JIBIN BALACHANDRAN

P14251

The Current State of Business

Analytics: A Study of the Indian
Context.
Introduction to Business Analytics

INTRODUCTION:
Business Analytics is increasingly being seen a main differentiator that provides a
competitive advantage to the companies across industries. While India has always been
known to others as an IT services destination and this gives significant opportunities to the
Business Analytics space as well. As Indians are known for their analytical capabilities.
Constant rise in trade and business doings across the world has resulted in the origination of
vast amount of digital data, which if analyzed effectively and efficiently can yield valuable
perceptions towards statistics.
So a major amount of both large and smaller companies are continually looking forward to
equip themselves with the sophisticated tools and applications which can help tap this large
data set and convert them into an intelligent report. Over the past couple of years, social
media area has witnessed an exponential growth in India which in turn has contributed
mainly in the accumulation of digital data.
Highly valuable information relating to consumers and related stake holders, their purchase
pattern, and product feedbacks given, social media has become a major source of collecting
raw data and information which can be a part of the input data for business analysis so as to
generate understandings and statistics useful for the firms.
BUSINESS ANALYTICS IN INDIA:
The comparative advantage that India possesses in enumerative skills and relative English
fluency is understandable. But the one skill set that is lacking is domain experience. While
the tools of business analytics regression, statistical methods, optimization, and data mining
are being used and taught, it is a different matter to design them and put them together in a
way that the final user can benefit from them. This is probably a bottleneck that has prevented
the full utilization of the resources that this country possesses. The Indian advantage basically
lies in the pool of professionals who have strong enumerative and accounting skills at
competitive prices.
As you go higher up the value circles the standard of on paper English that is required is
much higher and Indian English standards have to be improved vastly. We have very bright
people who have never been outside the country, whose reading is not wide and who are
fairly insular in orientation and outlook so we lack a global outlook. Our educational
standards are extremely varied, ranging from the few centers of excellence to the majority in
which there is no definite standard. Culturally, privacy is a constraint.
As a rule Indians find it difficult to say No, even to company information. The culture of
confidentiality has to be inculcated. People have to be taught that one cannot be free with
names of clients, practices and processes, especially in financial services. Investment in
infrastructure is important but it does not affect us much given that the mode of delivery is
largely independent of physical infrastructure.
There are many challenges in the industry in the middle to higher financial analytics space.
The boundaries are constantly changing and so we have to continuously update your domain
expertise, which might mean getting your client to share the mandatory knowledge. What we
are doing is essentially spanning India and the global financial centers and being connected
with the global changes that are taking place.

When a client effectively and efficiently transfers knowledge, it is also an act of subsidizing
and you become dependent on that knowledge. Once we get deeper into technically expert
areas, we have competitions from Eastern Europe and Russia.
Quality control is one more challenge when you go into higher value space. A lot of the
intellectual property exist in which will act as a barrier. We must protect intellectual property
with adequate regulation. That is the final barrier to our expansion in outsourcing in this area
of analytics.

In Financial Services
The analytic data that features in financial services in India is profit and loss data, balance
sheet data and time sheet data, transaction prices data, and stock prices data. This is time
series data. The other kind of data that is commonly used is retail data on consumer behavior
i.e. cross section data, and retail data on consumer behavior across time. We are mostly
concerned with multivariate data analysis, segmentation, perception mapping, clusters etc.
We use panel data methods such as the fixed effects model. There are several key challenges
in the field of analytics in financial services in India.
On the data side the challenges are many. First is the availability of data such as good credit
bureau data or cross border data like some EU nations do not allow data to be transported
across borders is a major challenge. Secondly, data theft is a grave problem. In India penalties
are unenforceable. If an employee walks away with data there is very little that can be done to
recover that data or provide stiff deterrence to minimize further occurrences. Thirdly,
technical issues, such as bandwidth which come into play if data resides in the US or one has
to get it out India and finally, the huge reputation risk. Losing data in India poses a larger
headline risk for the company than losing data in the US.

Value Creation in Businesses

Value creation in businesses is shifting to usage experience the economy has evolved from
the agrarian and manufacturing economy and the business analytics is more importantly
experimentation stage in order to create a break-out competitive advantage. As products
commodities, service features such as increasingly revenue realization, and success requires
continuously designing and testing custom-tailored products with wrap around features. The
core product is not disappearing but is being wrapped around by a bunch of service features.
If you were to give away a product for free, you would have to extract the value through after
sales service, with the usage defining what value the customer was willing to place on the
product and after sales service. That is the new concept of value realization. You cannot do
that without the power of analytics, without understanding customer data and more
importantly, testing it and learning from those tests. So effectively if you look at the past
performance data and do statistical analysis and reporting, you proceed to predictive
modelling. But in Indian scenario and our level of data sophistication are concerned, the lack
of credit bureaus.
In Traffic Management
In this system that manages traffic the data are in the form of videos, number of vehicles, type
of vehicles and this data can be used to understand the patterns of traffic and congestion. The
traffic data collected is very huge. Hence data analysis is essential for analysis of this data
and to make some conclusions and develop a traffic management policy accordingly. The
number of vehicles on road is increasing faster than ever. This, no doubt, leads to
overcrowding that in turn causes various problems like loss of fuel, time, pollution etc.
Hence, a full proof policy for traffic management is the need of the hour and big data analysis
is an essential activity to achieve that. This can be made applicable in India.
In the Credit Card Industry
In the credit card industry, the data mining and the business analytics helps us in finding
value in places where most people would not even look. The data is there from 1991, at a
time when the business was fairly homogenous and commoditized, with not much innovation.
An initial testing of the data from the point of view of utilization vs risk suggested a linear
relationship between utilization and delinquency. However, further testing found the elusive
low-risk revolver in an isolated test cell, that is, a group of people who utilize credit a lot but
are low risk.
Business Analytics and Decision Support
We look at business analytics as a technique that makes it easier to visualize and analyze
business data to support decision making, with the two distinct business functions Data
Analytics and Decision Support sharing a symbiotic relationship. With the market dynamics
evolving rapidly, by replaced time series forecast models, which are based on history, with
causal models. The new decision support model up with consumer choice models and
demonstrated the ROI from the data that goes with it.
For instance, earlier, while flight information provided insights into the current market
conditions and the frequency of occurrence by carrier, what was not apparent was the best in
the market in terms of lowest price, closest departure and least flight time. The enhanced
solution provided the same information coupled with the probability of each itinerary being
selected.
3

Institutes like the IITs and the IIMs have a key role to play in the incubation and development
of DSS expertise, which is very complex and must be built in a focused manner.

Context of Supply Chain

All practical applications an intelligent mix of exact algorithms and rule bound procedures.
There are opportunities where one can solve the problem and get an exact solution but there
are also situations where the personnel in industry ask for a rule bound algorithm because it
suits them better.
People prefer quickly and rule bound solutions to slow and exact solutions. It is something
that we accept. Standardization and duplication are possible but are difficult. The experience
in tackling production planning taught us that we cannot use the same tool for different
companies. The addition of a single dimension may change the methodology.
In the case of Indian Customs, in the Bangalore Air Cargo section, with reference to electrical
and electronic items, in a bid to predict who were the people likely to undervalue the customs
consignments, we used the classification tree with error weighting and pruning which we
applied to training and application data set pertaining to import transactions. With the model
obtaining correct predictions up to 82% on training data set and 85% on test data set. As a
result, the effort of the customs came down from 100% to 29%.

STATISTICS RELATED TO BUSINESS ANALYTICS:

In Indian these are the key areas where Organizations are mainly using business analytics for
the quantitative information to be typically more prevalent specifically, strategic planning,
finance, marketing, and information technology. These functional areas are where the
analysis and prediction is used.

CONCLUSION:
With businesses becoming more complex, there is a need from the demand side. Business
analytics as in the application of statistics and the tools to solving these problems is not an
academic discipline. It is up to industry jockeys to apply them and it is up to the computer
science academics to create the techniques. The biggest challenge is on the demand side in
understanding the whys of the complexity of the business environment, how you change
decision support and decision making to enable converting that data into action rapidly. The
Indian context on the other hand is very different and the IIMs can take the same leadership
position as the University of Chicago did 30 years ago in the securities situation, and others
have done in marketing and other situations.
To update you on the credit information history in India, CIBIL has been collecting credit
history from all credit cards in India and thats a step forward. But coming back to the key
question on what do we do about missing data, it depends upon whether the data is of the
required kind, that is, the data required to do advanced analytics or modelling, simulation
and forecasting, or of a more basic level, which could include even simple reporting.
From an operations perspective, if a decision is important then we will collect the data. From
the organizational point of view, missing data is never a major problem but if the ROI on the
5

decision is not going to be worth the cost of collecting the data then we will use some
heuristic technique or the other. If you take the context of Indian banks, 20 years ago they did
not have any credit research bureau. That did not prevent them from giving loans.
In our country competitors do not want to collaborate. This is a very fundamental problem.
Back in 1988, every bank wanted to put out an ATM network of 5000 ATMs. It took six years
of evangelizing to make banks realize the value of a shared network. People will not
collaborate till they reach a certain threshold level. As far as data sharing on the credit bureau
is concerned, we are probably two years behind in terms of this realization.
We are always talking about industry but the key player is the regulator, especially in a
country like India. In India, if you want a certain kind of data you have to get SEBI or the
Registrar of Corporations involved because they have the data. The best way to motivate the
regulators is by inviting them for such seminars and enlightening them that it is important to
release the brakes. Two parties are ready but the third party is yet to be. Regarding
willingness to share data, the airlines experience has shown us that if you make a valid
proposition that you give while you get, it will work. A readiness to interchange data is more
effective than an appeal to make data public.
REFERENCES:
1. AIM, 2014 (Featured Article), A Study of Domestic Indian Analytics Market,
June 22, 2014 (accessed on the Internet on October 20, 2014,
http://analyticsindiamag.com/a-study-ondomestic-indian-analyticsmarket/).
2. Banerjee, Arindam, Tathagata Bandyopadhyay and Prachi Acharya, 2013,
Data Analytics: Hyped up Aspiration or True Potential? Vikalpa, Vol. 38,
No. 4, Oct-Dec., 2013.