What-if Simulation Modeling in Business Intelligence

Optimizing decisions has become a vital factor for companies. In order to be able to evaluate beforehand the impact of a decision, managers need reliable previsional systems. Though data warehouses enable analysis of past data, they are not capable of giving anticipations of future trends. What-if analysis fills this gap by enabling users to simulate and inspect the behavior of a complex system under some given hypotheses. A crucial issue in the design of what-if applications is to find an adequate formalism to conceptually express the underlying simulation model. In this paper the authors report on how, within the framework of a comprehensive design methodology, this can be accomplished by extending UML 2 with a set of stereotypes. Their proposal is centered on the use of activity diagrams enriched with object flows, aimed at expressing functional, dynamic, and static aspects in an integrated fashion. The paper is completed by examples taken from a real case study in the commercial area. DOI: 10.4018/jdwm.2009080702 IGI PUBLISHING This paper appears in the publication, International Journal of Data Warehousing and Mining, Volume 5, Issue 4 edited by David Taniar © 2009, IGI Global 701 E. Chocolate Avenue, Hershey PA 17033-1240, USA Tel: 717/533-8845; Fax 717/533-8661; URL-http://www.igi-global.com ITJ 5290 International Journal of Data Warehousing and Mining, 5(4), 24-43, October-December 2009 25 Copyright © 2009, IGI Global. Copying or distributing in print or electronic forms without written permission of IGI Global is prohibited. The BI pyramid demonstrates that data warehouses, that have been playing a lead role within BI platforms in supporting the decision process over the last decade, are no more than the starting point for the application of more advanced techniques that aim at building a bridge to the real decision-making process. This is because data warehouses are aimed at enabling analysis of past data, but they are not capable of giving anticipations of future trends. Indeed, in order to be able to evaluate beforehand the impact of a strategic or tactical move, decision makers need reliable previsional systems. So, almost at the top of the BI pyramid, what-if analysis comes into play. What-if analysis is a data-intensive simulation whose goal is to inspect the behavior of a complex system (i.e., the enterprise business or a part of it) under some given hypotheses called scenarios. More pragmatically, what-if analysis measures how changes in a set of independent variables impact on a set of dependent variables with reference to a simulation model offering a simplified representation of the business, designed to display significant features of the business and tuned according to the historical enterprise data (Kellern et al., 1999). Example 1: A simple example of what-if query in the marketing domain is: How would my profits change if I run a 3×2 (pay 2, take 3) promotion for one week on all audio products on sale? Answering this query requires a simulation model to be built. This model, that must be capable of expressing the complex relationships between the business variables that determine the impact of promotions on product sales, is then run against the historical sale data in order to determine a reliable forecast for future sales. Among the killer applications for what-if analysis, it is worth mentioning profitability analysis in commerce, hazard analysis in finance, promotion analysis in marketing, and effectiveness analysis in production planning (Rizzi, 2009b). Less traditional, yet interesting applications described in the literature are urban and regional planning supported by spatial databases, index selection in relational databases, and ETL maintenance in data warehousing systems. Surprisingly, though a few commercial tools are already capable of performing forecasting and what-if analysis, very few attempts have been made so far outside the simulation community to address methodological and modeling issues in this field (Golfarelli et al., 2006). On the other hand, facing a what-if project without the support of a design methodology is very time-consuming, and does not adequately protect designers and customers against the risk of failure. Figure 1. The business intelligence pyramid 18 more pages are available in the full version of this document, which may be purchased using the "Add to Cart" button on the product's webpage: www.igi-global.com/article/simulation-modeling-businessintelligence/37403?camid=4v1 This title is available in InfoSci-Journals, InfoSci-Journal Disciplines Library Science, Information Studies, and Education, InfoSci-Select, InfoSci-Knowledge Discovery, Information Management, and Storage eJournal Collection, InfoSci-Surveillance, Security, and Defense eJournal Collection, InfoSci-Journal Disciplines Engineering, Natural, and Physical Science, InfoSci-Journal Disciplines Computer Science, Security, and Information Technology, InfoSciSelect. Recommend this product to your librarian: www.igi-global.com/e-resources/libraryrecommendation/?id=2