Week 01: BAFBAN1: Fundamentals of Business Analytics

BAFBAN1: Fundamentals of Business Analytics
Week 01
IBM Global Center for Smarter Analytics © 2013 IBM Corporation

© Copyright IBM Corporation 2013. All rights reserved.
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Agenda
§Course Overview
•Introduction to the Course
•Setting of Course Objectives
•Administrative Matters
•Project Introduction
§Module 1: Analytics in Practice
•What do we mean by Analytics?
•What kinds of questions can analytics answer?
•Analytics in Practice
•Business Users and Their Challenges
•Trends in Business Analytics
•Analytics for the rest of us
•Why its time to put analytics to work?
•Where does Analytics Apply?
•Power of Information
•Metrics and Measurements
•When are Analytics Not Practical?

3
Agenda
§Overview
•The Challenge of Business Analytics
•The Challenge from Outside
•The Challenge from Within
§Information
•The Secret of Success

4
Course Overview

5
Course Description
The course provides students with an overview of the current trends
in information technology that drives today’s business. The course
will provide understanding on data management techniques that
can help an organization to achieve its business goals and address
operational challenges.

6
Course Objectives
The course will enable the student to:
§Describe the various sources of data (structured, unstructured) and the
concept of data management
§Describe the importance of data, how data can be used by an
organization towards competitive advantage, and how it enables
organizations to make quicker and better business decisions
§Describe basics of business intelligence including data gathering, data
storing, data analyzing and providing access to data
§Describe how statistical analysis can help to better understand past
events and predict future events
§Understand the fundamentals of project risk management, various
methods used for effort and cost estimation, various phases within a
project, dependencies and critical path
§Describe various database models like the hierarchical database model
and network model

7
Learning Outcomes
Upon completion of this course, the student should be able to:
§Understand data management concepts and criticality of data
availability in order to make reliable business decisions
§Demonstrate understanding of business intelligence including the
importance of data gathering, data storing, data analyzing and
accessing data
§Describe where to look for data in an organization and create
required reports
§Perform high-quality tasks required by the organization in
particular, and the industry in general

8
What do we mean by Analytics?

9
Analytics in Practice: What It Means[3]
Analytics is defined as the extensive use of data, statistical and quantitative
analyses, explanatory and predictive modeling, and fact-based
management to drive decision making.
§Analytics is all about providing business users with better insights, particularly from
operational data stored in transactional systems.
§Fortunately, data mining, analytic applications, and business intelligence systems are
now being better integrated with transactional systems.

10
“facts and figures”
Each piece of data is a little fact that doesn’t mean much on its own.
The word data can be used for a singular fact or a collection of facts.
It comes from the Latin word datum, meaning “something given”.

Data vs. Information
§The terms data and information can mean different things in different contexts, but the
main differences between them are:
•Data is a collection of facts. Information is how you understand those facts in context.
•Data is unorganized, while information is structured or organized.
•Information is an uncountable noun, while data is a mass noun.
•Data is not typically useful on its own, but information is.
•Data generally includes the raw forms of numbers, statements, and characters. Information
doesn’t have to.
•Information depends on data.
§

the two terms.
Data vs. Information

● Data ● Information
● each individual homework and test ● the student’s average grade for each
grade of a student in one class class
● typing the words “cat videos” in your ● the list of search results that includes a
computer search engine (input) variety of cat videos on the internet
(output)
● 5551237798 ● a person’s phone number (555)123-

7798
● 100, 212, 0, 32 ● the freezing and boiling points of water
in Fahrenheit and Celsius

What do we mean by Analytics? [1]
Three types of analytics
Descriptive Descriptive analytics answers

Analytics the questions what happened
and why it happen
Predictive analytics answers

Predictive Analytics the question what will happen
Prescriptive analytics anticipates

Prescriptive what will happen, when it
Analytics happened, and also why it happened

15
What do we mean by Analytics? [1] (continued)
Predictive analytics
Prescriptive analytics
Descriptive analytics
All product and company names are trademarks™ or registered® trademarks of their respective holders. Use of them does
not imply any affiliation with or endorsement by them

16
Provides and
Data Analyze Generate
(Descriptive
Model)
Reports
Smart Decisions
Process involved using Descriptive Analytics.

17
§Descriptive analytics answers the questions what happened and why it happened.
§A sample picture shows data of the context of the source data “Course Pro Campaign”
used in a report.

18
Provides
Data Analyze Predictions and
(Predictive Forecasting
Model)
Smart Decisions
Process involved using Predictive

Analytics.

19
§Predictive analytics answers the question what will happen, A sample picture shows
predictive analytics workbench. A predictive analytics workbench allows a user to create,
validate, manage, and deploy predictive analytic models. A predictive analytics workbench
consists of these components[4]
Predictive
Analytics

20
Provides ,Generate
Data Analyze Recommendation
using Mathematical
(Prescriptive Algorithms
Model)
Smart Decisions
Process involved using Prescriptive

Analytics.

21
§Prescriptive analytics not only anticipates what will happen and when it will happen.
but also why it will happen. Prescriptive analytics software has the potential to help
during each phase of the oil and gas business through its ability to take in seismic data, well
log data, and their related data sets to prescribe where to drill, how to drill there and how
to minimize the environmental impact.
Prescriptive
Analytics

22
Analytics in Practice
What Kinds of Questions Can Analytics Answer?

23
What Kinds of Questions Can Analytics Answer? [1]
Figure 1-1 Degree of Complexity

24
Analytics in Practice

25
Business Users and Their Challenges[3]
§The following challenges highlight characteristics of this gap:
•The time to perform the overall cycle of collecting, analyzing, and acting on enterprise
data must be reduced.
•Clear business goals and metrics must be defined.
•Analytics results must be distributed to a wider audience.
•Data must be integrated from multiple sources.
•Acceptance criteria of the analysis models must be clearly stated.

26
Top Data Analytics Applications
§1. Security
§Data analytics applications or, more specifically, predictive analysis has also helped in dropping crime
rates in certain areas. In a few major cities like Los Angeles and Chicago, historical and geographical data
has been used to isolate specific areas where crime rates could surge. On that basis, while arrests could
not be made on a whim, police patrols could be increased. Thus, using applications of data analytics,
crime rates dropped in these areas.
§2. Transportation
§Data analytics can be used to revolutionize transportation. It can be used especially in areas where you
need to transport a large number of people to a specific area and require seamless transportation. This
data analytical technique was applied in the London Olympics a few years ago.
§For this event, around 18 million journeys had to be made. So, the train operators and TFL were able to
use data from similar events, predict the number of people who would travel, and then ensure that the
transportation was kept smooth.
§3. Risk detection
§One of the first data analytics applications may have been in the discovery of fraud. Many organizations
were struggling under debt, and they wanted a solution to this problem. They already had enough
customer data in their hands, and so, they applied data analytics. They used ‘divide and conquer’ policy
with the data, analyzing recent expenditure, profiles, and any other important information to understand
any probability of a customer defaulting. Eventually, it led to lower risks and fraud.

4. Risk Management
§While a person is being insured, there is a lot of data analytics that goes on during the process. The risk
involved while insuring the person is based on several data like actuarial data and claims data, and the analysis
of them helps insurance companies to realize the risk.
§Underwriters generally do this evaluation, but with the advent of data analysis, analytical software can be
used to detect risky claims and push such claims before the authorities for further analysis.
§5. Delivery
§Several top logistic companies like DHL and FedEx are using data analysis to examine collected data and
improve their overall efficiency. Using data analytics applications, the companies were able to find the best
shipping routes, delivery time, as well as the most cost-efficient transport means. Using GPS and accumulating
data from the GPS gives them a huge advantage in data analytics.
§6. Fast internet allocation
§While it might seem that allocating fast internet in every area makes a city ‘Smart’, in reality, it is more
important to engage in smart allocation. This smart allocation would mean understanding how bandwidth is
being used in specific areas and for the right cause.
§It is also important to shift the data allocation based on timing and priority. It is assumed that financial and
commercial areas require the most bandwidth during weekdays, while residential areas require it during the
weekends. But the situation is much more complex. Data analytics can solve it.
§For example, using applications of data analysis, a community can draw the attention of high-tech industries
and in such cases, higher bandwidth will be required in such areas.
§
§7. Reasonable Expenditure
§When one is building Smart cities, it becomes difficult to plan it out in the right way. Remodeling of the
landmark or making any change would incur large amounts of expenditure, which might eventually turn
out to be a waste. Data analytics can be used in such cases. With data analytics, it will become easier to
direct the tax money in a cost-efficient way to build the right infrastructure and reduce expenditure.
§8. Interaction with customers
§In insurance, there should be a healthy relationship between the claims handlers and customers. Hence,
to improve their services, many insurance companies often use customer surveys to collect data. Since
insurance companies target a diverse group of people, each demographic has their own preference when
it comes to communication.
§Data analysis can help in zeroing in on specific preferences. For example, a study showed that modern
customers prefer communication through social media or online channels, while the older demographic
prefers telephonic communication.
§9. Planning of cities
§One of the untapped disciplines where data analysis can really grow is city planning. While many city
planners might be hesitant towards using data analysis in their favour, it only results in faulty cities riddled
congestion. Using data analysis would help in bettering accessibility and minimizing overloading in the city.
§Using data analytics and modelling, it will be easy to predict the outcome of placing a building in a
specific situation and therefore, plan accordingly.
§
§10. Healthcare
§While medicine has come a long way since ancient times and is ever-improving, it remains a costly affair.
Many hospitals are struggling with the cost pressures that modern healthcare has come with, which includes
the use of sophisticated machinery, medicines, etc.
§But now, with the help of data analytics applications, healthcare facilities can track the treatment of patients
and patient flow as well as how equipment are being used in hospitals. It has been estimated that there can
be a 1% efficiency gain achieved if data analytics became an integral part of healthcare, which will translate to
more than $63 billion in healthcare services.
§11. For Travelling
§If you ever thought travelling is a hassle, then data analytics is here to save you. Data analysis can use data
that shows the desires and preferences of different customers from social media and helps in optimizing the
buying experience of travellers. It will also help companies customize their own packages and offer and hence
boost more personalized travel recommendations with the help data collected from social media.
§12. Managing Energy
§Many firms engaging with energy management are making use of applications of data analytics to help them
in areas like smart-grid management, optimization of energy, energy distribution, and automation building for
other utility-based companies. How does data analytics help here?
§Well, it helps by focusing on controlling and monitoring of a dispatch crew, network devices, and
management of service outages. Since utilities integrate about millions of data points within the network
performance, engineers can use data analytics to help them monitor the entire network.
§ © 2013 IBM Corporation
IBM Global Center for Smarter Analytics
13. Internet searching
§When you use Google, you are using one of their many data analytics
applications employed by the company. Most search engines like Google, Bing,
Yahoo, AOL, Duckduckgo, etc. use data analytics. These search engines use
different algorithms to deliver the best result for a search query, and they do
so within a few milliseconds. Google is said to process about 20 petabytes of
data every day.
§14. Digital advertisement
§Data analytics has revolutionized digital advertising, as well. Digital billboards
in cities as well as banners on websites, that is, most of the advertisement
sources nowadays use data analytics using data algorithms. It is one of the
reasons why digital advertisements are getting more CTRs than traditional
advertising techniques. The target of digital advertising nowadays is focused
on the analysis of the past behaviour of the user.

Why It’s Time to Put Analytics to Work

32
Why It’s Time to Put Analytics to Work [1]
Most companies today have massive amounts of data at their disposal. We can see this by
just accessing the net, social media and other surveys out there holds a very vast amount of
Data. On the next slide we will cite a sample analytics at work
All product and company names are trademarks™ or registered® trademarks of their respective holders. Use of them does not imply any affiliation
with or endorsement by them

33
Why It’s Time to Put Analytics to Work [1] (continued)
Managers we interviewed at a retail grocery chain confessed to this
deficiency when we asked them what they did with their data. One
manager said,
“Well, we sell it. In fact, we make
more money selling data to retail
data syndication firms than we ““What else do you do with it?”
do selling meat.”
““But what do you actually do

with it to manage your
business?”
“We store it on a disk, then we
put it on tape, then we store it “Not much, That’s why we
under a mountain so that it’s safe wanted to talk with you.”
from nuclear attack.”

34
Where Does Analytics Apply?

35
Where Does Analytics Apply? [1]
§Analytics can help to transform just about any part of your business or organization.
§Some processes and example of data analytics transformations: [5]

36
Information: The Power of Information

37
THE POWER OF INFORMATION [2]
§Information has always been power,
but the past few decades have seen a
subtle shift occur, fundamentally
altering the way we perceive it.
§It has been only relatively

recently that the amount of data
available to us has outstripped
our ability to investigate that data.

38
Metrics and Measurements

39
Metrics and Measurements[6]
§Metrics will translate the business challenges into operational measures that can be monitored over time, not only
for analytics impact, but for the entire company.
§Objective means by which your company can measure progress and business analytics impact.
•Increase productivity and market share
•Increase retention and conversion rate
•Increase wallet share

•
•Increase customer satisfaction
•
•Increase average order size/number of products
•
•Increase average spend per customer
•
•Decrease operational costs
•
•Decrease time-to-decision
•
•Optimize human capital

40
When Is Analytics Not Practical?

41
When Is Analytics Not Practical? [1]
§When There’s No Data.
§When There’s No Precedent.
§When History Is Misleading.
§When the Decision Maker Has Considerable Experience.
§When the Variables Can’t Be Measured.

42
Overview: The Challenges of Business Analytics

43
The Challenges of Business Analytics [6]
§Effective business analytics is a focus for business leaders across the globe in ever-increasing numbers.
A 2011 report by the McKinsey Global Institute projects that the United States needs 1.5 million more
data-literate managers to meet the demands of the data-driven enterprise. In addition, during IBM's
2012 IBM Partner World Conference, its CEO predicted that analytics will be the thread that weaves
together front- and back-office systems in order to give companies that harness huge volumes of
unstructured data a competitive business advantage.
ACTI VI TY : Cha llenge
Business Ana lyti cs
Story
in
Maria is the 17-yea r old hi gh

sc hool da ug hter of Pa ul.
She's a wonderful kid, very
personable a nd outg oing ,
and excels at most things she
attempt s. Paul is very proud
of her —she i s on t he honor
roll, ha s a l ot of nic e fri ends,
§ACTIVITY: Challenge of Business Analytics.

ha s t he responsibility of an
aft er-school job, ha s vi si ons
of colleg e, and even ha s a
long-term boyfri end of whom
you a pprove. Being a good
pa rent , Pa ul also occ asionall y
monitors her computer use
and e-ma il a cti vity. Paul
notic ed that she is getting a
lot of e-ma ils from a retail er
to encourage her to buy baby
and pregnan cy-relat ed items
and a re conc erned that the
retai ler is gl amorizing t he
notion of teen preg na ncy a nd
encourag ing her to g et
preg na nt . Furious, Pa ul
stormed into the reta iler i n
person, read t he manag er
the riot ac t, and demand that
these e-mai ls stop. The
retai ler humbly apolog izes
and vows to stop t he e-ma ils.
Sati sfied, Paul hea d home
and rel ate enti re ex perience
to your teenag e daug hter . To
your surpri se, she reve al s to
you t hat she i s indeed
preg na nt and is ex pec ting a
ba by in five months.
As Andrew Pole's

44
The Challenges of Business Analytics [6] (continued)
§Must be grounded in key business questions.
§The most impact on the organization when it is forward looking—not backward looking.
§New age of business analytics requires the integration and synthesis of various
information disciplines across the organization.

45
Overview:
Challenges from Outside

46
CHALLENGES FROM OUTSIDE [6]
We see several business challenges that led up to the newfound focus on business
analytics, as well as several challenges that business analytics must rise to meet.
§Environment
§Competition
§Customers

47
Information:
The Secret of Success

48
The Secret of Success [2]
Possibly the best-guarded secret in business analytics is that in practice, they must
§Establish business analytic culture
§Understand analytic in play
§Recognize the insights as a competitive advantage.

49
Analytics for the Rest of Us

50
The Journey of a Smarter Student

51
Analytics for the Rest of Us [1]
§Many of our practitioners worked in companies that didn’t want to become analytical competitors,
but rather wanted to move their organizations toward greater analytical maturity. They believed that
making decisions on facts and analytics was beneficial, but they didn’t necessarily want to build their
companies and value propositions around doing so.
§In this module we occasionally refer to analytical competitors, such as Cincinnati Zoo , Papa Gino’s ,
Kraft Vegemite, Boerse Stuttgart, Globe Telecom, University of Maryland and other business, because
they are great repositories of leading analytical practices.

52
For the Next Session

53
For the Next Sessions
§Advanced Readings
•Retail: Papa Gino’s
•Consumer Products: Kraft Australia
References
https://www.upgrad.com/blog/data-analytics-applications/
https://examples.yourdictionary.com/difference-between-data-and-i
nformation-explained.html
https://byjus.com/biology/difference-between-data-and-informatio
n/

54

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BAFBAN1: Fundamentals of Business Analytics

IBM Global Center for Smarter Analytics © 2013 IBM Corporation

IBM Global Center for Smarter Analytics © 2013 IBM Corporation

IBM Global Center for Smarter Analytics © 2013 IBM Corporation

IBM Global Center for Smarter Analytics © 2013 IBM Corporation

IBM Global Center for Smarter Analytics © 2013 IBM Corporation

IBM Global Center for Smarter Analytics © 2013 IBM Corporation

IBM Global Center for Smarter Analytics © 2013 IBM Corporation

IBM Global Center for Smarter Analytics © 2013 IBM Corporation

What do we mean by Analytics?

IBM Global Center for Smarter Analytics © 2013 IBM Corporation

IBM Global Center for Smarter Analytics © 2013 IBM Corporation

IBM Global Center for Smarter Analytics © 2013 IBM Corporation

IBM Global Center for Smarter Analytics © 2013 IBM Corporation

Data vs. Information

● 5551237798 ● a person’s phone number (555)123-

IBM Global Center for Smarter Analytics © 2013 IBM Corporation

Descriptive Descriptive analytics answers

Predictive analytics answers

Prescriptive analytics anticipates

IBM Global Center for Smarter Analytics © 2013 IBM Corporation

IBM Global Center for Smarter Analytics © 2013 IBM Corporation

Process involved using Descriptive Analytics.

IBM Global Center for Smarter Analytics © 2013 IBM Corporation

IBM Global Center for Smarter Analytics © 2013 IBM Corporation

Process involved using Predictive

IBM Global Center for Smarter Analytics © 2013 IBM Corporation

IBM Global Center for Smarter Analytics © 2013 IBM Corporation

Process involved using Prescriptive

IBM Global Center for Smarter Analytics © 2013 IBM Corporation

IBM Global Center for Smarter Analytics © 2013 IBM Corporation

IBM Global Center for Smarter Analytics © 2013 IBM Corporation

IBM Global Center for Smarter Analytics © 2013 IBM Corporation

IBM Global Center for Smarter Analytics © 2013 IBM Corporation

•Clear business goals and metrics must be defined.

•Analytics results must be distributed to a wider audience.

•Data must be integrated from multiple sources.

•Acceptance criteria of the analysis models must be clearly stated.

IBM Global Center for Smarter Analytics © 2013 IBM Corporation

IBM Global Center for Smarter Analytics © 2013 IBM Corporation

IBM Global Center for Smarter Analytics © 2013 IBM Corporation

Why It’s Time to Put Analytics to Work

IBM Global Center for Smarter Analytics © 2013 IBM Corporation

IBM Global Center for Smarter Analytics © 2013 IBM Corporation

““But what do you actually do

IBM Global Center for Smarter Analytics © 2013 IBM Corporation

Where Does Analytics Apply?

IBM Global Center for Smarter Analytics © 2013 IBM Corporation

§Some processes and example of data analytics transformations: [5]

IBM Global Center for Smarter Analytics © 2013 IBM Corporation

Information: The Power of Information

IBM Global Center for Smarter Analytics © 2013 IBM Corporation

§It has been only relatively

IBM Global Center for Smarter Analytics © 2013 IBM Corporation

Metrics and Measurements

IBM Global Center for Smarter Analytics © 2013 IBM Corporation

•Increase productivity and market share

•Increase retention and conversion rate

•Increase wallet share

IBM Global Center for Smarter Analytics © 2013 IBM Corporation

When Is Analytics Not Practical?

IBM Global Center for Smarter Analytics © 2013 IBM Corporation

§When There’s No Data.