ANALYTICS, DATA SCIENCE, & ARTIFICIAL INTELLIGENCE
SYSTEMS FOR DECISION SUPPORT
E L E V E N T H E D I T I O N
Ramesh Sharda Oklahoma State University
Dursun Delen Oklahoma State University
Efraim Turban University of Hawaii
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Library of Congress Cataloging-in-Publication Data
Library of Congress Cataloging in Publication Control Number: 2018051774
iii
Preface xxv About the Authors xxxiv
PART I Introduction to Analytics and AI 1 Chapter 1 Overview of Business Intelligence, Analytics,
Data Science, and Artificial Intelligence: Systems for Decision Support 2
Chapter 2 Artificial Intelligence: Concepts, Drivers, Major Technologies, and Business Applications 73
Chapter 3 Nature of Data, Statistical Modeling, and Visualization 117
PART II Predictive Analytics/Machine Learning 193 Chapter 4 Data Mining Process, Methods, and Algorithms 194 Chapter 5 Machine-Learning Techniques for Predictive
Analytics 251 Chapter 6 Deep Learning and Cognitive Computing 315 Chapter 7 Text Mining, Sentiment Analysis, and Social
Analytics 388
PART III Prescriptive Analytics and Big Data 459 Chapter 8 Prescriptive Analytics: Optimization and
Simulation 460 Chapter 9 Big Data, Cloud Computing, and Location Analytics:
Concepts and Tools 509
PART IV Robotics, Social Networks, AI and IoT 579 Chapter 10 Robotics: Industrial and Consumer Applications 580 Chapter 11 Group Decision Making, Collaborative Systems, and
AI Support 610 Chapter 12 Knowledge Systems: Expert Systems, Recommenders,
Chatbots, Virtual Personal Assistants, and Robo Advisors 648
Chapter 13 The Internet of Things as a Platform for Intelligent Applications 687
PART V Caveats of Analytics and AI 725 Chapter 14 Implementation Issues: From Ethics and Privacy to
Organizational and Societal Impacts 726 Glossary 770 Index 785
BRIEF CONTENTS
iv
CONTENTS
Preface xxv
About the Authors xxxiv
PART I Introduction to Analytics and AI 1
Chapter 1 Overview of Business Intelligence, Analytics, Data Science, and Artificial Intelligence: Systems for Decision Support 2 1.1 Opening Vignette: How Intelligent Systems Work for
KONE Elevators and Escalators Company 3 1.2 Changing Business Environments and Evolving Needs for
Decision Support and Analytics 5 Decision-Making Process 6 The Influence of the External and Internal Environments on the Process 6 Data and Its Analysis in Decision Making 7 Technologies for Data Analysis and Decision Support 7
1.3 Decision-Making Processes and Computerized Decision Support Framework 9 Simon’s Process: Intelligence, Design, and Choice 9 The Intelligence Phase: Problem (or Opportunity) Identification 10 0 APPLICATION CASE 1.1 Making Elevators Go Faster! 11
The Design Phase 12 The Choice Phase 13 The Implementation Phase 13 The Classical Decision Support System Framework 14 A DSS Application 16 Components of a Decision Support System 18 The Data Management Subsystem 18 The Model Management Subsystem 19 0 APPLICATION CASE 1.2 SNAP DSS Helps OneNet Make
Telecommunications Rate Decisions 20
The User Interface Subsystem 20 The Knowledge-Based Management Subsystem 21
1.4 Evolution of Computerized Decision Support to Business Intelligence/Analytics/Data Science 22 A Framework for Business Intelligence 25 The Architecture of BI 25 The Origins and Drivers of BI 26 Data Warehouse as a Foundation for Business Intelligence 27 Transaction Processing versus Analytic Processing 27 A Multimedia Exercise in Business Intelligence 28
Contents v
1.5 Analytics Overview 30 Descriptive Analytics 32 0 APPLICATION CASE 1.3 Silvaris Increases Business with Visual
Analysis and Real-Time Reporting Capabilities 32 0 APPLICATION CASE 1.4 Siemens Reduces Cost with the Use of Data
Visualization 33
Predictive Analytics 33 0 APPLICATION CASE 1.5 Analyzing Athletic Injuries 34 Prescriptive Analytics 34 0 APPLICATION CASE 1.6 A Specialty Steel Bar Company Uses Analytics
to Determine Available-to-Promise Dates 35
1.6 Analytics Examples in Selected Domains 38 Sports Analytics—An Exciting Frontier for Learning and Understanding Applications of Analytics 38 Analytics Applications in Healthcare—Humana Examples 43 0 APPLICATION CASE 1.7 Image Analysis Helps Estimate Plant Cover 50
1.7 Artificial Intelligence Overview 52 What Is Artificial Intelligence? 52 The Major Benefits of AI 52 The Landscape of AI 52 0 APPLICATION CASE 1.8 AI Increases Passengers’ Comfort and
Security in Airports and Borders 54
The Three Flavors of AI Decisions 55 Autonomous AI 55 Societal Impacts 56 0 APPLICATION CASE 1.9 Robots Took the Job of Camel-Racing Jockeys
for Societal Benefits 58
1.8 Convergence of Analytics and AI 59 Major Differences between Analytics and AI 59 Why Combine Intelligent Systems? 60 How Convergence Can Help? 60 Big Data Is Empowering AI Technologies 60 The Convergence of AI and the IoT 61 The Convergence with Blockchain and Other Technologies 62 0 APPLICATION CASE 1.10 Amazon Go Is Open for Business 62 IBM and Microsoft Support for Intelligent Systems Convergence 63
1.9 Overview of the Analytics Ecosystem 63 1.10 Plan of the Book 65 1.11 Resources, Links, and the Teradata University Network
Connection 66 Resources and Links 66 Vendors, Products, and Demos 66 Periodicals 67 The Teradata University Network Connection 67
vi Contents
The Book’s Web Site 67 Chapter Highlights 67 • Key Terms 68 Questions for Discussion 68 • Exercises 69 References 70
Chapter 2 Artificial Intelligence: Concepts, Drivers, Major Technologies, and Business Applications 73 2.1 Opening Vignette: INRIX Solves Transportation
Problems 74 2.2 Introduction to Artificial Intelligence 76
Definitions 76 Major Characteristics of AI Machines 77 Major Elements of AI 77 AI Applications 78 Major Goals of AI 78 Drivers of AI 79 Benefits of AI 79 Some Limitations of AI Machines 81 Three Flavors of AI Decisions 81 Artificial Brain 82
2.3 Human and Computer Intelligence 83 What Is Intelligence? 83 How Intelligent Is AI? 84 Measuring AI 85 0 APPLICATION CASE 2.1 How Smart Can a Vacuum Cleaner Be? 86
2.4 Major AI Technologies and Some Derivatives 87 Intelligent Agents 87 Machine Learning 88 0 APPLICATION CASE 2.2 How Machine Learning Is Improving Work
in Business 89
Machine and Computer Vision 90 Robotic Systems 91 Natural Language Processing 92 Knowledge and Expert Systems and Recommenders 93 Chatbots 94 Emerging AI Technologies 94
2.5 AI Support for Decision Making 95 Some Issues and Factors in Using AI in Decision Making 96 AI Support of the Decision-Making Process 96 Automated Decision Making 97 0 APPLICATION CASE 2.3 How Companies Solve Real-World Problems
Using Google’s Machine-Learning Tools 97
Conclusion 98
Contents vii
2.6 AI Applications in Accounting 99 AI in Accounting: An Overview 99 AI in Big Accounting Companies 100 Accounting Applications in Small Firms 100 0 APPLICATION CASE 2.4 How EY, Deloitte, and PwC Are Using AI 100
Job of Accountants 101 2.7 AI Applications in Financial Services 101
AI Activities in Financial Services 101 AI in Banking: An Overview 101 Illustrative AI Applications in Banking 102 Insurance Services 103 0 APPLICATION CASE 2.5 US Bank Customer Recognition and
Services 104
2.8 AI in Human Resource Management (HRM) 105 AI in HRM: An Overview 105 AI in Onboarding 105 0 APPLICATION CASE 2.6 How Alexander Mann Solutions (AMS) Is
Using AI to Support the Recruiting Process 106
Introducing AI to HRM Operations 106 2.9 AI in Marketing, Advertising, and CRM 107
Overview of Major Applications 107 AI Marketing Assistants in Action 108 Customer Experiences and CRM 108 0 APPLICATION CASE 2.7 Kraft Foods Uses AI for Marketing
and CRM 109
Other Uses of AI in Marketing 110 2.10 AI Applications in Production-Operation
Management (POM) 110 AI in Manufacturing 110 Implementation Model 111 Intelligent Factories 111 Logistics and Transportation 112 Chapter Highlights 112 • Key Terms 113 Questions for Discussion 113 • Exercises 114 References 114
Chapter 3 Nature of Data, Statistical Modeling, and Visualization 117 3.1 Opening Vignette: SiriusXM Attracts and Engages a
New Generation of Radio Consumers with Data-Driven Marketing 118
3.2 Nature of Data 121 3.3 Simple Taxonomy of Data 125
0 APPLICATION CASE 3.1 Verizon Answers the Call for Innovation: The Nation’s Largest Network Provider uses Advanced Analytics to Bring the Future to its Customers 127
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3.4 Art and Science of Data Preprocessing 129 0 APPLICATION CASE 3.2 Improving Student Retention with
Data-Driven Analytics 133
3.5 Statistical Modeling for Business Analytics 139 Descriptive Statistics for Descriptive Analytics 140 Measures of Centrality Tendency (Also Called Measures of Location or Centrality) 140 Arithmetic Mean 140 Median 141 Mode 141 Measures of Dispersion (Also Called Measures of Spread or Decentrality) 142 Range 142 Variance 142 Standard Deviation 143 Mean Absolute Deviation 143 Quartiles and Interquartile Range 143 Box-and-Whiskers Plot 143 Shape of a Distribution 145 0 APPLICATION CASE 3.3 Town of Cary Uses Analytics to Analyze Data
from Sensors, Assess Demand, and Detect Problems 150
3.6 Regression Modeling for Inferential Statistics 151 How Do We Develop the Linear Regression Model? 152 How Do We Know If the Model Is Good Enough? 153 What Are the Most Important Assumptions in Linear Regression? 154 Logistic Regression 155 Time-Series Forecasting 156 0 APPLICATION CASE 3.4 Predicting NCAA Bowl Game Outcomes 157
3.7 Business Reporting 163 0 APPLICATION CASE 3.5 Flood of Paper Ends at FEMA 165
3.8 Data Visualization 166 Brief History of Data Visualization 167 0 APPLICATION CASE 3.6 Macfarlan Smith Improves Operational
Performance Insight with Tableau Online 169
3.9 Different Types of Charts and Graphs 171 Basic Charts and Graphs 171 Specialized Charts and Graphs 172 Which Chart or Graph Should You Use? 174
3.10 Emergence of Visual Analytics 176 Visual Analytics 178 High-Powered Visual Analytics Environments 180
3.11 Information Dashboards 182
Contents ix
0 APPLICATION CASE 3.7 Dallas Cowboys Score Big with Tableau and Teknion 184
Dashboard Design 184 0 APPLICATION CASE 3.8 Visual Analytics Helps Energy Supplier Make
Better Connections 185
What to Look for in a Dashboard 186 Best Practices in Dashboard Design 187 Benchmark Key Performance Indicators with Industry Standards 187 Wrap the Dashboard Metrics with Contextual Metadata 187 Validate the Dashboard Design by a Usability Specialist 187 Prioritize and Rank Alerts/Exceptions Streamed to the Dashboard 188 Enrich the Dashboard with Business-User Comments 188 Present Information in Three Different Levels 188 Pick the Right Visual Construct Using Dashboard Design Principles 188 Provide for Guided Analytics 188 Chapter Highlights 188 • Key Terms 189 Questions for Discussion 190 • Exercises 190 References 192
PART II Predictive Analytics/Machine Learning 193
Chapter 4 Data Mining Process, Methods, and Algorithms 194 4.1 Opening Vignette: Miami-Dade Police Department Is Using
Predictive Analytics to Foresee and Fight Crime 195 4.2 Data Mining Concepts 198
0 APPLICATION CASE 4.1 Visa Is Enhancing the Customer Experience while Reducing Fraud with Predictive Analytics and Data Mining 199
Definitions, Characteristics, and Benefits 201 How Data Mining Works 202 0 APPLICATION CASE 4.2 American Honda Uses Advanced Analytics to
Improve Warranty Claims 203
Data Mining Versus Statistics 208 4.3 Data Mining Applications 208
0 APPLICATION CASE 4.3 Predictive Analytic and Data Mining Help Stop Terrorist Funding 210
4.4 Data Mining Process 211 Step 1: Business Understanding 212 Step 2: Data Understanding 212 Step 3: Data Preparation 213 Step 4: Model Building 214 0 APPLICATION CASE 4.4 Data Mining Helps in Cancer Research 214
Step 5: Testing and Evaluation 217
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Step 6: Deployment 217 Other Data Mining Standardized Processes and Methodologies 217
4.5 Data Mining Methods 220 Classification 220 Estimating the True Accuracy of Classification Models 221 Estimating the Relative Importance of Predictor Variables 224 Cluster Analysis for Data Mining 228 0 APPLICATION CASE 4.5 Influence Health Uses Advanced Predictive
Analytics to Focus on the Factors That Really Influence People’s Healthcare Decisions 229
Association Rule Mining 232 4.6 Data Mining Software Tools 236
0 APPLICATION CASE 4.6 Data Mining goes to Hollywood: Predicting Financial Success of Movies 239
4.7 Data Mining Privacy Issues, Myths, and Blunders 242 0 APPLICATION CASE 4.7 Predicting Customer Buying Patterns—The
Target Story 243
Data Mining Myths and Blunders 244 Chapter Highlights 246 • Key Terms 247 Questions for Discussion 247 • Exercises 248 References 250
Chapter 5 Machine-Learning Techniques for Predictive Analytics 251 5.1 Opening Vignette: Predictive Modeling Helps
Better Understand and Manage Complex Medical Procedures 252
5.2 Basic Concepts of Neural Networks 255 Biological versus Artificial Neural Networks 256 0 APPLICATION CASE 5.1 Neural Networks are Helping to Save
Lives in the Mining Industry 258
5.3 Neural Network Architectures 259 Kohonen’s Self-Organizing Feature Maps 259 Hopfield Networks 260 0 APPLICATION CASE 5.2 Predictive Modeling Is Powering the Power
Generators 261
5.4 Support Vector Machines 263 0 APPLICATION CASE 5.3 Identifying Injury Severity Risk Factors in
Vehicle Crashes with Predictive Analytics 264
Mathematical Formulation of SVM 269 Primal Form 269 Dual Form 269 Soft Margin 270 Nonlinear Classification 270 Kernel Trick 271
Contents xi
5.5 Process-Based Approach to the Use of SVM 271 Support Vector Machines versus Artificial Neural Networks 273
5.6 Nearest Neighbor Method for Prediction 274 Similarity Measure: The Distance Metric 275 Parameter Selection 275 0 APPLICATION CASE 5.4 Efficient Image Recognition and
Categorization with knn 277
5.7 Naïve Bayes Method for Classification 278 Bayes Theorem 279 Naïve Bayes Classifier 279 Process of Developing a Naïve Bayes Classifier 280 Testing Phase 281 0 APPLICATION CASE 5.5 Predicting Disease Progress in Crohn’s
Disease Patients: A Comparison of Analytics Methods 282
5.8 Bayesian Networks 287 How Does BN Work? 287 How Can BN Be Constructed? 288
5.9 Ensemble Modeling 293 Motivation—Why Do We Need to Use Ensembles? 293 Different Types of Ensembles 295 Bagging 296 Boosting 298 Variants of Bagging and Boosting 299 Stacking 300 Information Fusion 300 Summary—Ensembles are not Perfect! 301 0 APPLICATION CASE 5.6 To Imprison or Not to Imprison:
A Predictive Analytics-Based Decision Support System for Drug Courts 304
Chapter Highlights 306 • Key Terms 308 Questions for Discussion 308 • Exercises 309 Internet Exercises 312 • References 313
Chapter 6 Deep Learning and Cognitive Computing 315 6.1 Opening Vignette: Fighting Fraud with Deep Learning
and Artificial Intelligence 316 6.2 Introduction to Deep Learning 320
0 APPLICATION CASE 6.1 Finding the Next Football Star with Artificial Intelligence 323
6.3 Basics of “Shallow” Neural Networks 325 0 APPLICATION CASE 6.2 Gaming Companies Use Data Analytics to
Score Points with Players 328 0 APPLICATION CASE 6.3 Artificial Intelligence Helps Protect Animals
from Extinction 333
xii Contents
6.4 Process of Developing Neural Network–Based Systems 334 Learning Process in ANN 335 Backpropagation for ANN Training 336
6.5 Illuminating the Black Box of ANN 340 0 APPLICATION CASE 6.4 Sensitivity Analysis Reveals Injury Severity
Factors in Traffic Accidents 341
6.6 Deep Neural Networks 343 Feedforward Multilayer Perceptron (MLP)-Type Deep Networks 343 Impact of Random Weights in Deep MLP 344 More Hidden Layers versus More Neurons? 345 0 APPLICATION CASE 6.5 Georgia DOT Variable Speed Limit Analytics
Help Solve Traffic Congestions 346
6.7 Convolutional Neural Networks 349 Convolution Function 349 Pooling 352 Image Processing Using Convolutional Networks 353 0 APPLICATION CASE 6.6 From Image Recognition to Face
Recognition 356
Text Processing Using Convolutional Networks 357 6.8 Recurrent Networks and Long Short-Term Memory
Networks 360 0 APPLICATION CASE 6.7 Deliver Innovation by Understanding
Customer Sentiments 363
LSTM Networks Applications 365 6.9 Computer Frameworks for Implementation of Deep
Learning 368 Torch 368 Caffe 368 TensorFlow 369 Theano 369 Keras: An Application Programming Interface 370
6.10 Cognitive Computing 370 How Does Cognitive Computing Work? 371 How Does Cognitive Computing Differ from AI? 372 Cognitive Search 374 IBM Watson: Analytics at Its Best 375 0 APPLICATION CASE 6.8 IBM Watson Competes against the
Best at Jeopardy! 376
How Does Watson Do It? 377 What Is the Future for Watson? 377 Chapter Highlights 381 • Key Terms 383 Questions for Discussion 383 • Exercises 384 References 385
Contents xiii
Chapter 7 Text Mining, Sentiment Analysis, and Social Analytics 388 7.1 Opening Vignette: Amadori Group Converts Consumer
Sentiments into Near-Real-Time Sales 389 7.2 Text Analytics and Text Mining Overview 392
0 APPLICATION CASE 7.1 Netflix: Using Big Data to Drive Big Engagement: Unlocking the Power of Analytics to Drive Content and Consumer Insight 395
7.3 Natural Language Processing (NLP) 397 0 APPLICATION CASE 7.2 AMC Networks Is Using Analytics to
Capture New Viewers, Predict Ratings, and Add Value for Advertisers in a Multichannel World 399
7.4 Text Mining Applications 402 Marketing Applications 403 Security Applications 403 Biomedical Applications 404 0 APPLICATION CASE 7.3 Mining for Lies 404 Academic Applications 407 0 APPLICATION CASE 7.4 The Magic Behind the Magic: Instant Access
to Information Helps the Orlando Magic Up their Game and the Fan’s Experience 408
7.5 Text Mining Process 410 Task 1: Establish the Corpus 410 Task 2: Create the Term–Document Matrix 411 Task 3: Extract the Knowledge 413 0 APPLICATION CASE 7.5 Research Literature Survey with Text
Mining 415
7.6 Sentiment Analysis 418 0 APPLICATION CASE 7.6 Creating a Unique Digital Experience to
Capture Moments That Matter at Wimbledon 419
Sentiment Analysis Applications 422 Sentiment Analysis Process 424 Methods for Polarity Identification 426 Using a Lexicon 426 Using a Collection of Training Documents 427 Identifying Semantic Orientation of Sentences and Phrases 428 Identifying Semantic Orientation of Documents 428
7.7 Web Mining Overview 429 Web Content and Web Structure Mining 431
7.8 Search Engines 433 Anatomy of a Search Engine 434 1. Development Cycle 434 2. Response Cycle 435 Search Engine Optimization 436 Methods for Search Engine Optimization 437
xiv Contents
0 APPLICATION CASE 7.7 Delivering Individualized Content and Driving Digital Engagement: How Barbour Collected More Than 49,000 New Leads in One Month with Teradata Interactive 439
7.9 Web Usage Mining (Web Analytics) 441 Web Analytics Technologies 441 Web Analytics Metrics 442 Web Site Usability 442 Traffic Sources 443 Visitor Profiles 444 Conversion Statistics 444
7.10 Social Analytics 446 Social Network Analysis 446 Social Network Analysis Metrics 447 0 APPLICATION CASE 7.8 Tito’s Vodka Establishes Brand Loyalty with
an Authentic Social Strategy 447
Connections 450 Distributions 450 Segmentation 451 Social Media Analytics 451 How Do People Use Social Media? 452 Measuring the Social Media Impact 453 Best Practices in Social Media Analytics 453 Chapter Highlights 455 • Key Terms 456 Questions for Discussion 456 • Exercises 456 References 457
PART III Prescriptive Analytics and Big Data 459
Chapter 8 Prescriptive Analytics: Optimization and Simulation 460 8.1 Opening Vignette: School District of Philadelphia Uses
Prescriptive Analytics to Find Optimal Solution for Awarding Bus Route Contracts 461
8.2 Model-Based Decision Making 462 0 APPLICATION CASE 8.1 Canadian Football League Optimizes Game
Schedule 463
Prescriptive Analytics Model Examples 465 Identification of the Problem and Environmental Analysis 465 0 APPLICATION CASE 8.2 Ingram Micro Uses Business Intelligence
Applications to Make Pricing Decisions 466
Model Categories 467 8.3 Structure of Mathematical Models for Decision
Support 469 The Components of Decision Support Mathematical Models 469 The Structure of Mathematical Models 470
Contents xv
8.4 Certainty, Uncertainty, and Risk 471 Decision Making under Certainty 471 Decision Making under Uncertainty 472 Decision Making under Risk (Risk Analysis) 472 0 APPLICATION CASE 8.3 American Airlines Uses Should-Cost
Modeling to Assess the Uncertainty of Bids for Shipment Routes 472
8.5 Decision Modeling with Spreadsheets 473 0 APPLICATION CASE 8.4 Pennsylvania Adoption Exchange Uses
Spreadsheet Model to Better Match Children with Families 474 0 APPLICATION CASE 8.5 Metro Meals on Wheels Treasure Valley Uses
Excel to Find Optimal Delivery Routes 475
8.6 Mathematical Programming Optimization 477 0 APPLICATION CASE 8.6 Mixed-Integer Programming Model
Helps the University of Tennessee Medical Center with Scheduling Physicians 478
Linear Programming Model 479 Modeling in LP: An Example 480 Implementation 484
8.7 Multiple Goals, Sensitivity Analysis, What-If Analysis, and Goal Seeking 486 Multiple Goals 486 Sensitivity Analysis 487 What-If Analysis 488 Goal Seeking 489
8.8 Decision Analysis with Decision Tables and Decision Trees 490 Decision Tables 490 Decision Trees 492
8.9 Introduction to Simulation 493 Major Characteristics of Simulation 493 0 APPLICATION CASE 8.7 Steel Tubing Manufacturer Uses a
Simulation-Based Production Scheduling System 493
Advantages of Simulation 494 Disadvantages of Simulation 495 The Methodology of Simulation 495 Simulation Types 496 Monte Carlo Simulation 497 Discrete Event Simulation 498 0 APPLICATION CASE 8.8 Cosan Improves Its Renewable Energy
Supply Chain Using Simulation 498
8.10 Visual Interactive Simulation 500 Conventional Simulation Inadequacies 500 Visual Interactive Simulation 500
xvi Contents
Visual Interactive Models and DSS 500 Simulation Software 501 0 APPLICATION CASE 8.9 Improving Job-Shop Scheduling Decisions
through RFID: A Simulation-Based Assessment 501 Chapter Highlights 505 • Key Terms 505 Questions for Discussion 505 • Exercises 506 References 508
Chapter 9 Big Data, Cloud Computing, and Location Analytics: Concepts and Tools 509 9.1 Opening Vignette: Analyzing Customer Churn in a Telecom
Company Using Big Data Methods 510 9.2 Definition of Big Data 513
The “V”s That Define Big Data 514 0 APPLICATION CASE 9.1 Alternative Data for Market Analysis or
Forecasts 517
9.3 Fundamentals of Big Data Analytics 519 Business Problems Addressed by Big Data Analytics 521 0 APPLICATION CASE 9.2 Overstock.com Combines Multiple Datasets
to Understand Customer Journeys 522
9.4 Big Data Technologies 523 MapReduce 523 Why Use MapReduce? 523 Hadoop 524 How Does Hadoop Work? 525 Hadoop Technical Components 525 Hadoop: The Pros and Cons 527 NoSQL 528 0 APPLICATION CASE 9.3 eBay’s Big Data Solution 529 0 APPLICATION CASE 9.4 Understanding Quality and Reliability
of Healthcare Support Information on Twitter 531
9.5 Big Data and Data Warehousing 532 Use Cases for Hadoop 533 Use Cases for Data Warehousing 534 The Gray Areas (Any One of the Two Would Do the Job) 535 Coexistence of Hadoop and Data Warehouse 536
9.6 In-Memory Analytics and Apache Spark™ 537 0 APPLICATION CASE 9.5 Using Natural Language Processing to
analyze customer feedback in TripAdvisor reviews 538
Architecture of Apache SparkTM 538 Getting Started with Apache SparkTM 539
9.7 Big Data and Stream Analytics 543 Stream Analytics versus Perpetual Analytics 544 Critical Event Processing 545 Data Stream Mining 546 Applications of Stream Analytics 546
Contents xvii
e-Commerce 546 Telecommunications 546 0 APPLICATION CASE 9.6 Salesforce Is Using Streaming Data to
Enhance Customer Value 547
Law Enforcement and Cybersecurity 547 Power Industry 548 Financial Services 548 Health Sciences 548 Government 548
9.8 Big Data Vendors and Platforms 549 Infrastructure Services Providers 550 Analytics Solution Providers 550 Business Intelligence Providers Incorporating Big Data 551 0 APPLICATION CASE 9.7 Using Social Media for Nowcasting
Flu Activity 551 0 APPLICATION CASE 9.8 Analyzing Disease Patterns from an
Electronic Medical Records Data Warehouse 554
9.9 Cloud Computing and Business Analytics 557 Data as a Service (DaaS) 558 Software as a Service (SaaS) 559 Platform as a Service (PaaS) 559 Infrastructure as a Service (IaaS) 559 Essential Technologies for Cloud Computing 560 0 APPLICATION CASE 9.9 Major West Coast Utility Uses Cloud-Mobile
Technology to Provide Real-Time Incident Reporting 561
Cloud Deployment Models 563 Major Cloud Platform Providers in Analytics 563 Analytics as a Service (AaaS) 564 Representative Analytics as a Service Offerings 564 Illustrative Analytics Applications Employing the Cloud Infrastructure 565 Using Azure IOT, Stream Analytics, and Machine Learning to Improve Mobile Health Care Services 565 Gulf Air Uses Big Data to Get Deeper Customer Insight 566 Chime Enhances Customer Experience Using Snowflake 566
9.10 Location-Based Analytics for Organizations 567 Geospatial Analytics 567 0 APPLICATION CASE 9.10 Great Clips Employs Spatial Analytics to
Shave Time in Location Decisions 570
0 APPLICATION CASE 9.11 Starbucks Exploits GIS and Analytics to Grow Worldwide 570
Real-Time Location Intelligence 572 Analytics Applications for Consumers 573 Chapter Highlights 574 • Key Terms 575
Questions for Discussion 575 • Exercises 575 References 576
xviii Contents
PART IV Robotics, Social Networks, AI and IoT 579
Chapter 10 Robotics: Industrial and Consumer Applications 580 10.1 Opening Vignette: Robots Provide Emotional Support
to Patients and Children 581 10.2 Overview of Robotics 584 10.3 History of Robotics 584 10.4 Illustrative Applications of Robotics 586
Changing Precision Technology 586 Adidas 586 BMW Employs Collaborative Robots 587 Tega 587 San Francisco Burger Eatery 588 Spyce 588 Mahindra & Mahindra Ltd. 589 Robots in the Defense Industry 589 Pepper 590 Da Vinci Surgical System 592 Snoo – A Robotic Crib 593 MEDi 593 Care-E Robot 593 AGROBOT 594
10.5 Components of Robots 595 10.6 Various Categories of Robots 596 10.7 Autonomous Cars: Robots in Motion 597
Autonomous Vehicle Development 598 Issues with Self-Driving Cars 599
10.8 Impact of Robots on Current and Future Jobs 600 10.9 Legal Implications of Robots and Artificial Intelligence 603
Tort Liability 603 Patents 603 Property 604 Taxation 604 Practice of Law 604 Constitutional Law 605 Professional Certification 605 Law Enforcement 605 Chapter Highlights 606 • Key Terms 606 Questions for Discussion 606 • Exercises 607 References 607
Contents xix
Chapter 11 Group Decision Making, Collaborative Systems, and AI Support 610 11.1 Opening Vignette: Hendrick Motorsports Excels with
Collaborative Teams 611 11.2 Making Decisions in Groups: Characteristics, Process,
Benefits, and Dysfunctions 613 Characteristics of Group Work 613 Types of Decisions Made by Groups 614 Group Decision-Making Process 614 Benefits and Limitations of Group Work 615
11.3 Supporting Group Work and Team Collaboration with Computerized Systems 616 Overview of Group Support Systems (GSS) 617 Time/Place Framework 617 Group Collaboration for Decision Support 618
11.4 Electronic Support for Group Communication and Collaboration 619 Groupware for Group Collaboration 619 Synchronous versus Asynchronous Products 619 Virtual Meeting Systems 620 Collaborative Networks and Hubs 622 Collaborative Hubs 622 Social Collaboration 622 Sample of Popular Collaboration Software 623
11.5 Direct Computerized Support for Group Decision Making 623 Group Decision Support Systems (GDSS) 624 Characteristics of GDSS 625 Supporting the Entire Decision-Making Process 625 Brainstorming for Idea Generation and Problem Solving 627 Group Support Systems 628
11.6 Collective Intelligence and Collaborative Intelligence 629 Definitions and Benefits 629 Computerized Support to Collective Intelligence 629 0 APPLICATION CASE 11.1 Collaborative Modeling for Optimal
Water Management: The Oregon State University Project 630
How Collective Intelligence May Change Work and Life 631 Collaborative Intelligence 632 How to Create Business Value from Collaboration: The IBM Study 632
xx Contents
11.7 Crowdsourcing as a Method for Decision Support 633 The Essentials of Crowdsourcing 633 Crowdsourcing for Problem-Solving and Decision Support 634 Implementing Crowdsourcing for Problem Solving 635 0 APPLICATION CASE 11.2 How InnoCentive Helped GSK Solve a
Difficult Problem 636
11.8 Artificial Intelligence and Swarm AI Support of Team Collaboration and Group Decision Making 636 AI Support of Group Decision Making 637 AI Support of Team Collaboration 637 Swarm Intelligence and Swarm AI 639 0 APPLICATION CASE 11.3 XPRIZE Optimizes Visioneering 639
11.9 Human–Machine Collaboration and Teams of Robots 640 Human–Machine Collaboration in Cognitive Jobs 641 Robots as Coworkers: Opportunities and Challenges 641 Teams of collaborating Robots 642 Chapter Highlights 644 • Key Terms 645 Questions for Discussion 645 • Exercises 645 References 646
Chapter 12 Knowledge Systems: Expert Systems, Recommenders, Chatbots, Virtual Personal Assistants, and Robo Advisors 648 12.1 Opening Vignette: Sephora Excels with Chatbots 649 12.2 Expert Systems and Recommenders 650
Basic Concepts of Expert Systems (ES) 650 Characteristics and Benefits of ES 652 Typical Areas for ES Applications 653 Structure and Process of ES 653 0 APPLICATION CASE 12.1 ES Aid in Identification of Chemical,
Biological, and Radiological Agents 655
Why the Classical Type of ES Is Disappearing 655 0 APPLICATION CASE 12.2 VisiRule 656 Recommendation Systems 657 0 APPLICATION CASE 12.3 Netflix Recommender: A Critical Success
Factor 658
12.3 Concepts, Drivers, and Benefits of Chatbots 660 What Is a Chatbot? 660 Chatbot Evolution 660 Components of Chatbots and the Process of Their Use 662 Drivers and Benefits 663 Representative Chatbots from Around the World 663
12.4 Enterprise Chatbots 664 The Interest of Enterprises in Chatbots 664
Contents xxi
Enterprise Chatbots: Marketing and Customer Experience 665 0 APPLICATION CASE 12.4 WeChat’s Super Chatbot 666 0 APPLICATION CASE 12.5 How Vera Gold Mark Uses Chatbots to
Increase Sales 667
Enterprise Chatbots: Financial Services 668 Enterprise Chatbots: Service Industries 668 Chatbot Platforms 669 0 APPLICATION CASE 12.6 Transavia Airlines Uses Bots for
Communication and Customer Care Delivery 669
Knowledge for Enterprise Chatbots 671 12.5 Virtual Personal Assistants 672
Assistant for Information Search 672 If You Were Mark Zuckerberg, Facebook CEO 672 Amazon’s Alexa and Echo 672 Apple’s Siri 675 Google Assistant 675 Other Personal Assistants 675 Competition Among Large Tech Companies 675 Knowledge for Virtual Personal Assistants 675
12.6 Chatbots as Professional Advisors (Robo Advisors) 676 Robo Financial Advisors 676 Evolution of Financial Robo Advisors 676 Robo Advisors 2.0: Adding the Human Touch 676 0 APPLICATION CASE 12.7 Betterment, the Pioneer of Financial Robo
Advisors 677
Managing Mutual Funds Using AI 678 Other Professional Advisors 678 IBM Watson 680
12.7 Implementation Issues 680 Technology Issues 680 Disadvantages and Limitations of Bots 681 Quality of Chatbots 681 Setting Up Alexa’s Smart Home System 682 Constructing Bots 682 Chapter Highlights 683 • Key Terms 683 Questions for Discussion 684 • Exercises 684 References 685
Chapter 13 The Internet of Things as a Platform for Intelligent Applications 687 13.1 Opening Vignette: CNH Industrial Uses the Internet of
Things to Excel 688 13.2 Essentials of IoT 689
Definitions and Characteristics 690
xxii Contents
The IoT Ecosystem 691 Structure of IoT Systems 691
13.3 Major Benefits and Drivers of IoT 694 Major Benefits of IoT 694 Major Drivers of IoT 695 Opportunities 695
13.4 How IoT Works 696 IoT and Decision Support 696
13.5 Sensors and Their Role in IoT 697 Brief Introduction to Sensor Technology 697 0 APPLICATION CASE 13.1 Using Sensors, IoT, and AI for
Environmental Control at the Athens, Greece, International Airport 697
How Sensors Work with IoT 698 0 APPLICATION CASE 13.2 Rockwell Automation
Monitors Expensive Oil and Gas Exploration Assets to Predict Failures 698
Sensor Applications and Radio-Frequency Identification (RFID) Sensors 699 13.6 Selected IoT Applications 701
A Large-scale IoT in Action 701 Examples of Other Existing Applications 701
13.7 Smart Homes and Appliances 703 Typical Components of Smart Homes 703 Smart Appliances 704 A Smart Home Is Where the Bot Is 706 Barriers to Smart Home Adoption 707
13.8 Smart Cities and Factories 707 0 APPLICATION CASE 13.3 Amsterdam on the Road to Become a
Smart City 708
Smart Buildings: From Automated to Cognitive Buildings 709 Smart Components in Smart Cities and Smart Factories 709 0 APPLICATION CASE 13.4 How IBM Is Making Cities Smarter
Worldwide 711
Improving Transportation in the Smart City 712 Combining Analytics and IoT in Smart City Initiatives 713 Bill Gates’ Futuristic Smart City 713 Technology Support for Smart Cities 713
13.9 Autonomous (Self-Driving) Vehicles 714 The Developments of Smart Vehicles 714 0 APPLICATION CASE 13.5 Waymo and Autonomous Vehicles 715 Flying Cars 717 Implementation Issues in Autonomous Vehicles 717
Contents xxiii
13.10 Implementing IoT and Managerial Considerations 717 Major Implementation Issues 718 Strategy for Turning Industrial IoT into Competitive Advantage 719 The Future of the IoT 720 Chapter Highlights 721 • Key Terms 721 Questions for Discussion 722 • Exercises 722 References 722
PART V Caveats of Analytics and AI 725
Chapter 14 Implementation Issues: From Ethics and Privacy to Organizational and Societal Impacts 726 14.1 Opening Vignette: Why Did Uber Pay $245 Million to
Waymo? 727 14.2 Implementing Intelligent Systems: An Overview 729
The Intelligent Systems Implementation Process 729 The Impacts of Intelligent Systems 730
14.3 Legal, Privacy, and Ethical Issues 731 Legal Issues 731 Privacy Issues 732 Who Owns Our Private Data? 735 Ethics Issues 735 Ethical Issues of Intelligent Systems 736 Other Topics in Intelligent Systems Ethics 736
14.4 Successful Deployment of Intelligent Systems 737 Top Management and Implementation 738 System Development Implementation Issues 738 Connectivity and Integration 739 Security Protection 739 Leveraging Intelligent Systems in Business 739 Intelligent System Adoption 740
14.5 Impacts of Intelligent Systems on Organizations 740 New Organizational Units and Their Management 741 Transforming Businesses and Increasing Competitive Advantage 741 0 APPLICATION CASE 14.1 How 1-800-Flowers.com Uses Intelligent
Systems for Competitive Advantage 742
Redesign of an Organization Through the Use of Analytics 743 Intelligent Systems’ Impact on Managers’ Activities, Performance, and Job Satisfaction 744 Impact on Decision Making 745 Industrial Restructuring 746
xxiv Contents
14.6 Impacts on Jobs and Work 747 An Overview 747 Are Intelligent Systems Going to Take Jobs—My Job? 747 AI Puts Many Jobs at Risk 748 0 APPLICATION CASE 14.2 White-Collar Jobs That Robots Have
Already Taken 748
