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Brain trust

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 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
Copyright © 2010 SAS Institute Inc., Cary, NC, USA. All rights reserved. Limited copies may be made for internal staff use only. Credit must be given to the publisher. Otherwise, no part of this publication may be reproduced without prior written permission of the publisher and copyright owner. SAS and all other SAS Institute Inc. product or service names are registered trademarks or trademarks of SAS Institute Inc. in the USA and other countries. ® indicates USA registration. Other brand and product names are trademarks of their respective companies. 104447_S50296.0310


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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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Harrah’s. They can also determine optimal prices for hundreds of thousands of products at multiple locations. It can involve in-database analytics to optimize retail assortments or pricing. CEO. A good deal of this data can be converted into useful information and competitive advantage – by applying the right analytics. Thanks largely to its use of analytics. Banks can determine the optimal amount of cash to keep in ATMs. Now. Analytics converts those tremendous costs into invaluable assets. Automakers can predict how many spare parts they’ll need on hand – and when. with the right analytics. Far more than mere reporting or dashboards or scorecards. Right now. Harrah’s ranks No. gut decisions and hunches no longer suffice. 1 in profits as a percentage of revenues and has increased its share of wallet from 36 percent in 1998 to 45 percent today. business analytics is a discipline that digs deeper into these vastly larger sets of data to uncover the most important insights. a global casino operator. Our world generated more data in 2009 than in the previous recorded history of mankind. It can mean “social network analysis” to study behaviors and relationships on multiple levels to uncover fraud. Successful responses to threats and opportunities now depend on rapid and smart execution. giant retailers can zero in on the optimal price for all their SKUs and stores. The answers are out there – in the data we capture and store. that capture and storage is costing huge amounts of money. uses analytics to optimize its marketing and customer loyalty programs. Pricing used to be an art. SAS With the rising complexity of global business. For example. .P2|Performance and Profitability www. Let me state it plainly: Business analytics is the key to achieving these challenging objectives. It can mean analyzing portfolios to manage risk 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

because it uses analytics. overseeing an unbroken chain of revenue growth – a feat almost unheard of in the software industry. The result: a $50 million reduction in costs last year. And you won’t be able to do that without analytics. distribution and manufacturing operations. not only as it appears today but also how it’s likely to appear tomorrow. . they expect to save $10 billion in health care costs at the national level through their analytic Jim Goodnight has been at SAS’ helm since the company’s incorporation in 1976. 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. And it uses analytics to optimize its marketing. In addition to reducing unnecessary deaths. a 400 percent ROI in the first year. sometimes hourly. they are using analytics to reduce the number of patients who die from clinical errors. ONLINE Business Analytics Knowledge Exchange www. I’m not talking about gazing into a crystal ball. the Bureau of Internal Revenue used analytics to recoup $114 million in unpaid value-added taxes. Take the time to discover how analytics can provide an objective view of your world.Performance and Profitability|P3 www. 1-800-FLOWERS. In Sweden. 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. It also uses analytic software to target print and online promotions with greater In the Here’s my advice: Take the time to learn about analytics. shipping.COM changes prices and offerings on its Web site.

like reporting on transactions greater than $10. business analytics can help answer questions such as what new products should we offer and in what markets? Or relative to the example. It sounds like a lot. Why BI is not enough Business intelligence provides historical. but if you break it down it’s all about enabling effective decision making. how many units did we sell. It can also develop a simple rule for automatic reporting. BI can alert management on how many credit card transactions were completed on a given day. Despite years of talk about scorecards and metrics. .sas. IT infrastructure. The need for agile decision making has never been greater but unfortunately. Organizations make decisions every day. improve performance. which occur less frequently but greatly impact organizational strategy. even though current research reveals a clear link between business performance and the use of business analytics. sometimes critical decisions. the application of analytical techniques to resolve business issues. It provides organizations with a framework for decision making. From a more strategic decision perspective. BI is still a highly valuable part of your overall business analytics environment. and these sit on a continuum from frequent. gut feelings and experience are often still the guides for making important. These decisions have a low transformational impact on the business. drive sustainable growth through innovation. 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. up to millions per day to transformative. Creating intelligence and gleaning real insight from this data is what continues to elude organizations. 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. So what exactly is business analytics and how can it help? Business analytics is. simply put. helping organizations solve complex business problems. offering an excellent general purpose backbone for ad hoc analysis and basic operational reporting.P4|Face Forward with Business Analytics Business analytics: helping you put an informed foot forward By Jim Davis Most companies today have plenty of data. metric-driven decision making – and answers questions like.000 to the regulators. however. anticipate and plan for change while managing and balancing risk. people and processes are lagging behind. For example.

com/ba-cardfraud 1 advertising. 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). Business analytics allows organizations to “face forward. but rather provides for incremental growth to achieve strategic goals at any given stage of an organization’s value chain. A step toward business analytics Effective decision making requires a business analytics framework that incorporates the people. 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. promotion. ONLINE Business Analytics Knowledge Exchange www.” bringing insight to transformative decisions. • Service: activities that maintain a product’s value. It offers business-ready analytical applications with underlying technologies for key services like data management and quality. Competitive Advantage : Creating and Sustaining Superior Performance. • Outbound logistics: the activities required to get the finished products to market. processes. testing and all activities that add value from the raw material to final product. equipment maintenance. spare parts management and more. repairs. A business analytics framework is not a monolithic and costly approach.Face Forward with Business Analytics|P5 www. installation. Perhaps then it will become part of your plan to outthink and out-smart the competition. including: • Inbound logistics: receiving. . training. selling. inventory control and transportation including channel selection. you’ll hear from several experts about how business analytics can be applied to business problems across all types of organizations. pricing. reporting and advanced analytics. but also forecast accurately when it will occur again. technology and culture of an organization. including customer support. It benefits all aspects of an organization’s value chain. In the credit card scenario. In the following Credit card fraud management www. retail management and shelf space optimization. storing.. business analytics drives innovation and improves an organization’s speed of response to market and environmental changes. The company can then change business processes accordingly. 1 In this Michael E. business analytics can not only discover the causal factors of fraud. including warehousing and distribution management. • Operations: including factors such as packaging. • Marketing and sales: activities that lead a buyer to purchase the product. industries and value chains.

analytical semiprofessionals who do substantial amounts of modeling and analysis but are unlikely to develop sophisticated new algorithms or models. not where you are playing catch-up. and the analytical manager who focuses the work of analytical professionals. What’s the payoff? Business analytics is all about anticipating the payoff in order to maximize it. and perform data mining. The analytics initiative succeeds when the business capitalizes on an opportunity that analytics reveals. Where should we leverage business analytics? Focus business analytics where you already . processes. 5. And because it’s always risky to delay capitalizing on a new business Six questions about your company’s information The modern organization is awash in information – yet. methods and expertise it needs to derive the greatest value from this untapped asset. In virtually every successful firm. too often. guessed about rather than acted upon. Without good data. reported but not understood. 3. 2. What kind of people do we need? You need a variety of talented people: analytical professionals who design and refine analytical algorithms.P6|Face Forward with Business Analytics www. ONLINE www. it falls short of the tools. What information and technology do we need? Most companies don’t lack for sufficient data. you simply can’t do good analytics. Because competitors are likely exploring the possibilities of analytical competition. 4. competitors and more – is gathered but not analyzed. but instead suffer from a lack of integration and a lack of quality. Why now? Because the technology is ready. What roles must senior executives play? Committed senior executives provide the passion and the resources to drive their organizations in an analytical direction. But not with business analytics. Ask these questions of your company and join aggressive competitors by being a smart organization. The payoff is greatest where you are playing to your strength. senior management sets an analytical strategy and continually pushes it 1. Information about the most important facets of the business – customers. too. analytical amateurs who need to understand something of the analytical basis for operations and decisions. 6.

® As a result. banks are facing greater regulatory scrutiny. detects and manages financial crimes by scoring and accepting or rejecting millions of transactions a day in real time – at the point of sale. HSBC prevents. The ability to correctly make split-second decisions on accepting credit card transactions – before fraud occurs – is more important than ever. Global Security and Fraud Risk for HSBC. .com/ba-hsbc Jim Davis is Senior Vice President and Chief Marketing Officer for HSBC: fraud detection that exceeds aggressive goals With fraud levels surging around the as well as risks associated with damaging publicity from fraud. the global financial services leader has achieved significantly lower incidence of fraud across tens of millions of debit and credit card accounts. Using SAS Fraud Management.Face Forward with Business Analytics|P7 www. “The proof is in our fraud numbers – our detection rates and our false positives – which continue to meet our aggressive goals. part of the SAS Business Analytics Framework.” said Derek ONLINE www. Head of Group Fraud Risk.

Better Results (with Jeanne Harris and Robert Morison. indeed. His newest book is Analytics at Work: Smarter Decisions. However. and performance suffers. from Harvard Business Press). Given both negative and positive incentives to get better. new analytics. . decision automation tools and business intelligence systems make it possible to make better use of information in decisions. doing some of these things. 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. which products and services to offer. Author and researcher Tom Davenport is the President’s Distinguished Professor at Babson College. I found that while they are. one might expect that organizations would attempt to improve their decisions — that they would prioritize them. Organizations with poor decision processes and tools eventually encounter poor How organizations make better decisions The following article is an edited excerpt of an article distributed by the International Institute for Analytics. examine their current level of effectiveness. By Thomas H. which customers to target. In my survey and analysis of dozens of corporations.P8|Better Decisions www. Organizations cannot afford to ignore these new options if they wish to make the best possible decisions. what prices to charge and what employees to hire. investigate new options for making them better and implement some of those options. “Wisdom of crowds” approaches and technologies allow larger groups of people to participate meaningfully in decision processes.

Scoring approaches based on statistical analyses (usually some form of regression analysis) were common. Analytics. Other analytical approaches may not have as clear a path to a decision. behavior-based customer targeting. statistical forecasting. • Eliminating duplicate data.www. • Creating a common data architecture. . so it is not surprising that data-oriented responses were also common. • Gathering data from channel partners. testing and data Infrastructures predicated on analytics and data were among the most common decision-making frameworks among the surveyed firms. Not surprisingly. The range of analytical techniques employed was quite broad. Davenport found that very few organizations have undertaken systematic efforts to improve a variety of decisions. In this excerpt I describe some of the more frequent approaches used to intervene in decision processes. very few organizations have undertaken systematic efforts to improve a variety of Better Decisions|P9 In a survey and analysis of dozens of corporations. Other approaches included optimization. Systematic testing was one form of analysis that was being used somewhat frequently by companies. • Creating new metrics. it is generally assumed that a decision to adopt the winning page will be made. A prerequisite of virtually any form of analytics is high-quality data. Eighty-four percent of respondents mentioned an analytical component in their decision improvement efforts and 66 percent mentioned efforts to improve data. • Integrating “master data management. One key virtue is that it creates a decision-oriented context from the start. • Dealing with too much 18 percent mentioned it specifically in interviews. If a test between two alternative Web page designs is performed. prediction of various phenomena and the use of text analytics.” • Achieving “one version of the truth” in functional or process areas. The most common were: • Having difficulty in accessing data. many organizations reported that they needed to change business processes to make better decisions. Sixty-six percent of respondents mentioned some issue involving data.

popularized and taught by Stanford’s Engineering School and the Strategic Decisions Group. including the “A3” format for displaying key issues in a particular business domain. Several organizations mentioned changes for decisionoriented processes made in the context of Six Sigma programs. Several firms mentioned using specific display approaches not generally supported by conventional BI tools. Another popular decision technology involves using business rules to enable automated or semiautomated decision processes — sometimes in conjunction with analytics (e. some described process changes around supply chain management in an IT firm.. strategic management approach to guide all aspects of their efforts. • The Six Sigma approach to process quality and decision outcomes was implemented at a financial payments firm and a staffing firm. • An economic decision analysis approach. and that they had to work with other groups to accomplish them. testing software.g. three responding organizations developed analytically focused decision processes that have been widely used in IT systems development. As one head of an analyst group at an IT firm commented. These tools.” they involve the creation of a series of short-term deliverables.P10|Better Decisions www. 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. and at a faster pace. So we eventually just made it a part of our standard approach. Sometimes called “agile methods” or “rapid prototyping. . some decision-focused analysts noted that their original goal wasn’t necessarily to identify and implement process changes. but are not widely known in the decision-making or analytics literature. Thirty-eight percent of companies in the study mentioned some use of specialized information displays such as scorecards and dashboards.” Decision-oriented methods and tools Several organizations reported that one aspect of their decision processes was an overarching. The organizations that use this approach found that it led to results that better fit the decision-makers’ requirements. Most of these initiatives are well-known approaches to business and management. allow decision makers to see only the information that they need to make a decision. financial processes in health insurance or new product development processes. is used by an oil company. In addition. scoring-oriented applications). However. Forty-three percent mentioned process changes of some type. and frequent review of them by the client and stakeholders for the decision. Many organizations employ business rules but allow humans to override the recommended decisions when appropriate. typically found in the business intelligence category. • A financial services firm uses the “net promoter score” for customer satisfaction decisions. This may be a bellwether of future attempts to link information and decision Technology support – and overrides – for decisions Several firms surveyed mentioned specific analytical software. lease processing in an auto financing firm. Some companies are using neuroscience principles to guide how information is presented and digested. • An insurance company adopted enterprise risk management. But it kept coming up on our projects. For instance. data warehouses and Web analytics/ reporting software. Two other technologies were mentioned frequently: specialized information display technologies and business rule engines. Changes in business processes Not surprisingly.

process redesign. it’s clear that organizations recognize the importance of improving decisions. insurers. As a result. ONLINE Order it now – Analytics at Work: Smarter Decisions. • Treatment protocols for health care. Although the survey was not a random sample. Better Results http://www.www. • Product development for pharmaceutical firms. • Merchandising decisions (brands to buy.analyticsatworkbook. and change management — all in addition to the traditional analysis functions.).com Analysts — previously responsible for data gathering and analysis — are morphing into consultants who may be responsible for framing decisions. industrial goods. Organizations seeking to implement decision improvements should become familiar with these common intervention types and create ongoing capabilities to deliver them. organizations employ a variety of intervention types to improve decisions across analytics. • Hiring decisions. quantities and allocations). communication and education programs. credit card firms).sas. • Location decisions (for bank branches or where to service industrial equipment). • Decisions to target consumer segments (by Better Decisions|P11 Conclusion From my research. and change management — all in addition to the traditional analysis functions. individuals in 90 percent of organizations surveyed identified some attempt to improve decisions through better processes. Second. The most successful organizations adopted multiple interventions at once to improve a decision. process redesign. communication and education Read the full International Institute for Analytics research www. Analytics improves decisions Davenport’s research found the most common types of decisions improved by analytics include: • Pricing decisions (consumer goods. maintenance contracts. • Evaluating marketing approaches (in both consumer and B2B environments).com/ba-iia Engage with analytic leaders and researchers www. • Student performance in educational organizations.iianalytics. • Vehicle routing decisions. and data. culture and leadership. . government contracts. analysts — previously responsible for data gathering and analysis — are morphing into consultants who may be responsible for framing decisions.

heart care and gynecologic care. By taking better care of these patients. . health care quality is uneven and resistant to changes and Business analytics in action How are key industries deriving value from their business analytics implementations? By Gail Bamford. • Improved government/industry accreditation/compliance by incorporating national guidelines into key metrics.1 trillion in 2007. Karolinska Institute The Karolinska Institute in Sweden needed a way to examine the effects of drugs. David Wallace. which will reduce costs. That number will only grow in ways that affect businesses and citizens. Here’s how some forward-thinking health care institutions are delivering better quality of care more efficiently.P12|Business Analytics in Action The data-driven approach has produced excellent results: • Increased compliance on medication reconciliation by more than 50 percent in a nine-month period. global health spending totalled more than US$4. with $639 as the total health expenditure per person. Maine Medical Center uses SAS Business Analytics to understand key patient care metrics – and sustain a quality-driven culture. 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. Despite these huge investments. 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. the hospital expects fewer complications. Mike Newkirk and Becca Goren HEALTH CARE According to the World Health Organization. Using SAS Business Analytics. • Developed new methods for caring for stroke patients while controlling costs. • Dramatically reduced the rate of hospital-acquired infections by measuring where infections originated and what admission conditions closely correlated with acquired infections. other treatments and lifestyle factors on patients with rheumatoid arthritis. Maine Medical Center Named to US News and World Report’s “America’s Best Hospitals” list for orthopedics.

such as loan types. It starts with three basic steps.Business Analytics in Action|P13 www. collect more from each portfolio and grow revenues by 50 percent annually. including “maximize profits” or “minimize writeoffs” or against constraints. In the past two years in the US. enrich it (e. Collections optimization driven by business analytics delivers the results that institutions need to improve their profitability. • Optimize and execute treatment strategies. bank NCOs have soared by an average of more than 350 percent across all institutions. 1 Source: SNL Financial . Business analytics can provide the insights that institutions need to reduce both loan writeoffs and the cost of collections activities. • Analyze and score. Develop scoring models to analyze debtor-customer segment data against objectives. with institutions holding assets of $5 billion or less showing growth of almost 500 percent. add geocoding tags) and integrate it into a single data store. Cleanse and standardize third-party credit and customer data. Since introducing SAS for collections optimization. models created within a business analytics framework can identify likely candidates for workouts and loan modifications. Optimizing collections A leading Australian financial institution previously relied on instinct when contacting delinquent customers. which communication channels work best and how much payment to expect. How can financial institutions improve their collections and protect their bottom line? 1 • Cleanse and integrate. Analytical models help collections teams understand who is most likely to respond. A debt purchasing firm based in the UK uses SAS to predict debt portfolio BANKING In a challenging economic and regulatory climate. First. NPLs as a percentage of average loan balances have risen more than 278 percent at US banks with $1 billion or more in assets. bankers must be especially vigilant.g. 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.. it has achieved a 300 percent ROI in less than six months. Second. This enables the firm to make quicker decisions on acquiring new debt portfolios at the right prices. outstanding balances or days business analytics can optimize collections activities to improve the probability of success and maximize self-treatment among debtor segments.

etc. Better forecasts deliver ROI by: • Reducing inventories. business analytics can be a key contributor to a manufacturer’s success. so you switch providers. it saved $200. your satisfaction keeps them in business. Business analytics is essential in these settings to improve production and sales planning. Once that data is aggregated. business analytics models and tools can accurately forecast the demand for products by family. • Improving order fulfillment rates.000. but never gets insight into underlying causes or trends for outages. Many manufacturers struggle with optimally managing and forecasting their raw materials requirements. The result: long call-resolution times. It found that for every 1 percent reduction in forecast variance. network managers can analyze performance to pre-empt failures. analyzed and shared across the organization. Network managers typically receive error reports and alarms after a network device fails. enhance the supply chain. Strong data management. canceled). While the data is often available to prevent. production plans fall apart and customer orders are delayed (or. manufacturing expertise is a competitive differentiator for companies that follow optimal practices and methodologies to attack inefficiencies and eliminate waste. with demand forecasting. It simultaneously reduced inventory by 20 percent.P14|Business Analytics in Action www. Without the right mix of raw materials. customer 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. streamline logistics and much more. After all. They can analyze trouble tickets and optimize corrective services. worse. it is usually not integrated. individual SKU. • Shortening cash-to-cash cycles. which directly and positively affected customer satisfaction. The team addresses the stream of trouble tickets. MANUFACTURING From diapers to jet engines and almost everything in between. eliminating millions of dollars of holding costs. geography. With a clear and accurate demand picture. Low barriers to churning mean providers must vigilantly and carefully invest to maintain and increase their service quality and customer satisfaction rankings. workin-process (WIP) inventory and finished goods inventories. manufacturers can properly allocate raw materials across plants and regions – all optimized by distribution channel – to create complete roll-ups in master planning schedules. Data management technologies can bring together islands of information such as point-of-sale (POS) data and historical shipment data. including data quality and reporting capabilities – all key underpinnings for business analytics – can help quickly identify . identify and correct these imbalances and inefficiencies. shortening times you are without coverage. With business analytics and approaches such as predictive fault TELECOMMUNICATIONS You’ve likely experienced it before – your cell phone loses service one too many times. For example. 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. yet improved service levels. Another manufacturer improved two seemingly competing objectives. reduce inventory.

gail. 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. Business analytics allows network and service managers to better understand causes and impacts of failures. A telco provider can then identify when and where network resources are deployed and quality/performance variations over time. faults and systems to improve resource utilization and quality of service (QoS).com/ba-healthcareprovider The standard for clinical data analysis and reporting www. • Determine which services have the highest fault Mike Newkirk is a SAS Global Industry Marketing Manager for ONLINE Health care providers keep pace with change www.wallace@sas. Media and allowing it to keep your business. communications service providers David Wallace is a SAS Global Industry Marketing Manager for Financial Becca Goren is a SAS Global Industry Marketing Manager for Communications. Business analytics helps to: • Identify and remove duplicate trouble tickets. Karolinska Institute www.bamford@sas. a telco provider can limit the times you lose a signal and continually improve overall service. Gail Bamford is a SAS Global Industry Marketing Manager for Public Invest wisely.m.Business Analytics in Action|P15 • Understand faults and performance on a macro Solutions for better risk management www. In addition to analyzing network They can prioritize and pre-empt ONLINE Get the full stories on: Maine Medical Center Compete in manufacturing 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 service and network issues. predictive analytics technologies can help evaluate demand.

com/baexchange The art. 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. You will be expected to transform “data lead” into “knowledge gold” via the expeditious 1 Copyright 2009 by John Wiley & Sons. Futurist Thornton May positions analysts as heroes of the age we are about to enter in his new book. 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. All rights reserved. Reprinted with permission. Quite the contrary. We are now exiting a historical moment of undermanaged and only occasionally acted-upon information to an environment requiring much more active.P16|The New Know www. relatively speaking. much more aggressive information management. You as an executive will be held much more accountable for your data management behaviors. much more intense. The New Know: Innovation Powered by Analytics. All this newly digitized information has had. Inc. little impact on behavior and little impact on organizational outcomes. New Know Reality #1: You will be expected to do something with 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. .sas. I call the 20year interregnum we currently inhabit (1995 – 2015) the Age of Little Information. The New Know has changed our reality along 10 fundamental dimensions. For want of a better phrase.

Like the “fog of war. New Know Reality #2: There really is more to know. In a world of multiple sources of information and 24-hour decision making. what information sources are credible and what version of reality is to be acted on). sadly. In the New Know we will have to become information and knowledge carnivores. podcasts.” New Know Reality #3: You will have to know more about knowing. Organizations are having trouble keeping up — The New Know|P17 sensemaking leading to efficacious action.” info warriors speak of the “fog of facts” (e. they are really asking: “How were you thinking? Via what processes. Neuroscience has progressed to the point that we at least know what we do not know. Processing power doubles every 18 months. old-media headlines and evening news programs. the fact that there are more facts arriving at a faster rate of speed is not even the tip of the cognitive iceberg. A “fact” is no longer a “fact. Readers may be surprised to learn that neuroscience has been around for over 100 years. Bandwidth throughput doubles every nine months. Driving this cognitive plate shifting are the RSS feeds. customers and shareholders: “What were you thinking?” Looking beneath the surface. But they are sneaking up on it. . In the Age of Little Information. 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.www. blogs. which are increasingly filled with images and instances of current-generation leaders being asked by dissatisfied nextgeneration voters. Society is about to undergo a tectonic shift in how it thinks about thinking. One of the major changes defining the new competitive environment is the requirement to know more about knowing. The New Know will be awash with data. Scientists do not know how the brain works — yet. confusion about what information is to be believed. Storage capacity doubles every 12 months. we were data vegetarians. the very character of information is There is more to know. what experts sometimes refer to as metacognition.

former CEO at Hewlett-Packard. gradually strengthening new neural pathways in our brains while weakening old ones. The question is: How will we be able to keep up? . therefore.” Josh Bernoff. and what sets great leaders apart is their ability to cut through the clutter and distinguish the truly important from the merely interesting. She believes that all of us are overwhelmed with information. what adaptive pressures does this environmental change place on us? “Daily exposure to high technology — computers. believes that distilling truth from overwhelming amounts of information is the essence of leadership. boiling down the chatter to a manageable stream of Carly Fiorina.” The new scarce resource in the next economy will be the human attention needed to make sense of information. believes that distilling truth from overwhelming amounts of information is the essence of leadership. search engines — stimulates brain cell alteration and neurotransmitter release. Low-cost communications give rise to almost toxic levels of|The New Know www. video games. loosely. Because of the current technological revolution. 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. One of the transformational elements moving society to the New Know is something analysts at Forrester Research call the “groundswell. it’s like watching a thousand television channels at once. Leaders are able to cut through all the noise. To make sense of it. Thinking in Darwinian terms. To some extent.” New Know Reality #6: Information management Is the essence of leadership. New Know Reality #5: The environment is changing our brain. smart phones. it is a simple truism that the brain is involved with all things that comprise our human existence. New Know Reality #7: A more connected world. hype and empty rhetoric. former CEO at Hewlett-Packard. you need to apply some technology. Vice President at Forrester. our brains are evolving right now — at a speed like never before. Does your organization filter its data? Carly Fiorina. It follows. The information flood should be viewed as a permanent macroenvironmental change. that understanding the brain will help us understand the human condition more fully. The big news is that the brain possesses innate qualities that influence individual experience and opinions. contends: “There’s so much information flowing out of the groundswell.

sas. Program participants are expected to save 5 percent. This is not just unfortunate. or about $70 a year. New Know Reality #10: Knowing can change the world. 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. by a thermostat readout. the very-much-in-the-know editor of Good Morning Silicon Valley. 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. . “In an age where you need to be numerate to do almost anything (from building bridges to conquering disease). even if the topic has to do with something as mathematically messy as human behavior. and use the data to change their consumption patterns. governments anxiously compare their performance in mathematics with that of competitor nations. Business analytics tells you where that elephant will step. many otherwise “normal” executives have a pathological aversion to math. Some intuition about numbers. or through text messaging.000 meters. People use math to make decisions every day. on their energy bills. then “knowledge about power should be especially empowering. using 15. it is useful to know where it will step. If you are locked in a room with an elephant. Business analytics tells you where that elephant will step. serving a critical customer. it is dysfunctional. serving a critical customer. 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. Success requires materially expanding what you know and adding precision and efficiency to the processes (analytics) whereby you come to know.” New Know Reality #9: There are significant downsides to not knowing. 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. Every key process in your enterprise is locked in a room with an elephant — a critical process.” says John Murrell. The New Know|P19 New Know Reality #8: Math matters. Backing up a statement with mathematics gives it an aura of validity. If knowledge is power. counting and mathematical ability is basic to almost all animals. Every key process in your enterprise is locked in a room with an elephant — a critical process. For instance.www.

“I’ve got less money tied up in inventory. In the US. 2) Cash flow In addition to a shift in decision-making style. Once SMB executives get a real glimpse of the insights that are lurking beneath the surface of their transaction data. and range between 200 and 250 employees and $200 million and $500 million in revenue. In this Q&A. their willingness to adopt business analytics increases pretty quickly. But the fact is. However.” says Knight. these companies have revenues of less than $500 million. retain key customers and grow share of wallet in their markets.” Using SAS. these businesses are striving for the same goals to grow their business through innovation. SMB often refers to both employee numbers and revenue. “Now I can get the answers I need and base decisions on facts rather than gut intuition.” ONLINE www. owner and President of The Wine House. the SMB category comprises companies with a maximum of EUR 450 million (about US$611 million). generating $ 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 so my return on investment has been fantastic. Q. SAS Global Product Marketing Manager. the brick-and-mortar and Internet retailer discovered 1. how to market to them and can monitor the effectiveness of our marketing. In many ways. While in the Asia Pacific region. “We had a huge sale to blow it out. Considering the business analytics framework helps improve margins. Our ROI with SAS has been well over 100 percent in less than a year. The Wine House has reduced its aged inventory by 40 percent. That’s somewhat understandable given the complexity and scope of their analytical challenges and the nature of their highprofile brands. What are some of the unique challenges that SMBs face with respect to business analytics? A: SMBs primarily face the issue of scale. Matthew . The Wine House discovers $400. we’d be choking on that inventory. because in today’s economy. 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. shares his perspectives on what business analytics means to SMBs. but Bill Knight. The first day its SAS application was What business analytics means for small and medium businesses An interview with Matthew Mikell. cash constraints can pose very real obstacles for an SMB that wants to mature in this area.000 in ‘lost’ inventory Economic times may be tough. In Europe. SMB Global Product Marketing Manager When it comes to business analytics. I know who our best customers are. is toasting a 100 percent return on his investment in SAS. “and just in time.000 items of wine that hadn’t moved in more than a year. and need the same sophisticated functionality scaled appropriately to their processes.” Knight said. far more small to medium businesses (SMBs) are poised to implement business analytics solutions.P20|Business Analytics for SMBs www. it sometimes seems like only major enterprises garner the spotlight. the long-lasting return on investment far outweighs the capital required to undergo the transition.000 in capital in one weekend. But there’s so much more value that can be derived from in-depth analyses.

They’re stretched thin. reporting and the decision-making process. Make it clear how business analytics will resolve a compelling issue or attract and retain customers. to walk away from what’s made you successful. and building a capability that is costeffective and remains flexible and easy to use. Beyond Spreadsheets: The Value of BI and Analytics. every company differs – particularly at the SMB size. you’re Aberdeen 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. 1 The main SMB challenge for moving to business analytics is the understanding of its impact on these four critical areas. The first step is to ensure you have sponsorship from company executives. But we’ve found that there is a general approach to the adoption of business analytics. Q What’s the best way for SMBs to tackle the adoption of business analytics? A: Of course. 1 at a disadvantage. 2009. It reports that SMBs using some sort of analytical applications perform at a higher level than their competitors that do not. SMBs need to continually innovate.Business Analytics for SMBs|P21 www. culturally. 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. . Otherwise. This transparency is key at the SMB level as SMB executives are traditionally heavily involved in analyses. for example. Research from Aberdeen Group suggests that SMBs without the relevant skill sets are poorly positioned to drive value from an analytical solution. Internally. employees need these tools to be productive. The truth is what brought you to where you are typically won’t take you to the next level. 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 and that can make it very difficult to expand the IT mandate beyond critical business operations into managing business analytics environments. or cutting and pasting from multiple tools. 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. it’s gut-based decisions.

Matthew Mikell leads Global Product Marketing for SMB markets and software-as-a-service (SaaS) offerings at SAS. What’s the difference between business analytics for large enterprises vs. Don’t introduce business analytics as a broad. Some of the typical issues that we see being solved with business analytics include improving customer data quality for improved marketing. which was simply buying any debt assets for as little as possible and hoping to collect successfully. Deployment and support strategies will have a different nature. Despite their size. . unfocused utility for general usage. What’s more interesting to me. building up confidence in fact-based decision making as a core It is therefore essential to provide a rich set of features and a very high level of technology usability. Finally. Capitalize on your initial success to broaden deployment to other areas of the organization. A player in the secondary-ticket market uses SAS to develop a deeper understanding of the needs of its thousands of customers. however. Business analytics in SMBs is not about presenting a subset of functionality but rather surfacing the right functionality for the problem at hand. it’s about scale. supporting strategic planning. ONLINE Software for SMBs www. don’t rest on your laurels.P22|Business Analytics for SMBs www. Q. This will occur naturally as you solve more focused issues. 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. the company can optimize how frequently it contacts the customers and improves loyalty. or improved product pricing and packaging analysis to drive a higher market share. By segmenting them and catering to psychographics. messaging and product offerings through direct and indirect 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. This is a quantum leap forward from its previous model. and opening up to more as the business requires it. invoicing or customer service. SMBs? A: In a nutshell. invoicing or customer service. faster and more accurate way. Can you share some examples of how SMBs have been able to capitalize on business analytics? A: Sure. SMBs face similar challenges to make better and more informed decisions to continue innovating in their markets. Business analytics supplies that intelligence to traders in a cleaner. Those adoptions move faster once you can point to a successful track record in another area. is the important commonality: The second strategy is to focus on a particular business process or issue. or improved product pricing and packaging analysis to drive a higher market share. Q.

And analytics are well established in the engineering and simulation sides of product design. For processes that rely extensively on enterprise systems. starting with the techniques of statistical process control (SPC) and total quality management (TQM). the frontier is moving closer to real-time. techniques. For Better Results. Jeanne Harris and Robert Morison show how companies apply analytics in their daily operations. This excerpt.’ explores what to consider when infusing analytics into business processes. As a logistics company. key decisions — for example. and working relationships that are likely to be new and unfamiliar at first. every day. extraordinary customer need) change. Reprinted by permission of Harvard Business Press. many process analytics initiatives will require tools. . For a company this steeped in analytical applications. Real-time analytics are helping guide call center workers in their interactions with customers. dynamic adjustments. We have found that implementing analyticsenabled processes requires applying four major perspectives. road closures. 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. common in the management of technology operations.www. In corporate Analytics at Work|P23 Embedding analytics into processes In their latest book. Analytics at Work: Smarter Decisions. and relatively new to human resources (though of enormous potential there). We see examples of analytics at work within core processes in a variety of business areas. Among business support functions. Thomas Davenport. and often in designated time windows. Jeanne Harris and Robert Morison. However. ‘Embedded Analytics in Action. Statistical analysis has been a feature of supply chain and logistics management for decades. 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. Better Results by Thomas Davenport.g. All rights reserved. The solutions naturally demand very sophisticated and industrialized analytics: for capacity planning of aircraft and truck fleets. But you can start embedding analytics without a major overhaul. it may be possible to simply start taking advantage of the analytical capabilities that are already included in the software.. but few companies take a process approach to such activities. and for scheduling and routing delivery trucks. UPS lives and breathes the “traveling salesman problem”—how to reach a variable series of destinations most efficiently with the right delivery capacity. Making processes analytical The effects of analytics on the operations of a process can be profound. Excerpted from Analytics at Work: Smarter Decisions. for routing packages through its distribution network. regarding mergers and acquisitions—may benefit greatly from analytics. analytics are essential to many facets of finance.

Much of the distinctive work of process analytics centers on designing. If you are going to industrialize important decision processes. organizations should consider model implementation. The analytical system must be incorporated into the set of systems and technologies supporting the business process. it is important that the rules.. The first is process 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. 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. .. is on the human side. assumptions and algorithms in your model are correct. but most often you are adding capability to and altering an existing The effects of analytics on the operations of a process can be profound. but you can start embedding analytics without a major overhaul. developing and iteratively refining statistical algorithms and descriptive or predictive models or rule-based systems. this work is performed by business analysts and programmers with special skills in statistical methods and modeling. workflow and document management systems. especially when analytics is new to the process and the people performing it. In building these interfaces. of course. Occasionally a business may create a new analytically enabled process or rebuild a process from scratch. 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. process simulation can yield insights about how the process might perform even before implementation. Human implementation is the fourth perspective. including capabilities of ERP systems. Especially given the iterative nature of many analytical applications. Analytical projects generally require different tools and development methodologies from those employed in more traditional systems development. Only people can tell if an embedded application is resulting in good decisions. so be sure to involve them in developing. Third is systems implementation. And.P24|Analytics at Work www. In some cases. managing and monitoring the assumptions and results of any embedded model. and over time you may want to reengineer the overall business process . it helps to employ process-oriented technologies. Next. Often the greatest implementation challenge.

Embedding analytics into processes starts with a robust analytical architecture that provides an accurate. integrated. specifications or momentum. standardized. The knowledge and decision criteria used in these systems need to be highly structured. other information systems interface with the models and provide clean data feeds.www. be prepared to demo or pilot the concept. Scorecards and applications that monitor and alert based on predetermined thresholds are the norm these days. images) that is available electronically. yield optimization. Business activities that benefit from automated decisionmaking applications include fraud detection. ONLINE Accenture SAS Analytics Group www. technology (both industry and cross-industry offerings) and support (competency centers. An industrial-strength IT architecture makes it vastly easier to weave analytics into ongoing work processes in three ways: 1. So the best route to embedding analytics into processes is often through the technologies and applications that employees routinely use to do their jobs. text. secure and reliable information management environment. secure and reliable information management environment. integrated. Technology is best suited to automate decisions that must be made frequently and rapidly. certification programs) to help companies reach their competitive potential – more efficiently and cost-effectively. using any kind of information (data. apply codified knowledge or . The conditions are ripe for automating the decision when experts can readily codify the decision rules. These sense online data or Analytics at Work|P25 Embedding analytics into processes starts with a robust analytical architecture that provides an accurate. IT’s role in embedding analytics into business processes Technology is an integral part of most business processes timely. Automated decision applications. All four perspectives must mesh: process flow and decisions are enabled or controlled by analytical models. conditions and decision factors) must be clearly understood and not subject to rapid The new Accenture SAS Analytics Group combines Accenture’s domain and industry experience with SAS’ analytic strengths to provide the services (best business practices. and to make the business case for investing in prerequisite assets. and people perform the process better with the help of embedded analytics. The factors that must be taken into account (the business problem’s dimensions. and make decisions — all with minimal human intervention. often starting with data. solution configuration. If you lack clear business goals. dynamic forecasting and operational control (like monitoring and adjusting temperature). 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. to work with stakeholders to define targets and set ambitions. but too many remain as standalone applications. standardized. a production system automates the surrounding process and high-quality data exists in electronic form. proof of concepts). timely. recommendation/realtime offers.

Recommendation. a manager needn’t know that his Excel spreadsheet is using the company’s ERP system to prepare his forecast. Since the data. And Microsoft. 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. which are including more sophisticated analytical features. process-driven applications. 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. Major platform providers like Oracle are embedding analytics into their products by building statistical functions directly into their enterprise data warehouse products. Business applications for operational and tactical decision 2. . As vendors increase the analytical quotient of their collaboration and productivity tools. collaboration and personal productivity tools. Software companies are building more industry-specific. As platform vendors align their products to work together more seamlessly. project These tools and applications work best for less structured information with less defined decision criteria. Oracle. 3. SAP and SAS continue to quietly embed more sophisticated analytics and business intelligence capabilities into their applications and tools. they require industry and functional expertise. sales forecasting and advertising effectiveness/planning. Most information work is done through personal productivity tools like Microsoft Office. both specialty applications vendors and the major platform vendors are building more analytical functionality directly into their tools and applications. analytics become more accessible to analytical amateurs throughout the enterprise. ERP vendors. knowledge and decision criteria are typically less defined and/or more fluid than those of a fully automated application.P26|Analytics at Work www. Analytical business applications are best suited to welldefined. 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. periodic tasks in which most of the information needed is predictable and available electronically. remain a powerful way to integrate industry best practices into business processes. Information workflow.

What’s going on inside these market-leading companies that sets them apart? They have committed to deploying their people. technologies and business processes in new ways. using business analytics to determine both game strategy and optimal ticket prices. these companies identify their most profitable customers. Pharmaceutical firms use it to get life-saving drugs to market more 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. 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. By embracing an analytical approach. and identify the true drivers of financial Even sports teams are getting in on the action. saving millions. But these advanced business applications tell only part of the story. Retailers use business analytics to predict the best location for stores and how to stock them. accelerate product innovation. optimize supply chains and pricing.www. .

Transparency implies openness. Managers encourage asking the right questions of the data to get maximum insight. Keep the process transparent. Your technology portfolio should include: • Optimized data stores to support core business processes and discovery. 2.P28|8 Essentials www. The common thread? Evidence backs them all. explore and share results in a meaningful way. 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). . Demand fact-based decisions. 5. 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. • Analytical software with the means to effectively deploy. To make analytics work. and identify the true drivers of financial And you can too. some are transformative. Develop the talent you Get started with business analytics by taking these eight essential actions: 1. some are automated. When selecting technologies. High-quality data must be integrated and accessible across your organization. Remove disconnected silos of data. it is key to successful business analytics projects. Improve the flow and flexibility of data. 3. • Integrated analytical applications designed to solve defined issues quickly. 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. Some are ad hoc. 4. 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. accelerate product innovation. Take an enterprise approach to data management and analytics to effect better decisions. these companies identify their most profitable customers. The value delivered from an By embracing an analytical approach. Develop or recruit analytic thinkers who seek and explore the right data to make discoveries. Get the right technology in place. An analytical company makes a wide range of decisions. optimize supply chains and pricing. communication and accountability. technology or expertise. • Data integration and data quality software. data movies. How results are deployed is also important – through operation systems such as customer relationship management applications or real-time fraud applications to interactive dashboards. analysts must also be able to communicate effectively with leaders and link analytics to key decisions and the bottom line. regulatory or stakeholder demands.

com/ba-benefits ONLINE Defining business analytics white paper: www. Transform the culture. Experimentation should be seen as part of learning. 7. 6. Realizing cost efficiencies. Your competitors will often duplicate your analytical initiatives. Jim Davis is Senior Vice President and Chief Marketing Officer for . Staying ahead requires continuous review of strategy and development of new skills and capabilities. 5. Improving the decision-making process. function or 8. Revise your strategies – often. Responding to user needs for availability of data on a timely basis. Who the analysts are and what they’re seeking to accomplish should be clearly communicated to the business. 3. Speeding up the decision-making process. Better alignment of resources with strategies. Answer these questions. By creating small wins in any Develop an analytical center of excellence. 2. The five most popular were: 1. Find important questions that need answering and problems that need to be 8 Essentials|P29 investment in business analytics must be visible and measureable. Create a centralized team approach – an analytical center of excellence (ACE) – which promotes the use of analytics and associated best practices. Top five benefits of business analytics When Computerworld asked 215 IT and business professionals to name the key benefits of business analytics software. Your implementation of an ACE will depend on your organization’s maturity and requirements. Get started now. A strong analytical culture has executive sponsorship and encourages creativity. ONLINE www. as should their findings. 4. process. and employees should be given permission to fail as they learn from trying new things. solve these problems and create value for the organization. they received a wide range of responses. over time your company will become an analytical competitor. but the most effective implementations address all elements of the organization’s analytic infrastructure: people.www. technology and culture to support the business’ strategy and operations.

” Today. . occupational safety and dozens of other metrics.P30|Art of the Possible www. 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 The art of the possible: business analytics to measure corporate sustainability By Alyssa Farrell In the abstract. community development. 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 business analytics presents a range of powerful options to uncover meaningful insights that promote action.

Or. researchers articulated three major . Business analytics plays a critical role by enabling the organization to balance today’s ROI objectives with longer planning horizons. Future developments involve correcting operation and maintenance behaviors for the systems and indirectly for the buildings. Sustainability is a new discipline for most organizations. As a result. water and waste is a nonnegotiable premise for effective sustainability. including those with the highest energy consumption – such as data processing centers. Business analytics at work: gaining energy efficiency at Poste Italiane Group The art of the possible is already in practice at leading organizations today. 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. Three planning challenges Unfortunately.Art of the Possible|P31 www. Environmental protection only placed fourth on the list. interacting with and analyzing the fundamental data about energy. many organizations forego the effort to model the intangible benefits that may result from sustainable practices. What’s more.and 20-year time horizons. Accessing. The Poste Italiane Group uses software from SAS to analyze energy efficiency in more than 250 facilities. significant barriers have impeded decisive corporate action. companies often have conflicting definitions of precisely what sustainability means to their In a report from the Economist Intelligence Unit. without that business case based on accepted definitions. amply demonstrating that pragmatism and not altruism is the dominant motivator. In the first MIT Sloan Management Review Business of Sustainability Survey. executive centers and the largest branches. companies struggle with precisely how to measure the ROI of sustainability efforts. Their analysis has identified best practices that led to an immediate reduction in energy consumption and a 7 percent reduction in CO2 The first is a basic lack of information upon which to base sustainability efforts and decisions. they minimize important externalities such as environmental or societal costs and benefits – all of which can become tangible with business analytics. far exceeding the typical oneto three-year payback period. researchers report that the top three motivations for sustainability initiatives are brand enhancement. Third. outcomes that have a direct impact on profitability. Traditional reporting and analysis can often fall short when attempting to predict future impacts of sustainability investments. Despite the high profile for sustainability. These challenges are not uncommon for emerging business issues. Second. ONLINE www. revenue growth and cost savings – in other words. 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. 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

However. Notably. Environmental protection only placed fourth on the list. Delivering green analytics Transformational organizations require a combination of descriptive and predictive insight – the ability to track meaningful green indicators. these benefits are highly unlikely to achieve primacy in profit-driven enterprises. researchers report that the top three motivations for sustainability initiatives are brand enhancement. In a report from the Economist Intelligence Unit. In addition to employee engagement practices. the attention organizations are paying to sustainability matters is definitely not merely pro forma. forecasting and data mining to deliver metrics that matter. ONLINE For more information on SAS and sustainability.P32|Art of the Possible www. For example. creating the strongest possible business case is an essential mandate for today’s sustainability directors. a 1-megawatt solar array is providing clean. check out the Corporate Social Responsibility Report: The ROI matters Despite these challenges. business analytics can make the difference. Several construction projects at SAS offices around the world utilize low-environmental-impact design SAS and corporate sustainability Sustainability has remained a top priority with SAS precisely because of its potential to deliver tremendous business value. are far-reaching and 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. amply demonstrating that pragmatism and not altruism is the dominant motivator. from health care to expanded job opportunities. That’s because although few observers fail to see the importance of efforts to reduce carbon output and minimize environmental impact. And the US Army reports that 80 percent of its construction meets Leadership in Energy and Environmental Design (LEED) standards. SAS has made great progress in reducing its environmental footprint. identify causal relationships and forecast Such a business analytics framework can empower the organization to: • Measure sustainability activities using accepted methodologies and protocols. when implemented. outcomes that have a direct impact on profitability. 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. It’s not just the right thing to do. renewable energy to the public energy grid for the local utility. reducing its energy costs by 8 percent. it’s the smart thing to do. revenue growth and cost savings – in other words. validate strategies and costs before investing. • Reduce resource usage by accurately forecasting resource requirements needed to reach desired outcomes for a department or . For example. • Report on environmental performance to shareholders and regulators. • Improve sustainability metrics using analytical techniques such as optimization. www. And in these areas. The actions. while the pro forma income statement in the analysis is paramount.

business analytics can be a key enabler of strategic sustainability Measure and improve performance with sustainability management www. This transformation can be an exciting opportunity to innovate and redefine. Farrell works with customers to understand best practices and solutions for managing their business with environmental responsibility in With business analytics. 2009 www. And you can build green strategies with predicted ROI. Manager of Sustainability and Performance Management Management Magnified: Sustainability and Corporate . MIT Sloan Management Review. water and waste is a nonnegotiable premise for effective sustainability. You can determine which conservation efforts or greenhouse-gas reduction strategies will have the greatest impact – physically and financially. we start to see the “art of the possible” with respect to sustainability.farrell@sas.Art of the Possible|P33 www. By providing the right information and insights. embracing sustainability initiatives will lead to meaningful — sometimes profound — changes to processes and Alyssa has responsibility for SAS’ sustainability solutions. Accessing. Economist Intelligence Unit. And you can identify ways to profit from environmentally respectful goods and services. alyssa. You can ensure regulatory compliance. to explore new business models and Undoubtedly. Fall 2009 www. You can measure emissions and resource consumption throughout a value chain or product life cycle. interacting with and analyzing the fundamental data about energy. ONLINE Read the full white papers: The Business of Sustainability: What it Means to Managers Now.

SAS INSTITUTE INC. www. NC 27513 USA ® SAS Business Analytics software helps organizations across every industry discover innovative ways to increase pro ts. product or service names are registered trademarks or trademarks of SAS Institute Inc. SAS gives you The Power to Know. All rights reserved. WORLD HEADQUARTERS SAS CAMPUS DRIVE CARY. © 2010 SAS Institute Inc. fact-based decisions? You can. Other brand and product names are trademarks of their respective companies. in the USA and other countries. 54446US. and turn information assets into true competitive advantage. predict for a free research paper SAS and all other SAS Institute Inc.0310 .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. ® indicates USA registration. reduce risk.