BAFBAN1: Fundamentals of Business Analytics

Module 1: Analytics in Practice

(continued)

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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

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

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

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Analytics as an Integral Part of the Decision-Making Ecosystem

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.

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Analytics as an Integral Part of the Decision-Making Ecosystem

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.

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Analytics as an Integral Part of the Decision-Making Ecosystem

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.

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

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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?

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Where to Start—Identify the Opportunities (continued)

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Where to Start—Identify the Opportunities[3]
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

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Where to Start—Identify the Opportunities[3]
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

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Where to Start—Identify the Opportunities[3]
Samples of Most Common Business Challenges
Increase traffic and conversion

Increase employee productivity and performance

Reduce cost

Manage and anticipate competitors and gear up for new

competition

Increase customer loyalty

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Building an Analytics Culture

Do individuals use gut instincts more than they

rely on facts, numbers?

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Building an Analytics Culture

Does everyone in the organization understand

and appreciate how they use analytics to
substantiate their decisions?

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Building an Analytics Culture

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Building an Analytics Culture (continued)[3]

Analytics Solution Life Cycle

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Building an Analytics Culture (continued)[2]
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

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Building an Analytics Culture (continued)[2]

- 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

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Integration of Analytics with Action and Measurement[2]

How do I turn discovered information into

action?

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Integration of Analytics with Action and Measurement[2]

How do I know the effect of each action?

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Integration of Analytics with Action and Measurement

BASP Framework Pillars

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Integration of Analytics with Action and Measurement[3]
BASP Framework Pillars

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

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 Analytics Implementation Model
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Integration of Analytics with Action and Measurement[3]
Business Analytics Implementation Factors

- Drivers

- Facilitators

- Enablers

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Integration of Analytics with Action and Measurement[3]
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

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Integration of Analytics with Action and Measurement[3]
Drivers: Vision and Mandate

Expand the implementation in other countries, once viability is

ascertained

Expand across the world to ensure worldwide analytics coverage

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Integration of Analytics with Action and Measurement[3]
Drivers: Strategy

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

priority

- Commitment of people outside of the analytics team

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Integration of Analytics with Action and Measurement[3]
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.

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Integration of Analytics with Action and Measurement[3]
Drivers: Metrics and Measurement Examples

Increase productivity

Increase market share

Increase retention rate

Increase wallet share

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Integration of Analytics with Action and Measurement[3]
Drivers: Metrics and Measurement Examples

Increase conversion rate

Increase customer satisfaction

Increase average order size/number of products

Increase average spend per customer

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Integration of Analytics with Action and Measurement
Drivers: Metrics and Measurement Examples

Decrease operational costs

Decrease time-to-decision

Optimize human capital

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Integration of Analytics with Action and Measurement[3]
Drivers: Strategy

Business Analytics Project: Executive Summary

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Integration of Analytics with Action and Measurement[3]
Drivers: Organizational Collaboration

- Critical factor for success

- A must before starting any analytics implementation

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Integration of Analytics with Action and Measurement[3]
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

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Integration of Analytics with Action and Measurement[3]

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?

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Integration of Analytics with Action and Measurement[3]

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?

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Integration of Analytics with Action and Measurement[3]

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?

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Integration of Analytics with Action and Measurement[3]

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.

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Integration of Analytics with Action and Measurement[3]

Enablers: Technology and Tools

Key Principles to Consider:
Easy to use

Business relevant

Increase your team's impact

Data integrity

Extensible

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Integration of Analytics with Action and Measurement[3]

Enablers: Human Capital

- Multi disciplinary

- Talent is a requirement

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Integration of Analytics with Action and Measurement[3]

Enablers: Human Capital Skills Needed

Project Management

Data modeling

Data programming

Database extraction and manipulation

Multivariate statistics

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Integration of Analytics with Action and Measurement

Multivariate statistics

Data mining/exploration

Data visualization

Machine learning

Marketing analytics

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Integration of Analytics with Action and Measurement

Unstructured data analytics

Marketing research

Competitive intelligence

Data quality/governance

Web analytics

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Integration of Analytics with Action and Measurement[1]

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Integration of Analytics with Action and Measurement[3]

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Integration of Analytics with Action and Measurement[3]

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

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Integration of Analytics with Action and Measurement[3]

- 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

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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

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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

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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

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BAFBAN1: Fundamentals of Business Analytics

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.

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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?

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.

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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?

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.

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BAFBAN1: Fundamentals of Business Analytics

For the Next Session

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

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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 [Link]

[Link]/Company/Press_Room/Newsletter/Dec_12_Newsletter.html

N.d DELTA Model for Assessing Analytical Capability diagram retrieved from
[Link]

58 IBM Global Center for Smarter Analytics © 2013 IBM Corporation