Business Analytics &

Business Intelligence
Data Warehousing & Data Mining

Analytics
Promises, Myths, and Reality

Too many jargons

Business intelligence, Data mining, Data

warehousing, Predictive analytics, Prescriptive
analytics, Big data, .

Too many questions

BDM 2016

What on earth do they mean? Where did they

emerge from? Why are they getting so popular? Is
analytics the panacea? Is it yet another overhyped
buzzword?
2

Analytics defined?

Analytics is (Ref: Davenport)

Extensive use of data, statistical, quantitative, and

computer based analysis, explanatory and
predictive models, and fact-based rather than gut
feeling-based approach to arrive at business
decisions and to drive actions

Analytics can help arrive at intelligent

decisions

BDM 2016

What is intelligence in this context?

How can a machine help take intelligent decisions?
3

Netflix

Disruptive innovation riding on analytics

dimension

1997: Reed Hastings, Computer Science Masters from

Stanford, pays $40 late fee for a VHS cassette of the
movie Apollo 13 to Blockbuster
DVD by mail & on-demand streaming by Netflix
Netflix uses a recommender system based on analytics
Blockbuster initially ignored Netflix
Recognition (and virtual surrender) by Blockbuster it
was too late!

BDM 2016

Harrahs

Knowing customers better using analytics

BDM 2016

The magic of CRM

Wal-Mart

The ever annoying problem of stockout,

shrinkage, and inventory management and the
success of Radio Frequency Identifcation
(RFID) based analytics

BDM 2016

Reduced stockout!

Examples Galore

HP
Which employee is likely to quit?
Target
Which customers are expectant mothers?
Telenor
Which customers can be persuaded to stay back?
Latest US presidential election
Which voter will be positively persuaded by political
campaign such as a call, door knock, flier, or TV ad?

BDM 2016

Changing nature of competition in business world:

How to get competitive advantage?

Operational business processes arent much

different from anybody elses

BDM 2016

Thanks to R&D on best practices

Competitive advantage

Operational business processes arent much different from anybody elses

Thanks to R&D on best practices

Products arent much differentiated any more

BDM 2016

Thanks to comparable technology accessible to all

Competitive advantage

Operational business processes arent much different from anybody elses

Thanks to R&D on best practices

Products arent much differentiated any more

Thanks to comparable technology accessible to all

Unique geographical advantage doesnt

matter much

BDM 2016

Thanks to improved transportation and

communication logistics

10

Competitive advantage

Operational business processes arent much different from anybody elses

Thanks to R&D on best practices

Products arent much differentiated any more

Thanks to comparable technology accessible to all

Unique geographical advantage doesnt matter much

Thanks to improved transportation/communication logistics

Protective regulations are largely gone

BDM 2016

Thanks to globalization

11

Competitive advantage

Operational business processes arent much different from anybody elses

Thanks to R&D on best practices

Products arent much differentiated any more

Thanks to comparable technology accessible to all

Unique geographical advantage doesnt matter much

Thanks to improved transportation/communication logistics

Protective regulations are largely gone

Thanks to globalization

Proprietary technology gets rapidly copied

BDM 2016

Thanks to technological innovations

12

Competitive advantage

Operational business processes arent much different from anybody elses

Thanks to R&D on best practices

Products arent much differentiated any more

Thanks to comparable technology accessible to all

Unique geographical advantage doesnt matter much

Thanks to improved transportation/communication logistics

Protective regulations are largely gone

Thanks to globalization
Proprietary technology gets rapidly copied

Thanks to technological innovations

What is left is to improve efficiency and

effectiveness by taking the smartest
business decisions possible out of data
which may as well be available to
competitors

BDM 2016

13

Stock Market Analogy

Its too well known the stock market would

cease to exist if one could find a predictive
theory of price movements!

The market exists because no such ideal model is

possible. Players try disparate models - some
gain while others lose

Ocean of data best model or best

interpretation is meaningless

BDM 2016

The smarter guy discovers more meaningful

patterns for his business by using analytics!
14

Emergence of analytics: the contributors

Old wine in new bottle?

Yes and No

Pillars of business analytics

Data capture and storage in bulk

Statistical principles revisited
Developments in machine learning principles
Availability of easy to use software tools
Managerial involvement with a changed mindset

BDM 2016

15

Exploring ocean of data

Need for exploring ocean of (transactional) data

How to clean?
How to filter?
How about outliers?
How to summarize?
How to analyze?
How to apply?

BDM 2016

16

Course Objectives

To appreciate the emerging role of business

data mining in decision making
Learn about the journey from databases to data
warehouse and data mining
Learn the basic principles of popular data mining
methods
Develop familiarity with couple of data mining
tools and have some hands on experience to
conceive potential business applications
BDM 2016

17

How we structured the sessions

Discussion of background and relevant

principles of popular data mining methods in a
simplified manner
Explaining how those methods work with simple
examples
Use of software tool for solving problems using
the methods discussed
Hands on experience in class and in
assignments to consolidate your learning
BDM 2016

18

Packages & In-class exercises

XLMiner

IBM SPSS Modeler

BDM 2016

19