business analytics

AN OVERVIEW ofBUSINESS ANALYTICS

ByDr.B.Srinivasan IRAS; M.Com.,MBA.,P.hd

Dy.Financial Adviser and Chief Accounts OfficerSouthern Railway, Chennai

WHAT IF YOU COULD …. predict the buying behavior and decision criteria of your prospects weeks before your competition?. gain first-mover advantage by introducing new products and services to micro-segments that haven't been identified by competitors?.evaluate the impact of your marketing campaigns hourly and make adjustments in real-time?. improve customer experience scores that grow products per customer, reduce attrition, and leverage the power of customer recommendations for new business?.predict likely failures of critical equipment and processes?

What is Business Analytics ?Business Analytics is all about the decisions that go into the running of the business.

Encompasses methodologies from applied mathematics, probability, statistics,signal processing Computer Science to gain insight into Business performance.

Used as Decision Support System

Not same as Operation ResearchBusiness analytics (BA) refers to the

skills, technologies, practices for continuous iterative exploration and investigation of past business performance to gain insight and drive business planning.

Business analytics focuses on developing new insights and understanding of business performance based on data and statistical methods

Why Business Analytics ? To achieve Goals

High return on AssetsHigh return on equityHigh Revenue Low CostLow expensesRevenue TargetsCash flow targets

Business analytics makes extensive use of statistical analysis, including explanatory and predictive modelling, and fact-based management to drive decision making.

It is closely related to management science.

Analytics may be used as input for human decisions or may drive fully automated decisions. Business intelligence is querying, reporting, online analytical processing (OLAP), and "alerts."

Business intelligence is querying, reporting, online analytical processing (OLAP), and "alerts.”

Querying, reporting, OLAP, and alert tools can answer questions such as what happened, how many, how often, where the problem is, and what actions are needed. Business analytics can answer questions like why is this happening, what if these trends continue, what will happen next (that is, predict), what is the best that can happen (that is, optimize).

Examples of Application:-Banks use data analysis (or analytics, as it is

also called in the business to differentiate among customers based on credit risk, usage and other characteristics and then to match customer characteristics with appropriate product offerings.

Companies use analytics in its customer loyalty programs. quantitatively analyze and predicts the appeal of its products. One company saved more than $1 billion by employing a new analytical tool to better optimize inventory.

Types of analytics Decisive analytics: supports human

decisions with visual analytics the user models to reflect reasoning.

Descriptive Analytics: Gain insight from historical data with reporting, scorecards, clustering etc.

Predictive Analytics: (predictive modeling using statistical and Computer based techniques)

Prescriptive Analytics: recommend decisions using optimization, simulation etc

Basic Domains of Analytics:Behavioural AnalyticsCohort AnalyticsCollections analyticsContextual data modelling - supports the human reasoning that occurs after viewing "executive dashboards" or any other visual analytics

Financial Services analytics

Cohort analysis

Cohort analysis is a subset of behavioural analytics that takes the data from a given e Commerce platform, web application, or online game and rather than looking at all users as one unit, it breaks them into related groups for analysis. These related groups, or cohorts, usually share common characteristics or experiences within a defined time span. Cohort analysis allows a company to “see patterns clearly across the lifecycle of a customer (or user), rather than slicing across all customers blindly without accounting for the natural cycle that a customer undergoes.”

By seeing these patterns of time, a company can adapt and tailor its service to those specific cohorts. While cohort analysis is sometimes associated with a cohort study, they are different and should not be viewed as one in the same. Cohort analysis has come to describe specifically the analysis of cohorts in regards to big data and business analytics, while a cohort study is a more general umbrella term that describes a type of study in which data is broken down into similar groups

Basic domains within analytics

Fraud analyticsMarketing analyticsPricing analyticsRetail sales analyticsRisk & Credit analyticsSupply Chain analyticsTalent analyticsTelecommunicationTransportation analytics

History of Analytics

Analytics have been used in business since the management exercises were put into place by Frederick Winslow Taylor in the late 19th century.

Henry Ford measured the time of each component in his newly established assembly line.

But analytics gained more attention in the late 1960s when computers were used in decision support systems.

History of Analytics Since then, analytics have changed and formed with the development of enterprise resource planning (ERP) systems, data ware houses, and a large number of other software tools and processes.

ChallengesSuccess of Business analytics depends on sufficient volumes of high quality data. The difficulty in ensuring data quality is integrating and reconciling data across different systems, and then deciding what subsets of data to make available.

Copyright © 2012, SAS Institute Inc. All rights reserved.Copyright © 2012, SAS Institute Inc. All rights reserved.

FORECASTING

DATA MINING

TEXT ANALYTICS

OPTIMIZATION

STATISTICS

Finding treasures in unstructured data

like social media or survey toolswhich could

uncover insightsabout consumer

sentiment

Mine transaction databases of records about spending patterns which indicate a stolen card

Leveraging historical time series data to provide better insights into decision-making about the future

Analyze massive amounts of data in order to accurately

identify decisions which are likely to produce the most

optimal results

ANALYTICS – EXAMPLE ANALYTICS – EXAMPLE APPLICATIONSAPPLICATIONS

INFORMATION MANAGEMENT

Copyright © 2012, SAS Institute Inc. All rights reserved.

Trusted, analytically-based decisions are needed across the organization.

THE IMPACT OF ANALYTICS SPANS THE ENTIRE ORGANIZATION

Successful analytics are necessary in every business discipline: Planning, Research and Development, Marketing, Sales, Operations, Finance, Manufacturing, and Information Technology.


IDENTIFY /FORMULATE

PROBLEM

DATAPREPARATION

DATAEXPLORATION

TRANSFORM& SELECT

BUILDMODEL

VALIDATEMODEL

DEPLOYMODEL

EVALUATE /MONITORRESULTS

Domain ExpertMakes DecisionsEvaluates Processes and ROI

BUSINESSMANAGER

Model ValidationModel DeploymentModel Monitoring Data Preparation

IT / SYSTEMS MANAGEMENT

Data ExplorationData VisualizationReport Creation

BUSINESSANALYST

Exploratory AnalysisDescriptive SegmentationPredictive Modeling

DATA MINER /STATISTICIAN

THE ANALYTICS LIFECYCLE


VOLUME

VARIETY

VELOCITY

VALUE

TODAY THE FUTURE

DA

TA S

IZE

CURRENT TRENDS IN ANALYTICS - BIG DATA

Classification of BA tools:1. Enterprise reporting2. Cube analysis3. Ad hoc querying and analysis4. Statistical analysis and data mining5. Report delivery and alerting

The Business Analytics (BA) The Business Analytics (BA) Field: An OverviewField: An Overview

Strategic enterprise management

Three levels of support1. Operational2. Managerial 3. Strategic

The Business Analytics (BA) Field: An The Business Analytics (BA) Field: An OverviewOverview

Executive information and support systems Executive information systems (EIS) Provides rapid access to timely and relevant

information aiding in monitoring an organization’s performance

Executive support systems (ESS) Also provides analysis support,

communications, office automation, and intelligence support

Drill-downThe investigation of information in detail (e.g., finding not only total sales but also sales by region, by product, or by salesperson). Finding the detailed sources

The Business Analytics (BA) Field: An The Business Analytics (BA) Field: An OverviewOverview

Online analytical processing (OLAP)An information system that enables the user, while at a PC, to query the system, conduct an analysis, and so on. The result is generated in seconds

Some applications can be found at:http://www.olapreport.com/CaseStudiesIndex.htm

Online Analytical Processing (OLAP)Online Analytical Processing (OLAP)

OLAP versus OLTP :- OLTP concentrates on processing

repetitive transactions in large quantities and conducting simple manipulations

OLAP involves examining many data items complex relationships

OLAP may analyze relationships and look for patterns, trends, and exceptions

OLAP is a direct decision support method

Online Analytical Processing (OLAP)Online Analytical Processing (OLAP)

Reports and Queries Reports

Routine reports Ad hoc (or on-demand) reports Multilingual support Scorecards and dashboards Report delivery and alerting

Report distribution through any touch point Self-subscription as well as administrator-

based distribution Delivery on-demand, on-schedule, or on-

event Automatic content personalization

Reports and Queries Ad hoc query

A query that cannot be determined prior to the moment the query is issued

Structured Query Language (SQL)A data definition and management language for relational databases. SQL front ends most relational DBMS

Multidimensionality Multidimensionality

The ability to organize, present, and analyze data by several dimensions, such as sales by region, by product, by salesperson, and by time (four dimensions)

Multidimensional presentation Dimensions Measures Time

Multidimensionality Multidimensional database

A database in which the data are organized specifically to support easy and quick multidimensional analysis

Data cube A two-dimensional, three-dimensional, or higher-dimensional object in which each dimension of the data represents a measure of interest

Multidimensionality

CubeA subset of highly interrelated data that is organized to allow users to combine any attributes in a cube (e.g., stores, products, customers, suppliers) with any metrics in the cube (e.g., sales, profit, units, age) to create various two-dimensional views, or slices, that can be displayed on a computer screen

Multidimensionality

Multidimensionality

Multidimensional tools and vendors

Tools with multidimensional capabilities often work in conjunction with database query systems and other OLAP tools

Multidimensionality

Advanced Business Analytics

Data mining and predictive analysis Data mining Predictive analysis

Use of tools that help determine the probable future outcome for an event or the likelihood of a situation occurring. These tools also identify relationships and patterns

Data Visualization Data visualization

A graphical, animation, or video presentation of data and the results of data analysis The ability to quickly identify important

trends in corporate and market data can provide competitive advantage

Check their magnitude of trends by using predictive models that provide significant business advantages in applications that drive content, transactions, or processes

Data Visualization New directions in data visualization In the 1990s data visualization has moved into: Mainstream computing, where it is

integrated with decision support tools and applications

Intelligent visualization, which includes data (information) interpretation

Data Visualization New directions in data visualization

Dashboards and scorecards Visual analysis

http://www.lumina.com/software/influencediagrams.html influence diagrams

Financial data visualization Tree Map Examples http://www.robkerr.com/post/2008/04/

Favorite-Visualization-2-e28093-The-Performance-Map-(Heat-Map).aspx

http://visudemos.ilog.com/webdemos/treemap/treemap.html

Geographic Information Systems (GIS) Geographical information system (GIS)

An information system that uses spatial data, such as digitized maps. A GIS is a combination of text, graphics, icons, and symbols on maps

As GIS tools become increasingly sophisticated and affordable, they help more companies and governments understand: Precisely where their trucks, workers, and

resources are located Where they need to go to service a customer The best way to get from here to there

Geographic Information Systems (GIS) As GIS tools become increasingly

sophisticated and affordable, they help more companies and governments understand: Precisely where their trucks, workers,

and resources are located Where they need to go to service a

customer The best way to get from here to

there

Geographic Information Systems (GIS) GIS and decision making

GIS applications are used to improve decision making in the public and private sectors including:Dispatch of emergency vehiclesTransit managementFacility site selectionDrought risk managementWildlife management

Local governments use GIS applications for used mapping and other decision-making applications

Geographic Information Systems (GIS)

GIS combined with GPS Global positioning systems (GPS)

Wireless devices that use satellites to enable users to detect the position on earth of items (e.g., cars or people) the devices are attached to, with reasonable precision

GIS and the Internet/intranets Most major GIS software vendors provide Web access that

hooks directly to their software GIS can help the manager of a retail operation determine

where to locate retail outlets Some firms are deploying GIS on the Internet for internal

use or for use by their customers (locate the closest store location)

Geographic Information Systems (GIS) GIS and the Internet/intranets

Most major GIS software vendors provide Web access that hooks directly to their software

GIS can help the manager of a retail operation determine where to locate retail outlets

Some firms are deploying GIS on the Internet for internal use or for use by their customers (locate the closest store location)

http://www.360networks.com/includes/popups/rate_center_map/map.asp

Real-Time BI The trend toward BI software producing real-time data

updates for real-time analysis and real-time decision making is growing rapidly

Part of this push involves getting the right information to operational and tactical personnel so that they can use new BA tools and up-to-the-minute results to make decisions

Concerns about real-time systems An important issue in real-time computing is that not all

data should be updated continuously when reports are generated in real-time because one

person’s results may not match another person’s causing confusion

Real-time data are necessary in many cases for the creation of ADS systems

Real-Time BI Concerns about real-time systems

An important issue in real-time computing is that not all data should be updated continuously

when reports are generated in real-time because one person’s results may not match another person’s causing confusion

Real-time data are necessary in many cases for the creation of ADS systems

BA and the Web: Web Intelligence and Web Analytics Using the Web in BA Web analytics The application of business analytics activities to Web-based processes, including e-commerce

Clickstream analysis The analysis of data that occur in the Web environment.

BA and the Web: Web Intelligence and Web Analytics

Clickstream analysis The analysis of data that occur in the Web environment.

Clickstream dataData that provide a trail of the user’s activities and show the user’s browsing patterns (e.g., which sites are visited, which pages, how long)

Clickstream dataData that provide a trail of the user’s activities and show the user’s browsing patterns (e.g., which sites are visited, which pages, how long)

BA and the Web: Web Intelligence and Web Analytics

Usage, Benefits, and Success of BA Usage of BA

Almost all managers and executives can use some BA systems, but some find the tools too complicated to use or they are not trained properly.

Most businesses want a greater percentage of the enterprise to leverage analytics; most of the challenges related to technology adoption involve culture, people, and processes

Usage, Benefits, and Success of BA

Success and usability of BA Performance management systems (PMS) are BI tools that provide scorecards and other relevant information that decision makers use to determine their level of success in reaching their goals


Why BI/BA projects fail 1. Failure to recognize BI projects as

cross-organizational business initiatives and to understand that, as such, they differ from typical standalone solutions

2. Unengaged or weak business sponsors3. Unavailable or unwilling business

representatives from the functional areas


Why BI/BA projects fail 4. Lack of skilled (or available) staff,

or suboptimal staff utilization5. No software release concept (i.e.,

no iterative development method)6. No work breakdown structure (i.e.,

no methodology)


Why BI/BA projects fail 7. No business analysis or

standardization activities8. No appreciation of the negative

impact of “dirty data” on business profitability

9. No understanding of the necessity for and the use of metadata

10. Too much reliance on disparate methods and tools


System development and the need for integration

Developing an effective BI decision support application can be fairly complex

Integration, whether of applications, data sources, or even development environment, is a major CSF for BI

Any Questions ?

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