Introduction to Business Analytics - For XIME

Prithvijit Roy CEO & Founder, BRIDGEi2i Analytics Solutions prithvijit.roy@bridgei2i.com January 2012

@ 2012 BRIDGEi2i Analytics Solutions Pvt. Ltd. All rights reserved

CXOs tough balancing act

POS fraud detection in a credit card industry Maximize Return Maximize Lifetime Value of a customer engagement through promotions/loyalty

Increasing Agility

Optimize Resource Efficiency & Maximize Yield

Mitigate Risk

Predicting employee attrition in the BPO industry to minimize service disruptions

Improve Performan ce

Proactive crisis management by predicting natural catastrophes over the next 5 years

What is Analytics?

Analytics often involves studying past historical data to research potential trends, to analyze the effects of certain decisions or events, or to evaluate the performance of a given tool or scenario. The goal of analytics is to improve the business by gaining knowledge which can be used to make improvements or changes.*

* As defined by Business Dictinorary.com

Emerging trends

Explosion of digital information

Better storage and computing power

Real-time decisions in a dynamic environment

Demonstrated impact of analytics

New levers for differentiation

Data, information, insights, impact

The analytics JOURNEY
Data unrefined and factual. Dell sold a laptop to Customer A for $1000 Information data that has meaning for a user. Total revenues for Dell from sale of notebooks in Q1 is $200 Mn (What) Insights is a combination of information, experience and analysis. Total revenue from sale of notebooks have seen a 10% fall because of an 12% fall in traffic to the store (Why & What) Impact Actionable Intelligence. Targeted web marketing campaigns to increase traffic (How)
Why is this transformation important?

Looks like youve got all the data where is the hold up?

...helps take informed decisions

The Analytics journey

Business analytics is increasingly being adopted by companies in decision making to multiply business value based on data
INPUT
Internal & External Data with structured /unstructured content

OUTCOME
Accelerated Growth, Risk Mitigation, Cost Reduction

Destination

INFORMATION
Capture relevant data Identify key metrics Design & generate reports What happened? When? How much?

INSIGHTS
Identify drivers & trends Understand behavior Predict outcomes Why it happened? What will happen next?

IMPACT

Analytics Maturity of Firm Business Problem Addressed

Build & implement strategies Enterprise-wide adoption

How to operationalize? How to sustain?

Analytics Play

Metrics & reporting Descriptive statistics Visualization

Underlying trends Predictive models Optimization

Real time decisions tools Change management Institutionalization

The Analytics spectrum

Whats the best way for it to happen? What will happen next? Business Analytics Competitive Advantage Forecasting/ Extrapolation Statistical Analysis What actions are needed? Where exactly is the problem? Ad hoc Reports Standard Reports Query/ Drill down Business Intelligence How many, how often, where? Alerts Optimization Predictive Modeling What if the trend continues?

Why is this happening?

What happened? Degree of Intelligence

Source: Adapted from Davenport, Competing on Analytics

To make analytics relevant for businesses it is important to translate it into applications

Diaper & beer Story

Data Mining Discovery
POS Data Loyalty Card Data

1. Largest chain of large discount department stores in the US 2. World's largest public corporation by revenue ($408 billion) 3. More than 8,969 retail units under 55 different banners

Diapers

Beer

Shopping between 5-7 pm

Young American Fathers

Walmart placed Diaper & Beer together on the shelves

Enablers for successful Analytics

BUSINESS CONTEXT TECHNOLOGY ADOPTION ANALYTICS RIGOR PEOPLE PRACTICE CULTURE

Industry & functional understanding Company priorities Change management

Enterprise data linkage Analytics tools Data privacy and compliance

Handling big data Cutting-edge statistical techniques Analytics embedded in decision making

Attract analytical talent Develop / retain talents Knowledge management

Information based decisions Structured innovation Implementation focus

Pillars of the analytics bridge

Multiplying returns from analytics requires a balanced focus

BUSINESS CONTEXT

Functional applications
Market intelligence Maximize return on marketing investment Digital media effectiveness Price setting Discount optimization Price realization

Targeted acquisition Lifecycle value enhancement Customer experience management Enhance retention

Customer intelligence

Marketing effectiveness

Price optimization

Sales forecasting Sales force planning Sales force enablement

Customer risk management Fraud detection Portfolio risk assessment

Procurement spend optimization Human resource effectiveness Customer service planning

Sales effectiveness

Risk management

Operations planning

BUSINESS CONTEXT

Industry applications
Banking & Financial Services
Cross Sell / Up-Sell Credit Risk Management Customer Experience Management

Insurance
Lead Generation Claims Management Capital Adequacy

Public Sector
Service Quality Management Education Program Effectiveness Revenue Management

Telecom
Revenue Assurance Churn Management Asset Optimization

Retail & Consumer Goods

Market Mix & Promo Optimization Increase Customer Loyalty Assortment Planning

Technology
Product Usage Experience E-commerce effectiveness Pricing Optimization

TECHNOLOGY ADOPTION

Data types

Illustration Data available to Marketing function of a typical technology company

Financial Information
Revenue, Order, Shipment, Margin Marketing Spends and Cost information Pricing, deal, special discounts etc List price, catalogue, people cost

Marketing Targeting Information

Campaign targeting, cost & response Leads and opportunities Channel and RoI information Web traffic data

Support & Touch Point Information

Support Contracts Call Center data Warranty and Support Satisfaction data Product Usage Data

External Information
Company financials and profile Consumer demographics Market Research data Channel and Partner feedback data Market Tracking data

TECHNOLOGY ADOPTION

Data linkages

TECHNOLOGY ADOPTION

Analytics tools

SAS The most popular tool in the data analysis space IBM SPSS
Powerful tool used very highly in market research space. Well respected statistical tools, now moving into mining Integrated data mining into the database One of the first data mining applications (as opposed to tools). Good for Decision Tree analysis Great mining technology, focusing less on analytics and more on campaign operations Open source. Mostly used in academic and research reasons. Less costly, includes new techniques

Insightful Miner Oracle Angoss

IBM Unica

SPlus , R

ANALYTICS RIGOUR

Handling big data

Creating Final data for analysis Create New Derived Variables Sampling for analysis Cleaning

Outlier Treatment Delete / Impute Capping of values

Missing Value Imputation Mean / Median / Mode Imputation Special missing values Regression Imputation

Data Consolidation Merging diverse data Managing Granularity of data Univariate Analysis

ANALYTICS RIGOUR

Techniques
CLASSIFICATION INTO HOMOGENEOUS SEGMENTS Identify homogeneous segments based on key attributes behaving in similar manner ( cluster, tree & machine learning techniques) FORECASTING OF KEY METRICS Forecasting of key metrics based on trend and patterns observed over time and patterns in key influencing attributes OPTIMIZATION OF SPECIFIC OBJECTIVE Optimization of business objective based on multiple operative constraints

TESTING OF HYPOTHESIS & ASSESS DRIVERS Statistical testing of hypothesis and estimation of parameters , building business cases and analysis of key drivers PREDICTION OF EVENTS Prediction of certain business events ( sales, attrition, cost, risk etc.) based on attributes impacting the same SIMULATION OF SYSTEMS Simulation of scenarios to assess variability of business metrics based on assumptions on key external factors

PEOPLE PRACTICE

Skill development

Computer Science databases, programing

Business context to drive ROI from analytics

Statistics Mathematics Econometric s

Data visualization skills

Adaptability to continuous change in analytics

CULTURE

Implementation focus
Data selection / collection Data preparation / modeling Pattern discovery / deployment Monitoring and improvement

SUPPLY CHAIN Internal / External sources MARKETIING -Internal / External sources

SUPPLY CHAIN ANALYSIS

SUPPLY CHAIN DATA

SUPPLY CHAIN SERVICE

Availability Lead Time Overstock

CALL CENTER

CUSTOMER ANALYTICS

MODELS + CUSTOMER, PRODUCT DATA

SCORING SERVICE

Customer Propensity Product Association

REALTIME DATA RECOMMENDATION ENGINE

PRODUCT ANALYTICS INTERNAL DATA - Customer Touch points - Business Performance Data - Transactional Data EXTERNAL DATA - Prospect Demographics - Survey Data - Web, Publications

Campaigns Catalogs MARKETING DATA MARKETING SERVICE

WEB STORE PUBLIC/PRIVATE RULES & METADATA

MARKETING & PRODUCT MANAGEMENT Configuration Margin Product Families Product Hierarchies ADMINISTRATION SALES CLIENT BUSINESS MGR

PRODUCT DATA

PRODUCT SERVICE

13-Jan-12

Why bother about analytics?

Analytics is mission critical last remaining source of differentiation
Super Crunchers, by Ian Ayers In the past, one could get by on intuition and experience. Times have changed. Today, the name of the game is data. Steven D. Levitt, author of Freakonomics Data-mining and statistical analysis have suddenly become cool.... Dissecting marketing, politics, and even sports, stuff this complex and important shouldn't be this much fun to read Wired

Competing on Analytics, by Thomas Davenport Some companies have built their very businesses on their ability to collect, analyze, and act on data. Analytics competitors are the leaders in their varied fieldsconsumer products finance, retail, and travel and entertainment among them.

THANK YOU

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