Data Mining

- process of selecting, exploring, and modeling large amounts of data to discover previously unknown
relationships that can support decision making.

• Sequence or path analysis: Finding patterns where one event leads to another, later event.

• Classification: Finding whether certain facts fall into predefined groups.

• Clustering: Finding groups of related facts not previously known.

• Forecasting: Discovering patterns in data that can lead to reasonable predictions.

Customer Intelligence Group.

analyzes patterns of customer behavior so it can make predictions that help the company enhance
services and retain customers

Identifying Profitable Customer Groups

Utilizing Loyalty Programs

Inferring Demographics

ONLINE ANALYTICAL PROCESSING (OLAP)- exploit data warehouses

The Power of OLAP

drilling down, a process by which one starts with a table that shows broad information and successively
retrieves tables of more specific information.

dimensional databases/ multidimensional databases

the raw data is organized in tables that show information in summaries and ratios

Clickstream software- standard feature of the server management software

- tracks and stores data

Dashboards-

Knowledge management (KM)- combination of activities involved in gathering, organizing, sharing,

analyzing, and disseminating knowledge to improve an organization’s performance.

• Transfer individual knowledge into databases

. • Filter and separate the most relevant knowledge.

• Organize that knowledge in databases that allow employees easy access to it or that “push” specific
knowledge to employees based on prespecified needs.

employee knowledge networks, tools that facilitate knowledge sharing through intranets.

Autocategorization or automatic taxonomy automates the classification (taxonomy) of data into

categories for future retrieval.

Business intelligence (BI) or business analytics is any information about the organization, its customers,
and its suppliers that can help firms make decisions. In recent years organizations have implemented a
growing number of increasingly sophisticated BI software tools. Data mining is the process of selecting,
exploring, and modeling large amounts of data to discover previously unknown relationships that can
support decision making.

Data mining helps sequence analysis, classification, clustering, and forecasting.

Data mining is useful in such activities as predicting customer behavior and detecting fraud.

Online analytical processing (OLAP) helps users peruse two-dimensional tables created from data that
is usually stored in data warehouses.

OLAP applications are said to provide a virtual cube that the user can rotate from one table to another.

OLAP either uses dimensional databases or calculates desired tables on the fly.

OLAP facilitates drilling down, moving from a broad view of information to increasingly detailed
information about a narrow aspect of the business.

Dashboards interface with BI software tools to help users quickly receive information such as business
metrics. Knowledge management involves gathering, organizing, sharing, analyzing, and disseminating
knowledge that can improve an organization’s performance.
 The main challenge in knowledge management is identifying and classifying useful information to be
gleaned from unstructured sources. Most unstructured knowledge is textual, both inside an
organization and in files available to the public on the Web. Employee knowledge networks are
software tools that help employees find other employees who have expertise in certain areas of inquiry.
Autocategorization (automatic taxonomy), the automatic classification of information, is one important
element of knowledge management. Autocategorization has been used in online customer support Web
pages to reduce the labor involved in helping customers solve problems.

Systems integration looks at the information needs of an entire organization,

Legacy systems are older systems

FOUR ALTERNATIVES TO IN-HOUSE DEVELOPMENT

outsourcing,

licensing,

software as a service (SaaS)

user developed

1. Outsourcing- hiring the services of another organization

a. commission the development
b. hire the services
Outsourcing Custom-Designed Applications
custom-designed(tailored, software)
The alternatives to having applications developed in-house are outsourcing, licensing ready-made
software, using software as a service, and user application development.

Outsourcing has two meanings in IT: commissioning the development of a tailored application to an IT
company, and assigning all or some of the IT services of the organization to a vendor of IT services.

Outsourcing custom-designed applications might afford the organization good fit of the software to
need, good fit to culture, dedicated maintenance, smooth interface, specialized security, and potential
for strategic advantage.

The potential advantages of outsourcing IT services include

 improving cost clarity and reducing license and maintenance fees,

 freeing the client to concentrate on its core businesses,
 shortening the time needed to implement new technologies,
 reducing personnel and fixed costs,
 gaining access to highly qualified know-how,
 and receiving ongoing consulting as part of standard support.

However, outsourcing IT services has some potential risks:

loss of control,

loss of experienced employees,

loss of competitive advantage, and

high price.

To ensure that the client enjoys all the expected services and their quality, a detailed service-level
agreement must be signed with the IT service vendor.

When an organization purchases a license to use ready-made software, it enjoys high-quality software
that is immediately available at low price (license fee). However, licensed ready-made software has
some potential risks: loose fit between needs and the software features, difficulties in modifications,
bankruptcy of the vendor, and high turnover of the vendor’s employees.

Using software as a service has become popular. The client pays monthly fees based on the type of

application used and the number of users, and its employees use the applications via a network, mostly
through the Internet. ASP clients enjoy availability of applications, avoid the costs of storage hardware
and large IT staffs, and do not have to make a long-term commitment of capital to software that might
become obsolete in two or three years. The downsides of using an ASP are the loss of control over
applications, the potentially low speed of interaction, and the security risks associated with using an IS
via a public network.

The advantages to user application development include a short lead time, good fit of application
capabilities to business needs, good compliance with organizational culture, efficient utilization of
computing resources, acquisition of skills by users, and the freeing of IS staff to deal with the more
complex challenges of the systems. Disadvantages of user-developed applications include the risk of
poorly developed applications, undesirable islands of information and private databases, duplications of
effort, security problems, and poor documentation. Thus, user development of applications needs to be
managed. IS managers need to determine the applications that users should and should not develop and
dictate the tools that should be used.

Well over half of America’s office workers now have rich computer resources at the tips of their fingers.
Often, employees do not know which activities are welcomed and which are not. If an organization lacks
a clear policy, employees are not discouraged from abusing computers. This abuse is especially true
when employees access Web sites that are objectionable to their employer or when employees use e-
mail for purposes not intended by the employer. If no policy has been established, the simple rule is that
employees should not use their computers for anything but work.

Uptime is the proportion of time that the ASP’s systems and communication links are up and running.

Custom-designed (tailored software)

Advantages

• good fit to need

• good fit to culture

• dedicated maintenance

• smooth interface

• specialized security

• potential for strategic advantage

Disadvantages

• high cost

• potentially long wait for development if IS personnel are busy with other projects

• sometimes won't be able to interface with systems of other organizations

Outsourcing

• to commission the development of an application to another organization

• to hire the services of another company to manage all or parts of the services usually rendered
by an IT unit in the organization

Advantages of outsourcing

• improved financial planning

• reduced license and maintenance fees

• increased attention to core business

 • shorter implementation cycles

• reduction of personnel and fixed costs

• availability of ongoing consulting as part of standard support

Disadvantages of Outsourcing

• loss of control

• loss of experienced employees

• risks of losing a competitive advantage

• high price

Service-Level Agreement

• the most important element of an outsourcing agreement

• lists all services expected of the vendor

• defines the metrics to be used to measure vendor performance

• the client develops this, not the vendor

Beta Version

• a prerelease version of software to be tested by companies who want to use it

• often includes a period of up to one year of free service

• large applications require installation specialists

Licensing

• purchasing license to use the software (purchasing software)

• office suits to large applications that support entire organizational functions

Licensing Benefits

• immediate system availability

• high quality

• low price

• available support

Software as a service (SaaS)

• applications available through the Web

• no software is installed on a client's computer

• files may be stored on local storage devices

 • Uptime

 proportion of time that the ASP's system and communications links are up

• Storage Service Provider (SSP)

 rents storage space for remote storage of clients files

User-Developed Applications

• nonprogrammer users write their own business applications

• simple and limited in scope

• small applications developed for immediate or brief needs

• maintained by end users

User-Developed Applications

Advantages

• shortened lead times

• good fit to needs

• freeing up IS staff time

Disadvantages

• poorly developed applications

• islands of information

• security problems

• poor or no documentation

Offshoring-outsourcing to other countries such as India, China, Philippines, etc.

Business Process Outsourcing-outsourcing routine processes, such as order entry or HR

Request for Information (RFI)-request for informal information about a vendor's product

Request for Proposal (RFP)-a document that specifies all requirements and solicits a proposal

Vendors-another term for outsourcing companies

Application Service Provider (ASP)-an organization that offers software through communication lines
(such as the Web)