computerworld

TechnologY
BriefingS
forget spreadsheets. organizations that are winning in this down economy are
using automated analytical tools to take a more scientifc approach to decision
making through observation, experimentation and measurement to improve
their business processes. Their results: innovative and revenue-generating
improvements and savings.
Analytics: The
Art and Science
of Better
TABle of ConTenTS
Mining Data for Intelligence,
Creativity and Insights ........................................................... 2
Analytics: Unlocking Value in
Business Intelligence Initiatives .......................................... 6
Analytics Versus Intelligence ............................................... 8
The Analytical Competitor ........................................................ 10
BUSineSS inTelligence
SponSored By
®
®
STrATeGIC TeCHnoloGy InSIGHTS from CompuTerworld CuSTom puBlISHInG
2
mining data for
Intelligence, creativity
and Insights
AdVAnCed AnAlyTICS
Analytics software enables the collection,
classifcation, analysis and interpretation of a
wide range of data for better decision making.
F
or years, organizations have
relied on rudimentary tools
(spreadsheets, OLAP cubes
and the like) as the mainstays
in driving business improvement.
Three-ring binders full of columns and
rows of numbers are used to predict
complex, business-critical outcomes.
Yet these same tools, while necessary,
are no longer sufcient; they are inca-
pable of enterprise-size scaling, and too
tedious to pore through.
Even analytics professionals, who
mine data for a living, know that
spreadsheets, pivot tables and OLAP
cubes are limiting and, in some cases,
detrimental to organizations. Such
one-dimensional tools deter them
from their scientific roots, where they
would get to experiment by formulat-
ing a problem through observation,
measurement and analysis reporting.
That methodology can lead to the holy
grail of data-driven insights that enable
better decisions. Getting there requires
treating data as a strategic asset. When
organizations reach that understanding,
it is easy to see how successful analyt-
ics initiatives transcend tools to take
into account elements such as people,
process, culture and technology.
With robust analytics software,
data analysts and other decision mak-
ers within the organization get back to
more of a test-center setting to truly
study information gathered throughout
the enterprise. That information is
wide-ranging (transactional data, cus-
tomer conversations in the call center,
through email, on the Web, etc.) and
typically quite noisy.
Analytics software provides an
integrated environment that enables
the collection, classification, analysis
and interpretation of data to reveal
patterns, anomalies, key variables and
relationships.
This unique and rich insight, when
used in a business context, cuts the
noise and fosters better allocation of
scarce resources, achievement of objec-
tives, and accurate assessment of and
preparation for future scenarios. And
case studies overwhelmingly show that
the use of analytics tools encourages
employees to be more creative and
achieve their full potential while im-
proving the business overall.
A great example of this can be seen
at Beverly, Mass.-based Oxford Global
Resources, a leading IT and engineer-
ing recruitment firm with more than
20 ofces worldwide. For Oxford, being
successful means being able to predict
in-demand technology skills and attract
consultants with that talent before the
rest of the market catches on.
In the past, the company had relied
on data gathered into spreadsheets to
accomplish this goal. However, the in-
formation, which had to be manually
assembled from multiple systems at
each location, was often inconclusive.
Even though Oxford had profession-
TECHNOLOGY BRIEFING • AnAlyTICS: THe ArT And SCIenCe of BeTTer
By SAndrA GITTlen
J
als on staf skilled in data analysis,
they sufered from the limitations of
their tools.
So the data analysts, led by Scott
Beyer, vice president of strategy and
marketing, partnered with their IT
team to bring SAS® Enterprise Busi-
ness Intelligence for Midsize Business
in-house. They were able to integrate
data from across all the various systems
and ofces into a single data warehouse
and provide Web-based reporting on
key operational and trend data to their
managers across the globe.
This has allowed them to improve
core business processes, including
identifying the hottest IT and engineer-
ing skills and alerting the field sales
team so they can target their eforts ac-
cordingly, Beyer said.
Oxford also uses SAS Enterprise BI
to show the sales team how they are
performing based on tenure, region and
other key metrics. “We have combined
financial data, human resources stafng
data and phone system data to create
a holistic picture of each salesperson’s
performance,” he said. That informa-
tion is available to managers and sales
people via a Web-based portal, so to-
gether they can enhance individual and
overall productivity.
With SAS as the backbone of op-
erational and marketing analytics, the
company said it will achieve $225,000
in annual savings in productivity and
efciency and $400,000 in annual ac-
celerated revenue realization.
Multidimensional vs. flat View
Aberdeen Group, in its January 2009
report, Beyond Spreadsheets: The Value
of BI and Analytics,
1
identified business
intelligence/analytics as the most im-
portant technology to impact business-
es in the next two to five years. And
though the research firm said many or-
ganizations will try to extract business
intelligence using spreadsheets, that
strategy is flawed.
“Organizations are falling back on
spreadsheets as a means of providing
the output from BI systems to users
who either do not have the analytical
skills required, or for whom access to
BI capabilities is simply too expensive.
This thought process may be erroneous
when the costs associated with uncon-
trolled use of spreadsheets are factored
in,” Aberdeen reported.
In fact, the firm found in its April
2008 study, Financial Planning and
Budgeting, that respondents felt “the
likelihood of data corruption and hu-
man error is far greater when budget
and forecast information is shared
within spreadsheets.”
2
And in the Be-
yond Spreadsheets report, Aberdeen
stated that spreadsheets can be char-
acterized as a “clear and present dan-
ger” when it comes to information,
security and risk management. The
research firm also noted that “spread-
sheets, in and of themselves, serve to
exacerbate the business pressures, as
it is impossible to accurately integrate
data from multiple applications using
spreadsheets.”
Conversely, analytics tools can
facilitate data collection, cleansing,
analysis and reporting, and therefore
reduce the opportunity for human er-
ror, provide the ability to reliably re-
produce results, document, and con-
tinually improve the process. They
turn the focus from people having
to manually extract and manipulate
data to being able to concentrate on
creative problem solving using inte-
grated data, regardless of source.
“Analytics help you understand in-
flection points in your business and the
optimum investments to make,” said
Anne Milley, senior director of technol-
ogy product marketing at SAS. As an
example, a call center could use analyt-
ics to determine optimal on-hold times
for customers and then staf the call
center accordingly. “That information
is typically not sitting in a spreadsheet.
Instead, you need to test and measure
diferent options based on various met-
rics such as actual customer tolerance
levels,” she said.
A View to remember
Another benefit of more robust ana-
lytics tools vs. general spreadsheets
is the ability to generate highly dy-
namic, multidimensional visualiza-
tions/reports. Rather than printing
static spreadsheets and graphs, data
analysts can automatically produce
highly visual, interactive presenta-
tions that engage the audience.
For instance, instead of simply
looking at columns and rows of num-
bers, data analysts can show patterns as
TECHNOLOGY BRIEFING • AnAlyTICS: THe ArT And SCIenCe of BeTTer
“IT is the enabler for
analytics that scale,
including driving infra-
structure strategy and
determining how data
will be collected, cleaned
and dispersed, and re-
sults deployed through-
out the organization.”
MATThew Mikell, gloBAl
prodUcT MArkeTing MAnAger
for SMBs, SAS
1. Source: Aberdeen Group, January 2009. 2. Source: Aberdeen Group, April 2008.
4
points across a cube or as a movement
across a line. “You’re going beyond sum
and average to get people to think dif-
ferently,” said Matthew Mikell, global
product marketing manager for SMBs
at SAS. “You can tell a fantastic story
to upper management and allow the
people you’re targeting to ask—and an-
swer—more questions.”
More importantly, showing data in
a compelling way supports your abil-
ity to challenge business as usual and
foster new strategies. He said that if
people can relate to the data, they are
more likely to remember it and want to
react long after your presentation.
Stephen Few, a well-known data vi-
sualization expert and principal at IT
consultancy Perceptual Edge, pointed
to the example of The Bay Model, a
three-dimensional hydraulic model of
the entire San Francisco Bay and the
surrounding delta system that extends
into the Sacramento and San Joaquin
valleys. The U.S. Army Corps of Engi-
neers relies on the model to study and
anticipate the efects of various condi-
tions in the area so it can construct pre-
ventative protections. “The engineers
could have prepared a complex spread-
sheet, using mathematical calculations
alone to model this water system, but
this wouldn’t sufce. Some things must
be seen to be understood,” Few wrote.
3
However, he warned that models
must have the right balance of informa-
tion. “If a model is more complicated
than the thing it represents, it’s a bad
model. If it’s so simple that it leaves out
information that must be seen and un-
derstood, it’s a bad model,” he wrote.
Few also noted: “When supported by
good visualizations, predictive analyt-
ics come alive in ways that not only
help statisticians, but also make it pos-
sible for a much broader audience to
become involved in shaping the future.”
Organizations can use data visual-
ization software to extend predictive
analytics beyond statisticians to all
business users. According to Few, “…
most of the analytical tasks that non-
statisticians face in the course of their
work can be efectively handled using
relatively simple visualizations and
no more than a basic understanding
of statistics.”
And sharing the burden results in be-
ing able to make better use of an orga-
nization’s professional statisticians. For
instance, Few said, once statisticians
have built a good predictive model,
then by using analytics software, oth-
ers can perform routine analysis, and
“statisticians can keep their time free
for more daunting challenges to the
greater benefit of all.”
A Team effort
For analytics projects to be success-
ful, business units, which might be
used to going it alone or simply re-
questing reports from IT, must part-
ner with IT from the outset.
“IT is the enabler for analytics that
scale, including driving infrastructure
strategy and determining how data
will be collected, cleaned and dis-
persed, and results deployed through-
out the organization,” Mikell said.
Rafe Donahue, associate director
of statistics at implantable orthope-
dic device developer BioMimetic
Therapeutics Inc. in Franklin, Tenn.,
agrees. Until he partnered with IT to
deploy SAS® Visual Data Discovery
for Midsize Business, the company
relied heavily on third-party clinical
research organizations to generate
database reports. “We’d have to email
them what query we wanted, then
they’d say it’ll cost this much, and
we’d go back and forth. It would take
weeks to get answers to simple ques-
tions,” he said.
Now, using the IT-backed SAS en-
vironment, data analysts can develop
hypotheses and quickly test them
against clinical trial data. Donahue
said this kind of instant access allows
his team to be far more creative in a
cost-efcient manner. In fact, he pre-
dicts the company will save $100,000
in 2009 by performing analytics in-
house. He’s also confident that the
more of these checks that are done,
the better the final product will be.
Milley calls this a clear example of
how organizations can use analytics
to make “the invisible visible.” She
said such results are crucial to gain-
ing executive buy-in. Once executives
see the impact of applied analytics on
the success of the organization, they
are more likely to support and fund
the eforts of business and IT.
Beyond the Tool
People and processes play a major role
in analytics. Most organizations will
find that they’ll move from holding in-
stitutional knowledge in one person’s
head to enabling a host of users to en-
gage in creative problem solving.
To ease this cultural transition and
to lay the groundwork for broader
use in the future, Milley recommends
that organizations see if an Analytical
Center of Excellence (ACE) makes
sense for where they are on their ana-
lytics journey. The ACE provides a
foundation for gathering and sharing
best practices and developing a cross-
functional analytics community that
reaches across the organization.
“Rather than operating in depart-
mental or ofce-based silos, taking a
holistic view of the whole business
TECHNOLOGY BRIEFING • AnAlyTICS: THe ArT And SCIenCe of BeTTer
Predictive Analytics for the Eyes and Mind. Copyright 2008, Stephen Few.
b
process, which typically spans organi-
zational boundaries, you will be able
to achieve whole-process optimization
versus achieving departmental goals
which are often at cross-purposes,”
Milley said. “For example, if risk is
told to minimize credit risk exposure
and marketing is told to maximize
response for new credit card ofers,
by taking a broader view to maximize
the customer lifetime value you can
balance diferent goals in the near and
long term to best suit your overall or-
ganizational strategy.”
Oxford’s Beyer, who heads up the
ACE in his organization, said to get the
most bang for your buck, you should
focus your initial analysis project in a
specific area of operational and strate-
gic importance to the business. “Once
you show how advanced analytics can
provide insight and value to a critical
issue, you’ll be more likely to get buy-
in and will be able to build upon your
initial success,” he said.
He also encouraged organizations
to facilitate a feedback loop between
data analysts, users and IT so that
everyone continues to grow in their
knowledge of automated analytics.
If done right, IT and business will
quickly see the benefits of SAS analyt-
ics software and services within their
organizations. They will see data ana-
lysts, who bring an analytic perspec-
tive and creativity to the table, able to
derive better and faster results from
their eforts, and therefore improve
the business overall.
w
Sandra Gittlen is a Massachusetts-
based technology writer.
TECHNOLOGY BRIEFING • AnAlyTICS: THe ArT And SCIenCe of BeTTer
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oecaaºe l|e|e Waº jaºl loo rac| dala.”
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dala r|r|ro ara|]ºlº car deve|op ar Ara|]l|ca| Cerle| ol Etce||erce
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AnAlYTicS And The SMB
ô
dATA VS. InformATIon
Analytics: unlocking
Value in Business
Intelligence Initiatives

This article was originally published
on CIO.com on April 14, 2009.
O
ver the past few years,
one of the hottest
growth areas in IT has
been in the business
intelligence (BI) space. Companies
have finally realized there is value
in their data and have launched
major BI initiatives in their orga-
nizations. But most companies are
making a colossal mistake in how
they are approaching this challenge
because they fail to realize data
does not equal information.
This is an important concept and
bears repeating: data ≠ information.
To turn data into information,
companies need a three-step
process:
1. data warehouse (dw)—com-
panies need a place for data
to reside and rules on how the
data should be structured.
2. Business intelligence—compa-
nies need a way to slice and
dice the data and generate
reports.
3. Analytics—companies need
to extract the data, analyze
trends, uncover opportunities,
find new customer segments,
and so forth.
Most companies fail to add the
third step to their DW and BI initia-
tives and hence fall short on con-
verting data into information. Why
is this happening?
It really comes down to an is-
sue with nomenclature. The term
“business intelligence” is the culprit
here. Software companies like SAP
(Business Objects), IBM (Cognos),
Oracle, Microsoft and others in
this space have put themselves in
a great position by promoting the
term, “business intelligence” to
describe this sector. They are basi-
cally telling companies that if they
buy their software, they will auto-
matically have the tools-capability
to gather intelligence to run their
businesses. Plus, since these tools
are providing “intelligence,” they
come with premium pricing.
This has become one of the most
efective software industry market-
ing campaigns in the past decade.
There is no question these software
companies have very good tools for
things like reporting, data mining,
creating dashboards, etc., but call-
ing this “business intelligence” has
misled IT organizations.
Why? All of these tools, and the
strategy and structure behind them,
are geared toward providing data to
business users and not creating in-
TECHNOLOGY BRIEFING • AnAlyTICS: THe ArT And SCIenCe of BeTTer
Most companies are making a colossal mistake in
how they are approaching the business intelligence
challenge because they fail to realize data does
not equal information.
By SCoTT STApleS
I
formation for them. This is because
the tools are really just pipes with
a business user using the pipe to
get data out of the data warehouse.
In the simplest of terms, a data
warehouse is a box and BI tools
are pipes coming in and out of the
box—basic plumbing.
While it is paramount to have a
solid DW and BI infrastructure in
place, real “business intelligence”
can only occur when analytics is
also added into the mix. The DW
and BI infrastructure allow business
users to query against existing data,
but it is only analytics that enable
business users to go beyond the
current boundaries of that data.
This is because analytics is done
by people and these people can
look outside of the current data
limitations in an organization and
can even look outside the company
walls for answers. This is what
separates data and reports from in-
formation and answers. This is pro-
viding “business intelligence.”
When analytics is added to
this structure, the entire ofering
becomes powerful. Analytics en-
ables companies to move beyond
reporting and into a higher deci-
sion-making and questioning mode.
Analytics opens the door for things
that will have maximum impact on
the business: marketing campaign
efectiveness, pricing, channel seg-
mentation, customer treatment,
supply chain optimization, risk
mitigation, sales efectiveness,
and so forth.
The only way to accomplish
this, is to embrace the concept of
analytics being a key component of
any business intelligence plan. Busi-
ness intelligence without analytics
is just reporting.
So, instead of companies just
talking about their DW and BI
strategies, they must now accept
analytics as a core component of
business intelligence. This change
in mindset will solve the dilemma
of data ≠ information:
current Mindset: dw + Bi = data
future Mindset: dw + (Bi + Analytics) =
information
Analytics will be the next big
value-add ofering for IT organiza-
tions. The businesses which em-
brace it will grow. The IT organiza-
tions that own it and drive it will
thrive. It is that simple.
w
Scott Staples is the president and
Co-CEO of IT Services at MindTree,
operating out of MindTree’s U.S.
headquarters in Warren, N.J. As Co-
CEO, Staples shares responsibility for
all aspects of MindTree’s IT Services
business around the world. Staples
has 20 years experience in the market,
focusing on IT consulting, manage-
ment consulting, and the financial
services and healthcare industries.
TECHNOLOGY BRIEFING • AnAlyTICS: THe ArT And SCIenCe of BeTTer
B
This article originally appeared in Com-
puterworld Canada, March 27, 2009.
B
usiness intelligence is an
overused term that has
had its day, and business
analytics is now the difer-
entiator that will allow customers to
better forecast the future especially
in this current economic climate,
said SAS Institute Inc.’s senior vice-
president and chief marketing ofcer.
“I don’t believe [BI is] where the
future is,” said Jim Davis. “The fu-
ture is in business analytics.”
Classic business intelligence
questions, said Davis, “support re-
active decision-making that doesn’t
work in this economy” because it
can only provide historical informa-
tion that can’t drive organizations
forward. Business intelligence, he
said, doesn’t make a diference to
the top or bottom line, and is mere-
ly a productivity tool like e-mail.
“SAS is bucking the trend because
analytics has come of age,” said Davis.
The Cary, North Carolina-based
business analytics software vendor
held its annual SAS Global Forum,
a user-run event, with 3,200 regis-
tered users.
At the event, SAS announced
enhancements to its Business Ana-
lytics Framework including data
integration, collaboration, data ana-
lytics, new algorithms, and what-if
scenarios for forecasting.
Gaurav Verma, global marketing
manager for business analytics with
SAS, said customers have to deal
with ever-diverse and complex busi-
ness issues, and are demanding tools
with a short return on investment
that enable “proactive, predictive,
and fact-based decision-making.”
Using the word “framework” and
not “platform,” said Davis, reflects
the fact that the latter implies two to
three years of implementation and an
over-shot budget, a scenario that orga-
nizations must avoid. But a framework
“implies an iterative approach” that
renders a faster return on investment.
“The reality is, the framework be-
comes the platform over time,” said
Davis, referring to a company’s abil-
ity to leverage existing investments.
Other announcements at the
event include a new SAS Fraud
Framework geared towards banks,
insurance companies, and govern-
ment entities, to help improve the
monitoring of customer behaviour
across user accounts and systems.
It includes the SAS Social Network
Analysis tool that analyzes all relat-
ed activities and relationships with-
in a network, like shared address,
telephone number, employment and
account ownership.
SAS also released a software-as-
a-service ofering for its Campaign
Management software to more cost-
efectively run marketing campaigns
given tight customer budgets.
SAS customer StubHub Inc., a
San Francisco-based online sports
and theatre ticket marketplace,
BuSIneSS AnAlyTICS
Analytics Versus
Intelligence
TECHNOLOGY BRIEFING • AnAlyTICS: THe ArT And SCIenCe of BeTTer
By KATHleen lAu
U TECHNOLOGY BRIEFING • AnAlyTICS: THe ArT And SCIenCe of BeTTer
uses business analytics to gauge the
response to random, non-seasonal
events and “bake” that into fore-
casting models. Ming Teng, direc-
tor of analytics with StubHub, said
the company is a small shop with a
plethora of data it must manage, the
challenge being to deploy efcient
processes so its analysts have ac-
cess to relevant data.
According to Gareth Doherty,
research analyst with London, Ont.-
based Info-Tech Research Group
Ltd., while it is a fair diagnosis that
most business intelligence systems
focus only on manipulating histori-
cal data, “part of SAS’ new market-
ing campaign is to reclaim the word
‘analytics’ and push for what they
call business analytics, and to dis-
tinguish it from traditional BI.”
That said, Doherty thinks com-
panies could definitely benefit from
the forecasting that business analyt-
ics aford, but cautions that such
tools “are by no means a crystal
ball.” The issue is that companies
without the expertise in statistical
training would be incapable of fully
leveraging the technology, he said.
The future of business certainly
lies in the direction that SAS is
heading, said Doherty, and that “if
organizations aren’t moving in that
direction, they should certainly be
thinking about it.”
w
IO
C
onsider the following
enterprises that are using
business analytics to out-
perform the competition:
A gaming company boosts loy-
alty by analyzing customers’
gambling losses in real time
and notifies them when they’re
losing too much.
An insurance firm collects
information on customers’
driving habits by ofering a dis-
count if they install a monitor-
ing device in their cars.
After analyzing the tastes of
the Wine Spectator’s reviewer,
a winery reverse engineers its
wines to appeal to those tastes.
These are just a few examples
of “analytical competitors,” a term
coined by Thomas H. Davenport
and Jeanne G. Harris in their book
Competing on Analytics: The New
Science of Winning.
1
Analytical com-
petitors beat the competition by
strategically applying business, or
predictive, analytics to their daily
operations. They use analytics to
improve business processes and
make the best decisions possible,
even counterintuitive ones. After
studying hundreds of enterprises,
Davenport and Harris found that
top performers were 50% more like-
ly to use analytics compared with
the overall sample, and they were
five times as likely as low perform-
ers to use analytics.
High-flying analytical competi-
tors all select one or a few distinc-
tive capabilities on which to base
their strategies, and then apply ex-
tensive data, statistical and quantita-
tive analysis, and fact-based deci-
sion making to support the capabili-
ties. In short, analytical competitors
use analytics to outthink and outex-
ecute the competition—and, Dav-
enport and Harris believe, “trends
point to a more analytical future for
virtually every firm.”
CIOs and their teams have a vital
role to play in establishing an ana-
lytical IT architecture with the right
information, infrastructure and ana-
lytical tools, as this article and oth-
ers in this Technology Briefing will
illustrate. “CIOs play a crucial role in
helping business executives under-
stand the concept and potential of
analytical competition, as well as how
it relates to the firm’s business strat-
egy and position,” says Harris, execu-
tive research fellow and director of
research, Accenture Institute for High
Performance Business. “They can
contribute to the business by serving
as advocates to help build the organi-
zation’s analytical capabilities.”
“Who better than the CIO to
understand that the data needed by
the departments responsible for risk
and fraud, for instance, can also be
helpful to the marketing team,” says
Keith Collins, senior vice president
CompeTITIVe AdVAnTAGe
the Analytical competitor
TECHNOLOGY BRIEFING • AnAlyTICS: THe ArT And SCIenCe of BeTTer
By Tom fArre
innovation and predictive analytics can transform
your enterprise into a competitor on analytics.
1. Competing on Analytics: The New Science of Winning, Thomas H. Davenport and Jeanne G. Harris. Harvard
Business School Press, Boston, Mass. 2007.
II
and CTO at SAS, a leading provider
of business intelligence (BI) with
integrated analytics. “Who better
to look across the business disci-
plines to understand where the
opportunities are to leverage the
power of analytics.”
predictive Analytics and Bi
Though the term “analytics” is in
common parlance, business, or
predictive, analytics has a specific
meaning: software that includes
performance management tools
and applications, as well as data
warehouse technology. According
to IDC, business analytics software
is used to “access, transform, store,
analyze, model, deliver and track
information to enable fact-based
decision making and extend ac-
countability by providing all deci-
sion makers with the right infor-
mation, at the right time, using the
right technology.”
2
This definition suggests a close
relationship between BI and analyt-
ics. Indeed, Harris considers analyt-
ics an element of BI, which covers
the collection, management and re-
porting of decision-oriented data, as
well as the analytical techniques and
computer approaches that are per-
formed on the data. If BI historically
focuses on collecting transactional
data and presenting historical results
through queries and reports, analyt-
ics extends BI with a more proactive
approach to solving high-value busi-
ness problems (see diagram below).
“Data mining, data visualization,
forecasting, optimization and other
analytic capabilities raise the busi-
ness value of the kind of questions
you can answer,” says T.K. George,
worldwide BI product marketing
manger at SAS. “A historical report,
while useful, is not as valuable as
finding out, ‘What’s the best thing
that can happen if I make this
product-line decision?’ An execu-
tive using sophisticated forecasting
techniques can outcompete an exec-
utive who relies on a simple rolling
average. With analytics, you begin
to see lifts and changes that impact
your strategy, you may recognize
new niche markets, or you may start
negotiating contracts with vendors
ahead of time based on your fore-
cast of peak productivity. Predictive
analytics can improve your ability
to compete and innovate.”
Analytic capabilities are making
a diference across a wide range of
companies large and small, George
notes, including those in manu-
facturing, healthcare, life sciences,
government and education. Analyt-
ics is also finding traction within
business functions such as the ofce
of the CFO, where it supports per-
formance management, activity-
based costing and compliance man-
agement. Similarly, Davenport and
Harris found analytical competitors
winning big in industries as diverse
as gaming, cement manufacturing,
insurance, professional sports, wine
making and freight carriers, as well
as among the more familiar online
service providers, banks, retailers
and telecommunications companies.
“If a company like CEMEX,
which distributes cement, can find a
way to compete on analytics,” Har-
ris says, “almost any company can.”
The role of the cio
What do the most successful analyt-
ical competitors have in common?
Davenport and Harris note four
common characteristics:
Analytics supports a strategic,
distinctive business capability,
such as supply chain, pricing,
marketing or customer loyalty.
AnAlYTicS And Bi
reAcTiVe VS. proAcTiVe deciSion MAking
What’s the best that can happen?
Standard
reports
Ad hoc
reports
Query
drilldown
Alerts
Statistical
Analysis
forecasting
predictive
Modeling
optimization
What will happen next?
What if these trends continue?
Why is this happening?
What actions are needed?
What exactly is the problem?
How many, how often, where?
What happened?
degree of intelligence
c
o
m
p
e
t
i
t
i
v
e

a
d
v
a
n
t
a
g
e
2. Worldwide Business Analytics Software 2007-2011. IDC, Framingham, Mass. (Excerpt from IDC #208699).
TECHNOLOGY BRIEFING • AnAlyTICS: THe ArT And SCIenCe of BeTTer
I2
Senior management is fully
committed to competing
analytically.
The company made a sig-
nificant bet on analytics-based
competition, with millions or
even billions of dollars at stake,
and perhaps the company’s ul-
timate survival.
Analytic competitors take an
enterprise-wide approach to
managing analytics, which may
include a BI competency cen-
ter for the efective use of ana-
lytics across the enterprise.
These factors make clear the
importance of the CIO’s team in
facilitating analytical competition.
A key responsibility is serving as
the steward of the enterprise data
that is the basis for BI and analytics.
This role isn’t new to the IT de-
partment, as basic BI functionality
depends on accessing and managing
the growing stores of transactional
and unstructured data that every en-
terprise generates. Now that analyt-
ics has become an essential aspect
of BI, the CIO must assume stew-
ardship of the data that can lead to
analytic insights.
The challenge is that depart-
ments within an enterprise often
undertake their own analytic proj-
ects, drawing upon their own data
marts. If they are successful other
departments may follow, leading to
the silos of inconsistent data that
have dogged BI professionals for
years. By understanding the infor-
mation needs of the business and
taking control of the BI/analytics
function, IT can ensure that ac-
curate data and analysis are made
available throughout the enterprise.
“The key for CIOs is to think
long term and enterprise-wide
about how they’re going to capture,
cleanse, manipulate, analyze and
present data across the enterprise,
to ensure there’s a common version
of the truth,” says Harris. “Then
business managers can focus on
the insights they’ve gained from
the data, rather than arguing over
whose data and analysis is correct.”
Also important is helping busi-
ness executives realize the potential
of the data that is within the IT
environment, as well as the value of
external and unique data sources.
“One of the best ways to compete
on analytics is to have proprietary
data,” says Harris. “Because if you
have unique data, it doesn’t matter
what analytical capabilities your
competitor has. The CIO can play
an important role in helping to ex-
pand the vision of the business.”
Harris cites several examples
that show the value of external and
unique data sources: the upheaval
that FICO scores caused in con-
sumer finance; a company that ana-
lyzes a competitor’s website to un-
derstand its pricing and promotion
patterns; and the winery mentioned
earlier that gained an edge by ana-
lyzing a wine reviewer’s preferenc-
es, information that no competitor
had. “The key is discovering what
information would be really strate-
gic to the organization,” says Harris,
“and then going out and getting it.”
This, of course, implies a BI/ana-
lytics platform with the ability to ac-
cess and mine both structured and
unstructured data, including text,
audio, video and the web. You’ll also
want analytics to be well integrated
with the BI platform. An enterprise-
wide data warehouse with a single
metadata repository will make it
easier for analysts to understand
and share insights derived from the
data. And any efort spent integrat-
ing heterogeneous analytics with
BI could take time away from busi-
ness innovation.
fostering enterprise-wide
Analytical competency
Another aspect of IT’s role in the
enterprise-wide approach favored
by analytic competitors is creating
a BI competency center (BICC).
“The business units have their own
budgets and they can aford to buy
the analytic software, and they may
not want to get IT involved,” says
Kathy Lange, senior director of ana-
lytical consulting at SAS. “We often
bring the business and IT sides
together in a BICC to show them
the value of sharing the responsibil-
ity, with IT being responsible for
governance, standards and data
management, as well as information
delivery in a context relevant to the
decision makers.”
According to SAS, a BICC is
a “cross-functional team with a
CIOs can help business
executives understand
the concept of analytical
competition, and how it
relates to the business
strategy and position.
JeAnne g. hArriS, AUThor of
Competing on AnAlytiCs:
the new sCienCe of winning
3. From SAS website, www.sas.com/consult/bicc.html.
TECHNOLOGY BRIEFING • AnAlyTICS: THe ArT And SCIenCe of BeTTer
IJ
permanent, formal organizational
structure. It is owned and stafed
by the [company] and has defined
tasks, roles, responsibilities and pro-
cesses for supporting and promot-
ing the efective use of business in-
telligence across the organization.”
3

Usually under the direction of IT, a
BICC can provide a center of excel-
lence for the capabilities needed to
fuel analytic competition and sup-
port analytic projects throughout
the enterprise.
“Most analytical competition
begins with someone having a great
idea about how to run the busi-
ness—possibly a counterintuitive
insight, such as a gaming executive
realizing that it could be bad for
business if customers lose too much
money,” says Royce Bell, CEO of Ac-
centure Information Management
Services. “Where did this insight
come from? Many analytical com-
petitors have developed a back-room
discovery function—an analytical
competency center, if you will—
which brings together the people,
processes and technology for suc-
cessful analytical competition.”
In Bell’s view, IT executives man-
aging the competency center can
act as evangelists, raising the ana-
lytical consciousness of managers in
the business units. Says Bell, “The
analysts in a competency center can
discover business insights that help
executives decide where to compete
in an analytic fashion.”
Examples of analytic insights in-
clude the ability to match styles and
sizes of clothes to customer prefer-
ences across diferent retail outlets;
optimizing schedules for main-
taining heavy machinery; learning
which stafers to hire based on HR
statistics; knowing when to remove
a starting pitcher; and understand-
ing which subscribers are likely to
churn or respond to an ofer. Nearly
every internal and external business
function can be enhanced through
analytical insights.
Valuable as these may be, not
every business executive is a born
analytical competitor. Many prefer
to stay in their comfort zones, mak-
ing decisions by gut instinct. Savvy
CIOs will work to find senior execu-
tives to sponsor analytics projects,
and then aggressively communi-
cate positive results. “Anyone who
manages a BICC needs to market
the results across the enterprise
in a sustained way,” says George
of SAS. “Business executives want
to emulate success. If they hear of
successful projects, they will better
understand the value that analytics
can provide.”
Once analytics begins to take
hold, IT needs to ensure that ana-
lytic capabilities can be deployed
and delivered at scale, at speed and
at the lowest cost. IT must also play
the role of gatekeeper, ensuring
that the right analytic capabilities
are delivered where they will do
the most good. Providers of ana-
lytics software ofer products for
both analytics specialists and more
general business users. Predictive
analytic tools are available to those
whose jobs include performance-
management tasks such as data
mining, modeling, forecasting and
optimization. Analytic capabilities
are also embedded in job-function
and industry-specific applications,
such as fraud detection, campaign
management, credit scoring, retail
optimization and many more.
“This isn’t analytics for the
masses,” says Bell. “IT has to be
clear on who receives the analyti-
cal tools and has the ability to make
analytical decisions, as opposed to
situations where analytics are baked
into the business processes and ap-
plications.” IT executives who get
this right will find it’s good for their
companies and their careers.
“Historically, CIOs who champi-
on analytics have been in the minor-
ity,” says Harris. “But our research
suggests that it is a smart career
move. Executives who take owner-
ship of analytics have done very
well for themselves.”
w
“Data mining, data visu-
alization, forecasting,
optimization and other
analytic capabilities raise
the business value of
the kind of questions
you can answer.”
T.k. george, worldwide
Bi prodUcT MArkeTing
MAnAger, SAS
TECHNOLOGY BRIEFING • AnAlyTICS: THe ArT And SCIenCe of BeTTer

Even analytics professionals. key variables and relationships. This unique and rich insight. was often inconclusive. which had to be manually assembled from multiple systems at each location. through email. classification. where they would get to experiment by formulating a problem through observation. A great example of this can be seen at Beverly. Three-ring binders full of columns and rows of numbers are used to predict complex. measurement and analysis reporting. And case studies overwhelmingly show that the use of analytics tools encourages employees to be more creative and achieve their full potential while improving the business overall. Yet these same tools. when used in a business context. When organizations reach that understanding. organizations have relied on rudimentary tools (spreadsheets. business-critical outcomes. data analysts and other decision makers within the organization get back to more of a test-center setting to truly study information gathered throughout the enterprise. detrimental to organizations. and accurate assessment of and preparation for future scenarios. are no longer sufficient. analysis and interpretation of data to reveal patterns. being successful means being able to predict in-demand technology skills and attract consultants with that talent before the rest of the market catches on. on the Web.) and typically quite noisy. creativity and Insights Analytics software enables the collection. in some cases. a leading IT and engineering recruitment firm with more than 20 offices worldwide. Even though Oxford had profession- TECHNOLOGY BRIEFING • AnAlyTICS: THe ArT And SCIenCe of BeTTer  . it is easy to see how successful analyt- ics initiatives transcend tools to take into account elements such as people. customer conversations in the call center. achievement of objectives. and too tedious to pore through. know that spreadsheets. who mine data for a living. Mass. For Oxford.AdVAnCed AnAlyTICS mining data for Intelligence. culture and technology. while necessary. anomalies.-based Oxford Global Resources. pivot tables and OLAP cubes are limiting and. Such one-dimensional tools deter them from their scientific roots. Getting there requires treating data as a strategic asset. the company had relied on data gathered into spreadsheets to accomplish this goal. OLAP cubes and the like) as the mainstays in driving business improvement. they are incapable of enterprise-size scaling. That information is wide-ranging (transactional data. With robust analytics software. cuts the noise and fosters better allocation of scarce resources. That methodology can lead to the holy grail of data-driven insights that enable better decisions. By SAndrA GITTlen F or years. In the past. classification. analysis and interpretation of a wide range of data for better decision making. the information. Analytics software provides an integrated environment that enables the collection. process. However. etc.

” MATThew Mikell. the company said it will achieve $225. partnered with their IT team to bring SAS® Enterprise Business Intelligence for Midsize Business in-house.000 in annual savings in productivity and efficiency and $400. human resources staffing data and phone system data to create a holistic picture of each salesperson’s performance.” said Anne Milley. interactive presentations that engage the audience. including identifying the hottest IT and engineering skills and alerting the field sales team so they can target their efforts accordingly.als on staff skilled in data analysis. The research firm also noted that “spreadsheets.000 in annual accelerated revenue realization. Beyer said.” he said. This has allowed them to improve core business processes. They were able to integrate data from across all the various systems and offices into a single data warehouse and provide Web-based reporting on key operational and trend data to their managers across the globe. cleansing. Instead. January 2009. “That information is typically not sitting in a spreadsheet. And 1. flat View Aberdeen Group.” Conversely. So the data analysts. April 2008. analysis and reporting. general spreadsheets is the ability to generate highly dynamic. you need to test and measure different options based on various metrics such as actual customer tolerance levels. that strategy is flawed. vice president of strategy and marketing. This thought process may be erroneous when the costs associated with uncontrolled use of spreadsheets are factored in. gloBAl prodUcT MArkeTing MAnAger for SMBs. region and other key metrics. as it is impossible to accurately integrate data from multiple applications using spreadsheets. regardless of source. They turn the focus from people having to manually extract and manipulate data to being able to concentrate on creative problem solving using integrated data. and continually improve the process. instead of simply looking at columns and rows of numbers. led by Scott Beyer.”2 And in the Beyond Spreadsheets report. Aberdeen stated that spreadsheets can be characterized as a “clear and present danger” when it comes to information. cleaned and dispersed. senior director of technology product marketing at SAS. “Analytics help you understand inflection points in your business and the optimum investments to make. serve to exacerbate the business pressures. That information is available to managers and sales people via a Web-based portal. or for whom access to BI capabilities is simply too expensive. TECHNOLOGY BRIEFING • AnAlyTICS: THe ArT And SCIenCe of BeTTer  . Rather than printing static spreadsheets and graphs. “Organizations are falling back on spreadsheets as a means of providing the output from BI systems to users who either do not have the analytical skills required. “We have combined financial data. in and of themselves. and results deployed throughout the organization. SAS 2008 study. document. Beyond Spreadsheets: The Value of BI and Analytics. A View to remember Another benefit of more robust analytics tools vs. provide the ability to reliably reproduce results. that respondents felt “the likelihood of data corruption and human error is far greater when budget and forecast information is shared within spreadsheets. For instance. multidimensional visualizations/reports. security and risk management. they suffered from the limitations of their tools. In fact. so together they can enhance individual and overall productivity. though the research firm said many organizations will try to extract business intelligence using spreadsheets. in its January 2009 report. and therefore reduce the opportunity for human error. Financial Planning and Budgeting. Oxford also uses SAS Enterprise BI to show the sales team how they are performing based on tenure. 2. including driving infrastructure strategy and determining how data will be collected. a call center could use analytics to determine optimal on-hold times for customers and then staff the call center accordingly.” Aberdeen reported. As an example. data analysts can show patterns as Multidimensional vs. Source: Aberdeen Group.1 identified business intelligence/analytics as the most important technology to impact businesses in the next two to five years. the firm found in its April “IT is the enabler for analytics that scale. Source: Aberdeen Group.” she said. analytics tools can facilitate data collection. With SAS as the backbone of operational and marketing analytics. data analysts can automatically produce highly visual.

Stephen Few. “If a model is more complicated than the thing it represents. which might be used to going it alone or simply requesting reports from IT. then they’d say it’ll cost this much. others can perform routine analysis. but also make it possible for a much broader audience to become involved in shaping the future. it’s a bad model. “IT is the enabler for analytics that scale.” More importantly. using the IT-backed SAS environment. To ease this cultural transition and to lay the groundwork for broader use in the future. agrees. must partner with IT from the outset. cleaned and dispersed.S. a well-known data visualization expert and principal at IT consultancy Perceptual Edge. including driving infrastructure strategy and determining how data will be collected. using mathematical calculations alone to model this water system.” Few wrote. He said that if people can relate to the data. According to Few. and “statisticians can keep their time free for more daunting challenges to the greater benefit of all.” he said. Beyond the Tool People and processes play a major role in analytics. Stephen Few. taking a holistic view of the whole business Predictive Analytics for the Eyes and Mind. once statisticians have built a good predictive model.points across a cube or as a movement across a line. he warned that models must have the right balance of information. Now. he predicts the company will save $100. global product marketing manager for SMBs at SAS. “The engineers could have prepared a complex spreadsheet. and results deployed throughout the organization. they are more likely to support and fund the efforts of business and IT. The ACE provides a foundation for gathering and sharing best practices and developing a crossfunctional analytics community that reaches across the organization. “… most of the analytical tasks that nonstatisticians face in the course of their work can be effectively handled using relatively simple visualizations and no more than a basic understanding of statistics.” Mikell said. “We’d have to email them what query we wanted. Until he partnered with IT to deploy SAS® Visual Data Discovery for Midsize Business.3 However. “You can tell a fantastic story to upper management and allow the people you’re targeting to ask—and answer—more questions. but this wouldn’t suffice. If it’s so simple that it leaves out information that must be seen and understood. Tenn.” Organizations can use data visualization software to extend predictive analytics beyond statisticians to all business users. Milley recommends that organizations see if an Analytical Center of Excellence (ACE) makes sense for where they are on their analytics journey. Donahue said this kind of instant access allows his team to be far more creative in a cost-efficient manner. then by using analytics software.” said Matthew Mikell.” he wrote. Some things must be seen to be understood. Army Corps of Engineers relies on the model to study and anticipate the effects of various conditions in the area so it can construct preventative protections. The U. Once executives see the impact of applied analytics on the success of the organization. it’s a bad model. predictive analytics come alive in ways that not only help statisticians. “You’re going beyond sum and average to get people to think differently.” And sharing the burden results in being able to make better use of an organization’s professional statisticians. Few said. TECHNOLOGY BRIEFING • AnAlyTICS: THe ArT And SCIenCe of BeTTer  . Rafe Donahue.000 in 2009 by performing analytics inhouse. pointed to the example of The Bay Model. in Franklin. He’s also confident that the more of these checks that are done.” She said such results are crucial to gaining executive buy-in. and we’d go back and forth. Copyright 2008. they are more likely to remember it and want to react long after your presentation.. business units. the better the final product will be. For instance. Milley calls this a clear example of how organizations can use analytics to make “the invisible visible. Few also noted: “When supported by good visualizations. “Rather than operating in departmental or office-based silos. data analysts can develop hypotheses and quickly test them against clinical trial data. a three-dimensional hydraulic model of the entire San Francisco Bay and the surrounding delta system that extends into the Sacramento and San Joaquin valleys.” A Team effort For analytics projects to be successful. It would take weeks to get answers to simple questions. In fact. Most organizations will find that they’ll move from holding institutional knowledge in one person’s head to enabling a host of users to engage in creative problem solving. associate director of statistics at implantable orthopedic device developer BioMimetic Therapeutics Inc. the company relied heavily on third-party clinical research organizations to generate database reports. showing data in a compelling way supports your ability to challenge business as usual and foster new strategies.

For instance. said to get the most bang for your buck. able to derive better and faster results from their efforts. With SAS® Visual Data Discovery for Midsize Business. “Once you show how advanced analytics can provide insight and value to a critical issue. if the Dolphins are playing the Bears.” Mikell said. w Sandra Gittlen is a Massachusettsbased technology writer.process. Then. such as hosted services. They will see data analysts. you should focus your initial analysis project in a specific area of operational and strategic importance to the business. IT and business will quickly see the benefits of SAS analytics software and services within their organizations. analytics tools can lead to significant cost savings with little to no infrastructure costs. “For example. as an example. “Are we seeing attrition? Can we cross-sell among customers? Are we losing revenue per client?” “All businesses need to be able to answer these questions.” said Rafe Donahue. SAS offers alternatives to on-premise software. And relying on spreadsheets for answers can lead to costly errors. think again. StubHub can drum up business by sending this group a targeted email. data mining analysts can develop an Analytical Center of Excellence (ACE) that channels best practices. “SAS leaves the door open to flexibility and growth.” With SAS analytics. and able to be validated. “SMBs can’t afford to throw a tool out once they’ve outgrown it. by taking a broader view to maximize the customer lifetime value you can balance different goals in the near and long term to best suit your overall organizational strategy. an eBay company. Another benefit of SAS for the SMB is that as the organization grows. and therefore improve the business overall. They also can clearly identify the business problem they’re trying to solve. reproducible without guesswork. who bring an analytic perspective and creativity to the table. a building supplier with 0. as your business expands. “He had a hard time resolving errors that generated in the formulas because there was just too much data.” TECHNOLOGY BRIEFING • AnAlyTICS: THe ArT And SCIenCe of BeTTer  . AnAlYTicS And The SMB if YoU Think SMAll and midsize businesses (SMBs) should stick to spreadsheets and avoid analytics tools. which typically spans organizational boundaries.” he said. BioMimetic uses SAS Visual Data Discovery to analyze data generated from its clinical trials. Therefore. if risk is told to minimize credit risk exposure and marketing is told to maximize response for new credit card offers. for organizations concerned about not having an IT team to support the necessary infrastructure in-house. it found that SQL data extracts and Excel spreadsheets failed to provide the multidimensional view of the data needed to develop more precise strategies.” he said. Matthew Mikell. He also encouraged organizations to facilitate a feedback loop between data analysts. The process has to be programmatical. users and IT so that everyone continues to grow in their knowledge of automated analytics. creating a repository for institutional knowledge rather than having everything locked up in one employee’s or consultant’s head. In fact. you can easily bring your SAS platform in-house without losing all your analytics. Though many SMBs might consider them too costly and complex.” Mikell said. associate director of statistics at implantable orthopedic device developer BioMimetic Therapeutics Inc. who heads up the ACE in his organization. you will be able to achieve whole-process optimization versus achieving departmental goals which are often at cross-purposes. for many SMBs. “Serious analysis requires serious tools.” Milley said. StubHub was able to generate predictive models that grouped “personas. The company spends a significant amount of time and effort trying to create like-minded consumers for targeted marketing. Take ticket agent StubHub. If done right. global product manager for SMBs at SAS.000 SKUs tried to forecast seasonal product needs in a spreadsheet and “hit the wall. However. SMBs can clean and prepare the data to avoid such problems. Finally. automated analytics tools are actually cost-efficient and well suited to the small to midsize organization.” Oxford’s Beyer.” such as die-hard Miami fans who had moved to Chicago. you’ll be more likely to get buyin and will be able to build upon your initial success. said analytical software helps even the smallest company answer businesscritical questions such as.

TECHNOLOGY BRIEFING • AnAlyTICS: THe ArT And SCIenCe of BeTTer  . Microsoft and others in this space have put themselves in a great position by promoting the term. There is no question these software companies have very good tools for things like reporting. To turn data into information. analyze trends. find new customer segments. 3. Why is this happening? It really comes down to an issue with nomenclature. etc. Companies have finally realized there is value in their data and have launched major BI initiatives in their organizations. Why? All of these tools. one of the hottest growth areas in IT has been in the business intelligence (BI) space. but calling this “business intelligence” has misled IT organizations. InformATIon Analytics: unlocking Value in Business Intelligence Initiatives Most companies are making a colossal mistake in how they are approaching the business intelligence challenge because they fail to realize data does not equal information. But most companies are making a colossal mistake in how they are approaching this challenge because they fail to realize data does not equal information. and so forth. Software companies like SAP (Business Objects). and the strategy and structure behind them. The term “business intelligence” is the culprit here. are geared toward providing data to business users and not creating in- By SCoTT STApleS O ver the past few years. IBM (Cognos). since these tools are providing “intelligence. Plus. uncover opportunities.. “business intelligence” to describe this sector.” they come with premium pricing. This has become one of the most effective software industry marketing campaigns in the past decade. companies need a three-step process: 1. This is an important concept and bears repeating: data ≠ information. They are basically telling companies that if they buy their software. data warehouse (dw)—companies need a place for data to reside and rules on how the data should be structured. Analytics—companies need to extract the data. This article was originally published on CIO.dATA VS. 2. data mining. Oracle. 2009. they will automatically have the tools-capability to gather intelligence to run their businesses. Business intelligence—companies need a way to slice and dice the data and generate reports.com on April 14. creating dashboards. Most companies fail to add the third step to their DW and BI initiatives and hence fall short on converting data into information.

customer treatment. but it is only analytics that enable business users to go beyond the current boundaries of that data. So. a data warehouse is a box and BI tools are pipes coming in and out of the box—basic plumbing. the entire offering becomes powerful. instead of companies just talking about their DW and BI strategies. Staples shares responsibility for all aspects of MindTree’s IT Services business around the world. In the simplest of terms. This is what separates data and reports from information and answers. This is because analytics is done by people and these people can look outside of the current data limitations in an organization and can even look outside the company walls for answers. It is that simple. The businesses which embrace it will grow. and so forth. This is because the tools are really just pipes with a business user using the pipe to get data out of the data warehouse. sales effectiveness. w Scott Staples is the president and Co-CEO of IT Services at MindTree. While it is paramount to have a solid DW and BI infrastructure in place. Analytics enables companies to move beyond reporting and into a higher decision-making and questioning mode. and the financial services and healthcare industries. The IT organizations that own it and drive it will thrive. supply chain optimization. is to embrace the concept of analytics being a key component of any business intelligence plan. headquarters in Warren. operating out of MindTree’s U. channel segmentation. Analytics opens the door for things that will have maximum impact on the business: marketing campaign effectiveness. real “business intelligence” can only occur when analytics is also added into the mix.” When analytics is added to this structure. TECHNOLOGY BRIEFING • AnAlyTICS: THe ArT And SCIenCe of BeTTer  . focusing on IT consulting. N. As CoCEO. risk mitigation.S. Business intelligence without analytics is just reporting. The only way to accomplish this. management consulting. pricing. The DW and BI infrastructure allow business users to query against existing data.J. they must now accept analytics as a core component of business intelligence. This change in mindset will solve the dilemma of data ≠ information: current Mindset: dw + Bi = data future Mindset: dw + (Bi + Analytics) = information Analytics will be the next big value-add offering for IT organizations. This is pro- viding “business intelligence.formation for them. Staples has 20 years experience in the market.

TECHNOLOGY BRIEFING • AnAlyTICS: THe ArT And SCIenCe of BeTTer  .” Classic business intelligence questions. referring to a company’s ability to leverage existing investments.” said Davis. collaboration. doesn’t make a difference to the top or bottom line. the framework becomes the platform over time. a scenario that organizations must avoid. new algorithms. usiness intelligence is an overused term that has had its day. But a framework “implies an iterative approach” that renders a faster return on investment. and fact-based decision-making. At the event. and government entities. a San Francisco-based online sports and theatre ticket marketplace. “The future is in business analytics.” Using the word “framework” and not “platform. with 3.. predictive. said Davis. 2009. North Carolina-based business analytics software vendor held its annual SAS Global Forum.BuSIneSS AnAlyTICS Analytics Versus Intelligence By KATHleen lAu This article originally appeared in Computerworld Canada. global marketing manager for business analytics with SAS. to help improve the monitoring of customer behaviour across user accounts and systems. The Cary. “The reality is. SAS customer StubHub Inc. reflects the fact that the latter implies two to three years of implementation and an over-shot budget. insurance companies. telephone number.” said Jim Davis.” said Davis. March 27. “support reactive decision-making that doesn’t work in this economy” because it can only provide historical information that can’t drive organizations forward. “I don’t believe [BI is] where the future is. like shared address. It includes the SAS Social Network Analysis tool that analyzes all related activities and relationships within a network.200 registered users. employment and account ownership. he said. and business analytics is now the differentiator that will allow customers to better forecast the future especially in this current economic climate.’s senior vicepresident and chief marketing officer. Other announcements at the event include a new SAS Fraud Framework geared towards banks.” said Davis. and what-if scenarios for forecasting. a user-run event. Business intelligence. SAS announced B enhancements to its Business Analytics Framework including data integration. data analytics. and are demanding tools with a short return on investment that enable “proactive. said customers have to deal with ever-diverse and complex business issues. and is merely a productivity tool like e-mail. Gaurav Verma. SAS also released a software-asa-service offering for its Campaign Management software to more costeffectively run marketing campaigns given tight customer budgets. “SAS is bucking the trend because analytics has come of age. said SAS Institute Inc.

but cautions that such tools “are by no means a crystal ball. According to Gareth Doherty. they should certainly be thinking about it.- based Info-Tech Research Group Ltd. he said. “part of SAS’ new marketing campaign is to reclaim the word ‘analytics’ and push for what they call business analytics.. Ont. said Doherty. while it is a fair diagnosis that most business intelligence systems focus only on manipulating historical data. Doherty thinks companies could definitely benefit from the forecasting that business analyt- ics afford. non-seasonal events and “bake” that into forecasting models.” That said.” w TECHNOLOGY BRIEFING • AnAlyTICS: THe ArT And SCIenCe of BeTTer  . director of analytics with StubHub.uses business analytics to gauge the response to random. research analyst with London. said the company is a small shop with a plethora of data it must manage.” The issue is that companies without the expertise in statistical training would be incapable of fully leveraging the technology. the challenge being to deploy efficient processes so its analysts have access to relevant data. The future of business certainly lies in the direction that SAS is heading. Ming Teng. and to distinguish it from traditional BI. and that “if organizations aren’t moving in that direction.

” says Keith Collins. executive research fellow and director of research. “CIOs play a crucial role in helping business executives understand the concept and potential of analytical competition. even counterintuitive ones. By Tom fArre C onsider the following enterprises that are using business analytics to outperform the competition: A gaming company boosts loyalty by analyzing customers’ gambling losses in real time and notifies them when they’re losing too much. and they were five times as likely as low performers to use analytics. and then apply extensive data.” says Harris. Davenport and Jeanne G. After analyzing the tastes of the Wine Spectator’s reviewer. Boston. and fact-based decision making to support the capabilities. or predictive. Davenport and Jeanne G. Davenport and Harris believe.” a term coined by Thomas H. High-flying analytical competitors all select one or a few distinctive capabilities on which to base their strategies.” CIOs and their teams have a vital role to play in establishing an analytical IT architecture with the right information. Harris in their book Competing on Analytics: The New Science of Winning. “They can contribute to the business by serving as advocates to help build the organization’s analytical capabilities. can also be helpful to the marketing team. analytics to their daily operations. Davenport and Harris found that top performers were 50% more likely to use analytics compared with the overall sample. “trends point to a more analytical future for virtually every firm. infrastructure and analytical tools. Mass. analytical competitors use analytics to outthink and outexecute the competition—and.CompeTITIVe AdVAnTAGe the Analytical competitor innovation and predictive analytics can transform your enterprise into a competitor on analytics.” “Who better than the CIO to understand that the data needed by the departments responsible for risk and fraud. senior vice president 1. Harris. An insurance firm collects information on customers’ driving habits by offering a discount if they install a monitoring device in their cars. as well as how it relates to the firm’s business strategy and position. These are just a few examples of “analytical competitors. In short. for instance. a winery reverse engineers its wines to appeal to those tastes. statistical and quantitative analysis. They use analytics to improve business processes and make the best decisions possible.1 Analytical competitors beat the competition by strategically applying business. as this article and others in this Technology Briefing will illustrate. 2007. Thomas H. Accenture Institute for High Performance Business. Harvard Business School Press. TECHNOLOGY BRIEFING • AnAlyTICS: THe ArT And SCIenCe of BeTTer 10 . After studying hundreds of enterprises. Competing on Analytics: The New Science of Winning.

Davenport and Harris found analytical competitors winning big in industries as diverse as gaming. or you may start negotiating contracts with vendors ahead of time based on your forecast of peak productivity. which distributes cement. where? What happened? degree of intelligence TECHNOLOGY BRIEFING • AnAlyTICS: THe ArT And SCIenCe of BeTTer 11 . cement manufacturing. life sciences.and CTO at SAS. business. “almost any company can. while useful. as well as among the more familiar online service providers. data visualization.” predictive Analytics and Bi Though the term “analytics” is in common parlance. Worldwide Business Analytics Software 2007-2011.” Harris says. IDC. Mass. Harris considers analytics an element of BI. as well as data warehouse technology. model. Predictive analytics can improve your ability to compete and innovate. If BI historically focuses on collecting transactional data and presenting historical results through queries and reports. “A historical report. or predictive. analytics has a specific meaning: software that includes performance management tools and applications. Similarly. forecasting. What actions are needed? What exactly is the problem? How many. analyze. According to IDC. such as supply chain.” What if these trends continue? Why is this happening? The role of the cio What do the most successful analytical competitors have in common? Davenport and Harris note four common characteristics: Analytics supports a strategic. deliver and track information to enable fact-based decision making and extend accountability by providing all decision makers with the right information.” says T. Analytics is also finding traction within business functions such as the office of the CFO. store. can find a way to compete on analytics. AnAlYTicS And Bi reAcTiVe VS. With analytics. retailers and telecommunications companies. marketing or customer loyalty. management and reporting of decision-oriented data. you begin to see lifts and changes that impact your strategy. business analytics software is used to “access. using the right technology.K. worldwide BI product marketing manger at SAS. Framingham. activitybased costing and compliance management. as well as the analytical techniques and computer approaches that are performed on the data. banks. distinctive business capability. professional sports. is not as valuable as finding out. proAcTiVe deciSion MAking What’s the best that can happen? What will happen next? competitive advantage predictive Modeling forecasting Statistical Analysis Alerts Query drilldown Ad hoc reports Standard reports optimization techniques can outcompete an executive who relies on a simple rolling average. government and education. (Excerpt from IDC #208699). George. you may recognize new niche markets.”2 This definition suggests a close relationship between BI and analytics. transform. “If a company like CEMEX. where it supports performance management. “Data mining.” Analytic capabilities are making a difference across a wide range of companies large and small. ‘What’s the best thing that can happen if I make this product-line decision?’ An executive using sophisticated forecasting 2. insurance. at the right time. optimization and other analytic capabilities raise the business value of the kind of questions you can answer. pricing. Indeed. wine making and freight carriers. a leading provider of business intelligence (BI) with integrated analytics. analytics extends BI with a more proactive approach to solving high-value business problems (see diagram below). “Who better to look across the business disciplines to understand where the opportunities are to leverage the power of analytics. healthcare. George notes. including those in manufacturing. how often. which covers the collection.

“and then going out and getting it. From SAS website. “We often bring the business and IT sides together in a BICC to show them the value of sharing the responsibility. including text. the CIO must assume stewardship of the data that can lead to analytic insights. with millions or even billions of dollars at stake. Now that analytics has become an essential aspect of BI. cleanse. “The key for CIOs is to think long term and enterprise-wide about how they’re going to capture.” says Harris. a company that analyzes a competitor’s website to understand its pricing and promotion patterns.” says Harris. AUThor of Competing on AnAlytiCs: the new sCienCe of winning whose data and analysis is correct. The CIO can play an important role in helping to expand the vision of the business. a BICC is a “cross-functional team with a TECHNOLOGY BRIEFING • AnAlyTICS: THe ArT And SCIenCe of BeTTer 1 .” This. This role isn’t new to the IT department. “Then business managers can focus on the insights they’ve gained from the data.sas. video and the web. You’ll also want analytics to be well integrated with the BI platform. The company made a significant bet on analytics-based competition. to ensure there’s a common version of the truth. These factors make clear the importance of the CIO’s team in facilitating analytical competition.com/consult/bicc. “Because if you have unique data.” Also important is helping business executives realize the potential of the data that is within the IT environment. as well as information delivery in a context relevant to the decision makers. drawing upon their own data marts. as well as the value of external and unique data sources.html. of course. and the winery mentioned earlier that gained an edge by analyzing a wine reviewer’s preferences. JeAnne g. analyze and present data across the enterprise. An enterprisewide data warehouse with a single metadata repository will make it easier for analysts to understand and share insights derived from the data. implies a BI/analytics platform with the ability to access and mine both structured and unstructured data. If they are successful other departments may follow.” says Kathy Lange. manipulate. standards and data management. and they may not want to get IT involved. and how it relates to the business strategy and position.” Harris cites several examples that show the value of external and unique data sources: the upheaval that FICO scores caused in consumer finance. A key responsibility is serving as the steward of the enterprise data that is the basis for BI and analytics. it doesn’t matter what analytical capabilities your competitor has. information that no competitor had. rather than arguing over CIOs can help business executives understand the concept of analytical competition. audio. “The key is discovering what information would be really strategic to the organization. hArriS. “The business units have their own budgets and they can afford to buy the analytic software. IT can ensure that accurate data and analysis are made available throughout the enterprise. www. The challenge is that departments within an enterprise often undertake their own analytic projects. senior director of analytical consulting at SAS. By understanding the information needs of the business and taking control of the BI/analytics function.” says Harris. 3. as basic BI functionality depends on accessing and managing the growing stores of transactional and unstructured data that every enterprise generates. fostering enterprise-wide Analytical competency Another aspect of IT’s role in the enterprise-wide approach favored by analytic competitors is creating a BI competency center (BICC). “One of the best ways to compete on analytics is to have proprietary data.Senior management is fully committed to competing analytically. with IT being responsible for governance. and perhaps the company’s ultimate survival. And any effort spent integrating heterogeneous analytics with BI could take time away from business innovation. leading to the silos of inconsistent data that have dogged BI professionals for years. which may include a BI competency center for the effective use of analytics across the enterprise. Analytic competitors take an enterprise-wide approach to managing analytics.” According to SAS.

IT must also play the role of gatekeeper. credit scoring. “Business executives want to emulate success. as opposed to situations where analytics are baked into the business processes and applications. if you will— which brings together the people. and understanding which subscribers are likely to churn or respond to an offer. Predictive analytic tools are available to those whose jobs include performancemanagement tasks such as data mining. optimization and other analytic capabilities raise the business value of the kind of questions you can answer.permanent.” says Bell. retail optimization and many more. Providers of analytics software offer products for both analytics specialists and more general business users.” T. “But our research suggests that it is a smart career move. worldwide Bi prodUcT MArkeTing MAnAger. such as fraud detection. CEO of Accenture Information Management Services. responsibilities and processes for supporting and promoting the effective use of business intelligence across the organization. IT executives managing the competency center can act as evangelists. “Data mining. data visualization. Says Bell. Analytic capabilities are also embedded in job-function and industry-specific applications. optimizing schedules for maintaining heavy machinery. knowing when to remove a starting pitcher. “IT has to be clear on who receives the analytical tools and has the ability to make analytical decisions.” IT executives who get this right will find it’s good for their companies and their careers.” says Harris. CIOs who champion analytics have been in the minority. formal organizational structure. “Anyone who manages a BICC needs to market the results across the enterprise in a sustained way. raising the analytical consciousness of managers in the business units. SAS Valuable as these may be.” says Royce Bell. “Where did this insight come from? Many analytical competitors have developed a back-room discovery function—an analytical competency center. george. processes and technology for successful analytical competition. Savvy CIOs will work to find senior executives to sponsor analytics projects.k. “Most analytical competition begins with someone having a great idea about how to run the business—possibly a counterintuitive insight. Executives who take ownership of analytics have done very well for themselves. not every business executive is a born analytical competitor. It is owned and staffed by the [company] and has defined tasks. modeling.” Once analytics begins to take hold. ensuring that the right analytic capabilities are delivered where they will do the most good. “The analysts in a competency center can discover business insights that help executives decide where to compete in an analytic fashion. forecasting and optimization. campaign management. Nearly every internal and external business function can be enhanced through analytical insights.” says George of SAS.” w TECHNOLOGY BRIEFING • AnAlyTICS: THe ArT And SCIenCe of BeTTer 1 . making decisions by gut instinct. “This isn’t analytics for the masses. such as a gaming executive realizing that it could be bad for business if customers lose too much money. at speed and at the lowest cost.” In Bell’s view. they will better understand the value that analytics can provide.”3 Usually under the direction of IT. learning which staffers to hire based on HR statistics. and then aggressively communicate positive results. a BICC can provide a center of excellence for the capabilities needed to fuel analytic competition and support analytic projects throughout the enterprise. “Historically. IT needs to ensure that analytic capabilities can be deployed and delivered at scale. roles. Many prefer to stay in their comfort zones. forecasting.” Examples of analytic insights include the ability to match styles and sizes of clothes to customer prefer- ences across different retail outlets. If they hear of successful projects.