Business Analytics

BAFBAN1: Fundamentals of Business Analytics
Module 1: Analytics in Practice

(continued)
1
Analytics as an Integral Part of the Decision-Making Ecosystem [1]
Critical key components for a successful analytics solution:
Data collection
Integration with multiple data sources
Ability to create and manage single source of truth (unique identifiers)
Hardware sizing, performance considerations, and scalability
2 IBM Global Center for Smarter Analytics © 2013 IBM Corporation

Analytics as an Integral Part of the Decision-Making Ecosystem
Three Types of Analytics

Three Types of Analytics

Descriptive Analytics
- Provides information about the past state or performance of a business
and its environment.
- Provides regular reports for events that already happened and ad hoc
reports to help examine facts about what happened, where, how often,
and with how many.

Predictive Analytics
- Helps predict (based on data and statistical techniques) with confidence
what will happen next so that you can make well-informed decisions
and improve business outcomes.
- Uses simulation models to suggest what could happen.

Prescriptive Analytics
- Recommends high-value alternative actions or decisions given a complex
set of targets, limits, and choices.
- Predicts future outcomes and suggests courses of actions to take so that

you can benefit from those predictions.

Analytics as an Integral Part of the Decision-Making Ecosystem[2]

Where to Start—Identify the Opportunities[3]
Two fundamental approaches to finding business opportunities
Outside-In Thinking: Keeping tabs on what others in your industry
are doing.
What makes the business tick?
Where does the next breakthrough await?
Inside-Out Thinking: Keeping a systematic inventory of the key

business processes
How are key decisions made within?
What are the key business decisions?
How they can be made more process-oriented?

Where to Start—Identify the Opportunities (continued)

Samples of Most Common Business Challenges
Increase market share (customer acquisition)
Increase customer intimacy
Increase customer satisfaction and retention
Increase customer wallet share growth
Increase customer profitability

Increase market share (customer acquisition)
Increase customer intimacy
Increase customer satisfaction and retention
Increase customer wallet share growth
Increase customer profitability

Increase traffic and conversion
Increase employee productivity and performance
Reduce cost
Manage and anticipate competitors and gear up for new

competition
Increase customer loyalty

Building an Analytics Culture
Do individuals use gut instincts more than they

rely on facts, numbers?

Does everyone in the organization understand

and appreciate how they use analytics to
substantiate their decisions?


Building an Analytics Culture (continued)[3]
Analytics Solution Life Cycle

Building Your Analytical Culture
Specific places where you do establish it (or first establish it) should
be:
- Endowed with a great deal of data that is not fully utilized
- Important to the business success
- Led by a manager who already understands the importance of

analytics
- Blessed with a cadre of people who have some analytical skills

- Search for the truth
- Find or identify patterns and get to root causes
- Make data as granular as possible in their analysis
- Seek data, not just stories, to analyze a question or issue
- Value negative results as well as positive
- Use the results of analyses to make decisions and take actions
- Are pragmatic about trade-offs in decision making

Integration of Analytics with Action and Measurement[2]
How do I turn discovered information into

action?

How do I know the effect of each action?

Integration of Analytics with Action and Measurement
BASP Framework Pillars

BASP Framework Pillars
- Business challenges
- Data foundation
- Analytics implementation
- Insight
- Execution and measurement
- Distributed knowledge
- Innovation

Analytics Implementation Model
Business Analytics Implementation Factors
- Drivers
- Facilitators
- Enablers

Drivers: Vision and Mandate
- is what inspires the analytics leader.
Start small (one country). Starting small limits and reduces the cost
of failure
Test and learn before expanding
Track the performance and the results
Improve the approach and develop best practices

Drivers: Vision and Mandate
Expand the implementation in other countries, once viability is

ascertained
Expand across the world to ensure worldwide analytics coverage

Drivers: Strategy
- Focus on addressing the company's business challenges in order of

priority
- Commitment of people outside of the analytics team

Drivers: Metrics and Measurement
- Translate the business challenges into operational measures that

can be monitored over time
- Well defined
- Objective means by which the company can measure progress and

business analytics impact.

Drivers: Metrics and Measurement Examples
Increase productivity
Increase market share
Increase retention rate
Increase wallet share

Increase conversion rate
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

Drivers: Strategy
Business Analytics Project: Executive Summary

Drivers: Organizational Collaboration
- Critical factor for success
- A must before starting any analytics implementation

Drivers: Change Management
- Must reinforce the importance of business analytics solutions
- Must incorporate end-user needs and input
- Must involve the executive sponsors, as well as the analytics

project leaders, reaching into all project touch points
- Must also provide a process to support the change and help those
affected understand its impact on the organization

What is your goal (or business question) for the project?
What are the risks of not addressing that goal/question?
When will you meet that goal or answer the business question?
What is the analytics strategy to do so?

What impact (benefits) will the solution have on our customer-

facing employees?
How will end users be trained to use the solution?
What resources are required to achieve your plan?
Who will be involved in executing your plan, internally or

externally?

Is your analytics solution integrated with current customer-facing

insight tools?
What metrics will help you track/measure the performance

(progress) and success of the analytics solution?
What technology and tools will implement the strategy most

effectively?

Facilitators: Integrated Processes

Aims to optimize the overall success of the analytics initiatives and
ultimately deliver for the organization, with the highest impact at
the lowest cost.

Enablers: Technology and Tools

Key Principles to Consider:
Easy to use
Business relevant
Increase your team's impact
Data integrity
Extensible

Enablers: Human Capital

- Multi disciplinary
- Talent is a requirement

Enablers: Human Capital Skills Needed

Project Management
Data modeling
Data programming
Database extraction and manipulation
Multivariate statistics

Multivariate statistics
Data mining/exploration
Data visualization
Machine learning
Marketing analytics

Unstructured data analytics
Marketing research
Competitive intelligence
Data quality/governance
Web analytics



Main reasons companies failed to make forward progress included:
- Lack of a clear implementation strategy
- Lack of support
- Lack of internal customer experience
- Lack of executive sponsorship

- Lack of analytics leadership
- Lack of collaboration across organizational groups
- Lack of integrated processes
- Lack of skilled and focused human capital
- Lack of measurement or metrics to track outcomes

When Analytical Decisions Need Scrutiny[2]
Logic Errors
Not asking the right questions
Making incorrect assumptions and failing to test them
Usinganalytics to justify what you want to do (gaming or rigging

the model/data) instead of letting the facts guide you to the right
answer
Failing totake the time to understand all the alternatives or

interpret the data correctly

When Analytical Decisions Need Scrutiny
Process Errors
Making careless mistakes (transposed numbers in a spreadsheet or
a mistake in a model)
Failing to consider analysis and insights in decisions
Failing to consider alternatives seriously
Using incorrect or insufficient decision-making criteria

When Analytical Decisions Need Scrutiny
Gathering data or completing analysis too late to be of any use
Postponing decisions because you’re always dissatisfied with the

data and analysis you already have

Case Analysis
52
Retail: Papa Gino’s
What is the goal of Papa Gino’s
in turning to analytics as a
solution?
What was the specific analytics
solution that was implemented?
How did Papa Gino’s benefit
from the solution?
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.

Consumer Products: Kraft Australia
Why did Kraft Australia need
an analytic solution?
How did they use the solution?
What was the specifc analytic
solution that was implemented?
How is Kraft Australia
performing now?

Media and Entertainment: Cincinnati Zoo and Botanical Gardens
What are the impacts to
business that the Cincinnati Zoo
wanted to achieve in getting an
analytics solution?
What are the components of
the analytics solution that was
implemented at the zoo?
What insights did the
Cincinnati Zoo get from the
solution?

For the Next Session
56
For the Next Session
Advanced Readings
Banking: Boerse Stuttgart
Banking: First Tennessee Bank
Banking: MoneyGram International

References
[1]Mohanty, S. (2011). Analytics in Practice. McGraw-Hill Education India.
[2]Davenport, T. , Harris, J. and Morison, R. (2010). Analytics at Work: Smarter Decisions,

Better Results. Harvard Business School Publishing.
[3]Isson, J. and Harriot, J. (2013). Win with Advanced Business Analytics. John Wiley &
Sons.
N.d BASP Framework Pillars diagram retrieved from http://asii-

inc.com/Company/Press_Room/Newsletter/Dec_12_Newsletter.html
N.d DELTA Model for Assessing Analytical Capability diagram retrieved from
http://semanticommunity.info/Analytics/Strategic_Use_of_Analytics_in_Government

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BAFBAN1: Fundamentals of Business Analytics

Module 1: Analytics in Practice

Integration with multiple data sources

Ability to create and manage single source of truth (unique identifiers)

Hardware sizing, performance considerations, and scalability

2 IBM Global Center for Smarter Analytics © 2013 IBM Corporation

3 IBM Global Center for Smarter Analytics © 2013 IBM Corporation

4 IBM Global Center for Smarter Analytics © 2013 IBM Corporation

5 IBM Global Center for Smarter Analytics © 2013 IBM Corporation

- Uses simulation models to suggest what could happen.

6 IBM Global Center for Smarter Analytics © 2013 IBM Corporation

- Predicts future outcomes and suggests courses of actions to take so that

7 IBM Global Center for Smarter Analytics © 2013 IBM Corporation

8 IBM Global Center for Smarter Analytics © 2013 IBM Corporation

Inside-Out Thinking: Keeping a systematic inventory of the key

9 IBM Global Center for Smarter Analytics © 2013 IBM Corporation

10 IBM Global Center for Smarter Analytics © 2013 IBM Corporation

Increase customer intimacy

Increase customer satisfaction and retention

Increase customer wallet share growth

Increase customer profitability

11 IBM Global Center for Smarter Analytics © 2013 IBM Corporation

Increase customer intimacy

Increase customer satisfaction and retention

Increase customer wallet share growth

Increase customer profitability

12 IBM Global Center for Smarter Analytics © 2013 IBM Corporation

Increase employee productivity and performance

Manage and anticipate competitors and gear up for new

Increase customer loyalty

13 IBM Global Center for Smarter Analytics © 2013 IBM Corporation

Do individuals use gut instincts more than they

14 IBM Global Center for Smarter Analytics © 2013 IBM Corporation

Does everyone in the organization understand

15 IBM Global Center for Smarter Analytics © 2013 IBM Corporation

16 IBM Global Center for Smarter Analytics © 2013 IBM Corporation

Analytics Solution Life Cycle

17 IBM Global Center for Smarter Analytics © 2013 IBM Corporation

- Important to the business success

- Led by a manager who already understands the importance of

- Blessed with a cadre of people who have some analytical skills

18 IBM Global Center for Smarter Analytics © 2013 IBM Corporation

- Search for the truth

- Find or identify patterns and get to root causes

- Make data as granular as possible in their analysis

- Seek data, not just stories, to analyze a question or issue

- Value negative results as well as positive

- Use the results of analyses to make decisions and take actions

- Are pragmatic about trade-offs in decision making

How do I turn discovered information into

20 IBM Global Center for Smarter Analytics © 2013 IBM Corporation

How do I know the effect of each action?

21 IBM Global Center for Smarter Analytics © 2013 IBM Corporation

BASP Framework Pillars

22 IBM Global Center for Smarter Analytics © 2013 IBM Corporation

23 IBM Global Center for Smarter Analytics © 2013 IBM Corporation

25 IBM Global Center for Smarter Analytics © 2013 IBM Corporation

Test and learn before expanding

Track the performance and the results

Improve the approach and develop best practices

26 IBM Global Center for Smarter Analytics © 2013 IBM Corporation

Expand the implementation in other countries, once viability is

Expand across the world to ensure worldwide analytics coverage

27 IBM Global Center for Smarter Analytics © 2013 IBM Corporation