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Enabling the confident enterprise with business analytics
Informed decision making • Business analytics for industries and SMBs • Analytics applied to processes • Essentials to get started
Editor-in-Chief Anna Brown firstname.lastname@example.org Copy Editors Amy Dyson Trey Whittenton Chris Hoerter Editorial Contributors Kelly LeVoyer Greg Wood Anne Milley Michael Dowding Design Patrice Cherry Circulation Ellen Brandt Production Melody Fountain
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The impact of business analytics on performance and profitability Jim Goodnight Business analytics: helping you put an informed foot forward Jim Davis How organizations make better decisions Thomas H. Davenport Business analytics in action Gail Bamford, David Wallace, Mike Newkirk and Becca Goren The art, act and science of knowing Thornton May What business analytics means for small and medium businesses Matthew Mikell Embedding analytics into processes Thomas Davenport, Jeanne Harris and Robert Morison 8 essentials of business analytics Jim Davis The art of the possible: business analytics to measure corporate sustainability Alyssa Farrell
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Thanks largely to its use of analytics. Harrah’s ranks No. They can also determine optimal prices for hundreds of thousands of products at multiple locations.sas. giant retailers can zero in on the optimal price for all their SKUs and stores. Analytics converts those tremendous costs into invaluable assets. that capture and storage is costing huge amounts of money. The answers are out there – in the data we capture and store. . uses analytics to optimize its marketing and customer loyalty programs. 1 in profits as a percentage of revenues and has increased its share of wallet from 36 percent in 1998 to 45 percent today. It can mean analyzing portfolios to manage risk positions. Harrah’s. business analytics is a discipline that digs deeper into these vastly larger sets of data to uncover the most important insights. Banks can determine the optimal amount of cash to keep in ATMs. Pricing used to be an art. with the right analytics.P2|Performance and Profitability www. Our world generated more data in 2009 than in the previous recorded history of mankind. Let me state it plainly: Business analytics is the key to achieving these challenging objectives. Far more than mere reporting or dashboards or scorecards. For example. Successful responses to threats and opportunities now depend on rapid and smart execution. a global casino operator. Now.com/baexchange The impact of business analytics on performance and profitability By Jim Goodnight. retailers can predict how many red sweaters they need in stock and how many smalls or larges they need based on local demographics. Automakers can predict how many spare parts they’ll need on hand – and when. Right now. gut decisions and hunches no longer suffice. SAS With the rising complexity of global business. A good deal of this data can be converted into useful information and competitive advantage – by applying the right analytics. It can involve in-database analytics to optimize retail assortments or pricing. CEO. It can mean “social network analysis” to study behaviors and relationships on multiple levels to uncover fraud.
shipping. distribution and manufacturing operations. overseeing an unbroken chain of revenue growth – a feat almost unheard of in the software industry.com/baexchange In the Philippines. In addition to reducing unnecessary deaths. It also uses analytic software to target print and online promotions with greater accuracy. a 400 percent ROI in the first year. sometimes hourly.sas. the Bureau of Internal Revenue used analytics to recoup $114 million in unpaid value-added taxes. ONLINE Business Analytics Knowledge Exchange www. they expect to save $10 billion in health care costs at the national level through their analytic efforts. Take the time to discover how analytics can provide an objective view of your world. they are using analytics to reduce the number of patients who die from clinical errors.COM changes prices and offerings on its Web site. I’m not talking about gazing into a crystal ball. And you won’t be able to do that without analytics.Performance and Profitability|P3 www. Here’s my advice: Take the time to learn about analytics. not only as it appears today but also how it’s likely to appear tomorrow. And it uses analytics to optimize its marketing. In Sweden. And here’s my crystal-ball view: The ability to predict future business trends with reasonable accuracy will be one of the crucial competitive advantages of this new decade. The result: a $50 million reduction in costs last year. 1-800-FLOWERS. because it uses analytics. I’m talking about the capability of competitive organizations to develop and implement strategies today that are based on a careful analysis of their likely outcomes in the future.sas. .com/baexchange Jim Goodnight has been at SAS’ helm since the company’s incorporation in 1976.
BI is still a highly valuable part of your overall business analytics environment. drive sustainable growth through innovation. how many units did we sell. the application of analytical techniques to resolve business issues. which occur less frequently but greatly impact organizational strategy. Despite years of talk about scorecards and metrics. From a more strategic decision perspective. Organizations make decisions every day. simply put. These decisions have a low transformational impact on the business. but if you break it down it’s all about enabling effective decision making. Why BI is not enough Business intelligence provides historical. It can also develop a simple rule for automatic reporting. business analytics can help answer questions such as what new products should we offer and in what markets? Or relative to the example. up to millions per day to transformative. helping organizations solve complex business problems.000 to the regulators.sas.P4|Face Forward with Business Analytics www. Creating intelligence and gleaning real insight from this data is what continues to elude organizations. . which credit card transactions are likely to be fraudulent? Business analytics can predict this with certainty and automatically deny transactions – while reporting activities in real time. anticipate and plan for change while managing and balancing risk. sometimes critical decisions. however. metric-driven decision making – and answers questions like. So what exactly is business analytics and how can it help? Business analytics is. offering an excellent general purpose backbone for ad hoc analysis and basic operational reporting. It sounds like a lot. like reporting on transactions greater than $10. what did customers buy and for how much? BI is characterized by the creation of simple rules and alerts and the distribution of known facts to systems and people. and these sit on a continuum from frequent. improve performance.com/baexchange Business analytics: helping you put an informed foot forward By Jim Davis Most companies today have plenty of data. For example. The need for agile decision making has never been greater but unfortunately. It provides organizations with a framework for decision making. IT infrastructure. people and processes are lagging behind. BI can alert management on how many credit card transactions were completed on a given day. even though current research reveals a clear link between business performance and the use of business analytics. gut feelings and experience are often still the guides for making important.
1 In this way. training.com/ba-cardfraud 1 Porter. A step toward business analytics Effective decision making requires a business analytics framework that incorporates the people.sas. Competitive Advantage : Creating and Sustaining Superior Performance. 1985. It benefits all aspects of an organization’s value chain. business analytics can not only discover the causal factors of fraud. spare parts management and more. Perhaps then it will become part of your plan to outthink and out-smart the competition. including channel selection. selling. equipment maintenance.com/baexchange Credit card fraud management www. including customer support.Face Forward with Business Analytics|P5 www. business analytics drives innovation and improves an organization’s speed of response to market and environmental changes. including warehousing and distribution management. ONLINE Business Analytics Knowledge Exchange www. testing and all activities that add value from the raw material to final product. A business analytics framework is not a monolithic and costly approach. retail management and shelf space optimization.sas. advertising. storing. you’ll hear from several experts about how business analytics can be applied to business problems across all types of organizations. . including: • Inbound logistics: receiving. reporting and advanced analytics. but rather provides for incremental growth to achieve strategic goals at any given stage of an organization’s value chain. technology and culture of an organization. Business analytics allows organizations to “face forward. This common framework provides flexibility across the entire range of analytical decision-making types from highly managed operational analytics (such as a setting a simple credit limit) to discovery-based analytics (such as credit fraud scenarios or setting dynamic credit limits). processes.. • Operations: including factors such as packaging. but also forecast accurately when it will occur again. • Service: activities that maintain a product’s value. • Outbound logistics: the activities required to get the finished products to market. installation. It offers business-ready analytical applications with underlying technologies for key services like data management and quality. promotion. inventory control and transportation scheduling. In the credit card scenario. In the following report. The company can then change business processes accordingly. repairs. • Marketing and sales: activities that lead a buyer to purchase the product. industries and value chains. pricing. Michael E.com/baexchange A business analytics framework is not a monolithic and costly approach but rather provides for incremental growth to achieve strategic goals at any given stage of an organization’s value chain.” bringing insight to transformative decisions.sas.
analytical semiprofessionals who do substantial amounts of modeling and analysis but are unlikely to develop sophisticated new algorithms or models. 3. but instead suffer from a lack of integration and a lack of quality. But not with business analytics. What kind of people do we need? You need a variety of talented people: analytical professionals who design and refine analytical algorithms. and the analytical manager who focuses the work of analytical professionals. In virtually every successful firm.com/ba-sixquestions . it falls short of the tools. reported but not understood. Without good data. senior management sets an analytical strategy and continually pushes it forward. competitors and more – is gathered but not analyzed. too often. analytical amateurs who need to understand something of the analytical basis for operations and decisions. and perform data mining. methods and expertise it needs to derive the greatest value from this untapped asset. Where should we leverage business analytics? Focus business analytics where you already compete. processes. 1. 4. employees. too. 6. guessed about rather than acted upon. What’s the payoff? Business analytics is all about anticipating the payoff in order to maximize it. not where you are playing catch-up. The payoff is greatest where you are playing to your strength. Information about the most important facets of the business – customers. What information and technology do we need? Most companies don’t lack for sufficient data.sas.com/baexchange Six questions about your company’s information The modern organization is awash in information – yet. 5. 2. Ask these questions of your company and join aggressive competitors by being a smart organization. Because competitors are likely exploring the possibilities of analytical competition.P6|Face Forward with Business Analytics www.sas. ONLINE www. And because it’s always risky to delay capitalizing on a new business capability. What roles must senior executives play? Committed senior executives provide the passion and the resources to drive their organizations in an analytical direction. Why now? Because the technology is ready. The analytics initiative succeeds when the business capitalizes on an opportunity that analytics reveals. you simply can’t do good analytics.
® As a result. the global financial services leader has achieved significantly lower incidence of fraud across tens of millions of debit and credit card accounts. Global Security and Fraud Risk for HSBC.sas. HSBC prevents. detects and manages financial crimes by scoring and accepting or rejecting millions of transactions a day in real time – at the point of sale.com/baexchange HSBC: fraud detection that exceeds aggressive goals With fraud levels surging around the world. .sas. ONLINE www. The ability to correctly make split-second decisions on accepting credit card transactions – before fraud occurs – is more important than ever. as well as risks associated with damaging publicity from fraud.Face Forward with Business Analytics|P7 www. Head of Group Fraud Risk. part of the SAS Business Analytics Framework. “The proof is in our fraud numbers – our detection rates and our false positives – which continue to meet our aggressive goals.com/ba-hsbc Jim Davis is Senior Vice President and Chief Marketing Officer for SAS. banks are facing greater regulatory scrutiny.” said Derek Wylde. Using SAS Fraud Management.
from Harvard Business Press). which products and services to offer. I found that while they are.sas. doing some of these things. one might expect that organizations would attempt to improve their decisions — that they would prioritize them. which customers to target. Author and researcher Tom Davenport is the President’s Distinguished Professor at Babson College. investigate new options for making them better and implement some of those options. examine their current level of effectiveness. Organizations with poor decision processes and tools eventually encounter poor outcomes. Given both negative and positive incentives to get better. and performance suffers. Davenport Relatively few businesses and organizations have given full and proper attention to one of their most important activities: making decisions regarding key questions such as what strategies and business models to pursue. In my survey and analysis of dozens of corporations. Better Results (with Jeanne Harris and Robert Morison.com/baexchange How organizations make better decisions The following article is an edited excerpt of an article distributed by the International Institute for Analytics. However.P8|Better Decisions www. “Wisdom of crowds” approaches and technologies allow larger groups of people to participate meaningfully in decision processes. what prices to charge and what employees to hire. indeed. decision automation tools and business intelligence systems make it possible to make better use of information in decisions. By Thomas H. . new analytics. His newest book is Analytics at Work: Smarter Decisions. Organizations cannot afford to ignore these new options if they wish to make the best possible decisions.
• Creating a common data architecture.com/baexchange Better Decisions|P9 In a survey and analysis of dozens of corporations. • Eliminating duplicate data. • Integrating “master data management. many organizations reported that they needed to change business processes to make better decisions. Not surprisingly. The most common were: • Having difficulty in accessing data. so it is not surprising that data-oriented responses were also common. 18 percent mentioned it specifically in interviews. Systematic testing was one form of analysis that was being used somewhat frequently by companies. Analytics.sas. Scoring approaches based on statistical analyses (usually some form of regression analysis) were common. very few organizations have undertaken systematic efforts to improve a variety of decisions. behavior-based customer targeting. it is generally assumed that a decision to adopt the winning page will be made. • Dealing with too much data. In this excerpt I describe some of the more frequent approaches used to intervene in decision processes. One key virtue is that it creates a decision-oriented context from the start. Eighty-four percent of respondents mentioned an analytical component in their decision improvement efforts and 66 percent mentioned efforts to improve data. The range of analytical techniques employed was quite broad. Other analytical approaches may not have as clear a path to a decision. Davenport found that very few organizations have undertaken systematic efforts to improve a variety of decisions.www. Sixty-six percent of respondents mentioned some issue involving data. prediction of various phenomena and the use of text analytics. testing and data Infrastructures predicated on analytics and data were among the most common decision-making frameworks among the surveyed firms. • Creating new metrics.” • Achieving “one version of the truth” in functional or process areas. If a test between two alternative Web page designs is performed. Other approaches included optimization. . • Gathering data from channel partners. A prerequisite of virtually any form of analytics is high-quality data. statistical forecasting.
Several organizations mentioned changes for decisionoriented processes made in the context of Six Sigma programs. strategic management approach to guide all aspects of their efforts. • An insurance company adopted enterprise risk management. including the “A3” format for displaying key issues in a particular business domain. and at a faster pace. many organizations reported that they needed to change business processes to make better decisions. “We didn’t initially have the franchise to do process improvement — our thing was analytics. Many organizations employ business rules but allow humans to override the recommended decisions when appropriate. Most of these initiatives are well-known approaches to business and management. • An economic decision analysis approach. but are not widely known in the decision-making or analytics literature. Forty-three percent mentioned process changes of some type. The organizations that use this approach found that it led to results that better fit the decision-makers’ requirements. typically found in the business intelligence category. But it kept coming up on our projects.g. Changes in business processes Not surprisingly.com/baexchange Technology support – and overrides – for decisions Several firms surveyed mentioned specific analytical software. lease processing in an auto financing firm. . Another popular decision technology involves using business rules to enable automated or semiautomated decision processes — sometimes in conjunction with analytics (e. • The Six Sigma approach to process quality and decision outcomes was implemented at a financial payments firm and a staffing firm..” they involve the creation of a series of short-term deliverables. This may be a bellwether of future attempts to link information and decision making. These tools. Two other technologies were mentioned frequently: specialized information display technologies and business rule engines. Thirty-eight percent of companies in the study mentioned some use of specialized information displays such as scorecards and dashboards.sas. some described process changes around supply chain management in an IT firm. financial processes in health insurance or new product development processes. For instance. some decision-focused analysts noted that their original goal wasn’t necessarily to identify and implement process changes. Some companies are using neuroscience principles to guide how information is presented and digested. As one head of an analyst group at an IT firm commented. and frequent review of them by the client and stakeholders for the decision. scoring-oriented applications). is used by an oil company. testing software. popularized and taught by Stanford’s Engineering School and the Strategic Decisions Group. and that they had to work with other groups to accomplish them. So we eventually just made it a part of our standard approach. data warehouses and Web analytics/ reporting software. Several firms mentioned using specific display approaches not generally supported by conventional BI tools.P10|Better Decisions www. • A financial services firm uses the “net promoter score” for customer satisfaction decisions. However. In addition.” Decision-oriented methods and tools Several organizations reported that one aspect of their decision processes was an overarching. allow decision makers to see only the information that they need to make a decision. three responding organizations developed analytically focused decision processes that have been widely used in IT systems development. Sometimes called “agile methods” or “rapid prototyping.
it’s clear that organizations recognize the importance of improving decisions. maintenance contracts. organizations employ a variety of intervention types to improve decisions across analytics. and change management — all in addition to the traditional analysis functions. • Evaluating marketing approaches (in both consumer and B2B environments).com Analysts — previously responsible for data gathering and analysis — are morphing into consultants who may be responsible for framing decisions. • Location decisions (for bank branches or where to service industrial equipment). analysts — previously responsible for data gathering and analysis — are morphing into consultants who may be responsible for framing decisions. • Hiring decisions. etc. communication and education programs. credit card firms). Better Results http://www. Although the survey was not a random sample. • Decisions to target consumer segments (by retailers. and data. • Product development for pharmaceutical firms.com/ Read the full International Institute for Analytics research www. process redesign. and change management — all in addition to the traditional analysis functions. The most successful organizations adopted multiple interventions at once to improve a decision.iianalytics. communication and education programs. • Student performance in educational organizations. • Merchandising decisions (brands to buy. Second. quantities and allocations). Analytics improves decisions Davenport’s research found the most common types of decisions improved by analytics include: • Pricing decisions (consumer goods.).analyticsatworkbook. As a result. Organizations seeking to implement decision improvements should become familiar with these common intervention types and create ongoing capabilities to deliver them.com/baexchange Better Decisions|P11 Conclusion From my research. . insurers.www. ONLINE Order it now – Analytics at Work: Smarter Decisions. individuals in 90 percent of organizations surveyed identified some attempt to improve decisions through better processes. industrial goods.com/ba-iia Engage with analytic leaders and researchers www. process redesign. • Vehicle routing decisions.sas. • Treatment protocols for health care. culture and leadership.sas. government contracts.
That number will only grow in ways that affect businesses and citizens. heart care and gynecologic care. the Institute has deployed a Web-based patient self-help application and predictive modeling to determine which treatments will be most effective for certain segments of RA patients.P12|Business Analytics in Action www. Maine Medical Center uses SAS Business Analytics to understand key patient care metrics – and sustain a quality-driven culture. Using SAS Business Analytics. • Developed new methods for caring for stroke patients while controlling costs.sas. • Improved government/industry accreditation/compliance by incorporating national guidelines into key metrics. . which will reduce costs.1 trillion in 2007. Mike Newkirk and Becca Goren HEALTH CARE According to the World Health Organization. Despite these huge investments. The data-driven approach has produced excellent results: • Increased compliance on medication reconciliation by more than 50 percent in a nine-month period. Maine Medical Center Named to US News and World Report’s “America’s Best Hospitals” list for orthopedics. global health spending totalled more than US$4. David Wallace. health care quality is uneven and resistant to changes and improvements. with $639 as the total health expenditure per person. By taking better care of these patients.com/baexchange Business analytics in action How are key industries deriving value from their business analytics implementations? By Gail Bamford. How can we enhance health care delivery while controlling those costs? It starts by carefully measuring and monitoring the quality of that care – a complex task perfectly suited for business analytics. Karolinska Institute The Karolinska Institute in Sweden needed a way to examine the effects of drugs. other treatments and lifestyle factors on patients with rheumatoid arthritis. Here’s how some forward-thinking health care institutions are delivering better quality of care more efficiently. the hospital expects fewer complications. • Dramatically reduced the rate of hospital-acquired infections by measuring where infections originated and what admission conditions closely correlated with acquired infections.
with institutions holding assets of $5 billion or less showing growth of almost 500 percent. NPLs as a percentage of average loan balances have risen more than 278 percent at US banks with $1 billion or more in assets. collect more from each portfolio and grow revenues by 50 percent annually. How can financial institutions improve their collections and protect their bottom line? 1 • Cleanse and integrate. First. Collections optimization driven by business analytics delivers the results that institutions need to improve their profitability.. Two key indicators of a bank’s health are net charge-offs (NCOs) – the value of loans written off as uncollectable – and nonperforming loans (NPLs) that are in default or delinquent more than 90 days. such as loan types.g. outstanding balances or days delinquent.Business Analytics in Action|P13 www. • Analyze and score. Optimizing collections A leading Australian financial institution previously relied on instinct when contacting delinquent customers. 1 Source: SNL Financial . • Optimize and execute treatment strategies. enrich it (e. Business analytics can provide the insights that institutions need to reduce both loan writeoffs and the cost of collections activities. Analytical models help collections teams understand who is most likely to respond. add geocoding tags) and integrate it into a single data store. Since introducing SAS for collections optimization. This enables the firm to make quicker decisions on acquiring new debt portfolios at the right prices.sas. bankers must be especially vigilant. In the past two years in the US. including “maximize profits” or “minimize writeoffs” or against constraints. It starts with three basic steps. Cleanse and standardize third-party credit and customer data. models created within a business analytics framework can identify likely candidates for workouts and loan modifications. business analytics can optimize collections activities to improve the probability of success and maximize self-treatment among debtor segments. bank NCOs have soared by an average of more than 350 percent across all institutions. it has achieved a 300 percent ROI in less than six months. A debt purchasing firm based in the UK uses SAS to predict debt portfolio performance. which communication channels work best and how much payment to expect. Second.com/baexchange BANKING In a challenging economic and regulatory climate. Develop scoring models to analyze debtor-customer segment data against objectives.
geography.com/baexchange Meaningful ROI with Business Analytics One SAS customer increased company profitability by accurately predicting product demand and customer behavior – more than doubling its forecasting accuracy. • Improving order fulfillment rates. it saved $200.sas. Once that data is aggregated. streamline logistics and much more. enhance the supply chain. • Shortening cash-to-cash cycles. It found that for every 1 percent reduction in forecast variance. so you switch providers.P14|Business Analytics in Action www. workin-process (WIP) inventory and finished goods inventories. customer type. shortening times you are without coverage. TELECOMMUNICATIONS You’ve likely experienced it before – your cell phone loses service one too many times. it is usually not integrated. identify and correct these imbalances and inefficiencies. Business analytics is essential in these settings to improve production and sales planning. yet improved service levels. business analytics models and tools can accurately forecast the demand for products by family. With a clear and accurate demand picture.000. reduce inventory. Better forecasts deliver ROI by: • Reducing inventories. Low barriers to churning mean providers must vigilantly and carefully invest to maintain and increase their service quality and customer satisfaction rankings. manufacturers can properly allocate raw materials across plants and regions – all optimized by distribution channel – to create complete roll-ups in master planning schedules. The team addresses the stream of trouble tickets. production plans fall apart and customer orders are delayed (or. It simultaneously reduced inventory by 20 percent. analyzed and shared across the organization. MANUFACTURING From diapers to jet engines and almost everything in between. Many manufacturers struggle with optimally managing and forecasting their raw materials requirements. Data management technologies can bring together islands of information such as point-of-sale (POS) data and historical shipment data. network managers can analyze performance to pre-empt failures. which directly and positively affected customer satisfaction. eliminating millions of dollars of holding costs. including data quality and reporting capabilities – all key underpinnings for business analytics – can help quickly identify . Network managers typically receive error reports and alarms after a network device fails. your satisfaction keeps them in business. For example. canceled). etc. with demand forecasting. business analytics can be a key contributor to a manufacturer’s success. Without the right mix of raw materials. Missing WIP forecasts similarly leads to inefficient schedules and a crippling misallocation of finished stocks – not having the right quantities of the right goods at the right time and in the right places. After all. The result: long call-resolution times. With business analytics and approaches such as predictive fault analysis. While the data is often available to prevent. manufacturing expertise is a competitive differentiator for companies that follow optimal practices and methodologies to attack inefficiencies and eliminate waste. Strong data management. but never gets insight into underlying causes or trends for outages. Another manufacturer improved two seemingly competing objectives. worse. They can analyze trouble tickets and optimize corrective services. individual SKU.
com Becca Goren is a SAS Global Industry Marketing Manager for Communications. gail. A telco provider can then identify when and where network resources are deployed and quality/performance variations over time. a telco provider can limit the times you lose a signal and continually improve overall service.com/ba-healthcareprovider The standard for clinical data analysis and reporting www.com/baexchange One large telco service provider used SAS to identify emerging issues (an average of two weeks prior to failure) and double the percentage of tickets resolved within 48 hours.com/ba-banking Compete in manufacturing www.sas.sas. service and network issues.sas.sas.com ONLINE Health care providers keep pace with change www. communications service providers www. • Determine which services have the highest fault rates. Gail Bamford is a SAS Global Industry Marketing Manager for Public Sector. Media and Entertainment.com/ba-mfg Invest wisely.Business Analytics in Action|P15 www.m.bamford@sas. • Understand faults and performance on a macro level. optimize repairs and mitigate risk with answers to key questions: • How significant is each factor influencing network faults degradation? • Which network faults are tied to a given trouble ticket? • Which faults are related and what are their impacts? Armed with predictive fault analytics. david.com David Wallace is a SAS Global Industry Marketing Manager for Financial Services. faults and systems to improve resource utilization and quality of service (QoS). In addition to analyzing network performance. They can prioritize and pre-empt outages.sas.com/ba-karolinska Solutions for better risk management email@example.com@sas.sas. allowing it to keep your business. Business analytics allows network and service managers to better understand causes and impacts of failures.com/ba-maine Karolinska Institute www.com Mike Newkirk is a SAS Global Industry Marketing Manager for Manufacturing. becca.sas.newkirk@sas. michael. Business analytics helps to: • Identify and remove duplicate trouble tickets.com/ba-telco . predictive analytics technologies can help evaluate demand.com/ba-pharma ONLINE Get the full stories on: Maine Medical Center www.
The New Know has changed our reality along 10 fundamental dimensions. . The New Know: Innovation Powered by Analytics. Quite the contrary. Reprinted with permission.P16|The New Know www. You as an executive will be held much more accountable for your data management behaviors. You will be expected to transform “data lead” into “knowledge gold” via the expeditious 1 Copyright 2009 by John Wiley & Sons. I call the 20year interregnum we currently inhabit (1995 – 2015) the Age of Little Information. act and science of knowing An excerpt from The New Know By Thornton May 1 The Internet makes self teaching — and lifelong learning — the rule rather than the exception. much more aggressive information management. Historians ultimately will come to consensus on what to call the time period between the frenzy that was the dot-com bubble and the period before society finally enters the data cloud. For want of a better phrase. All rights reserved.com/baexchange The art. much more intense. I come to this label not because the age exhibits a lack of information. it is during this epoch that information — previously locked away in analog form — is becoming widely digitized. relatively speaking. We are now exiting a historical moment of undermanaged and only occasionally acted-upon information to an environment requiring much more active. Inc. All this newly digitized information has had. New Know Reality #1: You will be expected to do something with information. Futurist Thornton May positions analysts as heroes of the age we are about to enter in his new book.sas. little impact on behavior and little impact on organizational outcomes.
Readers may be surprised to learn that neuroscience has been around for over 100 years. . using what data and assisted by what tools did you arrive at your course of action?” New Know Reality #4: Brain science and decision science are converging. we were data vegetarians. they are really asking: “How were you thinking? Via what processes. what experts sometimes refer to as metacognition. confusion about what information is to be believed. Scientists do not know how the brain works — yet. Neuroscience has progressed to the point that we at least know what we do not know. In a world of multiple sources of information and 24-hour decision making. podcasts. Organizations are having trouble keeping up — and. Society is about to undergo a tectonic shift in how it thinks about thinking.” New Know Reality #3: You will have to know more about knowing.sas. the fact that there are more facts arriving at a faster rate of speed is not even the tip of the cognitive iceberg. Processing power doubles every 18 months. the very character of information is changing. In the New Know we will have to become information and knowledge carnivores. which are increasingly filled with images and instances of current-generation leaders being asked by dissatisfied nextgeneration voters. Storage capacity doubles every 12 months. Driving this cognitive plate shifting are the RSS feeds. what information sources are credible and what version of reality is to be acted on). But they are sneaking up on it.www.” info warriors speak of the “fog of facts” (e. customers and shareholders: “What were you thinking?” Looking beneath the surface. blogs. In the Age of Little Information. There is more to know.g.. Bandwidth throughput doubles every nine months. sadly. New Know Reality #2: There really is more to know. The New Know will be awash with data. old-media headlines and evening news programs. One of the major changes defining the new competitive environment is the requirement to know more about knowing.com/baexchange The New Know|P17 sensemaking leading to efficacious action. A “fact” is no longer a “fact. Like the “fog of war.
Because of the current technological revolution.” Josh Bernoff. Leaders are able to cut through all the noise.P18|The New Know www. it is a simple truism that the brain is involved with all things that comprise our human existence.” New Know Reality #6: Information management Is the essence of leadership. and what sets great leaders apart is their ability to cut through the clutter and distinguish the truly important from the merely interesting.com/baexchange Carly Fiorina. There are things that can be known— that need to be known by executives seeking to maximize value from the knowledge assets available to the enterprise. former CEO at Hewlett-Packard. contends: “There’s so much information flowing out of the groundswell. gradually strengthening new neural pathways in our brains while weakening old ones. therefore. believes that distilling truth from overwhelming amounts of information is the essence of leadership. It follows. loosely. Thinking in Darwinian terms. it’s like watching a thousand television channels at once. Low-cost communications give rise to almost toxic levels of spin. New Know Reality #5: The environment is changing our brain. The question is: How will we be able to keep up? .” The new scarce resource in the next economy will be the human attention needed to make sense of information. boiling down the chatter to a manageable stream of insights. New Know Reality #7: A more connected world.sas. She believes that all of us are overwhelmed with information. Vice President at Forrester. To some extent. One of the transformational elements moving society to the New Know is something analysts at Forrester Research call the “groundswell. that understanding the brain will help us understand the human condition more fully. video games. The information flood should be viewed as a permanent macroenvironmental change. you need to apply some technology. our brains are evolving right now — at a speed like never before. former CEO at Hewlett-Packard. search engines — stimulates brain cell alteration and neurotransmitter release. Does your organization filter its data? Carly Fiorina. smart phones. what adaptive pressures does this environmental change place on us? “Daily exposure to high technology — computers. To make sense of it. believes that distilling truth from overwhelming amounts of information is the essence of leadership. The big news is that the brain possesses innate qualities that influence individual experience and opinions. hype and empty rhetoric.
” says John Murrell. Backing up a statement with mathematics gives it an aura of validity. on their energy bills. then “knowledge about power should be especially empowering. Every key process in your enterprise is locked in a room with an elephant — a critical process. it is useful to know where it will step. People use math to make decisions every day. by a thermostat readout.” New Know Reality #9: There are significant downsides to not knowing. and use the data to change their consumption patterns. using 15. counting and mathematical ability is basic to almost all animals. “In an age where you need to be numerate to do almost anything (from building bridges to conquering disease). If knowledge is power. Here is a metaphor to keep in mind as you think about the New Know. If you are locked in a room with an elephant. However. serving a critical customer. If you are locked in a room with an elephant. or about $70 a year. serving a critical customer. Mathematics is now so widely accepted as the arbiter of truth in the modern world that it has become the backbone of disciplines ranging from physics (of course) to economics and sociology. Success requires materially expanding what you know and adding precision and efficiency to the processes (analytics) whereby you come to know.sas. even if the topic has to do with something as mathematically messy as human behavior. it is dysfunctional. Program participants are expected to save 5 percent. . For instance. Change advocates from all fields of endeavor are excited about the possibility of putting new information in front of people in the hopes of changing behavior. it is useful to know where it will step. a subset of National Grid Customers will be able to access their energy — use information via the Internet. Every key process in your enterprise is locked in a room with an elephant — a critical process. This is not just unfortunate. the very-much-in-the-know editor of Good Morning Silicon Valley. governments anxiously compare their performance in mathematics with that of competitor nations.000 meters. Some intuition about numbers. Business analytics tells you where that elephant will step. many otherwise “normal” executives have a pathological aversion to math.com/baexchange The New Know|P19 New Know Reality #8: Math matters. Business analytics tells you where that elephant will step. or through text messaging.www. New Know Reality #10: Knowing can change the world.
000 in capital in one weekend. and range between 200 and 250 employees and $200 million and $500 million in revenue. because in today’s economy. In the US. we’d be choking on that inventory.000 items of wine that hadn’t moved in more than a year. I know who our best customers are. Matthew Mikell. these businesses are striving for the same goals to grow their business through innovation. far more small to medium businesses (SMBs) are poised to implement business analytics solutions. The first day its SAS application was live. the long-lasting return on investment far outweighs the capital required to undergo the transition. SMB Global Product Marketing Manager When it comes to business analytics. While in the Asia Pacific region. shares his perspectives on what business analytics means to SMBs. Considering the business analytics framework helps improve margins. But there’s so much more value that can be derived from in-depth analyses.com/baexchange What business analytics means for small and medium businesses An interview with Matthew Mikell.com/ba-winehouse .P20|Business Analytics for SMBs www. but Bill Knight. That’s somewhat understandable given the complexity and scope of their analytical challenges and the nature of their highprofile brands.” Using SAS. What are some of the unique challenges that SMBs face with respect to business analytics? A: SMBs primarily face the issue of scale. In many ways. the SMB category comprises companies with a maximum of EUR 450 million (about US$611 million). SMB often refers to both employee numbers and revenue. these companies have revenues of less than $500 million. SAS Global Product Marketing Manager.sas. cash constraints can pose very real obstacles for an SMB that wants to mature in this area. “and just in time. The Wine House discovers $400. Our ROI with SAS has been well over 100 percent in less than a year. In this Q&A. However.” says Knight. it sometimes seems like only major enterprises garner the spotlight. Most SMBs have Excel experts who can generate some great static charts and graphs — and I wouldn’t ever want to denigrate the value those reports provide. Once SMB executives get a real glimpse of the insights that are lurking beneath the surface of their transaction data. The Wine House has reduced its aged inventory by 40 percent. and need the same sophisticated functionality scaled appropriately to their processes. generating $400.” ONLINE www. Q. is toasting a 100 percent return on his investment in SAS.” Knight said. “I’ve got less money tied up in inventory. retain key customers and grow share of wallet in their markets.000 in ‘lost’ inventory Economic times may be tough.sas. In Europe. “Now I can get the answers I need and base decisions on facts rather than gut intuition. how to market to them and can monitor the effectiveness of our marketing. 2) Cash flow In addition to a shift in decision-making style. the brick-and-mortar and Internet retailer discovered 1. At SAS we have heard four general constraints when listening to organizations that are SMBs: 1) Decision-making style Transitioning from gut instinct to factbased framework can be difficult in part because the former approach has likely served the successful SMB very well. so my return on investment has been fantastic. But the fact is. owner and President of The Wine House. their willingness to adopt business analytics increases pretty quickly. “We had a huge sale to blow it out.
1 The main SMB challenge for moving to business analytics is the understanding of its impact on these four critical areas. it’s gut-based decisions. and building a capability that is costeffective and remains flexible and easy to use. The truth is what brought you to where you are typically won’t take you to the next level.com/baexchange SMB executives – often owners or people with lengthy tenures – worry about letting go of the information flow and empowering people to make decisions that were previously reserved for executives. If you’re an SMB that isn’t constantly seeking to optimize every possible aspect of the operation. Why should SMBs adopt business analytics? A: It essentially boils down to competitive pressures. They’re stretched thin. you’re Aberdeen Group. SMBs need to continually innovate. employees need these tools to be productive. Beyond Spreadsheets: The Value of BI and Analytics. Q What’s the best way for SMBs to tackle the adoption of business analytics? A: Of course. every company differs – particularly at the SMB size. SMB executives – often owners or people with lengthy tenures – worry about letting go of the information flow and empowering people to make decisions that were previously reserved for executives. Q. 4) Business analytics maturity SMBs must have an appreciation for the level of skills required to meet overall strategic goals through business analytics. But it’s very difficult.sas. 1 at a disadvantage. Make it clear how business analytics will resolve a compelling issue or attract and retain customers. or cutting and pasting from multiple tools. and that can make it very difficult to expand the IT mandate beyond critical business operations into managing business analytics environments. Internally. This transparency is key at the SMB level as SMB executives are traditionally heavily involved in analyses. Research from Aberdeen Group suggests that SMBs without the relevant skill sets are poorly positioned to drive value from an analytical solution. The first step is to ensure you have sponsorship from company executives. reporting and the decision-making process.Business Analytics for SMBs|P21 www. 2009. to walk away from what’s made you successful. Otherwise. for example. But we’ve found that there is a general approach to the adoption of business analytics. It reports that SMBs using some sort of analytical applications perform at a higher level than their competitors that do not. 3) IT resources and infrastructure More than 80 percent of SMBs with about 100 employees have only four dedicated IT staffers. . Clearly lay out the business analytics benefits and return to the management team. culturally.
is the important commonality: functionality. Those adoptions move faster once you can point to a successful track record in another area. Q.P22|Business Analytics for SMBs www. Matthew Mikell leads Global Product Marketing for SMB markets and software-as-a-service (SaaS) offerings at SAS.com/ba-smb Some of the typical issues that we see being solved with business analytics include improving customer data quality for improved marketing. . or improved product pricing and packaging analysis to drive a higher market share. invoicing or customer service. ONLINE Software for SMBs www. What’s the difference between business analytics for large enterprises vs. supporting strategic planning. messaging and product offerings through direct and indirect channels. A player in the secondary-ticket market uses SAS to develop a deeper understanding of the needs of its thousands of customers. By segmenting them and catering to psychographics. Capitalize on your initial success to broaden deployment to other areas of the organization. This will occur naturally as you solve more focused issues. Finally.sas. SMBs face similar challenges to make better and more informed decisions to continue innovating in their markets. We’ve worked with an energytrading company that enables staff to predict what today’s electricity and gas purchases will sell for months later when consumers buy. Business analytics in SMBs is not about presenting a subset of functionality but rather surfacing the right functionality for the problem at hand. SMBs? A: In a nutshell. What’s more interesting to me. building up confidence in fact-based decision making as a core competency. Don’t introduce business analytics as a broad. unfocused utility for general usage. Some of the typical issues that we see being solved with business analytics include improving customer data quality for improved marketing. A collection agency uses SAS Business Analytics to analyze bad-debt portfolios before acquiring those assets.com/baexchange The second strategy is to focus on a particular business process or issue. Q. Can you share some examples of how SMBs have been able to capitalize on business analytics? A: Sure. invoicing or customer service.sas. which was simply buying any debt assets for as little as possible and hoping to collect successfully. the company can optimize how frequently it contacts the customers and improves loyalty. faster and more accurate way. Business analytics supplies that intelligence to traders in a cleaner. It is therefore essential to provide a rich set of features and a very high level of technology usability. This is a quantum leap forward from its previous model. or improved product pricing and packaging analysis to drive a higher market share. Deployment and support strategies will have a different nature. however. and opening up to more as the business requires it. it’s about scale. Despite their size. don’t rest on your laurels.
and for scheduling and routing delivery trucks. ‘Embedded Analytics in Action. . and working relationships that are likely to be new and unfamiliar at first. starting with the techniques of statistical process control (SPC) and total quality management (TQM). but few companies take a process approach to such activities. This excerpt. it may be possible to simply start taking advantage of the analytical capabilities that are already included in the software. And analytics are well established in the engineering and simulation sides of product design. Better Results. We see examples of analytics at work within core processes in a variety of business areas. and over time you may want to reengineer the overall business process and revamp its information systems to capitalize on the potential for analytics-based improvement. Thomas Davenport. Consider the example of UPS to whet your appetite for embedding analytics in your core business processes. UPS is experimenting with algorithms to adjust the order of deliveries as conditions (e.. The solutions naturally demand very sophisticated and industrialized analytics: for capacity planning of aircraft and truck fleets. Reprinted by permission of Harvard Business Press.www. extraordinary customer need) change. Analytics at Work: Smarter Decisions. key decisions — for example. UPS lives and breathes the “traveling salesman problem”—how to reach a variable series of destinations most efficiently with the right delivery capacity. Jeanne Harris and Robert Morison. For processes that rely extensively on enterprise systems. Jeanne Harris and Robert Morison show how companies apply analytics in their daily operations. dynamic adjustments. Excerpted from Analytics at Work: Smarter Decisions. the frontier is moving closer to real-time. As a logistics company. regarding mergers and acquisitions—may benefit greatly from analytics.’ explores what to consider when infusing analytics into business processes. many process analytics initiatives will require tools. In corporate development. Real-time analytics are helping guide call center workers in their interactions with customers. techniques. for routing packages through its distribution network.com/baexchange Analytics at Work|P23 Embedding analytics into processes In their latest book. Making processes analytical The effects of analytics on the operations of a process can be profound. We have found that implementing analyticsenabled processes requires applying four major perspectives. Statistical analysis has been a feature of supply chain and logistics management for decades. and often in designated time windows.sas. For a company this steeped in analytical applications. For example. analytics are essential to many facets of finance. Better Results by Thomas Davenport. common in the management of technology operations. every day. But you can start embedding analytics without a major overhaul.g. All rights reserved. However. road closures. and relatively new to human resources (though of enormous potential there). Among business support functions.
The analytical system must be incorporated into the set of systems and technologies supporting the business process.sas.. Third is systems implementation. . it’s essential to measure baseline process performance first and to run the enhanced process in parallel to the original (perhaps as a pilot or test) in order to refine the new process and measure its performance and value. including capabilities of ERP systems. In building these interfaces. so be sure to involve them in developing. Analytical projects generally require different tools and development methodologies from those employed in more traditional systems development. but most often you are adding capability to and altering an existing process. it helps to employ process-oriented technologies.P24|Analytics at Work www. In some cases.. workflow and document management systems. Especially given the iterative nature of many analytical applications. Human implementation is the fourth perspective.com/baexchange The effects of analytics on the operations of a process can be profound. The first is process implementation. If you are going to industrialize important decision processes. And integrating and testing the new systems and interfaces is critical given analytics’ reliance on a broad range of quality data and the fact that analytics-based decisions may dramatically change process flow. assumptions and algorithms in your model are correct. but you can start embedding analytics without a major overhaul. is on the human side. Next. and over time you may want to reengineer the overall business process . developing and iteratively refining statistical algorithms and descriptive or predictive models or rule-based systems. organizations should consider model implementation. process simulation can yield insights about how the process might perform even before implementation. of course. Often the greatest implementation challenge. it is important that the rules. Occasionally a business may create a new analytically enabled process or rebuild a process from scratch. Only people can tell if an embedded application is resulting in good decisions. Another important factor is developing the right mix of automated and human decision making and enabling process performers to trust and use their new analytical information and sometimes tools. especially when analytics is new to the process and the people performing it. And. this work is performed by business analysts and programmers with special skills in statistical methods and modeling. Much of the distinctive work of process analytics centers on designing. managing and monitoring the assumptions and results of any embedded model.
and people perform the process better with the help of embedded analytics. SAS and Accenture: Making business analytics work for you SAS and Accenture have joined the forces of their best and brightest to help more organizations reap the benefits of an analytic approach. If you lack clear business goals. solution configuration. Automated decision applications. The factors that must be taken into account (the business problem’s dimensions.sas. often starting with data. images) that is available electronically. and make decisions — all with minimal human intervention. other information systems interface with the models and provide clean data feeds. yield optimization. The knowledge and decision criteria used in these systems need to be highly structured. IT’s role in embedding analytics into business processes Technology is an integral part of most business processes today. text. proof of concepts). These sense online data or conditions. timely. secure and reliable information management environment. but too many remain as standalone applications. and to make the business case for investing in prerequisite assets. apply codified knowledge or logic. standardized. conditions and decision factors) must be clearly understood and not subject to rapid obsolescence. technology (both industry and cross-industry offerings) and support (competency centers.com//ba-partner . The new Accenture SAS Analytics Group combines Accenture’s domain and industry experience with SAS’ analytic strengths to provide the services (best business practices. specifications or momentum. secure and reliable information management environment. be prepared to demo or pilot the concept. All four perspectives must mesh: process flow and decisions are enabled or controlled by analytical models. standardized. The conditions are ripe for automating the decision when experts can readily codify the decision rules. dynamic forecasting and operational control (like monitoring and adjusting temperature).www. So the best route to embedding analytics into processes is often through the technologies and applications that employees routinely use to do their jobs. timely. Business activities that benefit from automated decisionmaking applications include fraud detection. Technology is best suited to automate decisions that must be made frequently and rapidly.sas. integrated. recommendation/realtime offers. An industrial-strength IT architecture makes it vastly easier to weave analytics into ongoing work processes in three ways: 1.com/baexchange Analytics at Work|P25 Embedding analytics into processes starts with a robust analytical architecture that provides an accurate. to work with stakeholders to define targets and set ambitions. Scorecards and applications that monitor and alert based on predetermined thresholds are the norm these days. using any kind of information (data. ONLINE Accenture SAS Analytics Group www. integrated. Embedding analytics into processes starts with a robust analytical architecture that provides an accurate. certification programs) to help companies reach their competitive potential – more efficiently and cost-effectively. a production system automates the surrounding process and high-quality data exists in electronic form.
planning and “what-if” applications can incorporate near real-time information and multiple models to dynamically optimize a solution while factoring in conflicting goals like profitability and customer satisfaction. These tools and applications work best for less structured information with less defined decision criteria. Major platform providers like Oracle are embedding analytics into their products by building statistical functions directly into their enterprise data warehouse products. process-driven applications. Information workflow. Most information work is done through personal productivity tools like Microsoft Office. Analytical managers rely on analytical applications (whether custom developed or from third parties) that are integrated directly into Web applications or enterprise systems for tasks such as supply chain optimization. Business applications for operational and tactical decision making. Recommendation. And Microsoft. 3. Analytical business applications are best suited to welldefined. periodic tasks in which most of the information needed is predictable and available electronically. ERP vendors.sas. Oracle. remain a powerful way to integrate industry best practices into business processes. both specialty applications vendors and the major platform vendors are building more analytical functionality directly into their tools and applications. SAP and SAS continue to quietly embed more sophisticated analytics and business intelligence capabilities into their applications and tools.P26|Analytics at Work www.com/baexchange 2. collaboration and personal productivity tools. Since the data. As platform vendors align their products to work together more seamlessly. they require industry and functional expertise. a manager needn’t know that his Excel spreadsheet is using the company’s ERP system to prepare his forecast. analytics become more accessible to analytical amateurs throughout the enterprise. sales forecasting and advertising effectiveness/planning. As vendors increase the analytical quotient of their collaboration and productivity tools. project management. which are including more sophisticated analytical features. One consumer products company found that its elaborate modeling tool was ignored by nearly everyone until the findings were distilled into a monthly deck of ten PowerPoint slides and e-mailed directly to the sales force. To address the growing need to embed analytics into processes. knowledge and decision criteria are typically less defined and/or more fluid than those of a fully automated application. Software companies are building more industry-specific. .
technologies and business processes in new ways. accelerate product innovation. optimize supply chains and pricing.com/baexchange 8 Essentials|P27 8 essentials of business analytics Find out what business analytics can do for you – and how to get started By Jim Davis Leading banks use business analytics to predict and prevent credit fraud. these companies identify their most profitable customers. They have committed to a culture that is based on fact-based decisions – which helps them anticipate and solve complex business problems throughout the organization. using business analytics to determine both game strategy and optimal ticket prices. and identify the true drivers of financial performance. .www. saving millions. Pharmaceutical firms use it to get life-saving drugs to market more quickly. By embracing an analytical approach. Even sports teams are getting in on the action. Retailers use business analytics to predict the best location for stores and how to stock them.sas. But these advanced business applications tell only part of the story. What’s going on inside these market-leading companies that sets them apart? They have committed to deploying their people.
It should also be structured in a flexible way that allows your analysts to discover new insights and provide leaders the information they need to adjust strategies quickly. Your technology portfolio should include: • Optimized data stores to support core business processes and discovery. technology or expertise. explore and share results in a meaningful way. Transparency implies openness. How results are deployed is also important – through operation systems such as customer relationship management applications or real-time fraud applications to interactive dashboards. Demand fact-based decisions. The value delivered from an By embracing an analytical approach. The common thread? Evidence backs them all. these companies identify their most profitable customers. it is key to successful business analytics projects. Develop the talent you need. Some are ad hoc. . communication and accountability. accelerate product innovation. • Data integration and data quality software. When selecting technologies. in databases – wherever needed to ensure decision makers have the information they need when they need it (and in the way they can best consume it). data movies. Get the right technology in place. Take an enterprise approach to data management and analytics to effect better decisions. High-quality data must be integrated and accessible across your organization. 5. Improve the flow and flexibility of data.P28|8 Essentials www. Get started with business analytics by taking these eight essential actions: 1. regulatory or stakeholder demands. consider “risk-to-value”: Can the technology be applied to help reduce costs and increase revenue? And getting the right technology in place doesn’t have to mean a complete overhaul. 3.com/baexchange And you can too. • Integrated analytical applications designed to solve defined issues quickly. Managers encourage asking the right questions of the data to get maximum insight. An analytical company makes a wide range of decisions. and identify the true drivers of financial performance. Strengthening and flexing the data backbone of your enterprise will pay off when you need to change business processes quickly in response to market shifts.sas. • Analytical software with the means to effectively deploy. optimize supply chains and pricing. analysts must also be able to communicate effectively with leaders and link analytics to key decisions and the bottom line. To make analytics work. Develop or recruit analytic thinkers who seek and explore the right data to make discoveries. Remove disconnected silos of data. 4. some are transformative. some are automated. 2. Keep the process transparent.
Realizing cost efficiencies. Get started now. Staying ahead requires continuous review of strategy and development of new skills and capabilities. Your implementation of an ACE will depend on your organization’s maturity and requirements. ONLINE www. and employees should be given permission to fail as they learn from trying new things. By creating small wins in any business. Responding to user needs for availability of data on a timely basis. as should their findings. function or department. 6. Revise your strategies – often. 2. Speeding up the decision-making process. 3. Transform the culture. 4. 5. Find important questions that need answering and problems that need to be solved. 8.com/baexchange 8 Essentials|P29 investment in business analytics must be visible and measureable.com/ba-definingba . over time your company will become an analytical competitor. Improving the decision-making process. Your competitors will often duplicate your analytical initiatives. solve these problems and create value for the organization. Create a centralized team approach – an analytical center of excellence (ACE) – which promotes the use of analytics and associated best practices.sas. Better alignment of resources with strategies. Top five benefits of business analytics When Computerworld asked 215 IT and business professionals to name the key benefits of business analytics software. Develop an analytical center of excellence. Who the analysts are and what they’re seeking to accomplish should be clearly communicated to the business.sas. 7. The five most popular were: 1. Experimentation should be seen as part of learning. but the most effective implementations address all elements of the organization’s analytic infrastructure: people. technology and culture to support the business’ strategy and operations.com/ba-benefits ONLINE Defining business analytics white paper: www. process.www.sas. A strong analytical culture has executive sponsorship and encourages creativity. Jim Davis is Senior Vice President and Chief Marketing Officer for SAS. Answer these questions. they received a wide range of responses.
com/baexchange The art of the possible: business analytics to measure corporate sustainability By Alyssa Farrell In the abstract. companies are seeking to strengthen the so-called “triple bottom line” that conceptually expands the traditional financial framework to encompass rigorous reporting on the organization’s performance on sustainability issues such as the carbon footprint. business analytics presents a range of powerful options to uncover meaningful insights that promote action.sas. . occupational safety and dozens of other metrics.P30|Art of the Possible www. But the case becomes even more persuasive when we consider how it can be applied to one of the fastest-emerging issues in corporations today: sustainability and the corporate “environmental footprint. And that promise is compelling to virtually any organization. community development.” Today.
Three planning challenges Unfortunately. As a result. companies struggle with precisely how to measure the ROI of sustainability efforts. outcomes that have a direct impact on profitability. In the first MIT Sloan Management Review Business of Sustainability Survey. Business analytics plays a critical role by enabling the organization to balance today’s ROI objectives with longer planning horizons.Art of the Possible|P31 www. tangible and intangible costs and benefits abound in the sustainability discipline – but they can be especially challenging to forecast because the goals for greenhouse gas emissions reductions established by governments are often in 10. one where there isn’t a generation of tested and proven models to call upon and modify. Or. ONLINE www.com/baexchange In a report from the Economist Intelligence Unit. Sustainability is a new discipline for most organizations. What’s more. Despite the high profile for sustainability.and 20-year time horizons. including those with the highest energy consumption – such as data processing centers. amply demonstrating that pragmatism and not altruism is the dominant motivator. These challenges are not uncommon for emerging business issues.com/ba-poste . without that business case based on accepted definitions. researchers report that the top three motivations for sustainability initiatives are brand enhancement. This makes it extremely challenging to develop a meaningful business case for sustainable investments and presents an often insurmountable barrier to the effective cross-functional collaboration that is necessary for success. Third. they minimize important externalities such as environmental or societal costs and benefits – all of which can become tangible with business analytics. Accessing. Future developments involve correcting operation and maintenance behaviors for the systems and indirectly for the buildings. researchers articulated three major roadblocks. water and waste is a nonnegotiable premise for effective sustainability. Business analytics at work: gaining energy efficiency at Poste Italiane Group The art of the possible is already in practice at leading organizations today. Traditional reporting and analysis can often fall short when attempting to predict future impacts of sustainability investments.sas. Second. The Poste Italiane Group uses software from SAS to analyze energy efficiency in more than 250 facilities. executive centers and the largest branches. far exceeding the typical oneto three-year payback period. companies often have conflicting definitions of precisely what sustainability means to their organizations. Environmental protection only placed fourth on the list.sas. managers often find themselves forced to speculate about drivers of sustainable performance and lack a deep understanding of issues that are relevant for their industry. interacting with and analyzing the fundamental data about energy. The first is a basic lack of information upon which to base sustainability efforts and decisions. Their analysis has identified best practices that led to an immediate reduction in energy consumption and a 7 percent reduction in CO2 emissions. significant barriers have impeded decisive corporate action. revenue growth and cost savings – in other words. many organizations forego the effort to model the intangible benefits that may result from sustainable practices.
Delivering green analytics Transformational organizations require a combination of descriptive and predictive insight – the ability to track meaningful green indicators. forecasting and data mining to deliver metrics that matter. while the pro forma income statement in the analysis is paramount. renewable energy to the public energy grid for the local utility. And in these areas. the attention organizations are paying to sustainability matters is definitely not merely pro forma. And the US Army reports that 80 percent of its construction meets Leadership in Energy and Environmental Design (LEED) standards. • Reduce resource usage by accurately forecasting resource requirements needed to reach desired outcomes for a department or enterprise. • Report on environmental performance to shareholders and regulators. these benefits are highly unlikely to achieve primacy in profit-driven enterprises. www. In a report from the Economist Intelligence Unit. creating the strongest possible business case is an essential mandate for today’s sustainability directors.P32|Art of the Possible www. ONLINE For more information on SAS and sustainability. GE announced that its Ecoimagination program to reduce environmental impact generated a $17 billion revenue stream and reduced costs by more than $100 million since 2005. a 1-megawatt solar array is providing clean. are far-reaching and transformational. revenue growth and cost savings – in other words. The actions. check out the Corporate Social Responsibility Report: The ROI matters Despite these challenges. • Improve sustainability metrics using analytical techniques such as optimization.com/ba-csr . For example. That’s because although few observers fail to see the importance of efforts to reduce carbon output and minimize environmental impact. Several construction projects at SAS offices around the world utilize low-environmental-impact design principles. SAS has made great progress in reducing its environmental footprint.sas. In addition to employee engagement practices. when implemented. researchers report that the top three motivations for sustainability initiatives are brand enhancement.com/baexchange SAS and corporate sustainability Sustainability has remained a top priority with SAS precisely because of its potential to deliver tremendous business value. SAS is pursuing Leadership in Energy and Environmental Design (LEED) certification for a new conference facility and a new cloud computing facility located at its global headquarters. validate strategies and costs before investing. outcomes that have a direct impact on profitability. business analytics can make the difference.sas. For example. Environmental protection only placed fourth on the list. reducing its energy costs by 8 percent. Notably. However. It’s not just the right thing to do. from health care to expanded job opportunities. Such a business analytics framework can empower the organization to: • Measure sustainability activities using accepted methodologies and protocols. it’s the smart thing to do. amply demonstrating that pragmatism and not altruism is the dominant motivator. identify causal relationships and forecast outcomes.
we start to see the “art of the possible” with respect to sustainability.Art of the Possible|P33 www. water and waste is a nonnegotiable premise for effective sustainability.sas. business analytics can be a key enabler of strategic sustainability initiatives.sas. Manager of Sustainability and Performance Management Solutions.com . Farrell. alyssa. You can measure emissions and resource consumption throughout a value chain or product life cycle. And you can build green strategies with predicted ROI. Economist Intelligence Unit. By providing the right information and insights. has responsibility for SAS’ sustainability solutions. 2009 www. interacting with and analyzing the fundamental data about firstname.lastname@example.org/ba-mit Management Magnified: Sustainability and Corporate Growth. You can determine which conservation efforts or greenhouse-gas reduction strategies will have the greatest impact – physically and financially. Undoubtedly. This transformation can be an exciting opportunity to innovate and redefine. Accessing.com/ba-eiu Measure and improve performance with sustainability management www.sas. And you can identify ways to profit from environmentally respectful goods and services. embracing sustainability initiatives will lead to meaningful — sometimes profound — changes to processes and culture. You can ensure regulatory compliance.com/baexchange With business analytics. Farrell works with customers to understand best practices and solutions for managing their business with environmental responsibility in mind. MIT Sloan Management Review.com/ba-sustainability Alyssa A.sas. ONLINE Read the full white papers: The Business of Sustainability: What it Means to Managers Now. Fall 2009 www. to explore new business models and markets.
com/decisions for a free research paper SAS and all other SAS Institute Inc.SAS® Business Analytics Software Data Management | Analytics | Reporting | Targeted Business and Industry Solutions What if you could increase revenue by 66% using your data to make con dent. Other brand and product names are trademarks of their respective companies. in the USA and other countries. product or service names are registered trademarks or trademarks of SAS Institute Inc. NC 27513 USA ® SAS Business Analytics software helps organizations across every industry discover innovative ways to increase pro ts. SAS gives you The Power to Know. SAS INSTITUTE INC. © 2010 SAS Institute Inc. fact-based decisions? You can. and turn information assets into true competitive advantage.sas.0310 . 54446US. www. reduce risk. predict trends. ® indicates USA registration. WORLD HEADQUARTERS SAS CAMPUS DRIVE CARY. All rights reserved.
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