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Business Intelligence Applications in Retail Business: OLAP, Data Mining & Reporting
Services
Article in Journal of Information & Knowledge Management · June 2010
DOI: 10.1142/S0219649210002541 · Source: RePEc

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Journal of Information & Knowledge Management, Vol. 9, No. 2 (2010) 171181 #. c World Scienti¯c
Publishing Co.
DOI: 10.1142/S0219649210002541

Business Intelligence Applications in Retail Business: OLAP, Data

Mining & Reporting Services¤

Ipek Deveci Kocakoçy,x and Sabri Erdemz,{

yDokuz Eylu€l University, Faculty of Economics and Administrative Sciences
Dokuzce»smeler, Buca, 35160, Izmir, Turkey and
zDokuz Eylu€l University, Business Faculty, Tnaztepe Yerle»skesi
Buca, 35160, Izmir, Turkey [email protected]
{[email protected]
*
Abstract. As a result of today's competitive business This study is a part of a project (No: 200878) which is supported
environment, companies have been trying to improve the by Dokuz Eylül University Scienti¯c Research Fund.
utilization of funds e®ectively in their budgets for regularly have shown importance for the last decade
information technology investments. These companies
and serious research have been carried out in this area
retrieve more information with the same set of resources by
means of business intelligence methods. According to since then. The main requirement in these sectors is
Rubin (Chabrow, 2004) IT budgets are not simply declining extracting usable information out of the gathered data.
or levelling o®, rather, companies are shifting from a pure Reaching that goal requires lots of resources and takes
cost-cut mode to a model that emphasises agility and a very long time unless business intelligence is used.
e±ciency. Tremendous daily growth of the company data Moreover, the information, which comes from
requires more funds and investment for establishing the
personnel who are responsible for gathering data, may
technologies and infrastructure necessary for gathering fast
and crucial information that supports the decision making be incorrect which may lead to unwanted results.
process. This necessity gave birth to various business By 2010, enlightened IT and business intelligence
intelligence methods, which mainly aim to process mass leaders will continue to take a more business-focused
amount of collected data from their existing application, and approach to their BI investments by deploying new,
represent it in a way with which companies can apply to targeted solutions that deliver the right capabilities to
their daily competitive decisions.
meet the needs of speci¯c user groups (Chitkara,
This application primarily concerns the implementation
of business intelligence for a retail business company. The 2010). BI provides business functions, spending 80%
aim is to implement built-in business intelligence solutions of its time analysing data instead of collecting it
of the Microsoft SQL Server that holds the commercial (Eckerson, 2010).
information of the company for the past three years. The Managers can directly access the information
customer company has already been using Microsoft automatically generated by the system and manipulate
products. The key items used for analyzing data are sales,
it in order to make necessary decisions. In this project,
momentary inventory and logistics information.
The application can be grouped in ¯ve main areas: the aim is to give the company, operating at the highly
Building the data warehouse, constructing OLAP cubes, transactional retail business, the ability to make
applying data mining algorithms on OLAP cubes, predictions and reach the necessary information
representing the results in reports with reporting services, instantly from gathered data by means of business
and implementation. intelligence. Since the amount of transactions are
enormous, the gathered data increases in size
Keywords: Retail; business intelligence; OLAP; data
mining; reporting services. correspondingly. In such a case, summarising and
information extraction based on this data and future
prediction plays a very vital role for making healthy
1. Introduction decisions.
In today's highly competitive business environment in The customer company is a medium-sized
retail industry, where an immediate response to enterprise and one of the market leaders in denim
market needs and changes is so crucial, gathering and products from the textile sector for many years. It has
storing data 100 stores and 300 sales points. Demand in the textile
market is highly °exible, includes seasonality, product changes, product delivery locations are in terms of
life cycles are very short due to frequent model hundreds all around the country, delivery
171
172 I. D. Kocakoc and S. Erdem
times are quietly short, hundreds of di®erent models are sold decision for the next year's production and determine the
at any moment and transactions are executed real time. The need for new stores or excessive stores.
company has historical data for two years and approximately The ¯rst step is to create a data warehouse for each year
10 million sales records during this period. All data must be from OLE DB to collect the necessary data speci¯cally for
summarised, reported and interpreted in a short amount of business intelligence applications. Then OLAP (Online
time in such a market to survive among the market sharers. In Analytical Processing) cubes, which are queried and
sum, what we need here to manage information in this market periodically loaded from data warehouse, were constructed.
is Business Intelligence tools. Data mining is the further step to analyse the data and ¯nding
Business Intelligence tools are being widely used in the hidden patterns by applying classi¯cation, association and
retail industry all over the world. Before we began to apply forecasting algorithms. Finally, the speci¯ed data was
our solution, we investigated the samples which guided us. reported with the Reporting Services tool of MSSQL server
Granebring and Revay (2007) give some ideas and to provide users with meaningful data in an organised way.
suggestions on determining and ¯nding the common needs in
the retail industry like supporting the promotional activities
with personalised customer o®ers and forming a strategy to 2. Phases of Application
introduce daily decision support in the retail trade. Goddard,
an IT strategic development 2.1. Determining business requirements
manageratTesco,explainedtheirchallengesandresultsina case Determination of business requirements is the most important
study (http://www.businessobjects.com/company/ phase of a BI (Business Intelligence) project. Any lack of
customers/spotlight/tesco.asp). Tesco is one of the top three information can seriously damage the success of the project.
international retailers in the world, with around 2,000 stores We have interviewed all key users of the system and
and 326,000 people in 13 countries across Europe and Asia. inspected the documents and tables, which they had already
They also decided to use a web-based business intelligence utilized, to ¯nd out the requirements.
product which delivers the speed, functionality and °exibility Key business objectives expected as an output from this
required to deliver both standard and ad hoc reporting in a BI application are found to be as follows:
timely fashion to their clients across the world. In many
. Sales performance and required inventory tracking: It is
applications, it is shown that accurate forecast of consumer
required to get sales and inventory information based on
retail sales can help improve retail supply chain operation,
region and product based on each year and month. The
especially for larger retailers which have a signi¯cant market
business needs can be detailed as follows:
share.
OLAP usage is another most preferred solution all over (i) To examine sales and inventory status of eachproduct
the world. A case study in Winmetrics (http://www. regarding each year and a speci¯c season;
winmetrics.com/olap casestudies.html) reports that a ¯nancial (ii) To analyse the growth rates and sales performanceof
service company developed performance reports for clients each region and each store monthly;
and they saved $200K in nine months. The company had (iii) To determine the total sales and the amount
preferred a Microsoft solution, because they already have ofrequired inventory for each gender.
licenses and familiar with Microsoft environment. They said
. Pro¯tability: Pro¯tability analysis is also required to track
that \OLAP looked like the answer because it pre-computes
the actual sales against target amounts on a monthly basis
numeric aggregations for the cross-product of all relevant
for each sales region and store. Determining the shelf life
dimensions so that summary information for any combination
of the products to decide discounts o®ered to customers is
of dimensions can be displayed on demand."
another point for the company. Therefore, a company's
In our application, Microsoft SQL Server Business
business requirements are determined as follows:
Intelligencer1 tools are used for the customer company which
already uses MSSQL server infrastructure and has three years (i) Time-based quantity of sales and inventory reports
of data to solve the issues listed above. The company aims to (Region, City, Branch, Product Detailed)
get comparative reports year to year to follow up sales and (ii) Weekly, monthly and annual comparative tables
inventories according to the regions, and wants to make a (iii) Highest and lowest sales, salesmen reports
(iv) Pro¯t and revenue reports
1 Microsoft SQL Server Business Intelligence is a registered trademark of (v) Prediction of next month's sales
Microsoft Corporation.
173 I. D. Kocakoc and S. Erdem
 Business Intelligence Applications in Retail Business 174
(vi) Determining the products mostly sold together geographical location, the managers, the size and the type.
forpromotions. There are also performance outputs for the sales person of
that particular store. The data warehouse structure can be
Then a data warehouse is built based on these requirements.
seen in Appendix A.

2.2 System architecture

The model we developed can be examined at three layers (see
Figs. 1 and 2). In the Data Layer, the necessary data for BI
applications are ¯ltered and transferred to the data warehouse
using ETL (Extract, Transform and Loading) packages. In
the BI Layer, OLAP cubes and data mining models are
created to feed up the reports. In the Interface Layer, we are
presenting end-user reports on the web with the reporting
services.

2.3 Building the data warehouse

It is di±cult to access the operational information in the
database for end-users. There are hundreds of tables spread
across the database, which stores terabytes of data, and it
requires expert knowledge to answer a business question.
Building only new reports is not adequate because it takes
too much time to get results and it is not cost e±cient. SQL
Server 2005 Analysis Services provides wizards and
designers for all major objects. Wizards are used to initially
create any object, and in Analysis Services 2005 they are Fig. 1. Project stages.
°exible enough that in many cases you do not need to further
re¯ne your objects afterwards (MacLennan, 2004).
At this point, the ¯rst step before we apply the BI
application, we need to construct our data warehouse based
on the requirements above. In this context, data warehouse
application takes place as depicted in Fig. 3.
A typical data warehouse is a collection of databases
including both active and archive ones that the analysis and
reporting services are running on (Jacobson, Misner and
Hitachi Consulting, 2006). The most important step of
business intelligence is that it uses a separate database from
the actual one that the OLEDB transactions are performed.
Before designing the data warehouse, necessary analyses are
made with the managers and users. Based on these analyses,
it is found that the grouping and reporting for inventory
properties, customer properties, time, region, branch and
sales person are necessary.
In the data warehouse created, all customer and inventory
information to be analysed were placed. Current account
information from the CRM database (profession, age, sex,
marital status), report codes and inventory properties (color,
size, season) that create the functional groupings are also
available. The retail stores are grouped based on their
175 I. D. Kocakoc and S. Erdem

Fig. 2. A general view of the project structure.

Fig. 3. Data warehouse in business intelligence application.

Source: Hancock and Toren, 2006.

2.4 Designing OLAP cubes is reorganising data

Online Analytical regarding business
Processing (OLAP) is a requirements to access
multidimensional solution information faster.
architecture that allows the In retail business, there
gathering of the most are huge numbers of
valuable data from products with their many
relational databases for kinds of variants and sales
querying and reporting transactions. Summarising
purposes according to meaningful data on time is
business needs. Langit very useful for sales
(2007) points out that the forecasting and production
aim in designing OLAP planning. Thus, OLAP is
176 I. D. Kocakoc and S. Erdem

the best choice for

reporting under these
circumstances.
The OLAP database
increases relational
database capability with
following bene¯ts:
(i) User can reach
summarised data quickly;
(ii) Data can be
stored in a hierarchical
way via cubes;(iii) It has
speci¯c areas for
numerical measures.

OLAP components can be

sampled as shown in Figs.
4 and 5.
Figure 5 shows the
analysis services view of
the cube in Fig. 4. Any
dimension can be extended
to see the aggregated
values for a speci¯c
selection by clicking the
plus sign at each main
group. The columns are
year, quarter and month
dimensions respectively.
The rows include two
other dimensions: district
dimension and product
group
 Business Intelligence Applications in Retail Business 177

Fig. 4. Three-dimensional cube: product, month and variables.

Fig. 5. The analysis services view of the cube in Fig. 4.

dimension. For example, Cube: A cube stores

clicking the \þ" sign of the business dimensions and
aggregated facts in a form
second quarter, the sales
that makes it easy for users
quantities of product groups to analyse the data by
for each district will be viewing the aggregated
drilled down. To see the values where dimensions
sales quantities for a speci¯c and facts intersect. Unlike a
two-dimensional table,
district, click the \þ" sign for
cubes are multidimensional.
that one. The graphic also The cube is then reached for
shows the totals for each reporting purposes by user
dimension of the cube. (Kimball and Ross, 2002).
Our cube contains the
following objects. Details of
 Business Intelligence Applications in Retail Business 178

the objects can be seen in

Appendix A.

Measures: Measure is a
quantitative value that you
generally aggregate and
analyse. Measures can be
values in the underlying fact
tables of the cube, or you
can de¯ne calculated
measures (Thomsen, 2002).
In our project, the amount of
sales and total sales income
are measures.

Fact Tables: These are tables

in the data warehouse which
include detailed data for
measures. A fact table
contains measures and
foreign key ¯elds which are
related to dimension tables.
The fact tables may contain
the number of sales, the
amount of discount, returns,
existing inventories, shelf
life, cover, etc., which is
usually used in analysis
reports in retail business
(Kimball and Ross, 2002).
In our application, there are
two fact tables: sales and
inventory, which can be
seen in Fig. 3 in detail.

Dimension: Dimensions
form the contexts for the
facts, and provide the axes
of the cubes in the OLAP
solution. Dimension tables
in the data warehouse
consist of the dimension
members such as time. Our
analysis is based on
179 I. D. Kocakoc and S. Erdem
dimension tables that connected to measures in fact tables. Microsoft Time Series Algorithm: This was used for
For example, a product group, a sales region, etc., are predicting future values based on historical data. Production
dimensions and number of products sold, total sales amount and investment plans can be based on the data obtained from
for a region, etc., are measures and they are summed the algorithm.
regarding to those dimensions de¯ned in the table as in Microsoft Association Algorithm: This algorithm identi¯es
Wrembel and Koncilia's study (2006). Our dimensions in this rules to predict a customer's likely future purchases based on
study are the branch, customer, inventory, returns, promotion items that already exist in the customer's basket. We applied
and variants. the algorithm to determine the most commonly sold product
There is a unique ¯eld for each record in the dimension groups as shown in Fig. 6.
table which is connected to a foreign key described in the fact Finding the most commonly sold products in the dataset is
table in order to put a relation between dimension and fact called a market basket analysis. When the mining model is
tables. processed, it ¯rst looks for the most commonly sold item set
in the dataset and their size. Size means the number of items
in a set. Then the model calculates the probability of each
2.5 Data mining item set and orders them according to their importance.
Data mining is a method to look for new, valuable and Figure 6 shows the results of a two-item market basket
noticeable information in large volumes of data. It is a analysis. If a customer buys \Bermuda" and \Pants" products,
combination of human and computer e®ort (Tang and he is likely to buy a \T-shirt" product with them. The
MacLennan, 2005). When human expertise for describing customer company required the results of this analysis to use
problems and the search capabilities of a computer come during promotion periods.
together, best results can be achieved. When applying data
mining algorithms, mostly, data drives the analyst. It is not 2.6 Representing reports by reporting services
possible to catch the same strategic correlations and clusters
Preparing reports on user friendly screens from MSSQL
with human sensation or SQL queries. Finding hidden
Analysis Services is as important as the other parts of the
patterns in the data and getting knowledge of the cause and
system. No matter how well the infrastructure of the project
e®ect structure within the business processes can bring
is, there have been many unsuccessful IT projects due to its
substantial bene¯ts.
not having an ease of use. In this project, we planned to
In this application, the Analysis Services Data Mining
present the results of data mining and OLAP cubes over a
component is utilised. Data mining solutions are created by
Web Portal.
means of SQL Server Business Intelligence Development
The information on the analysis services, generated by
Studio. Data mining was applied on OLAP cubes.
SQL reporting services, can be presented in detail and visual
Additionally, SQL Server Reporting Services was used for
design as the customer requested. It is also designed to make
data mining models to process data as well. In our
the necessary ¯ltering and applying constraints on the reports,
application, the following questions were examined with
which are accessible based on the user permissions and
speci¯c the data mining methods:
content ¯ltering, via GUIs (Turley et al., 2006). With the help
(i) What is the expected income for the next month? of these constraint GUIs, the user can ¯lter the information as
What are the expected pro¯ts for each product for the a result of the report taken.
next month? Generated reports can also be accessed from any web or
(ii) Which products are being sold mostly together? desktop applications, as well as mobile devices after the
(iii) What are the customer purchase characteristics fora generation of mobile device views. This enables the customer
speci¯c region and time period? to reach information from anywhere, at any time, very fast
(iv) How can we classify our customers? and very accurately.
The instantaneous Online Transaction Process (OLTP)
For each question, the most appropriate data and the most
reports requested from the database, which stores actual
accurate algorithm should be chosen. Analysis Services
transactions, are also added to the reporting services index.
provides nine algorithms. In our application, we used the
These reports are categorised in a special label and secured
following algorithms:
by user rights, enabling access by the authorised personnel
only. Since the reliability of the application system can be
180 I. D. Kocakoc and S. Erdem
severely a®ected, it was necessary to restrict access to some
groups of users. Figures 7 and 8 demonstrate the same report
generated via reporting services in two di®erent visual
formats.
 Business Intelligence Applications in Retail Business 181

Fig. 6. Market basket analysis output.

 Business Intelligence Applications in Retail Business 182
Fig. 7. Graphical chart sample.
183 I. D. Kocakoc and S. Erdem

Fig. 8. Tabular view of graphical report.

The pie-chart Services
shows the Reporting
distribution of the Services.
sales for the top This is the
10 colors of male tabular view of
products. The graphical reports
value list in the shown in Fig. 7.
scale indicates the With this web
colors of the report, the user
products. The can ¯lter the
bar-chart at the information to
upper side shows whatever he
pro¯ts for each wants to see. By
color. The chart using that report,
at the bottom the exact
shows the number quantities of total
of male products sales are shown in
sold for each detail.
color during In addition,
summer period. users can
These are generate their
generated with reports according
MSSQL Analysis to their needs by
184 I. D. Kocakoc and S. Erdem

using Report suitable for the

Builder which is a company.
component of Aftertheinfrast
Reporting ructurewasinstalle
Services. It dandcon¯gured,w
gathers the e
columns from the createdOLAPcub
dimension and esonthedatawareh
fact tables de¯ned ousedesigned.The
in the OLAP n we deployed
cubes and present data mining
the results as real- applications and
time reports on completed
the web. analysis services
Generated reports operations.
can either be Finally, to present
saved in excel, the results to the
pdf, html users, we
formatorcanbesto prepared the
redonthewebporta reports on a web
lforfuturereferenc portal that is
e. being used by
reporting
2.7 services. The
company required
and only authorised
documentation personnel
After completing accessing the
our BI design, the reports, hence we
implementation authenticated the
phase started in users and
the company restricted
environment. The accesses.
company bought The last step
a new server of
machine for implementation
storing the data was giving
warehouse. We training to end-
created DTS users for system
(Data usage and
Transformation technical
Service) packages personnel for
for that data °ow taking, and even
for getting data creating reports.
from OLE DB to Because business
data warehouse cases and
based on a requirements are
schedule that is changing day by
185 I. D. Kocakoc and S. Erdem

day, the company

needs additional
reports.
Therefore, the
training subject
for technical
personnel was
creating reports
by utilising
reporting builder.
Finally, to
provide
continuity and
maintenance, we
trained the system
administration
personnel in case
any problem
occurs during
data °ow. User
manuals are also
prepared and
provided.

2.8 Savings of the

project
With this project,
the time for
generating reports
is decreased
explicitly. The
reports are taken
from the data
warehouse so
transactional
operations which
are recorded
 Business Intelligence Applications in Retail Business
186
Table 1. Data sizes and performance gains.
DW 2007 2008 20072008 Total Gain (%)

Data ¯les (MB) 900 44.400 20.100 64.500 98.60

Sales transaction 2.906.675 7.881.128 2.543.127 10.424.255 72.12

Average report time (sec.) BI solution 2007 Gain (%) 2008 Gain (%)
Top sales report 15 900 98.33 360 95.83
Monthly comparative table 20 1,200 98.33 420 95.24
Weekly comparative table 30 1,500 98.00 480 93.75
in OLE DB are not requirements of a
a®ected. textile company.
Generating reports When we are
rapidly helps designing our
managers to make solution, we have
decisions on time. worked with
Report Builder is professionals of
also an easy-to-use the company to
tool which allows determine the
users prepare their needs and business
own reports cases and to meet
without getting the expected
help from an IT business bene¯ts.
person. Even these bene¯ts
This project may or may not be
also produced measurable,
dramatic shortening
performance gains. business processes,
Table 1 shows disk showing the
sizes for the last hidden data to lead
two years' data ¯les business decisions
and data and presenting
warehouse (DW), valuable data in an
and performance easier way are the
gains for most points we aimed
common reports. together with the
Storage space company.
decreased by At the end of
98.60%, and the project,
average report management and
times are decreased sales department
by over 90%. gained an
advantage of
analysing the sales
3. Conclusion status of
This BI project is approximately 150
focused on branches and
delivering business making critical
 Business Intelligence Applications in Retail Business
187
decisions on time
via sales reports.
On the other hand,
the inventory
reports make it
easier to make
decisions for
demands from
suppliers and for
inventory
exchange between
the branches. Top
management has
found forecasting
reports derived
from data mining
applications useful
since the reports
help them make
strategic decisions.
As a result,
using BI
applications in
retail business,
which has
terabytes of data,
provides serious
competitive
advantages.
Generating
comparative
reports based on
years, reaching
strategic
information faster
and making
accurate business
forecasts are vital
results of the BI
applications.
188 I. D. Kocakoc and S. Erdem
Appendix A. Data Warehouse Diagram References
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Chitkara, AR (2010). BI 2010: Evolving to meet demands of
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Eckerson, WW (2010). TDWI announces new best practices
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Granebring, A and P Revay (2007). Service-oriented
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Hancock, JC and R Toren (2006). Practical Business
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WinMetrics Corporation (2008). Business Intelligence Case
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Jacobson, R, S Misner and Hitachi Consulting (2006).
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Thomsen, E (2002). OLAP Solutions: Building
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