Artificial Intelligence & Business Analytics

ITS Session 13
Business Analytics
Digitization of What can be learned from
Business Processes these mountains of data to
More data is improve decisions?
Generated

ITS_S13 | Vimal Kumar M | IIM Calcutta

Data Mining is about
discovering knowledge
from massive data…
Statistics influences data
Business Analytics deals with the use of mining via machine
data and mathematical, statistical, OR learning. (Zhou 2020)
techniques, and machine learning
algorithms as a means for aiding the
decision process in all the functional
areas of business.
Source: Business Analytics, The Science of Data-Driven Decision Making
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Types of Analytics

• Standard reporting
Descriptive Analytics
• Customer segmentation, sentiments
(What happened?)

ITS_S13 | Vimal Kumar M | IIM Calcutta

Predictive Analytics
Data • Customer churn, direct marketing
(What will happen?) • Credit scoring, fraud detection

Prescriptive Analytics
(Why did something happen?, What should I do?)

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Applications of Analytics
• Anywhere with Big Data – biology, astronomy, sociology, geographic, image
processing etc.

• Across industry domains - Banking and Finance, Telecommunications,

Healthcare, CPG etc.

ITS_S13 | Vimal Kumar M | IIM Calcutta

• Marketing and CRM have major applications
– Direct Marketing
– Customer Acquisition
– Customer Retention
– Cross Selling
– Trend Analysis

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Big Data?
4 Vs
• Structured (about 10% of all data)
• Semi-structured (about 10% of all data)
• Unstructured (about 80% of all data)
– High-volume
– High-velocity

ITS_S13 | Vimal Kumar M | IIM Calcutta

– High-variety
– High-veracity
• Usually accumulated and stored in a distributed manner

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How to do Analytics?

AI? ML? DL?

AI is the New
Electricity
“About 100 years ago, electricity transformed every
major industry. AI has advanced to the point where it
has the power to transform…every major sector in
coming years.”

ITS_S13 | Vimal Kumar M | IIM Calcutta

- Andrew Ng, Stanford University

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What is AI?
 Some Classical Definitions

Thought process
and Reasoning

ITS_S13 | Vimal Kumar M | IIM Calcutta

Behavior

Human Performance Ideal Performance

Source: Russell and Norvig - Artificial Intelligence: A Modern Approach 9

 Simpler Approach

Intelligence → Prediction

ITS_S13 | Vimal Kumar M | IIM Calcutta

Using Information that You Have to Generate Information
that You Don’t Have.

Source: Prediction Machine: The Simple Economics of Artificial Intelligence 10

Other common questions of AI
§ AI Vs AGI?
– Weak and Narrow AI
– Strong AI

ITS_S13 | Vimal Kumar M | IIM Calcutta

§ What is Human/Machine Intelligence?
§ Collaborative Intelligence

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 Current Understanding: Putting it together

ITS_S13 | Vimal Kumar M | IIM Calcutta

Source: Gary Marcus and Earnest Davis, Rebooting AI, 2019

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Building Blocks of Artificial Intelligence Systems

ITS_S13 | Vimal Kumar M | IIM Calcutta

Source: Paschen et al. (2019, p. 1412)

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Core of AI:
Machine Learning
 ITS_S13 | Vimal Kumar M | IIM Calcutta
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Introduction:
Machine Learning
• Machine Learning
– Grew out of work in AI
– New capability for computers

• Examples:

ITS_S13 | Vimal Kumar M | IIM Calcutta

– Database mining
– Large datasets from growth of
automation/web.
– E.g., Web click data, medical records,
biology, engineering
– Applications can not be codified apriori
– E.g., Autonomous driving, handwriting
recognition, Natural Language Processing
(NLP), Computer Vision.
– Self-customizing programs
– E.g., Amazon, Netflix product
recommendations

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 Machine Learning Definition
• Arthur Samuel (1959)
Field of study that gives computers the ability to learn without being
explicitly programmed.

ITS_S13 | Vimal Kumar M | IIM Calcutta

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Machine Learning Definition
• Traditional Programming

Data
Computer Output
Program

ITS_S13 | Vimal Kumar M | IIM Calcutta

• Machine Learning

Data
Computer Program
Output
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Machine Learning Definition
• Tom Mitchell (1998)

Machine Learning: A computer program is said to learn from experience E

with respect to some task T and some performance measure P, if its
performance on T, as measured by P, improves with experience E.

ITS_S13 | Vimal Kumar M | IIM Calcutta

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 A computer program is said to learn from experience E with respect to Quick Exercise
some task T and some performance measure P, if its performance on T,
as measured by P, improves with experience E.

Suppose your email program

watches which emails you do or do
not mark as spam, and based on
that learns how to better filter
spam. What are P, T, and, E in this
setting?

ITS_S13 | Vimal Kumar M | IIM Calcutta

a) Classifying emails as spam or not spam.
b) Watching you label emails as spam or not
spam.
c) The number (or fraction) of emails correctly
classified as spam/not spam.
d) None of the above—this is not a machine
learning problem.

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Advances in Machine LearningY
• Speech Recognition
"I like pickles"

• Machine Translation डीप ल&न(ग का प,रचय

Introduction to Deep Learning ஆழமான க(ற* அறி-க.
গভীর িশ(ার ভূ িমকা

ITS_S13 | Vimal Kumar M | IIM Calcutta

• Sentiment Classification Awesome experience.. best in class camera...
oxygen os..love

• Image Recognition Pixels Correctly classified (Y/N)

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 Why the Buzz Now?

ITS_S13 | Vimal Kumar M | IIM Calcutta

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Factor One: Modern Computing
§ Cloud Computing

§ Advances in hardware: more memory and faster

ITS_S13 | Vimal Kumar M | IIM Calcutta

computation

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Factor Two: Data is the New Oil
§ Prediction requires data

§ Machine learns from examples

ITS_S13 | Vimal Kumar M | IIM Calcutta

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 AI Advances
• Perception
– Image Recognition
– Speech Recognition
– Voice Recognition
New Capabilities
• Perception and Comprehension
(Digital automation beyond standardized processes)
• Expert reasoning: Performs tasks that were generally

ITS_S13 | Vimal Kumar M | IIM Calcutta

• Cognition associated with human expert (cataract diagnosis)
– Problem Solving • Deepening Digital Analytics: Personalization and Forecasting
– Reasoning
at much higher accuracy

Source: The Business of Artificial Intelligence, HBR, 2017 25

 AI Advances: Perception

ITS_S13 | Vimal Kumar M | IIM Calcutta

Source: The Business of Artificial Intelligence, HBR, 2017 26
 Advances in Machine Learning
You See Your ML Algorithm Sees

ITS_S13 | Vimal Kumar M | IIM Calcutta

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 AI Advances: Cognition
• Cognition
– Problem Solving

ITS_S13 | Vimal Kumar M | IIM Calcutta

Source: The Business of Artificial Intelligence, HBR
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 What is Possible with AI today?

ITS_S13 | Vimal Kumar M | IIM Calcutta

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 ITS_S13 | Vimal Kumar M | IIM Calcutta
Implications of AI for Organizations

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 Technology Shaping: Virtuous Cycle

ITS_S13 | Vimal Kumar M | IIM Calcutta

Source: Competing in the Age of AI
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 Manager’s Responsibilities and
Skills: New Implications
• New Responsibilities
– Process
– Outcome

• Changes in Skills
– Managers need to learn how to communicate with the tool: they must be able to

ITS_S13 | Vimal Kumar M | IIM Calcutta

provide input for the tool and understand its output, data skills and algorithmic
literacy.
– Managers need to learn how to make sense of the tool’s results quickly and on a large
scale to ensure close monitoring
– Judgement Skills

Source: Leyer, M., & Schneider, S. (2021) https://doi.org/10.1016/j.bushor.2021.02.026 .

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 Risks and Limits of AI
• Black box Nature, Lack of Explainabilty

• Bias in Data, Discrimination

ITS_S13 | Vimal Kumar M | IIM Calcutta

Amazon scraps secret AI recruiting
tool that showed bias against
women

News Source: Reuters.com https://www.reuters.com/article/us-amazon-com-jobs-automation-insight-idUSKCN1MK08G

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 Risks and Limits of AI

Other Issues?
• Unemployment
• Human behavior & Interaction
• Unintended consequences
• Singularity

ITS_S13 | Vimal Kumar M | IIM Calcutta

News Source: Business Insider
https://www.businessinsider.in/elon-musk-warns-that-
creation-of-god-like-ai-could-doom-mankind-to-an-eternity-
of-robot-dictatorship/articleshow/63647102.cms 41
 Thank You

ITS_S13 | Vimal Kumar M | IIM Calcutta

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