EXPERT SYSTEMS AND BUSINESS INTELLIGENCE APPLICATIONS IN KNOWLEDGE MANAGEMENT PROCESSES

Prof. Ds.C., Ph.D. Eng. Leszek Kietyka

Czestochowa University of Technolog, Department of Management Information Systems Al. Armii Krajowej 19 B, 42-200 Czstochowa, Poland

M.Eng. Edyta Kulej-Dudek

ditto

ABSTRACT

The paper discusses information and knowledge as the primary factors conditioning the efficiency of decision taking processes. Business Intelligence systems and Expert Systems are characterized as the tools supporting management and being a flexible solution in business. Advantages connected with the implementation and effective usage of the discussed applications are enumerated. The paper presents also results of a research on the implementation of information systems and knowledge management systems in Polish enterprises.
KEYWORDS

information, knowledge, expert systems, business intelligence

1. INTRODUCTION
Acceleration of development processes, rapid information growth and globalization of knowledge access methods are the features of a new era, new type of society based on knowledge and information. The notion of Knowledge Management (KM) stresses the importance of content and management of data resource owned by company employees as it is this knowledge that is decisive in the process of decision taking as well as in determining the quality and efficiency of corporate activities. Company managers receive huge amounts of different information coming from various, difficult to verify sources and having clearly unstable nature. In new economic and political conditions, being completely new to Poland, the importance of complex mental procedures directed to broad, generalized, deepen and accurate detection of nature of the phenomena taking place in the environment grows [Kietyka, 2003]. On the verge of changes in the way of running businesses, caused by factors such as globalization of trade or Internet development it is difficult to imagine a company willing to achieve success without an effective information system. A contemporary enterprise cannot operate without gathering and processing data. Information application is directly related to the decision taking process. An information system is the basic element of a management system, responsible for realization of companys aims and tasks. Due to this fact, the role of information in efficient operation of a company cannot be underestimated. The value of corporate information capital greatly depends on the quality of information architecture and computer systems being its components. Market observation, adjustment to the needs of customers and strengthening the company position on the market is not possible without the introduction of effective processes of information and knowledge gathering, selection, flow and application. Constant market environment and technology changes necessitate companies to plan their actions flexibly and implement their strategy consequently. It becomes possible thanks to the application of the right information technologies and systems, facilitating corporate integration and offering numerous possibilities of transferring information and exchanging data among participants of the global market.

413

IADIS International Conference WWW/Internet 2004

2. INFORMATION AND KNOWLEDGE MANAGEMENT

Every enterprise having a few branches and employing many workers faces the problem of providing optimum information and knowledge exchange as well as access to the corporate data. The key ability of managers, functioning in the conditions of growing competitiveness and economic growth, is the ability to plan corporate development, define business objectives and methods of their achievement. Knowledge Management is based on the ability to apply the knowledge resources possessed (it may concern any advanced technology, internal procedures or knowledge of company employees). In the era of information revolution it is most important whether we are able to select the knowledge resources that are crucial to us. One should skilfully filter the information available and select the most useful one. Knowledge Management aims also at disseminating the information contained in IT systems and convincing employees to exchange their experience and knowledge. A combination of the knowledge gathered and the abilities of the people applying it is to result in new information, thus increasing corporate knowledge resources. Another advantage of knowledge management systems is the fact that they facilitate contacts with knowledge possessing people experts cooperating with the company. Most enterprises possess integrated information systems that are to support managers in decision taking processes. However, in spite of applying complex computer infrastructure, only few companies are satisfied with the information supplied [Stanoch, 2001]. Moreover, the information and reports gathered are hardly ever correlated with a corporate strategy. Two factors will soon decide on competitive advantage: fast access to reliable information and its careful application. A question thus appears, whether company managers can access information and knowledge easily and fast, whether they are able to navigate and process it in order to take reliable business decisions without great involvement of computer specialists?

3. INFORMATION AND KNOWLEDGE MANAGEMENT SYSTEMS RESEARCH RESULTS

The above considerations may be completed by a research conducted at the beginning of 2004 among medium and top-level employees of small, medium and large enterprises. Beside the survey itself, profound interviews with the management constituted an important part of the research. A survey questionnaire consisted of closed and half-open questions. The questionnaires were delivered to the respondents in person. When analyzing the results received there was a division made taking into consideration size, kind and trade of a company. Surveyed companies included production and trade companies however, there were also service industries represented in it. Most companies employ white collar workers (not knowledge workers well qualified and well paid specialists). A survey analysis showed that 52% of the researched firms were production companies, 17% - service companies, 31% - other companies operating in the following branches of industry: construction, motor, wood, metallurgy, glass, electrical power, steel as well as offering consulting and financial services. On the basis of the conducted research it has been concluded that small companies constituted majority of 45%, medium ones made up for 36% and large ones represented 19%. One part of the survey concerned the application of information systems and knowledge management systems. Taking the right and efficient business decisions is presently impossible without reliable support of computer systems. There is a number of computer solutions on the market. The problem however, is processing of the so gathered information. The first question concerned the type of an information system supporting the company operation. Respondents could supply more than one answer.

414

EXPERT SYSTEMS AND BUSINESS INTELLIGENCE APPLICATIONS IN KNOWLEDGE MANAGEMENT PROCESSES

SCM ERP, ERPII MRP, MRPII DSS CRM MIS storage management systems financial and accounting aplication 0% 20% 40% 60% 80% 100%

Figure 1. Type of an information system supporting the company operation Source: own analysis

Most answers (figure 1) concerned the application of financial and accounting programmes (86%). Storage management systems were pointed by 62% respondents, MRP and MRP II systems - 17%, CRM systems and supply chain management systems - 12% each, Management Information Systems - 7% ERP and ERP II systems - 2%. The respondents pointed to the major role of information technologies supporting also coordination of everyday activities. It was stressed that the application of information and knowledge management systems must offer free access to information and people. Knowledge exchange environment needs to become one of the key issues in the life of an organization, in the development of its branches, in the carrier path of particular staff members. The basic task of company managers is to create an atmosphere facilitating successful adaptation of these solutions. Another question concerned the implementation of knowledge management systems. 74% of respondents stated that their companies did not introduce such systems. What is more, as much as 28% have not even considered the need of introducing such system. Only 9% of them declared a positive attitude towards the implementation of knowledge management systems (figures 2 and 3).
14% 9%
7% 28

58%

74%

Yes

No

I don't know

Yes

No

I don't know

Figure 2. Responses to the question on the implementation of knowledge management systems Source: own analysis

Figure 3. Responses to the question on whether implementation of knowledge management systems has ever been considered Source: own analysis

The last question of this part of the questionnaire concerned potential advantages resulting from the introduction of knowledge management systems. Time saving was considered the greatest advantage - 84%. The other advantages enumerated were the following: higher quality of information and services rendered 63%, shorter time of reaction to customer needs - 74%, greater work effectiveness 67%, instant access to necessary information - 58%, smaller number of erroneous decisions - 42%, compilation of the data on sales, distribution, production, finances, etc. 37%, facilitation of decision taking processes and the possibility of planning, simulating and predicting processes - 30%. Another advantage pointed by 14% of the respondents was online access to current reports and business analyses (graph on figure 4).

415

IADIS International Conference WWW/Internet 2004

compilation of the data on sales, distribution, production, finances online access to current reports and business analyses possibility of planning, simulating and predicting processes facilitation of decision taking processes instant access to necessary information shorter time of reaction to customer needs smaller number of erroneous decisions greater work effectiveness time saving higher quality of information and services

0%

20%

40%

60%

80%

100%

Figure 4. Potential advantages resulting from the introduction of knowledge management systems. Source: own analysis

The process of implementing knowledge management systems must be supported by the right computer tools. The Internet (or a corporate intranet) is a medium offering a possibility of an integrated approach to intellectual resources gathered by a company and of creating an internal knowledge management system. The system has to be based on efficient computer solutions. Thanks to these solutions it is possible to create an internal knowledge management system enabling a company to fully and effectively utilize its intellectual resources and identify the areas that need support. Due to a diversified character of data sources and their complex structure, single ERP, CRM or SCM systems cannot cover all corporate needs. Although they are highly useful in keeping records and automating business processes, they are not efficient mechanisms enabling one to conduct multidimensional analyses of business and they are thus unable to supply complex management support information. Due to the above reasons, these solutions seem insufficient to conduct more complex analyses and it is thus necessary to apply additional, advanced tools e.g. business intelligence or expert systems. Work may be more effective and efficient if information gathered and processed in different, not cooperating systems, databases and information services is integrated. Multidimensional integration is based on cooperation of applications as well as users who share and create the information together [Ozimek, 2001]. Dispersed data may be aggregated and published in the network, including company environment customers, suppliers, sub-contractors and partners.

4. BUSINESS INTELLIGENCE APPLICATIONS

The answer to managers needs are Business Intelligence (BI) applications that have been created to support management by supplying the right data to the right people, at the right time. Business Intelligence is a set of concepts, methods and processes aiming at facilitating business decisions with the application of the data contained in all corporate information resources as well as the experience and knowledge of its users [Wojtala, 2001]. Business Intelligence comprises data gathering, its management, analysis and distribution of information contained in CRM, MRP, ERP or SCM systems. Key profitability indexes, identification of business information areas and on-line information analysis are determined on the basis of business rules

416

EXPERT SYSTEMS AND BUSINESS INTELLIGENCE APPLICATIONS IN KNOWLEDGE MANAGEMENT PROCESSES

present in company (figure 5). BI systems fill information gaps in corporate strategic and financial analyses. Business analyses ensure optimisation of integrated business processes and analyses from the perspective of financial decisions. Thanks to this fact the help estimate different solutions possible. They offer company managers an easy access to the right, reliable and timely information on different aspects of company operation and thus facilitate the analysis of its results and effectiveness as well as the process of taking the right business decisions supporting the implementation of a company strategy [Stanoch, 2001]. One of the most important resources of a company is knowledge, usually stored in the heads of its employees. This knowledge enables them to act smart, to understand company actions, aims and visions. A combination of this knowledge with the information coming from computer systems enables business process participants to act in accordance with company objectives. These systems ensure great savings of time and work, high quality of management and work comfort.

CRM
Marketing Automation Call Center Field services

Information analyses on-line Business information area Crucial index of effectiveness Information technology

Balanced Score Card

MRP/ERP
Production Distribution

Analyses and Reports

SCM
Supply Chain

Multidimensional analyses

DATA

INFORMATION
Figure 5. Business Intelligence aplications Source: own analysis

BUSINESS INTELLIGENCE

A Business Intelligence system comprises the following components [Kulej-Dudek, 2002]: Corporate portal WWW interface offering its users access to business information and applications; software packages for specific users (e.g. for particular branches of industry) or for special purposes; decision support tools, from simple applications to complex systems of multidimensional analyses conducted in the real time (OLAP - ON-Line Analytical Processing) that process information interactively. They are applied to support financial analyses, planning, predicting, and reporting as well as modelling business processes and data analyses; data mining applications they search information for hidden relations, regularities; it is a process of mining information from databases with the use of advanced techniques such as decision trees, neural networks, regression and correlation analysis, rule searching or classifications; BI system administration tools (safety, monitoring, storage, scheduling, audit and settlement tasks). Business Intelligence systems are able to download data from different sources situated in different places of a particular company (data warehouses, relational databases, transactional systems, flat files, internet portals) and to publish the results as reports and graphical analyses via popular interfaces such as internet browsers. These features facilitate the establishment of an integrated, uniform computer system comprising all quantitative and qualitative information that is then presented to managers in a clear way. The key features of this solution include predicting and modelling different corporate development plans. BI applications offer the possibility of analysing historical and current data as well as of controlling e.g. costs or financial flows [Kulej-Dudek, 2002]. Predictions that result from analyses may be generated as HTML documents and then published in internet browsers. Analysis results are then sent back to production systems

417

IADIS International Conference WWW/Internet 2004

that are supported by intuition, knowledge and experience of the management. Only if the results obtained from these two sources are compatible, reliable decisions may be taken. Information is based on a qualitative data analysis applied on all management levels to implement short- and long-term strategic objectives of an organization. Precise predictions created on this basis prevent one from taking wrong decisions [KulejDudek, 2002]. Multidimensional analyses and automatically generated reports are the source of comprehensive information enabling one to evaluate the phenomena observed and to take the right and fast business decisions. All currently introduced BI solutions are systems providing access to analytical tools and reports thanks to internet technologies. The application of popular environments and internet browsers reduces the costs of BI system implementation. These solutions utilize technological standards such as XML (eXtensible Markup Language), JDBC (Java Database Connectivity) or SQLJ (Structured Query Language Java) .

5. EXPERT SYSTEMS IN ENTERPRISE MANAGEMENT

Entering the world of connexions with the environment of external knowledge is an extremely important component of integrated knowledge management, facilitating reaching experts and highly valued knowledge. Creating an effective and easy-to-handle corporate knowledge management system is a challenge, particularly for large companies. An example of such a knowledge management system can be expert systems (ES), which as computer applications designed for solving complex problems, requiring professional expertise are connected with knowledge acquisition and processing [Glaner, 1997]. There is a growing interest in such systems in Poland. Creation of a system based on a knowledge base requires acquisition of the knowledge of an expert, who often comes up with a solution, based on problem details and his/her own experience. After having stored the experts knowledge in a chosen field, the expert system can use it repeatedly, in an economically effective manner, as the expert presence is no loner required. The basis for proper operation of an effective expert system is creating appropriate knowledge bases, i.e. data and principles indispensable to provide solutions in a particular area, and then extending such knowledge by new facts and inference rules [Mulawka, 1996]. Expert systems undertake to copy the decisions made by a human-expert in a repeatable and user-friendly manner. They prompt on decision to be made, or solve a problem with the accuracy comparable to a human-expert, specialist in the given field. They constitute a branch of applied artificial intelligence. The majority of expert systems are based on the following modules (figure 6) [Glaner, 1997]: knowledge base, inference module (inference engine), explanation module, knowledge extraction module, interface. Knowledge in an expert system is divided into the field-related knowledge (knowledge base) and the remaining system knowledge, such as general knowledge on how to solve problems (inference module), or the knowledge about means of communication with the environment (interface). Knowledge engineering involves acquiring and modelling information and creating a computer-aided system for solving problems [Sroka, 1994]. Knowledge base contains a defined collection of specific information, proper for a particular application area, as well as facts being a collection of characteristics of the problem in question. The inference engine cooperates with the information and facts stored in the knowledge base, searches for solutions in the environment status space, by means of the search and heuristics strategies, employing certain inference methods [Glaner, 1997]. User interface enables communication of the person involved in consultation with the expert system. Explanation module consists of information enabling one to analyse the way of finding the solution and to obtain more accurate details regarding the solution. The basic idea consists in transferring expert knowledge resources into a computer, which is equipped with special inference rules and a language to communicate with the user. The system, alike the expert, provides the best advice and, if necessary, explains the logic, based on which it has drawn the particular conclusion [Kietyka, 2002]. What distinguishes such programs from ordinary applications is the expertise, internal knowledge, inference depth and symbolic reasoning. ES are not fitted with built-in procedural algorithms, but they apply heuristics (the ability to derive new facts and relations between them, based on practical knowledge and intuition).

418

EXPERT SYSTEMS AND BUSINESS INTELLIGENCE APPLICATIONS IN KNOWLEDGE MANAGEMENT PROCESSES

Knowledge, experience

Expert Knowledge engineering Expert system Interface User Inference engine

Explanation module

Knowledge base

Knowledge extraction module

Figure 6. Expert systems structure Source: own analysis on the basis of [Kietyka, 2002]

Their operation involves manipulating the knowledge, which may be acquired in an interactive learning process [Kietyka, 2003]. The most important features of corporate expert systems are: the simplicity of use, independence from IT professionals, compatibility with databases existing in the company, professional approach to the planning and decision making procedures and higher quality of information and knowledge.

6. EFFECTS AND BENEFITS FROM USING BUSINESS INTELLIGENCE AND

EXPERT SYSTEMS
The table below presents synthetic listing of benefits (in terms of efficiency, effectiveness and innovativeness) from using applications described in this paper.
Table 1. Benefits from using applications Business Intelligence and Expert Systems

Time compression efficiency - no need of entering the same data repeatedly; - information availability at any time, irrespective of place; - using many information sources at the same time; - flexible and selective data acquisition - shortening task completion times; - effective usage of computer and communication technologies - development of new products and services, using modern methods of computer-aided design

Information transfer speed - obtaining up-to-date information and reports; - immediate identification of threats, opportunities and trends availability and diversity of information sources make it possible to identify market changes - fast project completion (orders, contracts) related with cost reduction; - immediate access to reliable and comprehensive information and reports - creation of a dynamic company image; - greater flexibility of information flow, shaping information in time
Source: own analysis

Reorganization of work with environment - omitting intermediaries; - direct contact with experts; - quick contact with customers; - more up-to-date and reliable information

effectiveness

innovativeness

- interactive contact with customers; - gaining customers loyalty, - faster knowledge and technology development, improving the knowledge quality - setting up intelligent, network organizations; - testing alternative strategies and plans with the application of simulation models

419

IADIS International Conference WWW/Internet 2004

Because of quick changing environment and complexity of decisive problems flexible and selective data, information and knowledge acquisition means better effectiveness of taken activities, shortening realization time of undertakings and acquiring up-to-date reports thanks to immediate access to comprehensive information. Accessibility and diversity of information sources facilitate perception of changes undergoing on the market, technology and knowledge development and quality improvement of new products and services. Application of presented systems improves flexibility of information flows and shaping information in time.

7. CONCLUSION
Creation of knowledge-based economy is the most significant challenge faced by contemporary enterprises. Knowledge constitutes the factor which is critical for the ability to rapidly respond to market transitions, and at the same time it is a base for generating new products, technologies and organizational solutions. The ability to create, disseminate and use knowledge is becoming the source of competitive advantage [Grudzewski, 2002]. Hence, the nature of knowledge management should be complex, expanding to all areas and aspects of business organization. Modern information and communication technologies play a great role in the knowledge-based economy, contributing to the creation of knowledge in innovative societies. Managers in companies need information that will limit risk of wrong decision making. That means necessity of possessing and using proper information system. Expert and Business Intelligence systems assist the managing person at all stages of the decision-making process. They are found helpful at any case, where there are large knowledge resources, basing on which numerous decisions are to be made. They may find their application in situations, where good qualifications, abilities to make decisions in circumstances of uncertainty, and those of heuristic reasoning are required. Due to being relatively easy to use, the system does not require time-consuming training for the employees assigned to operate them. Unfortunately, not all Polish companies can afford to purchase such systems due to their high price. The knowledge management systems described herein constitute a tool ensuring the best usage of corporate intelligence resources, by storing knowledge and enhancing access to it for all employees. However, one must not forget that any software is just a communication tool and that organizational culture is of equal importance.

REFERENCES
Glaner A.P., 1997. Decision Support Expert Systems. Papers of the Institute of Management and Marketing No 2. Business Problems in the Process of System Transformation. Technical University of Koszalin, Koszalin, Poland. Grudzewski W.M., Hejduk I.K., 2002. Knowledge Management Systems Creation as a basis of achievement competitive adventage in contemporary enterprises. Future Enterprise. Difin, Warsaw, Poland. Kietyka L., Kulej E., 2002. Expert Systems and Business Intelligence Application of Corporate Data Resources to Business Decisions Support. X Conference on Production and Management in Metallurgy, Ustro, Poland. Kietyka L., 2003. The Role of a Manager in a XXI Century Enterprise. Economics and Organization of Enterprise, No 9 (644), Warsaw, Poland. Kulej-Dudek E., 2002. Company information and knowledge management with the application of information technologies. Zbornk prednok 4. medzinrodnej vedeckej konferencie Vuvanie novch poznatkov v strojrskej praxi, TRANSFER 2002, 2. Diel. Trenn, Slovakia. Mulawka J.J., 1996. Expert Systems. WNT, Warsaw, Poland. Ozimek W., 2001. Adaptive Architecture and Knowledge Management. IT in Knowledge-Based Economy ed. by P.W. Fuglewicz and J.K. Grabara, WNT, Warsaw-Mrgowo, Poland. Sroka H., 1994. Expert Systems. Computer Aided Decision Support in Management and Finances. University of Economics in Katowice, Katowice, Poland. Stanoch E., 2001. Building Competitive Advantage, Computerworld Custom Publishing, IDG Forum, November, Poland Wojtala M., 2001. Business Intelligence Strategy, Computerworld Custom Publishing, IDG Forum, November, Poland.

420