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Data to Knowledge to Results

Review and Analysis of Paper by Davenport et al
Team: Something Different Myron Burr Kevin McComas Easwar Srinivasan Bill Winett

Data vs Information
Data : Measures, Transactions Knowledge / Information Profit maximizing product mix Parts per hour Billing rate Click through rate Profit maximizing bundling of solutions Individualized, targeted web pages

What are the Issues? • Background: – Firms are spending billions on IT applications ( ERP. web and e-commerce systems. and CRM) – Generated billions of transaction records • Observation: – Very little data is converted to knowledge (less than 10% in studied firms) • Problem Statements: – Lost opportunities for improved results – Unrealized business value from these investments . POS scanners.

researched over 100 companies  Developed a model for building analytic capability  Demonstrated how to realize results from this capability .Proposed Approach to Resolution  Davenport et al.

Framework .

Strategy • What are our core business processes? • What key decisions need analytic insights? • What information matters? • Clear strategy leads to good measurements and therefore good data gathering .

Context  Process needs a foundation  Required ingredients for success  Grounded in  Firm’s strategy (and the information needed to execute this strategy)  Skills and experience of staff  Organization and culture  Data-oriented / Fact-based  Technology and Data .

. organizes and checks data  Business Analyst / Data Modeler  Decision Maker / Outcome Manager  Skills: Depth depends on above role      Technology Skills Statistical Modeling and Analytic Skills Knowledge of the Data Knowledge of the Business Communication and Partnering Without skilled staff. IT applications are a waste of $$$.Skills and Experience  Key Roles  DB Administrator: loads.

Organization and Culture  62% of managers: organization and culture biggest barriers to getting significant return on IT investment  Related to skills and experience  Value Data-oriented / Fact-based analysis and decision making  Organization of analytics staff  Centralized or decentralized depends on:  Sophistication of the analysis  Amount of local knowledge needed  Cultural orientation of the firm .

networking and infrastructure  Transaction versus analytic approach  Integration of analytic technologies  Requires human insight. can’t automate  60 to 80% of cost in cleaning up and integrating data .Technology and Data  Specific hardware and software.

Transformation Data to Knowledge  Analytic and Decision Making Process  Depends on experience and relationships of analysts and decision makers  Working closely with decision makers to understand the questions:  Standard. highly-structured: Inventory? Sales?  Semi-structured: Optimum inventory level? Production versus forecasting?  Unstructured: customer segment migration?  An evolving and iterative process  Use “decision audits” to evaluate effectiveness of process .

. revenues. . or market share) may require changes in:  Behaviors: e.g. development of new marketing initiative  Extensive communication may be required  Implementation of decisions will determine result.g.. cost control  Processes and Programs: e.Outcomes  Desired financial outcomes (greater profitability.

Application Methodology • Flowchart High quality transaction data? No Implement new systems and data architectures Yes Supportive senior executives? No Launch small pilots and educate managers Yes Broad need in organization? No Launch analytical initiative in single area Yes Analytical skills and culture in place? No Launch analytical organizational change program Yes Integrate analytical capabilities into business .

Implementation Options • Business needs to dictate extent of implementation and level of focus .

edu/~imberman/DataMining/KD D%20beginnings.cuny.csi.Examples Source: http://www.cs.pdf .

increased profits by 70% • Owens & Minor won $100M contract by showing customer how to save money • Wachovia Bank improved performance by modeling branch locations • Harrah’s Entertainment plans to use customer data to increase cross-selling • Fleet Bank saved >$12M encouraging customers to change from branches to ATMs .More Results • Earthgrains eliminated 20% of products.

Outcome: Increased Profitability Cumulative Profitability Dependence on Route Complexity 50 45 Cum. Profit ($Millions) 40 35 30 25 20 15 10 5 0 0 5 10 15 20 Number of Routes 25 30 35 40 .

cs.csi.Other Applications of Data to Knowledge to Results Source: http://www.cuny.edu/~imberman/DataMining/KDD%20beginnings.pdf .

software. networking and infrastructure only the starting point • You need to commit significant skilled human resources • Develop sophisticated analytic processes • Instill culture that values data and creating information • Make decisions on info and then execute .Take-Aways To get the most from your IT investment: • Hardware.

com i2.com Oracle.com b-eye-network.com cio.com WonderWare.com Salesforce.com .com juiceanalytics.Additional Resources • • • • • • • • • • • SAP.com Spotfire.com Google Analytics Accenture.

Questions? .