Predictive Analytics

Sales Enablement Workshop

 Agenda

Introduction to the Predictive Analytics Suite

Sales pitch 

Target Industries (Sweet spots) 

Competitive information 

How to identify a PA opportunity? 

Pricing

© 2015 SAP AG or an SAP affiliate company. All rights reserved. 2

© 2015 SAP AG or an SAP affiliate company. All rights reserved. 3
 Agenda

Introduction to the Predictive Analytics Suite

Sales pitch 

Target Industries (Sweet spots) 

Competitive information 

How to identify a PA opportunity? 

Pricing

© 2015 SAP AG or an SAP affiliate company. All rights reserved. 4

 Positioning

How to sell Predictive Analytics

SPEAK
SPEAK TO
TO LEAD
LEAD WITH
WITH SHOW
SHOW COMBINED
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THE
THE BUSINESS
BUSINESS USE
USE CASES
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use cases
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IT is not our target customers
customers duedue to:
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•• Inquire
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•• Speak
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business where
where predictive
predictive •• BW
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tools
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•• Use
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drivers, ROI
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questions •• Embedded
studies,
studies, success stories
success stories •• Use Embedded analytics
analytics
Use customer
customer datadata –– turn
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often
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use case in to an evaluation

COMPETE
COMPETE

•• EASIER
EASIER(BUSINESS-FRIENDLY,
(BUSINESS-FRIENDLY,INTUITIVE,
INTUITIVE,MORE
MOREAPPROACHABLE
APPROACHABLEBY
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ACTIONS

©
© 2015
2015 SAP
SAP AG
AG or
or an
an SAP
SAP affiliate
affiliate company.
company. All
All rights
rights reserved.
reserved. 5
 Agenda

Introduction to the Predictive Analytics Suite

Sales pitch 

Target Industries (Sweet spots) 

Competitive information 

How to identify a PA opportunity? 

Pricing

© 2015 SAP AG or an SAP affiliate company. All rights reserved. 6

 Industry Use Cases

RETAIL

Customer Loyalty Customer Sentiment

Product Launch
Analysis Analysis

Short-term Check-out Demographic Profiling Buyer Classification &

Prediction for Marketing Churn Prevention

Market Basket Markdown

Analysis Optimization

Real-time
Store Segmentation &
Personalized
Performance
Offers

Returner
Sales and Inventory
Segmentation &
Forecasting
Targeting

© 2015 SAP AG or an SAP affiliate company. All rights reserved. 7

Meeting Retail Opportunities
with Predictive Analytics solutions from SAP
Affinity Insight (Market Basket)
Retail organizations need the ability to understand product associations for better
marketing campaigns, add placements, and product inventory planning.
Current Problem
• Lack of analysis in to single-transaction
market basket patterns
• Inability to market products to consumers
based on previous patterns and affinity
• Marketing and product offers not aligned to
regional and local consumer purchasing
behaviors
• Inability to make personal product
recommendations
• Lack of channel sales analysis
Solution
• SAP Predictive Analytics
• SAP Affinity Insight
• SAP HANA Platform
© 2014 SAP AG or an SAP affiliate company. All rights reserved.
Benefits
• Insights to buying behavior on market
basket level
• Sell larger basket sizes by identifying
products that drive drag-along sales
• Increased effectiveness of promotional
strategies
• Understand importance of individual products
for over-all business
• Estimate brand effect on customers’
purchase decisions
Measures
 Achieving up to 82% accuracy in
sales forecasts, a 10% improvement
over prior forecasting techniques.
 Response rate to direct marketing
campaigns up by 220%
Internal 9
Customer Engagement Intelligence
Profile, score and predict customer behavior, buying propensity, and recommended offers
based on real time insights to drive personalized engagement.
Current Problem
• Technology is changing customer buying
behavior rapidly
• Customer determines rules of the interaction
and is usually leveraging more than 2
channels to collect information and buy a
product
• Brand loyalty is decreasing and competition
increases significantly
with online
• 57% of marketers have no clear cross-
channel marketing strategy
Solution
• SAP Predictive Analytics
•  TBD
SAP Customer Engagement Intelligence
• SAP HANA Platform
© 2014 SAP AG or an SAP affiliate company. All rights reserved.
Benefits
• Maximize purchase opportunities and sales
conversion rates
• Reduce customer attrition
• Target the right customers and discover the
right audiences
• Understand what your customers are
thinking and saying. Follow conversations
and understand customer affinities.
• Profile, score and predict customer behavior
– buying propensity and recommended offers
• Create, execute and track data driven
marketing initiatives
Measures
 TBD
Internal 10
Demand Modeling and Forecast
Develop custom segmentation and supply/demand forecasting models based
on hierarchies of customer interest in products.

Current Problem Benefits

• Stock outs effect short and long term
customer loyalty and satisfaction
• Suboptimal inventory and imprecise demand
forecasts result in frequent stock outs,
causing loss in revenue, profit, and unit
sales
• Time constraints on strategic analyses of
large, complex data sets
• Lost productivity and higher than expected
labor costs
• Increased revenue from reduced stock-outs
with more accurate demand forecasting
across all stores
• Actionable demand forecasts disseminated in
real time
• Optimized inventory planning at granular
level with real-time reporting
• Accelerated tactical decision making
regarding inventory levels
• Develop custom segmentation and
forecasting models based on hierarchies of
customer interest in products

Solution Measures
• SAP Predictive Analytics  Up to 20% replenishment process improvement

•  Up to 10% inventory reduction in warehouses

SAP Customer Engagement Intelligence
and distribution centers
• SAP HANA Platform

© 2014 SAP AG or an SAP affiliate company. All rights reserved. Internal 11

Price Optimization
Increased revenue and profit with accurate demand forecasting with
pricing alignment to regions, markets, and centers of activity.

Current Problem Benefits

• Competitive retail environment with tight
margins
• “One price fits all” approach due to lack of
customer profiles and buying strategies
• Lack of complex pricing strategies in key
markets, regions, centers
• Inability to optimize price during marketing
campaigns and programs
• Time constraints on strategic analyses of
large, complex data sets
• Enhanced efficiency and lower costs through
reduced inventory levels, increased product
profitability, and extended product lifecycles
• Improved forecast accuracy based on
customer and market demands
• Pricing aligned with marketing programs and
regional analysis
• Develop custom forecasting models,
business rules and constraints at the
customer’s product/organizational hierarchy
levels

Solution Measures
• SAP Predictive Analytics  TBD

•  TBD
SAP HANA Platform

© 2014 SAP AG or an SAP affiliate company. All rights reserved. Internal 12

Workforce Optimization
Employ workforce optimization to optimize organization’s staffing levels, achieving
greatest productivity at lowest possible labor cost.
Current Problem
• Challenge managing store staffing levels
while ensuring optimal customer service
• Competing needs between store
departments
• Staffing checkout registers to meet customer
demand while minimizing payroll costs
• Limited insight into how to plan register
channels and staff sizes for stores
• Lack of transparency to measure/manage
the performance of cashiers in all locations
• Imprecise forecast of store traffic leading to
less than required check out / customer
assistance staff throughout store
Solution
• SAP Predictive Analytics
•  TBD
SAP BusinessObjects Suite
• SAP HANA Platform
© 2014 SAP AG or an SAP affiliate company. All rights reserved.
Benefits
• Meet employee labor standards
• Monitor and maintain employee performance
• Assess employees using quantitative metrics
such as historical transaction data
• Effectively manage wait times, queue
lengths, service rates, queue perception and
staff utilization
• Improve customer service at checkout while
minimizing labor costs
• Encompass all aspects of managing the
workforce lifecycle and support management
with key insights into how its workforce is
performing
Measures
 TBD
Internal 13
 Industry Use Cases

CONSUMER
CONSUMER PRODUCTS
PRODUCTS

Analyzing Demand Trade Promotion

Data Optimization

Product Category
Smart Vending
Management

Regional Sales
Forecasting

Brand Sentiment &

Sales Analysis

Inventory & Logistics

Planning

© 2014 SAP AG or an SAP affiliate company. All rights reserved. Internal 14

Meeting CP Opportunities
with Predictive Analytics solutions from SAP
Inventory & Logistics Planning
Utilize real-time analysis of high data volumes, and quickly apply a variety of visualizations and
advanced predictive algorithms to optimize inventory and logistics planning.

Current Problem Benefits

• Limited ability to forecast product demand
patterns from available data
• Difficulty discovering root causes of demand
variance across geographies.
• Lack of insight into drivers of inventory costs
• Limited ability to react fast and communicate
with service providers for changes to
production and shipping plans
• Forecast and visualize optimal inventory
levels and distribution scenarios in changing
market dynamics.
• Improve cash flow by reducing rush orders.
• Avoid dual hazards of over-/under-stocked
inventory. Know the right level of safety
stock. Expand logistics planning horizons.
Have the right product in the right place at
the right time at the lowest transportation
cost.

Solution Measures
• SAP Predictive Analytics  Up to 20% replenishment process improvement

•  Up to 10% inventory reduction in warehouses

SAP BusinessObjects Suite
and distribution centers
• SAP HANA Platform

© 2014 SAP AG or an SAP affiliate company. All rights reserved. Internal 16

Smart Vending
Optimize your category, brand, product assortments, improve your brand health, and
maximize sales channel profitability.
Current Problem
• Lack of visibility into assortment composition
and channel cluster assortments
• Inability to assess assortment sales across
the enterprise
• No visibility in to factors which should affect
assortment control like location, season,
weather, and other demographics
• Difficultly in modifying the assortment mix
regularly enough, especially by
geography/store, to meet consumer
demands
Solution
• SAP Predictive Analytics
• SAP Smart Vending Solution
• SAP HANA Platform
© 2014 SAP AG or an SAP affiliate company. All rights reserved.
Benefits
• Improve the product sales mix and drive
profitability for your category based on
analysis/insights into merchandise
performance by category and product
• Improve channel visibility
• Understand which products are performing
well or poorly, in which channel and
geographic area. Tailor and monitor the
product assortment mix and process
• Monitor the review category management
process for SKU rationalization
Measures
Up to 85% increase in trade
promotions effectiveness
Up to 20x increase in
purchase response rates
Internal 17
 Industry Use Cases

UTILITIES
MANUFACTURING
(IM&C, Automotive, High Tech)

Predictive Asset Marketing Impact Shipping Volume Service Customer Churn

Maintenance & Insight Guarantees Prioritization Reduction (telco)

Equipment Margin & Sales Load Demand Subscriber Outage

Effectiveness Analysis Modeling Impact

Improving Demand Automotive

Forecasting Service Preventive
Planning & Inventory Depreciation
Costs Maintenance
Management Modeling

Yield Management Spare Parts Energy Efficiency & Predictive Capacity

& Optimization Optimization Audit Analysis Planning

Constrained MFG Predictive Safety

Warranty Analysis
Optimization & Risk

© 2015 SAP AG or an SAP affiliate company. All rights reserved. 18

Meeting MFG Opportunities
with Predictive Analytics
se this title s li d e o n solutions
ly wit h an image from SAP
U
Predictive Maintenance
Conduct intelligent sales forecasting across regions for quarterly, monthly, perhaps daily analysis,
and better anticipate demand (results) and supply (needs).

Current Problem Benefits

• Lost production due to downtime, customer
dissatisfaction, and extensive repair hours
• Difficulty determining root causes of
problems using multiple isolated monitoring
systems
• Extensive man hours being spent on assets
that are not near failure
• Sub-optimal planning of machinery
maintenance
• Manipulation of processing routines
• Quickly forecast and visualize maintenance
costs
• Perform root cause analysis to determine
why the manufacturing systems and
equipment failed
• Prevent asset downtime and decrease
maintenance costs
• Leverage Business Analytics for visibility
across all departments and business focus
areas, including operation efficiency, costs,
reliability, safety, workforce activity
breakdown

Solution Measures
• SAP Predictive Analytics Up to 35% improvement in equipment lifespan by
predicting parts and maintenance needs
• SAP BusinessObjects Suite
Increased revenue due to decreased
• SAP Visual Enterprise downtime
• SAP HANA Platform
© 2014 SAP AG or an SAP affiliate company. All rights reserved. Internal 20
Meeting Telco Opportunities
with Predictive Analytics solutions from SAP

© 2014 SAP AG or an SAP affiliate company. All rights reserved. Internal 21

Reduce Customer Churn
Anticipate the customers who will churn and produce target lists more quickly
to launch appropriate campaigns and offers.

Current Problem Benefits

• High customer churn rates dictated by
competitor offers and social influence
• Lack of customer loyalty programs
• Marketing campaigns not targeted toward
existing (top) customers
• No visibility in to social sentiment and how it
affects churn reduction efforts
• Reduce customer churn, increasing revenue
• Design targeted retention programs and
improve performance of existing retention
programs
• Create improved viral marketing campaigns
to increase adoption of products or services
• Score a multimillion-member+ customer base
in minutes or hours
• Minimize the spread of negative word of
mouth via social interaction analysis

Solution Measures
• SAP Predictive Analytics 8x improvement in uptake of
customer retention offers
• SAP HANA Platform
Decrease churn by as much
as 12% annually

© 2014 SAP AG or an SAP affiliate company. All rights reserved. Internal 22

Increase Cross-sell/Up-sell Opportunities
Enable deep customer insights to better serve the customer and to propose the right
personalized offer with the most appropriate channel at the right time.

Current Problem Benefits

• Reduced market basket deals due to online
competitiveness, price matching strategies,
and
• No insight in to product associations,
therefore unable to make smart
recommendations
• Irrelevant/impersonal marketing campaigns
don’t draw expected leads and revenue
• Lack of insight in to social linkages between
spending groups
• Using behavioral segmentations to predict
future behavior (like churn, propensity to
purchase)
• Create cross-sell and up-sell opportunities
using intelligent, predictive models based on
the top customer behaviors/purchases
• Get 360-degree view of customer and reuse
to create new targets
• Expand social communities profiles to
understand linkages and paths to greater
attach rates
• Make real-time product recommendations to
increase basket size

Solution Measures
• SAP Predictive Analytics 380% higher campaign response
rates
• SAP HANA Platform
14% more products per customer
household

© 2014 SAP AG or an SAP affiliate company. All rights reserved. Internal 23

 Industry Use Cases

PUBLIC SECTOR FINANCIAL SERVICES

Tax Fraud Federal Grants & Customer Churn Portfolio Simulations

Identification Stimulus Modeling Reduction & Valuation Modeling

Population &
Strategic Project Cross-Sell/Up-Sell Risk Assessment
Commerce
Planning Management Modeling
Planning/Zoning

Predictive State & Local Anti-fraud Investment Planning

Maintenance Procurement Planning Analysis & Forecasting

Fraud, Waste, and Predict Community Demographic Profiling Lifetime Relationship

Abuse Discovery Taxing District Moves for Marketing Propensity

Crime & At-risk Price Optimization

Prediction Analysis Analysis

© 2015 SAP AG or an SAP affiliate company. All rights reserved. 24

 Industry Use Cases

OIL
OIL &
& GAS
GAS LINE OF BUSINESS

Up-stream/Down-
Load Demand Sales Pipeline Predictive
stream
Modeling Analysis Segmentation
Supply Forecasting

Well Workover Service Customer Propensity Logistics

Profitability Prioritization Scoring Planning

Drilling Failure Forecasting Service Cash Flow Analysis Supply Chain

Prediction Costs & Forecasting Optimization

Predictive Safety Energy Efficiency & Proactive Employee

Retention IT Project Payback
& Risk Audit Analysis

Preventive Asset Management &

Maintenance Maintenance

© 2015 SAP AG or an SAP affiliate company. All rights reserved. 25

 Agenda

Introduction to the Predictive Analytics Suite

Sales pitch 

Target Industries (Sweet spots) 

Competitive information 

How to identify a PA opportunity? 

Pricing

© 2015 SAP AG or an SAP affiliate company. All rights reserved. 26

Beating the Competition

Traditional Predictive Solutions (such as SAS and IBM)

Slow Isolated Hard Manual
Time-intensive, Hard to maintain, Statistical Statisticians pre-
manual share and port library where select variables,
processes. model code or the right hence excluding
Linear workflow algorithm must information
relationship diagrams be selected,
between model tested and fine-
accuracy and tuned
analyst time

1
5 2

4 3

©
© 2015
2015 SAP
SAP AG
AG or
or an
an SAP
SAP affiliate
affiliate company.
company. All
All rights
rights reserved.
reserved. 27
Competitive Solution Value Scorecard
Lower TCO, Higher ROI
Completeness of Ease of use for
Typical time Native in- Available in Cloud
Advanced model
Vendor Analytics development &
to value during database, in- or Virtual
predictive lifecycle memory support Appliance
portfolio testing

SAP20

SAS10

IBM SPSS13

Oracle12

RapidMiner8

R6

Best Good Normal Poor

© 2015 SAP AG or an SAP affiliate company. All rights reserved. 28

 Agenda

Introduction to the Predictive Analytics Suite

Sales pitch 

Target Industries (Sweet spots) 

Competitive information 

How to identify a PA opportunity? 

Pricing

© 2015 SAP AG or an SAP affiliate company. All rights reserved. 29

 Discovery Questions & Pain Points
Pain Points & Business Drivers Discovery Questions
• Market is demanding solutions to answer questions like • Are you able to use your existing BI tools to perform
“Why” and “What’s likely to happen next.” predictive analysis on your data?
• Inability to use historical analysis as a means to predict • Are you able to visualize performance of historical data
anticipated results. against expected results, and use that combined
• Increased data volume and varieties analysis to implement strategies to make you more
competitive in the market?
• Typical data mining tools are designed for data scientists.
• Unable to identify fraudulent patterns to reduce risk. • Are your reports just static and current data without
visibility in to predictive or ‘what if ’ scenarios?
• Have operational inefficiencies by identifying contributing
factors. • Are you reliant on a very specific type of user, such as a
statistician, in order to create predictive analysis that
• Not able to identify patterns in performance to discover can be viewed by all?
new business opportunities.
• Are you able to apply and interpret predictive analysis
• Inability to make decisions based on quantifiable and to ensure positive forward changes?
justifiable information.

“Among
“Amongbusiness
business intelligence
intelligencedisciplines,
disciplines,prediction
predictionprovides
provides the
themost
mostbusiness
businessvalue...”*
value...”*
*Data
*Datasource
source––2007
2007TDWI
TDWI

WHAT CUSTOMERS CARE ABOUT

Line of Business IT Operations Executives
 Market basket analysis  Support/call center analysis  Global growth & sales
 Customer loyalty programs  Asset utilization demand planning forecasting
 Cross-sell and up-sell  Procurement planning/forecasting  Recruitment and workforce
opportunities retention
 Project optimization and
 Financial planning and assessment  Strategy management
forecasting simulations
 Anticipate peek performance
issues and root cause  Cash flow and A/P optimization

© 2015 SAP AG or an SAP affiliate company. All rights reserved. 30