Analytics has been defined as “the extensive use of data, statistical and quantitative analysis, explanatory and predictive models, and fact-based management to drive decisions and actions” (Davenport and Harris, Competing on Analytics, 2007) What is Business Analytics?
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Analytics has been defined as “the extensive use of data, statistical and quantitative analysis, explanatory and predictive models, and fact-based management to drive decisions and actions” (Davenport and Harris, Competing on Analytics, 2007)
What is Business Analytics?
business analytics is the access, reporting, and analysis of data supported by software to drive business performance and decision making
What is Business Analytics?
These trends are leading firms to use and analyze data to improve business performance and make better decisions
Competing on Analytics by Davenport and Harris: some firms use analytics as a competitive weapon
Consider some examples, many from our research
Business Analytics
Name a company that you would identify as world-leading in business analytics.
Provide examples.
Identify a sport that would you would consider world-leading in the use of analytics? Provide examples in your explanation.
04/15/2023
Activity
Movie recommendation engine “throttling”: infrequent-use customers (most
profitable) given priority in shipping Paying for distribution rights of DVDs (look at
success of related movies)
Netflix
Marriott Rewards used analytics to predict customer acquisition and retention
Realized, expected, and potential customer value is measured
Predict each customer’s likelihood of visiting a location on a weekday or weekend in the next year
Marriott
“In God we trust, all others bring data” “Do you think that, or do you know that?” “Those who succeed with six sigma, and
then advance in our company, have the better quantitative skills”
“We are basing our strategy on analytics, especially customer analytics”
What Business Leaders Are Saying…
Some authors view analytics as a subset of business intelligence (BI): “a set of technologies and processes that use data to understand and analyze business performance ” and “includes both data access and reporting, and analytics” (Davenport and Harris, Competing on Analytics, 2007)
What is Business Analytics?
What Is Business Intelligence? · Originally a term coined by the Gartner Group in 1993, Business Intelligence (BI) is a broad range of software and solutions aimed at collection, consolidation, analysis and providing access to information that allows users across the business to make better decisions.
· The technology includes software for database query and analysis, multidimensional databases or OLAP tools, data warehousing and data mining, and web enabled reporting capabilities.
· Applied across disciplines but especially in Customer Relationship Management (CRM), Supply Chain Management (SCM) Enterprise Resource Planning
Provide better, faster and more accessible reports
Action
Vision
MissionOrganizational Context
Policies, Goals, and Objectives
Givens
Values, Purpose, Structure, Politics, Environment, etc.
What should be done ?
Analytics, Decision Making
When and how ??
StrategicDirection
DecisionMaking
ImplementationProject Management
Managing Organizations – The role of Business Intelligence
Alok Srivastava
Alok Srivastava
Enterprise Wide Decisions
Goals/Strategy
Marketing Demand
Pricing
Promotion
LoyaltyConsumers
Production
Finance
Capacity
Labor
Materials
Cash flow
Debt/Equity
Investments
Quantity
Revenues
Suppliers
Investors
Alok Srivastava
ComplexityWhat does it add up to?Uncertainty
What can happen?
INTELLIGENCE
CHOICE
DESIGN
DATAMODELS
Variables (Measures and Estimates)
Probabilities and Estimates
Structuring Relationships
Problem Representation
Generation of Alternatives
Spreadsheet Models for managing complex relationships and detail
Applying Business Intelligence
Business Applications in the Extended Enterprise
Alok Srivastava
Tactical Apps.
Strategic Apps.
Suppliers Customers
Enterprise Resource Planning Applications
Supply Chain Applications
Customer Relationship Management Applications
Materials/ComponentsConsumers
Business Intelligence
Business Analytics
Alok Srivastava
Data Analysis and Data Mining
Business Modeling
Knowledge Management
“Actionable” Information
Report Warehouse
And Document
Mart
Data Warehouse
And Data Marts
BusinessIntelligence
PROJECT MANAGMENT
Decision Making
Stages in Business Intelligence
Smart Analytics is the process of collecting and analyzing data in order to make better business decisions, develop better products and serve the customers better.
What is Smart Analytics?
It is providing the right information at the right time to enable managers to make informed business decisions
It fact-based rather than gut based decision making
It is used for strategic decisions to gain a performance advantage over the opposition
Smart Analytics is:
MONEYBALL
• Baseball has always used stats to manage the game– RBI– HR– Fielding errors per game– Batting averages vs. right or left handers
• But what was missed is the one measure that was most correlated with winning baseball games
Case Example – Smart Analytics
Provide an example from your sport where you engage in ‘smart analytics’; that is, you have analytics that help you to predict the future of your sport’s performance demand and gold medal performance
04/15/2023
Activity
Much more operational data is being created and captured because of the use of technology (structured) Enterprise software
– ERP– CRM– SCM
Much more unstructured data is being captured and stored (social media data) Facebook Twitter
Much more unstructured data being captured Web transactions Smart objects
Why is analytics becoming more important now?
Privacy Security Drawing decisions on incomplete data Drawing decisions on inaccurate data Using only data that supports our gut
decisions Drawing the wrong conclusion from
the data Stock prices example
Dangers in Analytics
Data Storage Terminology
Data mining Statistical analysis Predictive analysis Correlation Regression Forecasting Process Modeling Optimization Simulation
Analytic Tools
Management support and commitment and desire to implement findings
Collecting the right data (historical perspective)
Developing a Data Warehouse (all data in one place
Having a staff to analyze the data Managers that understand the business &
embrace managing by the numbers
What it takes to succeed using this technique?
Managing using Analytics
The success of analytics can only be measured in terms of how well they help the firm achieve their strategic objectives
So a managers role is to: Identify business goals Find the matrices that are correlated with achieving
the business goals Collect the data necessary to measure performance
towards goals Analyze the data Establish weights for the each matrix element Draw conclusion based on the information generated
The End
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