with an emphasis
on transaction processing and short interaction times. As a result, most firms have been
missing valuable input from customers on how to improve their business processes. This
has led to low levels of customer satisfaction, little long-term loyalty and an expensive,
albeit necessary, way of resolving customer complaints
Blended service delivery models using text mining, telephone and web services will enable
companies to identify not only what the customer said, but also what was meant will be
able to spot and resolve problems earlier improve their ability to prevent problems
recurringimproved measurement of customer satisfaction over todays flawed survey
methodology.

Dr. Lakshmi Mohan

46

Business Activity Monitoring

(BAM)
Automated monitoring of business-related activity affecting an enterprise
Report on activity in the current operational cycle, e.g., the current hour, day or week.
Designed to spot problems early enough to head them off.

BAM is not a new concept

Credit Card companies have had real-time fraud monitors for years.
Manufacturers have real-time error-detection software built into their assembly lines.

Proactive or Reactive?
The conventional wisdom has been to just take transactional data and move it to the data
warehouse and then to the BI System. But these systems arent responsive
Monitoring business activity after the fact is too late to head off a problem such as a missed
deadline or the loss of a major customer.

BAM systems pluck the data in real time from the applications where it originates order entry, accounts receivable, call centers, etc. Output in variety of forms
dashboards, e-mails, pager alerts,
Dr. Lakshmi Mohan

47

GEs Real-Time Dashboard

GEs aim is to monitor everything in real time, GEs CIO explains, calling up a
special web page on his PC: a digital dashboard. From a distance it looks
like a Mondrian canvas in green, yellow and red. A closer look reveals that the
colors signal the status of software applications critical to GEs business. If one
of the programs stays red or even yellow for too long, he gets the system to email the people in charge. He can also see when he had to intervene the last
time, or how individual applications such as programs to manage book-keeping
or orders have performed.
As CIO, Mr. Reiner was the first in the firm to get a dashboard, in early 2001. Now
most of GEs senior managers have such a constantly updated view of their
enterprise. Their screens differ according to their particular business, but the
principle is the same: the dashboard compares how certain measurements, such
as response times or sales or margins, perform against goals, and alerts
managers if the deviation becomes large enough for them to have to take action.

Dr. Lakshmi Mohan

48

BAM Case Example

- Davis Controls Ltd. (Canada)
Every afternoon, at 4:30 pm, a screen pops up on the CEOs PC with
important news:
How many orders the company booked
Names of customers who have gone past 90 days without paying
Orders that have missed delivery promises

PLUS 15 Daily E-mail Alerts, e.g.,

Which salespeople have not logged in that day to download the latest data from a
corporate database about the customers in their territories Sometimes those
remote sales guys will just sit out there in never-never land, and as long as they
think no one is watching, they will march to their own drummer.
When a promised order-delivery is missed, one e-mail alert is generated for the
responsible salesperson, one goes to a customer with an apology, and one goes
to an expediter Different e-mails go to new customers, depending on the size of
their initial orders.
Dr. Lakshmi Mohan

49

BAM Case Example

- Davis Controls Ltd. (Canada)
Use Macola Enterprise Suite, an ERP package from Exact
Software, a subsidiary of a Dutch Company
Includes the Exact Event Manager, a BAM product that triggers
alerts and reports on activity and non-activity, both inside and
outside the ERP system.

BAM enables me to manage the Company more

proactively. Before, Id have to wait until a customer called
with a complaint or the month-end financial reports to
really get a feel for how the business was doing.

Dr. Lakshmi Mohan

50

BAM Case Example

- A Fortune 100 Financial Services
Firm
Uses SeeRun Platform, a suite of products from SeeRun Corp. in
San Francisco

To monitor some 50,000 cases per year where the firm has signed contracts
with its clients guaranteeing performance against operational metrics
relating to dozens of milestones in the contracts.

If a task is supposed to be completed within 24 hours but isnt, an

alert is generated for the appropriate manager.
Even more helpful is receiving live activity-tracking along the way
at 6 hours, 12 hours, 18 hours and so on.
Benefits:
Improved Performance & Reduced Expenses
Serves also as a marketing tool to show prospective clients

Biggest Challenge: What To Do With All the Data

You can actually over engineer something like this. If you get too many
stakeholders involved, everyone wants their own particular metric. We have
been able to keep it focused and simple.

Dr. Lakshmi Mohan

51

BAM Case Example

- The Albuquerque City
Government
Uses NoticeCast from Cognos
To proactively push e-mail notices of important events, in near real time, to city
employees, residents & vendors
NoticeCast sits outside the citys firewall on an extranet and monitors events by
periodically querying Oracle tables populated by municipal systems.

Vendors
Sends an e-mail to each vendor that was issued an electronic payment during the night.
Directs the vendor to a Website on the extranet where it can get a remittance report

Residents
Sends an e-mail to each residents for whom a water-bill was produced with all the
pertinent billing info
Directs the resident to a Website where he may pay his bill online

City Employees
Once-a-day e-mails to certain employees letting them know of all online payments made
to the city during the past 24 hours > whenever a candidate files a contribution report,
NoticeCast sends an e-mail to city employees responsible for tracking campaign law
compliance
Dr. Lakshmi Mohan

52

Whats Next for BAM?

Will become tightly coupled to Business Process
Management (BPM) systems
Send Alerts in a publish/subscribe model to lots of BPM systems
throughout the enterprise.
Events go in and alerts come out, but those alerts just become
events in other applications

Example:
A BAM system could generate an alert that the estimated date of
a package delivery had slipped.
A CRM system and a BPM system might each subscribe to such
package due-date change alerts, extending the usefulness of
the alerts.
Dr. Lakshmi Mohan

53

Whats Next for BAM?

More sophisticated rules of logic will be included in BAM
capable of finding hidden patterns in current business
activity by doing on-the-fly analyses of historical data.
If a process is beginning to go South, the early birds of that are
hard to see. Eventually, well see BI & BAM married at the level of
using historically recorded data to identify problems much earlier.
Even further out lies the Holy Grail of BAM: When a system not
only sees a problem coming but also goes beyond alerts to
actually fixing the problem.
e.g., automatically reordering a part when it sees that a shipment
has been lost
an example of autonomic response, a self-learning system.
Dr. Lakshmi Mohan

54

An Example of Autonomic Response

10 years ago: If you were a good customer, FedEx shipped you a PC and allowed you to
dial into their network
5 years ago: You could get the shipping information from any browser
Customers now want shipping information on their order status screen
Tomorrow's Scenario:
FedEx plane containing your package
is snowed in Cincinnati
FedEx system knows your package
will not arrive in the morning
A Web service can send you early notice of
a non-delivery through the CRM system
Business process for supply chain looks for an
alternate supplier, if you cannot wait for the package
Dr. Lakshmi Mohan

55