Round Table
Business Analytics in
India – Opportunities and
Challenges: Discussion
Ishwar Murthy
Ishwar Murthy is Professor, Quantitative
Methods and Information Systems, Indian
Institute of Management Bangalore.
ishwar@iimb.ernet.in
Prof Ishwar Murthy anchored the Round Table
Discussion and is the Guest Editor of the Round
Table on Business Analytics in India –
Opportunities and Challenges.
IIMB Management Review, June 2006
B
usiness Analytics or Business Intelligence is increasingly being
seen as the key differentiator that provides a competitive edge to
companies across industries. While India has long been known to
be the destination for IT services and more recently Business Process
Outsourcing, are there significant opportunities in the Business Analytics
space as well? If opportunities are present, then where, and in what form do
they exist? Are there specific areas where India offers a unique advantage?
What are the impediments to the growth of this industry in India?
The IIMB Management Review (IMR) Round Table on Business Analytics in
India – Opportunities and Challenges brings together a panel of experts to
explore and understand this emerging field. The panel discussion includes
issues such as the infrastructure and manpower needs for India to be a
major player, user needs in Business Analytics, the technological challenges
associated with integrating data from multiple sources in Business Analytics,
collaboration between industry and academia, the use of new analytical
models and studies of the successful application of Business Analytics
especially in banking and in supply chain management, and what India
must do to leverage its special strengths and deliver in this space.
175
Paul Alapat
Business Analytics in India: Advantages and
Challenges
The comparative advantage that India possesses in
enumerative skills and relative English fluency is obvious. But
the one skill set that is lacking is domain experience. While
the tools of business analytics – regression, statistical methods,
optimisation, 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 utilisation of the
resources that this country possesses.
Our company, Amba Research works in the sub segment of
investment resource outsourcing, a subset of knowledge
process outsourcing. We focus on capital markets. We have
moved a step forward from processes, into analytics and
design. The opportunity we saw was essentially in moving
higher up in business process outsourcing. In this field the
opportunity actually lies in the balance between the migration
of a worker and the outsourcing of work. Once workers
have enough knowledge they will head for Western markets
The panellists in the Round Table discussion on Business
Analytics in India – Opportunities and Challenges were:
Dr Paul Alapat, Managing Director, Amba Research.
paulj@ambaresearch.com
Mr Ajay Kela, President, India Symphony Services.
Dr Ajay Mookerjee, CEO, Offshore Analytics, and ED, HBS
India Research. amookerjee@hbs.edu
Prof V Nagadevara, Professor, Quantitative Methods and
Information Systems, Indian Institute of Management
Bangalore. nagadev@iimb.ernet.in
Mr Rajendar Rajanhally, who was Vice-President, GENPACT
Analytics when this round table discussion was conducted.
Mr Mahesh Ramakrishnan, Vice President, i-flex solutions.
mahesh.ramakrishnan@iflexsolutions.com
Mr Anand Srinivasan, Manager – Operations Research, Sabre
Travel Technologies. Anand.Srinivasan@sabre.com
Prof G Srinivasan, Professor, Department of Management, IIT
Madras. gsrini@iitm.ac.in
Mr Pratap Thumboochetty, Co-founder and CEO, Purple
Tangerine, a consulting company. Earlier he was Senior
Business Analyst at Capital One in the US and Country
Manager (India). pratap@thumboochetty.com
Dr Tushar M Waghmare, Vice President, HSBC Electronic
Data Processing India Pvt. Ltd., HSBC.
tushar.m.waghmare@us.hsbc.com
The discussion was anchored by Prof Ishwar Murthy, IIMB.
Prof B Mahadevan, Chief Editor, IMR, was co-chair. Faculty
members of IIMB participated in the discussion.
176
and work there at four times the salary. So you have to draw
a fine line as to where you can decide you have sufficient
senior domain knowledge to leverage in the pool of resources
that India has.
The Indian advantage, as I said, lies basically in the pool of
professionals who have strong enumerative and accounting
skills at competitive prices. As you go into higher value circles
the standard of written English that is demanded is much
higher and Indian English standards have to improve vastly.
Our MBA courses do not sufficiently emphasise English
presentation and communication skills – written and oral.
We lack a global outlook. 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.
Our educational standards are extremely varied, ranging from
the few centres of excellence to the majority in which there is
no guaranteed standard. Culturally, confidentiality 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 value financial analytics space. The frontiers are
constantly changing and so you have to continuously update
your domain expertise, which might mean getting your client
to share the required knowledge. What we are doing is
essentially straddling India and the global financial centres
and being connected with the global changes that are taking
place. When a client effectively transfers knowledge, it is also
an act of subsidising and you become dependent on that
relationship/knowledge. Once you get deeper into technically
proficient areas, you have competition from Eastern Europe
and Russia. At those levels English becomes relatively less
important. Eastern Europe also has a much more competitive
time zone advantage vis-à-vis an Indian location. Further, as
you go into higher value, cost is no longer the basis for doing
business. What matters is confidence, quality and an
assurance that you know the domain – that you are insiders.
Quality control is another challenge as you go into higher
value. The process is not easy to manage, it is a lot like creativity.
For instance, how do you measure the quality of a professor?
Then, there are many domains where intellectual property is
a grey area. Is it the client’s property or is it yours? How
much of it is legitimate for you to transfer to other projects,
Business Analytics in India – Opportunities and Challenges: Discussion
how much of it has to be returned to the client? A lot of the
intellectual property resides with the factor of production.
We must protect intellectual property with adequate
regulation. That is the final barrier to our expansion in
outsourcing in this area of analytics.
Tushar Waghmare
Analytics in Financial Services in India
When you look at the analytics space in financial services in
India, you find a plethora of institutions including domestic
and foreign national banks, multilateral financial institutions,
brokerage houses/investment companies, rating institutions,
market research companies, outsourced operations of foreign
retail financial companies and foreign investment financial
companies, third party providers of analytic solutions and
other retail service providers.
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 behaviour i.e. cross section data, and
retail data on consumer behaviour across time.
The methods that we use are mostly parametric and non
parametric. We do not make much use of the time series
method. We are mostly concerned with multivariate data
analysis – logit/probit, segmentation, perception mapping,
clusters etc. We use panel data methods such as the fixed
effects model and Seemingly Unrelated Regression system
(SUR). We have started using a lot of optimisation in our
work.
What is the knowledge that is required in this field? One has to
have good business and domain knowledge to leverage the
tools and techniques most efficiently – Where do I get my
income from? Where are my losses accumulating; the soft
skills, emotional quotient, innovations and perseverance; and
‘wisdom’, that is, knowing how to lead a team and how to get
maximum productivity out of people. I would look for people
who scored high on these parameters.
There are several challenges in the field of analytics in financial
services in India.
On the data side the challenges are many. First, availability of
data such as good credit bureau data or cross border data —
for example, some EU nations do not allow data to be
transported across borders – is a major challenge. Secondly,
data theft is a serious issue. In India penalties are
unenforceable. If an employee walks away with data there is
IIMB Management Review, June 2006
In academics, there is an accepted
theory, and empirical work tries to
validate the theory or its variants. Any
modelling involves a priori knowledge
of variables of interest. Data mining is
taboo in academics. But that is exactly
what we do in the credit card business
today. We start with 500 variables and
then try to find the ones that best
predict whether a person is going to
pay or not.
very little that can be done to recover the data or provide stiff
deterrence to minimise 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.
On the methods side the greatest challenge is the very slow
adoption of different technical methods into the business. In
academics, there is generally a well accepted theory, and
empirical work is essentially trying to validate the theory or
its variants. Thus any modelling normally involves a priori
knowledge of variables of interest. Data mining is taboo in
academics. But that is exactly what I do in the credit card
business today. We start with something like 500 or 600
variables and then try to find which are the variables that best
predict whether a person is going to pay or not! There is no a
priori knowledge or theory on which variables will turn out
to be significant. The aim is not to validate any theory but to
find the best predictors given the business constraints. Given
the diametrically opposite views, there is little updation of
knowledge in the field and a severe crunch of knowledge
seminars in India. There is a huge need for focused workshops
where people can learn about new tools and techniques and
also pick up industry domain knowledge. The most serious
challenge comes from the ‘flat maximum principle’. Lovie
and Lovie (Lovie, A D, and P Lovie, 1986, ‘The Flat Maximum
Effect and Linear Scoring Models for Prediction’, Journal of
Forecasting, Vol 5, pp. 159–168) found that the best predictive
models are often redundant. Particularly in the context of
credit scoring models, we have yet to find a technique that is
sufficiently better than logistic regression.
177

Value creation in businesses is
shifting to usage experience. As
products commoditise, service
features increasingly drive revenue
realisation, and success requires
continuously designing and testing
custom-tailored products with
wraparound features. The core
product is not disappearing but is
being wrapped around by a bunch
of service features.
Business knowledge is severely lacking in India. There are
few business-academic joint papers/seminars as in the US or
other channels of industry-academic interaction. In India,
we have no specialised institutions such as the Credit Research
Centre, which is a part of the University of Edinburgh and
which specifically caters to researching the consumer credit
market (http://www.crc.man.ed.ac.uk). Knowledge of the
regulatory frameworks is also severely lacking.
Some aspects of what I classify as ‘wisdom’, Dr. Alapat has
touched upon. There are certain aspects of managing a
knowledge worker that we are poor in, such as conflict
resolution and expectations management. We lack skills of
presentation and even telephone etiquette. The expectations
of people who come out of educational institutions are
unrealistically high. Employees need to realise that there is no
substitute to working in the trenches.
To conclude, I would like to see more orientation towards
business problems in academics, more advanced training
programmes and not simple regression analysis, more short-
term programmes and more joint work. I look forward to
working with academic institutions and leveraging the talent
and business knowledge in my team to advance the frontiers
in techniques.
Ajay Mookerjee
Applying Business Analytics to Create
Business Value
My presentation is an abstraction of 20 years in the profession
of applying business analytics to create business value. I have
178 Business Analytics in India – Opportunities and Challenges: Discussion
been part of the founding team of Capital One which has
used the power of analytics to great business success. I will
focus my remarks on business abstractions, while Pratap
Thamboochetty who was in the founding team of Small
Business Card sub segment of Capital One, will delve into the
Capital One experience with data mining and analytic tools
in the context of risk management and business
experimentation. Being associated with the India Research
Programme of the Harvard Business School, one of the
programmes that I am involved in is The Business
Experimentation (TBE) project, which involves people from
the industry in the US and Europe and some faculty members
of the Harvard School.
My opening proposition is that business analytics is not a
general management concept. It is a tool. General managers
are interested in business experimentation. Business analytics
is the driver behind business experimentation.
Value Creation in the ‘Experience’ Economy
Value creation in businesses is shifting to usage experience –
the economy has evolved from the agrarian and
manufacturing stages to the ‘experience’ economy, and there
business analytics and more importantly experimentation is
key to creating break-out competitive advantage. As products
commoditise, service features increasingly drive revenue
realisation, and success requires continuously designing and
testing custom-tailored products with wraparound features.
The core product is not disappearing but is being wrapped
around by a bunch of service features.
I would see the new challenge as follows: if, as general
manager you were to give away your product free, you would
have to extract value through after sales service, with the
usage experience defining what value the customer was
willing to place on the product and after sales service. That is
the new concept of value realisation. 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 (Exhibit 1). However,
no more than 20% of the business value is added from these
three steps. Eighty percent of the value is added in that last
step, in the feedback loop, i.e. in-market testing. Test and
learn and analytics driven business experimentation is key in
consumer financial services and is evolving in consumer
packaged goods/retailing. Capital One, Barclaycard, Tesco
and Wal-Mart are examples of companies that have managed
 Exhibit 1 Value Creation in the ‘Experience’ Economy
Past Performance Statistical Analysis &
Data Reporting
Management (Spot Trends)
Continuous Improvement (‘Learning’)
turnarounds through analytics driven business
experimentation.
However for such methods of value creation to be successful,
it requires a sea change in data mining intensity. If conventional
business management required tens of statisticians and
gigabytes of data, worked offline and practised static trend
spotting, test and learn management would require hundreds
of statisticians and terabytes of data, work online on a real-
time basis and the analyses would be predictive.
As far as the Indian scenario and our level of data
sophistication are concerned, the lack of credit bureaus
pointed out by Dr. Waghmare is indicative of the fact that
there is not much ammunition to fuel business analytics, that
test and learn is still at a rudimentary stage. Most of what we
do is not highly evolved in terms of rigour. The data handling
and modelling capabilities and the notion of experimentation
in data rich economies is two orders of magnitude more. It is
only within the offshored environment – the third party
offshorers as well as the captives — that there exists the level
of sophistication that I have talked about. However, it is not
impossible to achieve those levels.
In addition to an order of magnitude increase in data
management intensity, you also have to change your business
philosophy with experimentation replacing experience. The
old way of management is heuristic, loaded in favour of
judgement and experience. Now the world has become very
complex, product features have exploded in three orders of
magnitude and it is impossible for anybody to claim to be an
expert. Customer usage experience has to speak for itself.
With the shelf life of a product being around three months,
this experience is not worth much. You have to think of
completely different management philosophies, control
structures and architectures in organisations where you have
very young people with high degrees of empowerment.
Organisations must identify and test each winning strategy in
a micro segment and monitor results to revise strategy. This
cycle must be repeated on an ongoing basis with continuous
improvement and innovation.
IIMB Management Review, June 2006
Predictive Modelling In-market ‘Testing’
(Hypothesise Programme
business concepts) (Rollout business
concepts)
The organisation paradigm here is completely different. The
pyramid will have one business segment leader — a global
business leader with a track record in building analytically
driven businesses, instead of having a top-heavy management
team. The pyramid will broaden out with business analysts —
experts in test and learn, risk and marketing analytics and
investment analysis and research, modellers/statisticians and
data analysts forming the descending levels of the widening
base.
Pratap Thumboochetty
Business Analytics in the Credit Card
Industry
I would like to give you two examples from Capital One’s use
of data mining and business analytics, applied to the credit
card industry. The first is an experiment in high-intensity
data mining and predictive modelling from Capital One’s Small
Business line, applied to the collections side of the credit card
industry. Data was taken from different sources — from
transactional, collections, geodemographic, recoveries and
consumer bureau databases, and straightforward statistical
techniques were applied to it to do a collections analysis.
These techniques enabled us to minutely ‘slice and dice’ the
delinquent customer base and apply differential collections
treatments to optimise collections efforts. Based on the
recoveries analysis, we segmented the customer base into
illiquid and liquid debt. The illiquid debt, where the possibility
of recovery was low, was recommended for debt sale while
we optimised agency placement for the liquid debt between
high and low commission agencies.
However, this is what Capital One did about seven years ago
and the shelf life of this model is around 90 days. The model
has been iterated in many versions since. The idea here is to
impress the efficacy of intense slicing and dicing and data
mining.
The other example is from the marketing side of Capital One
179

Given the fast changing pace of the
world we need to leap forward in
certain things. That may even
include cutting short the experience,
and making up for it by more
knowledge-based methods like
teaching or experimentation. This is
where a course on Business
Analytics would help. It would make
available domain knowledge from
different parts of the world.
in the credit card industry, where data mining and business
analytics helped us find value in places where most people
would not even look. The data is from 1991, at a time when
the business was fairly homogenous and commoditised, with
not much innovation. An initial testing of the data from the
point of view of utilisation vs risk suggested a linear
relationship between utilisation and delinquency. However,
further testing found the elusive low-risk revolver in an isolated
test cell, that is, a group of people who utilise credit a lot but
are low risk. Capital One focused on that segment and built a
very profitable business. There are several more such
examples but this is probably the most dramatic example of
how we actually challenged the industry norms, added value
through innovative thinking and a belief in information based
strategy, and used data to make informed decisions. A lot of
organisations today are waking up to the fact that you can
actually change the way you do business and data mining and
business analytics is one tool that helps to turn the business
on its head.
Discussion
Ishwar Murthy:
Murthy Three of the speakers have talked about
the apparent lack of domain knowledge in the output we get
from India. Is there a possibility or a need for a new discipline
called business analytics?
Tushar W aghmar
aghmaree: There is certainly a need for it primarily
Waghmar
because the applications have to be focused on solving
business problems. I am sure there would be a number of
such problems that can be collected from different areas and
you can structure your entire programme towards solving
180
those kinds of problems, towards doing more
experimentation as Dr Mookerjee suggested. Our people here
are smart, intelligent and very ambitious and should be given
the opportunity to update their domain knowledge.
Ajay Mookerjee:
Mookerjee I heartily second that. If we look at IT
offshoring, half the CMM Level 5 companies are in India but
our domestic penetration and application of IT is abysmal. If
you measure the IT spend in India versus Capex, we rank at
number 30 in the world. Having said that, it is also true that
the application of IT domestically may be lagging behind
because of the lack of demanding customers. However, one
must make a beginning and it would be a very good idea if the
IIMs were to take leadership here.
Paul Alapat
Alapat: We should be very careful about taking short
cuts. Our MBA course packs in too much. Moreover, one
acquires domain knowledge by working in an industry for
some time. An average MBA student in the USA has worked
for 4 to 5 years and is 30 or 33 years before s/he starts. Here
we have 25-year-olds, fresh out of college, who have never
worked in an industry and then you give them a jack-of-all-
trades education. I think it is suicidal. We have to acquire
sound basic skills, do basic math well, learn to speak and
write English clearly. I say just say teach them good statistics
and good English. They will be much better managers.
Tushar W aghmar
aghmaree: Given the fast changing pace of the world
Waghmar
we need to leap forward in certain things. That may even
include cutting short the experience, and making up for it by
more knowledge-based methods like teaching or even
experimentation. This is where such a course would help. It
would make available a lot of domain knowledge from
different parts of the world. We have to make sure that we
enrich that process. Of course, the course has to be structured
properly so that you teach the right skills. While there is no
substitute to working in the trenches, we can help shorten
the trench period by jump-starting and building on the spiral
of accumulated knowledge.
Anand Srinivasan:
Srinivasan When you speak of increasing domain
knowledge, you have to be more specific. It would be easier
with a vertical domain. You need people to work on particular
domains, you need more consulting projects and it takes time
to achieve concrete results. Institutes must specialise.
Mahesh R amakr
Ramakr ishnan
amakrishnan
ishnan: Being in the financial industry,
one of the key things I look for when I recruit people, is a
finance background. I cannot take a person from supply chain
management or retail and get him to do business analytics
for a financial enterprise. However, approaching it from a
course perspective has several positives. One is the underlying
commonality of business analytics across all verticals. But
Business Analytics in India – Opportunities and Challenges: Discussion
once somebody has been working in a particular vertical
domain for a number of years, it would be time to supplement
his knowledge skills with some core tools and get him up to
the next level where he can start thinking from the analytical
perspective and relating his knowledge to a real world
scenario. We must look at such a course not from a freshers’
perspective but as one for people with prior experience. That
would be a tremendous win-win not only for people in various
organisations, but for a country as well. It would throw up a
new set of people with a new set of skills that are going to be
really unmatched considering the significant success that we
have achieved so far.
V Nagadevara
Nagadevara: Such a course has to be run with a
combination of academics and practitioners. There is no
substitute for the experience that practitioners can bring in.
It will reduce the students’ leaning time lag and help them
reach the level required by the industry. However, co-
ordinating with industry has been an issue.
Rajendar Rajanhally
High Value Analytics – The Challenges
One of the biggest challenges in the field of analytics is
translating a business problem into an academic problem.
Once I come up with a solution I must know how to
implement it, to translate it into a business solution. In this
business, by and large, we have people who can crunch data
very well and are sound on methodology but they do not
have domain expertise. Companies should also be in a position
to take up a problem and come out with a solution for it
instead of asking the business to define the problem clearly.
Hiring the right skill sets and getting the right fit for the job is
a major challenge. While people have sound backgrounds —
masters in statistics, MBAs in finance and operations research,
we need to see what the required skill sets are to solve
problems in the business. Companies must also reduce the
number of people working on reporting and digitisation by
automatising these processes so that they can free up more
people to work on high-end analytics which adds a lot of
value to the business. Retention is the major problem in the
industry and poaching across companies is common.
Innovation is something which we all need to focus on.
One question that is constantly debated is whether to invest
in the current technology instead of building new technology.
When you have a very good business process management
system for modelling you can come out with a tool which
builds the model efficiently and quickly, and which would
lead eventually to the automation of the process. Companies
IIMB Management Review, June 2006
One of the biggest challenges in
the field of analytics is translating
a business problem into an
academic problem. Once I come
up with a solution I must know
how to implement it, to translate it
into a business solution. Hiring
the right skill sets and getting the
right fit for the job is a major
challenge. Retention is another
problem in the industry.
are not investing in such processes or looking to industry for
such collaboration at present. They stick to tools that they
are familiar with and hence do not know what is available
outside. While companies do feel the lacunae on the technical
training side, they are not able to find people who can train
them specifically on the things that they do regularly. A lot of
people would be very productive if they were given the right
training at the right time. The right training would create
managers with the ability to leverage technology, data mining
and domain expertise.
Research must have an industry focus, concentrating on
industry problems. Productive partnerships between
institutes and industry that would result in reduced cycle
time from research to application. The other approach that is
gaining ground in the Knowledge Process Outsourcing (KPO)
industry is outsourcing of analytics to countries such as India.
Instead of working on analytics on an Full Time Equivalent
(FTE) basis i.e. calculating the number of people working on
different kinds of projects, we can change the paradigm and
say that can we become solution providers irrespective of
how many people work on the job. Right now, we can take it
on as a challenge and see how it works.
Ajay Kela
Business Analytics in India – An Overview
Symphony Services is a three year old company with two
major businesses – building products for software companies
and market analytics, where we have focused on two verticals
– consumer packaged goods (CPG) and telecom. We are a
services company doing product development and analytics
181
 Exhibit 2 Business Analytics – The Value Chain

Business Analytics:
l Gathering, management, analysis of data
l Improve the effectiveness and efficiency of decision making

Predictive Analytics

○
○
○
○
○
Business Analytics Value
○
○
○

Data Integration &

○

Management
○
○
○

Data Modelling
○
○

and Analysis
○

Reporting and
○
○

Dashboards
○
○

○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○ ○
○

Business Analytics Opportunity Space

l Purpose-built offshore analytics centres

l Applying vertical knowledge and providing actionable business insights

for clients primarily in the US. We are beginning to see a Among the competencies that are required to be successful,
strong correlation between products and analytics. We now domain knowledge is the most critical and takes the longest
have teams that are building analytic modules and products time to acquire. Other competencies include – knowledge of
within the software products of companies. industry verticals; data warehousing; business intelligence –
The value chain on analytics (Exhibit 2) starts with data balanced scorecard, report design, dashboard development
integration and management and moves with increasing value and other reporting tools; analytic modelling techniques
through reporting and dashboards, data modelling and including statistical, computational intelligence — neural
analysis to the upper end of the spectrum to predictive networks, fuzzy logic and optimisation techniques; analytic
analytics. The offshore models that are prevalent today are — service practices; and some standard industry platforms.
the FTE model that Mr. Rajendar just talked about, and the To present a flavour of the global business analytics market,
value-based assignments that are not really concerned about the core analytics market by March 2008 is seen as a US$ 8.7
how many people are behind the scene. Exhibit 3 depicts our billion market. The market for business intelligence and data
analysis of the potential business analytics market. We have warehousing alone in 2006 according to Gartner would be
analysed a few market verticals – finance, telecom, CPG $ 29 billion. The global CRM analytics market was expected
manufacturing and non CPG and looked at the variety of
to surpass $ 1.5 billion in 2005 and the telecom analytics
offerings from market analytics, starting from data
consulting market was expected to reach US$ 175 million in
management and reporting and going down to things like
2006.
fraud detection and so on. We have analysed how mature
these offerings are within the verticals. In the really mature With a potential 70% share of the offshoring market, India is
areas there are several companies operating, and Indian fast emerging as a key player in the KPO space due to its large
service providers have the advantage here and can acquire base of highly qualified professionals. According to
industry standard practices and tools to provide end-to-end NASSCOM estimates, the total market size for the KPO
services. In the developing and emerging application areas business in India may rise from $1.2 billion in 2003 to $15.5
we can develop our own IP and provide value-based services. billion by 2010 with a CAGR of 43%. According to a Deloitte
There is a large potential market there and we have started to Consulting study, the KPO industry is projected to grow to
focus on those areas. approximately $17-18 billion by 2010, with India expected to

182 Business Analytics in India – Opportunities and Challenges: Discussion

account for approximately $12-14 billion.
The defining parameters in service providers today, which
have a direct impact on revenues include all-round value
creation. Today the value that our company is able to provide
its clients is through software. Mr. Rajendar just spoke about
companies not spending enough time on automating some
of the models – to tackle that we have technology oriented
people spending time on building tools so that we can
automate some of the basic modelling. Domain expertise is
crucial and both on the product side as well as on the analytics
side it has been a primary driver. We are looking at setting up
a Symphony Academy where we train people on products as
well as on analytics, and we are looking forward to
collaborating with other institutes here. Focus is an important
issue and ours has been on the customer and market analytics
in the chosen verticals. The other big differentiator is that we
are doing end-to-end work on the complete product and
process lifecycles. The operating model now takes into
account persistent and long term contracts since our clients
are investing in our people and transitioning a lot of their
domain knowledge. The model envisages proactive, persistent,
close collaboration and dedicated teams that are an extension
of the client team. Their core market offerings are thus
dependent on our advanced competencies.
In conducting a SWOT analysis on business analytics in India,
our strengths, as mentioned by the previous speakers, lie in
our strong knowledge infrastructure in the form of world-
class management, technology and maths/statistics
educational institutions, the large educated English speaking
population, trainable on industry best practices and our 30+
years of national experience in successfully providing offshore
ITES services to global clients.
Our weaknesses arise from the engagement model, which
still operates on an adhoc, consulting services basis. The global
market is too immature for persistent, long-term engagement.
Enough has been said about our lack of domain knowledge.
There is very little industry-academic interaction to foster
entrepreneurship and the Symphony Academy that we are
in the process of setting up spells our resolve to engage with
the academic and the local community. Connected with the
lack of domain knowledge is the lack of a good domestic
market. A very strong domestic market would ensure domain
knowledge.
Our opportunities lie in end-to-end customer and market
analytics – a one-stop-shop for data and reporting as well as
high value predictive analysis, high value business analytics
services to top-line customers across industry verticals, high
end KPO – market intelligence content creation, enrichment

Exhibit 3 Business Analytics – Potential Market

Market Analytics Application Areas Industry Verticals

Finance Telecom CPG Non-CPG

Offerings
Mfg/ Mfg/
Retail Retail
End-to-end Data-Content-Reporting management
on
train o
Customer Segmentation, Profiling n e r and actices t
Part ls / p r s
ire/ too ice
Acqu tandard end serv
Advertising, Target Mkg, Response Mgmt t r y s d - t o -
s
indu ovide en
Fraud Detection, Risk Assessment pr

Customer Acquisition, Cross Sell / Upsell d

IP an d
lo p own a s e
b
Attrition, Churn, Loyalty, Lifetime Value Deve e value-
id
prov s e r v i c e s
Profitability, Pricing, Revenue Optimisation

Market & Consumer Understanding

Advertising Recall, Market and Store Testing

Mix Drivers – Product, Price, Channels, Promotions

Assortment, Space & Floor Planning, Trade-Funds Mgmt

Legend : Mature Application Area Developing Application Area

Emerging Application Area

IIMB Management Review, June 2006 183


Since the performance of the
decision support system (DSS)
was heavily dependent on the
quality of the forecasts, in the mid-
90s we thought of enriching the
DSS forecasting models by
collecting rich transaction data
through the retail channels. We
provided sophisticated ‘reports’
based on this data but we had
limited success.
and management for certain verticals, and analytics R&D for
enhanced intelligence of enterprise product for independent
software vendors in all verticals.
Our threats come from other knowledge economies – very
strongly, China. Further, price wars among offshore service
providers, especially ‘mom and pop’ shops trying to do data
management analytics are deflating the value proposition.
The mindset is all BPO centred and the low IP/value
consciousness among traditional BPO service providers may
prove a barrier to moving up the value-chain.
Anand Srinivasan
Business Analytics and Decision Support
In delineating the Sabre approach to business analytics, I will
use a case-study approach. Our mission statement describes
Sabre Holdings as a world leader in travel commerce, retailing
travel products, and providing distribution and technology
solutions for the travel industry. Sabre has three basic divisions.
Travelocity and Sabre Travel Network are retail channels for
travel distribution, providing data that can be (and is) used
for airline decision support. Sabre Airline Solutions provides
sophisticated decision support modules for airline planning
and operations, relying heavily upon data collected from retail
channels. We look at business analytics as a technique that
makes it easier to visualise and analyse business data to
support decision making, with the two ‘distinct’ business
functions Data Analytics and Decision Support sharing a
symbiotic relationship.
Travel Network and Travelocity are the providers of the data
184
that feeds into our data analytics, and the decisions about our
models that come from Airline Solutions are the end
consumer of data analytics. Both our providers and
consumers as far as data analytics is concerned are in-house.
Revenue management operates on a simple concept. We have
a single product that is the source of our revenue – a seat on
a plane – and the idea is to maximise revenue from it. On a
price-demand curve, revenue and consumer surplus for a
given price point can be established. Revenue management is
all about increasing revenue and decreasing the consumer
surplus. How does one convert consumer surplus into real
cash? The revenue management solution is to ‘differentiate’
the product by applying ‘restrictions’, such as advance
purchase, online discount only, etc and set different price
points for each. These are all essentially differentiators of the
same product so that you can sell each of those versions at
different price points. Once the different products are
identified, revenue optimisation sets ‘optimal’ allocations for
the different products based on forecast demand for each
product.
Since the performance of the decision support system (DSS)
was heavily dependent on the quality of the forecasts, in the
mid 90s we thought of enriching the DSS forecasting models
by collecting rich transaction data through the retail channels,
which we could do easily because we had the retail channels
in-house. We provided sophisticated ‘reports’ based on this
data but we had limited success and penetration because the
high cost of data could not justify the return on investment
for the end customers. We had to abandon the attempt.
In the year 2000, we gave serious thought to evolving decision
support models that would drive upon the kind of data that
we had. For instance, we had very sophisticated data on
shopping requests for different cities by carrier, and we could
generate cross sections which told us that on the Boston to
Orlando flight, for example, the airline that was the market
leader dominated on a particular day of the week and not on
other days. However, the DSS that we were selling could not
leverage such information to the client’s advantage and the
quality of the data and the sophistication of the reports had
little impact. We would have to come up with ‘better’ DSS
models to keep pace with the data, and better ROI
justification.
In our second innings we invested in building the next
generation decision support models. With market dynamics
evolving rapidly, we replaced time series forecast models,
which are based on history, with causal models. We came up
with consumer choice models and demonstrated the ROI
Business Analytics in India – Opportunities and Challenges: Discussion
from the new decision support model and 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. We were able to leapfrog stages
successfully.
The lessons for us from this experience were, briefly, that
data analytics without matching decision support systems
cannot add value. Thereafter, Sabre transplanted significant
DSS expertise to India before establishing the Business
Analytics functions and new personnel received significant
training to build up the necessary expertise. The preliminary
indications in this stream are extremely positive.
Data analytical skills are readily available in the country, but
the DSS expertise is woefully inadequate and high-end
business analytics will not grow without it. There are two
kinds of global sourcing models typically in vogue today. One
way is to work with local vendors on a project basis or even
on a long term basis, in a staff augmentation or FTE mode.
The other approach is to establish local presence and transfer
DSS expertise. 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.
G Srinivasan
Business Analytics in the Context of Supply
Chain
My presentation will concentrate on the work that my
students and I have done in the field of supply chain
optimisation.
The opportunities or resources that an educational institution
such as ours has in handling applications comes through
faculty and student projects, sponsored research projects,
consulting and assignments, and problems sought by research
and PhD scholars for their doctoral theses. The MBA
programme provides several relevant skill sets including
courses in data mining and warehousing, and tools and
techniques as well. In this context I would like to respond to
the question that was raised about requiring a separate subject
such as business analytics. Our MBA programme has a
specialisation called business consulting comprising a set of
IIMB Management Review, June 2006
Data analytical skills are readily
available in the country, but the
DSS expertise is woefully
inadequate and high-end
business analytics will not grow
without it. 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.
electives where the students get exposed to the various issues
of business consulting as well as a domain area, with people
from the industry being involved. Realising that it is not enough
to work on one project with the industry, we have worked
out a longer time frame of student involvement with the
industry, and a deeper involvement with the different
operational issues faced by companies. If the student were to
end up joining the organisation it would be the best thing to
happen both ways. It would help in bridging the gap that we
are all concerned about. To ensure participation we are tying
up with a software organisation in Chennai. While this would
not prepare the student to immediately address all issues that
are relevant to the IT industry, it would quicken the process,
reduce the gap and make the student more prepared. As
with the construction and manufacturing industries, our
culture of user-oriented programmes extends to the IT
industry as well and we also have programmes tailormade
for them.
In our interactions with industry, we have faced many issues.
All practical applications (solutions), we have discovered, are
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 persons in industry ask for a rule bound algorithm
because it suits them better. People prefer quick and rule
bound solutions to slow and exact solutions. It is something
that we accept. Standardisation and duplication are possible
but are difficult. Our experience in tackling production
planning in the auto ancillary industry has taught us that we
cannot use the same tool for different companies. The addition
of a single dimension may change the methodology. For
185

The classic approach is that to get
the data into the warehouse, clean
it, churn it and do some modelling;
in effect you are throwing the data
around in various forms for
somebody else. Our experience
has been in dealing with business
intelligence and warehousing from
a user’s perspective, which has
made a big difference to our
product offerings.
example, there is a huge difference in the algorithms that you
use if you want to find the first shortest path and the second
shortest path and there is a bigger difference if you want to
find the shortest path with a constraint.
The question of software creation versus software
procurement often comes up, especially when applications
do not directly impact the end customer or the consumer. In
the realm of public systems or manufacturing, when people
know that it is going to be a while before the product reaches
the end customer, there is some reluctance to invest in
software that can handle a variety of situations. The problem
of integrating new software into existing systems comes up
when you consider software creation. Most DSS systems
seem to be standalone systems and become expensive when
they have to be integrated with ERP systems. Further, most
of the data that comes out is static data, emerging from a
system and unlike the data that comes out of the experience
of the persons involved. Often, choice and availability of data
decide and influence the solutions. Customers are still hesitant
to share complete data with us. Further, we must be mindful
that it is not only the forward movement of the business
problem to an academic problem that is important but the
reverse is equally so. When an academic solution comes out
how well are we able to take it back to where it started?
Mahesh Ramakrishnan
Business Analytics – A Product Perspective
I-flex has fundamentally been known as a product company.
We have the number one product as far as the transactional
processing system for financial institutions is concerned. We
186 Business Analytics in India – Opportunities and Challenges: Discussion
also have another product called Reveleus which is the leader
in the business analytics space. This has been the result of a
long journey and I am going to share with you a few of the
perspectives that went in.
Many organisations have evolved gradually from being just
data processing units to knowledge-based organisations.
However, a Gartner study shows that of the big market for
business analytics, the Asia-Pacific share is very small and of
that India’s share is negligible. As a country we are not using
business analytics but we are serving business analytics leads
and advice to the rest of the world. It is time to turn things
around and several financial institutions and business
organisations are beginning to actively consult with academic
institutions. Academic involvement can give a huge push to
the industry and that in turn can spin schedules within India.
Data warehousing is the basic foundation of business
analytics. The classical approach is that you get the data into
the warehouse, clean it, churn out various analytics and do
some modelling; in effect you are throwing the data around
in various shapes and forms, for somebody else. Our
experience has been in dealing with business intelligence and
warehousing from a user’s perspective, which has made a
big difference to our product offerings to our customers.
The business intelligence (BI) user is the end user of data. And
the user’s reaction usually varies between, ‘I can’t trust the
data’, ‘I don’t get the full picture’, ‘It doesn’t work the way I
think’, ‘I cannot close the loop’, and ‘I need to “jump start” my
analytics’. We have to deal with all these issues. If our data
goes against the users’ notion or perception of it, s/he will not
trust it. In large organisations data is an asset and people
protect it. Very often it is difficult to get the full picture from
the reports made by the different departments, even for the
CEO. Further, people like to receive data the way they are
used to it – some people want to see just one number, some
people may want to play around with the data while others
don’t want to look at any numbers. So different people have
different ways of looking at data and find it difficult to close
the loop.
It is our job to facilitate the way data gets presented to the
end user and also close the loop and bring the data back into
its original content. The need to ‘jump start’ analytics,
especially in these times where people are constantly changing
jobs, are impatient to break across silos, get the data they
require and get on with the job, is a need that we understand
and have built into our products.
Our groundwork for product strategy envisages several steps.
We formulate our products through internal ideation and
external inputs. In creating Reveleus, after the task force
formulations, we presented the idea to leading analysts and
got feedback on several aspects, including the market and
the industry. We researched competitive offerings and figured
out a ‘unique selling proposition’, and then built a preliminary
business plan and strategy. When we went into the market,
packaged business analytics did not exist. Everybody thought
it was a great idea which somebody should get into at some
time. We were creating a new brand and it required a lot of
management investment and commitment. The management
model that we followed was the classical model for new
product planning and for managing a product life cycle. What
made the big difference was our focus on the domain and
that we addressed the entire proposition from end to end.
The technology was capable of not only providing end to end
support for business analytics but it could transparently
integrate with any of the earlier investments, such as
investments in reporting or modelling tools. So we originated
the idea of the business solution pack which contained pre-
packaged application solutions.
We put in one standard, a common warehousing model that
could interact with multiple tools at various points in time.
Additionally, we built the product for customisation,
depending on the geographical needs and specifications of
the customer. The customer could also build in his own unique
processes on top of what we actually provided as part of pre-
package applications. The product is a completely integrated
solution set that provides a single view of all organisation
knowledge. It prevented people from reinventing the wheel.
Today, there is a wide variety of pre-configured analytics readily
available in the market place. We are fairly successful as far as
analytical applications go and our product is spread across
more than 50 banks worldwide. We now want to leverage on
what we have accomplished so far. Apart from this product
we also run the services side of business analytics and part of
the product also goes in as a complimentary offer.
V Nagadevara
Business Analytics – Some Applications
Since the common applications of business analytics have
been covered by the previous speakers, I will talk about some
applications which I perceive as interesting and uncommon.
The first is the case of a pharma company that came to us.
This company sells a particular drug which makes use of
IIMB Management Review, June 2006
The management model that we
followed was the classical model
for new product planning and for
managing a product life cycle.
What made the big difference was
our focus on the domain and that
we addressed the entire
proposition from end to end. The
technology was also capable of
integrating transparently with any of
the earlier investments.
expensive formulas and is meant for an ailment which is a life
long condition. While there are comparable drugs available,
this specific formulation is not. The drug is expensive as it is
still under patent. Their problem was that the patient
discontinued the drug after the ailment came under control,
usually under the advice of the pharmacist. The client wanted
to find out who was likely to discontinue this drug so that
their representative could talk to such patients. If cost was
the criterion they were ready to give free supplies for a certain
period. We collected information on different variables
through a feedback form and applied every possible
classification technique but ultimately logistic regression gave
us the result.
The next was a case from the hospitality industry on its loyalty
programmes. It needed to classify members into different
categories and predict potential spending, identify the
characteristics that differentiate the categories and
understand them. Here we used artificial neural networks
(ANN) on the variables and were able to categorise the low,
medium and high spenders. We were able to predict correctly
the low spenders 92% of the time, medium 82% of the time
and high 86% of the time.
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 for
the year 2004. We obtained 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%, and
187

In the business domain, there are
likely to be great changes in the
art of usage given product
complexity, innovation, the
diminished shelf life of products,
the change in IT architecture and
in products enabling data
access. With businesses
becoming more complex, the
biggest challenge is on the
demand side.
their recovery was up to 92%.
The next case is from Berry and Linoff, (Mastering Data
Mining: The Art and Science of Customer Relationship
Management, 1999, Wiley) which represents a completely
different kind of data mining application. R R Donnelly and
Sons, a major player in printing, ran into the problem of
cylinder banding which left a streak of ink running across the
image. In 1989 the company lost 800 hours because of the
cylinder banding. A member of their team with machine
learning specialisation used classification tree and solved the
problem, coming out with the guidelines that the chrome
solution ratio and the ink viscosity had to be kept high, while
the ink temperature had to be kept low. With the new
guidelines, the number of hours lost was reduced to only 30
hours per year.
Discussion
B Mahadevan
Mahadevan: Are there specific challenges and issues that
people face in a business analytics situation in which we may
assume that they will not have data?
Ajay Mookerjee:
Mookerjee The answer to this lies in the relative levels
of development of the US/Western and Indian economies.
Academically there are four structural drivers to business
analytics. One is data. The US has a three-decade long history
of collecting data. Apart from organisations that have been
collecting consumer panel or credit bureau data, academic
institutions have been involved in the effort, such as the
University of Chicago that took the lead in crunching securities
data, spawning applications that gave rise to a lot of financial
engineering and rocket science analytics.
188 Business Analytics in India – Opportunities and Challenges: Discussion
The second driver is statistical tools and this field, as far as I
know, has registered no great advances since World War II.
The third area is IT, and I fully agree with Mahesh that this is
an area of great applicability and advancement – products
such as Reveleus, Fast Query Languages, and search
techniques such as Google are making accessing data
important. The fourth structural area is the business domain,
which includes the users, and concerns such as marrying of
decision support technology with data availability. There are
likely to be great changes in the art of usage given product
complexity, innovation, the diminished shelf life of products,
the change in IT architecture and in products enabling data
access. 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.
Ishwar Murthy:
Murthy How do we get the academics and the
industry working on a complementary basis? In the US,
revenue management is a classic example of how a body of
knowledge grew out of a need followed by rich interaction.
Industry-academic interaction is quite well established. My
own limited experience here is that there are several
academics who are good at problem solving and are looking
for problems to solve but nobody has come forth with
problems for them to solve. If confidentiality is an issue, that
too can be resolved by presenting the problem in very general
terms.
Mahesh R amakr
Ramakr ishnan
amakrishnan
ishnan: To update you on the credit
information history in India, CIBIL has been collecting credit
history from all credit cards in India and that’s 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.
To give you an example of our experience with data, we did a
project in RBI where we collected data for the entire history
of the organisation. The data available was not always on the
computer or quantified. We found it in archived paper and in From an operations perspective, if
a variety of databases in different parts of the world. Thus, a decision is important then we
even if data is there and available, it is a question of its being
accessible to everybody at a single point in time. In fact, will collect the data. From the
converting paper-based data into database tables has become
organisational point of view,
a thriving industry. The ROI of business analytics, as Prof
Nagadevara said, is not a question of 2% or 3% but it is an missing data is never a major
order of magnitude. The biggest problem in India is getting in
problem but if the ROI on the
data on a regular basis.
G Sriniv
Sriniv asan
inivasan
asan: We have been in situations in which, with better
decision is not going to be worth
data, we could have done better. There are also situations the cost of collecting the data then
where you know that some of the data that is required is not
available, and others where the data that you get cannot be we will use some heuristic
directly used. technique or the other.
We were trying to build a model for a client when we discussed
the possibility of getting data from a competitor into the we have lack of data? In such a situation, the idea of a credit
neural network. That was not possible at all, which changed research institute which is part trade and part academia makes
the structure of the neural network and at one point we had sense.
to give up. If you still insist on going ahead, you will have to
Anand Srinivasan:
Srinivasan Essential business functions are so critical
work with dimensions with unequal data points. Aspects of
that the opportunity cost of not doing something is simply
confidentiality, as raised by Prof Ishwar Murthy, can be
too high. So if data does not exist you basically work around
tackled through an MOU, which you can sign before you
it and put in the infrastructure to collect the data.
commence working on a problem.
V Nagadevara
Nagadevara: It is not just a question of not having data or
Tushar W aghmar
aghmaree: From an operations perspective, if a
Waghmar
working around the data. There seems to be a paranoia about
decision is important then we will collect the data. From the
sharing data, this was our experience.
organisational point of view, missing data is never a major
problem but if the ROI on the decision is not going to be Paul Alapat:
Alapat I will not underestimate the importance of data,
worth the cost of collecting the data then we will use some but its integrity is also important. Getting high fidelity financial
heuristic technique or the other. If you take the context of asset prices in India is very difficult. If you cannot trust the
Indian banks, 20 years ago they did not have any credit sources, then the data is meaningless. Like the initiatives taken
research bureau. That did not prevent them from giving loans. by the University of Chicago that Ajay referred to, we need
institutions like the IIMs to take similar initiatives in the Indian
Aja
Ajayy Mook
Mooker er jee
erjee
jee: I second Dr Waghmare’s comment that
context. Business analytics basically boils down to statistics. I
lack of data can never be an excuse. For instance, in the
don’t think business analytics is a separate domain. It is good
Indian context of consumer lending, a common complaint is
data, good statistical skills, strong analytical minds, and last
that CIBIL is a new institution and does not have that many
but not the least, transfer of knowledge happening through
records. Hence you cannot really have a credit risk priced
the movement of Indians from Western markets or through
consumer lending programme in India on the basis of CIBIL
multinationals. These have laid the basic foundations on which
data. So, either you hang up your hat up until CIBIL grows or
we need to innovate.
you look for other sources of data. For example, 80% of the
market share of consumer-lending is enjoyed by public sector Srinivas Prakhya:
Prakhya In the US there is a tradition of PhD
financial institutions in India and there are 200 million bank work being based on retired panel data. From 1983 onwards,
customers out there and at least 50 million consumer-lending a third of the PhDs in the US were econometric models based
borrowers. So clearly there is a lot of information available on retired panel data provided by the IRI. We do not have the
on banking habits and propensities on the asset side of the infrastructure to do that and that is an opportunity denied to
financial services in India. But why aren’t people thinking out our academics. I want to use this opportunity to request
of the box? Why are we not thinking of cross marketing when companies to see if there is any data which is no longer useful

IIMB Management Review, June 2006 189


In our interactions with some of the
banks, we understood that the
reluctance to share data within the
organisation stemmed from a
perceived ‘erosion of power’ by
those who were privy to the data,
such as the finance and risk
management departments.
Further, the use of data for
business development and growth
was ill understood.
to them and pass it on to institutes like ours. That would
spawn PhD work and would no longer entail confidentiality.
Ishwar Murthy:
Murthy I would like to extend it not just to data
and statistics but also to decision support. Many academics
spend a lot of time tackling hypothetical decision support
problems. If industry could come up with actual problems,
they could use the willing resources in academic institutions
in India.
Ajay Mookerjee:
Mookerjee I have three pieces of advice for the IIMs.
One is, do not waste the sharpest brains that India has, on
basic inventory problems. You could train your students and
the government officials to do that. Secondly, you must take
the lead in promoting the usage of data intensive, fact based
decision making through research institutes, which are part
trade and part academia. Thirdly, as far as your own research
programme is concerned, faculty and doctoral students
should focus on business decision making or decision support
systems.
Tushar W aghmar
aghmaree : Coming to Prof Murthy’s question
Waghmar
about what it takes for industry and academia to collaborate,
one aspect I would like to emphasise is the need to leapfrog
developments, and that is not happening at present. As things
stand now, I know that logit progression gives the best result
and I was very disheartened to hear Prof. Nagadevara say the
same thing. We need something more, we need to come up
with newer techniques other than the simple things that we
have been doing so far.
Mahesh Ramakrishnan:
Ramakrishnan Speaking of the sharing of data from
the banking perspective, there are several organisations such
as the Reserve Bank of India, State Bank of India, The Institute
190 Business Analytics in India – Opportunities and Challenges: Discussion
for Development and Research in Banking Technology of
Hyderabad and others who have hoards of data and who
have made a start in analytics. The RBI mandated some years
back that every financial institution must have a data
warehouse because they saw that as a big motivator for people
to get into business analytics, but a move still has to made in
that direction.
Ravi Anshuman
Anshuman: We are always talking about industry and
academia 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.
P C Narayan:
Narayan I would like to share my thoughts in the area of
banking, based on my own experience with the ‘data issues’
confronting banks in India. While it is true that the Vasudevan
Committee Report recommended Indian banks to get into
data warehousing applications, those closely involved in the
business of banking in India knew that the backend
transaction and accounting data that are required to build
the data warehouses were distributed across 63,000 branch
locations and consequently any data warehousing initiative
could not take off. The first thing that the banks needed to
do, as a prelude to building a bank-wide data warehouse, was
to have a centralised transaction processing and accounting
database. And if you look at the strides made by banks in
India in this regard in the last 10 years, it has been pretty
impressive. The transaction processing systems in these banks
process 2 to 3 million transactions per hour on a base of 40
to 50 million customers! In comparison, six million customers
is considered to be a significant size by a lot of the US banks
whereas that would be the size for some of the smaller banks
in India!
In our interactions with some of the banks, we understood
that the reluctance to share data within the organisation
stemmed from a perceived ‘erosion of power’ by those who
were privy to the data such as the finance and risk
management departments. Further, the use of data for
business development and growth was ill understood.
Investment in a data warehouse was seen as means to a
implement a transfer pricing model, to compute product
level and customer level profitability, etc. Data has not so far
been seen as a resource to grow the business. Perhaps the
lone example is of a private sector bank in the country which
has built a BI solution to empower the employee at their
call-centre and the front desk in their branch to cross sell that they learn more by getting access to a bigger pool of
intelligently. For example, a credit card with a small limit or default data.
an automobile loan is pre-authorised automatically by the
P C Narayan
Narayan: In our country competitors do not want to
computer system for those customers who qualify based on
collaborate. This is a very fundamental problem. Back in 1988,
the strength and longevity of his/her savings bank account.
every bank wanted to put out an ATM network of 5000
This information was made available to the call centre staff as
ATMs. It took six years of evangelising to make banks realise
well as the front desk staff in the branches on their computer
the value of a shared network. People will not collaborate till
screen whenever the customer called to transact. This small
they reach a certain threshold level. As far as data sharing on
but significant initiative enabled the bank to ‘cross-sell’ very
the credit bureau is concerned, we are probably two years
effectively. When this was implemented, the real meaning of
behind in terms of this realisation. We can consider the effort
‘effective use of data’ to grow the business was understood
to be worth the while if we can compress the two years to 18
by the entire bank. We are now evangelising this across several
months! Academics will be heard more objectively and
banks and we believe that our efforts should be successful, as
dispassionately by senior functionaries as they will be seen as
banks generally are good followers of the ‘me too’ syndrome.
people with no axe to grind, compared to consultants. That
There are several such opportunities where we can deliver
is the contribution that we can make.
value to the customer and business growth for the bank using
good analytics. And soon everybody will start talking about Anand Srinivasan:
Srinivasan Regarding willingness to share data,
the success of and the need for analytics! the airlines experience has shown us that if you make a valid
proposition that you give while you get, it will work. A
What are we doing in this process as academics? We are
readiness to interchange data is more effective than an appeal
participating in this silent revolution by getting into ‘consulting to make data public.
engagements’ and sitting on the boards of banks to influence
its senior functionaries in the effective use of business analytics Ishwar Murthy:
Murthy I want to thank all the panellists for taking
and data as a valuable resource to grow their business. off their time to make it here. We have had a fruitful
discussion.
Ajay Mookerjee:
Mookerjee The network externalities are important.
Banks must be encouraged to share data and to understand
Reprint No 06206

IIMB Management Review, June 2006 191