Topic 5: Business Analytics & Big

Data
Sagar Kulkarni
Sagar.kulkarni@telfer.uottawa.ca
ADM3378 Emerging Topics in MIS
Telfer School of Management, University of Ottawa
 Agenda
1. Lecture
2. Discussion: PBS Big Data Video
3. Break
4. Questions
5. In-Class exercise: Predictive vs Prescriptive analytics

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 1. Introduction: Netflix
Netflix uses Analytics to gain
competitive advantage
It knows what is watched by
all its customers all the time
plus
 When someone pauses, rewinds,
fast forwards
 What is being searched, what is
selected from the search
 What device is used to watch a
program
 When the viewer leaves the
content, when he/she comes
back
 Etc.

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 1. Introduction: Netflix
Compare what Netflix does to How accurate are set meters?
how TV viewing is monitored
by Nielsen Television Ratings
which use:
Viewer "diaries“: a target
audience self-records its viewing
Set Meters: devices connected to
TVs in selected homes gather
the viewing habits of the home
and transmit (through a phone
line) the information to Nielsen

[Source:
https://en.wikipedia.org/wiki/Nielsen_ratings
#Measuring_ratings
www.Cartoonstock.com
]

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 1. Introduction: Netflix
Netflix’s use of analytics yields
far better results than other
means (e.g., focus groups,
surveys, etc.)
Netflix “data-driven culture”
covers
Decisions about original content
What films to licence
What shows to recommend to
viewers
What colors and images to use
on its website
Etc.

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 1. Introduction: Caesars
Caesars Entertainment, the
world’s largest gaming
company more than
doubled revenues by
collecting and analysing
customer data
Learning about customers
enables Caesars to keep
them happy by catering to
all their wants and needs 
customers will spend more
 an increase in revenue
per customer

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 1. Introduction: Capital One
Capital One became one of the industry's (financial
services) big players by using analytics
Created new products/services that appeal to new
customers and strengthen their relationship with existing
customers
Addressed “niche markets” which are unattractive to big
players because of the smaller number of potential
customers
Capital One learned that the most profitable customers
charge a large amount but pay their credit cards off
slowly
 Capital One created a product that caters to such
7 customers
 1. Introduction: why analytics?
One reason for the rise in
the use of analytics to
gain competitive
advantage is that many
industries offer similar
products and use similar
technologies
 Analytics are among the
remaining points of
differentiation
Analytics enable fact-
based decision-making

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 2. Knowledge Management (KM)
what?
KM “includes the processes
necessary to generate,
capture, codify, integrate, and
transfer knowledge across the
organization to achieve
competitive advantage”
KM is not a new concept but
it has been invigorated lately
by new technologies (e.g.,
intranets which act as large,
geographically distributed Source:

knowledge repositories) https://www.linkedin.com/pulse/knowledge-management-e

xecutive-search-industry-pankaj-arora

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 2. Knowledge Management (KM)
data, information, knowledge
Data: specific, objective facts or observations
E.g., “distributor ABC bought 600 of our sweaters”
Information: data endowed with relevance and purpose
E.g., “an average distributor buys 800 sweaters annually”; “ABC
bought 400 sweaters last year and 200 sweaters the year before”
Knowledge: richer, deeper and more valuable than information
because someone has added his/her own unique experience, and
judgement
E.g., ABC’s order sizes are growing. So the information put in context
indicates that “there is an opportunity to grow as ABC grows”

The amount of human contribution increases along the continuum data-

information-knowledge

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 2. Knowledge Management (KM)
value of managing knowledge
Value Source of value
Sharing best practices • Avoid reinventing the wheel
• Build on valuable work and expertise
Sustainable competitive • Shorten the lifecycle of innovation
advantage • Promote view of an “infinite resource” that isn’t used up
Managing overload • Filter data to assimilate relevant knowledge into the company
• organize and store data for easy retrieval
Rapid change • Build on previous work to make company more agile
• Sense and respond to change more quickly
Embedded knowledge • Gather product information automatically to refine products
from products • Add value through intangibles such as addressing problems before
customers know about them
Globalization • Manage global competitive pressure
• Provide global access to knowledge
Insurance for downsizing • Protect against loss of knowledge when workers leave
• Reduce time to knowledge acquisition

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 2. Knowledge Management (KM)
tacit vs. explicit
Tacit Explicit
Personal, context Can be easily collected,
specific, hard to organized and
formalize and transferred through
communicate digital means
(experiences, beliefs,  E.g., procedures listed in a
skills) manual, books, articles,
 E.g., applying similar presentations, etc.
experiences to solve a
problem

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 2. Knowledge Management (KM)
knowledge conversion – SECI model
TO
Tacit Knowledge Explicit Knowledge
Tacit Knowledge Socialization: transferring tacit Externalization:
knowledge through shared articulating and thereby
experiences, apprenticeships, capturing tacit
on-the-job training, “talking at knowledge through use
the water cooler” of metaphors, analogies,
FRO and models
M Explicit Internalization: learning by Combination: combining
Knowledge doing; studying previously existing explicit
captured explicit knowledge knowledge through
(e.g., manuals) to gain exchange and synthesis
technical know-how into new explicit
knowledge

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 2. Knowledge Management (KM)
KM process

Knowledge Knowledge Knowledge Knowledge

Generation Capture Codification Transfer

Activities that Continuous Representation of Transmitting

discover new process of knowledge in a knowledge from
knowledge scanning, manner that can be one person/group
organizing, & easily accessed to another and the
For instance
packaging and transferred absorption (to
through the use of
knowledge after it ensure that the
Business
is generated transfer occurs) of
Analytics (BA)
that knowledge

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 3. Business Analytics
is it BA or BI?
Business Analytics (BA) / Business Intelligence (BI) is an important
component of KM
--------------------------------------------------------------------------------------
BI is “about extracting knowledge from data”
BI describes the “set of technologies and processes that use data to
understand and analyze business performance”
--------------------------------------------------------------------------------------
BA refers to “the use of qualitative and predictive models, algorithms, and
evidence-based management to drive decisions”
BA is a subset of BI
Often BI and BA are used interchangeably
--------------------------------------------------------------------------------------
The way I see it: We use BA as a “tool” to “deliver” BI - let’s focus on the
concepts not the buzzwords

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 3. Business Analytics
definition
Business Analytics (BA) refers to “using tools and
techniques to turn data into meaningful business
insights” [2]

Data
Data
Tools and Business insight
Data
Techniques Source: [2]

e.g., data from e.g., statistical e.g., Capital One

databases, models, machine knowing that “the
spreadsheets, social learning most profitable
media, etc. techniques, etc. customers charge a
large amount but pay
their credit cards off
slowly”
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 3. Business Analytics
types of analytics
Descriptive analytics: what is happening?
Predictive analytics: what might happen?
Prescriptive analytics: what should we do?

There is more value-added as we go down the list

Source: [2]

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 3. Business Analytics
types of analytics
Descriptive Analytics (Information)
summarize raw data and make it interpretable by humans
used to understand at an aggregate level what is going on in the
company
 e.g., reports that provide historical insights

Predictive analytics (Prediction)

provide estimates about the likelihood of a future outcome
 e.g., forecasting customer behavior and purchasing patterns

Prescriptive analytics (Decision Making)

attempt to quantify the effect of future decisions before the
decisions are actually made
 e.g., using prescriptive analytics to optimize production, scheduling and
inventory in the supply chain

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 3. Business Analytics
types of analytics

what should
we do?

what might
happen?

what is
happening?

Source:
http://www.theorsociety.com/Pages/SpecialInterest/AnalyticsNetwork_analytics.aspx

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 3. Business Analytics
types of analytics
Watch these videos
HBR - Business Analytics Defined
HBR- Big Data and Analytics

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 3. Business Analytics
traditional analytics

database

Extract, • Data mining

Transfor Data • Reports
database m& Warehouse • Queries
Load • Multidimensional
(ETL) analysis
• Visualization
database

• ETL is the most challenging

aspect of analytics, requiring
about 80% of the time and effort.
• The challenge is due to poor data
quality; legacy technology,
incompatibility of formats, etc.

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 3. Business Analytics
big data analytics
Big data analytics is known for
Instant access to real-time data
Combining structured and unstructured data (internal or external)
Powerful visualization and analysis tools
More sophisticated algorithms

Extract, • Data mining

Transfor Data • Reports
m& Warehouse • Queries
Load • Multidimensional
(ETL) analysis
• Visualization
database

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 3. Business Analytics
big data analytics
Structured data: stored in databases and spreadsheets
Internal data (operational, financial, etc.)
External data (competition, economic trends, etc.)
Unstructured data: information is embedded in these data
sources but work must be done to extract it
Twitter feeds
Videos
Blogs
Web pages
Real-time data
Stock prices, twitter feeds

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 3. Business Analytics
BA Components
Component Definition
(1) Data sources Data streams and
repositories
(2) Software tools Applications and processes
for statistical analysis,
forecasting, predictive
modeling, and optimization
(3) Data-driven Organizational environment
environment that creates and sustains the
use of analytics tools
(4) Skilled workforce Workforce that has the
training, experience, and
capability to use the
analytics tools
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Example
Weather data, Data warehouse
Data mining process, forecasting
software package
Reward system that encourages
the use of analytics tools,
willingness to test and
experiment
Data scientists, chief data
officers, centre of excellence for
analytics, etc.
 4. Big data
“Every day, we create 2.5 quintillion (1 followed by 18
zeros) bytes of data - so much that 90% of the data in
the world today has been created in the last two years
alone. This data comes from everywhere: sensors used
to gather climate information, posts to social media
sites, digital pictures and videos, purchase transaction
records, and cell phone GPS signals to name a few.
This data is big data.”

[Source: https://www-01.ibm.com
/software/data/bigdata/what-is-big-data.html]

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 4. Big data
Big data: “techniques and technologies that make it
economical to deal with very large data sets at the extreme end
of the scale” [1]
The sizes of data sets are in EXABYTES (10 18 bytes) and
ZETTABYTES (1021 bytes) - a MEGABYTE is (106 bytes)
 Due to the fact that we now look at information around the transaction (not
just the transaction itself) – see Netflix example
 Due to social media channels: conversations (rich and unstructured data
streams) need to be analyzed, not just keywords – see sentiment analysis
 Internet of things (IoT): connected devices stream large amounts of sensor
data
Extreme data sets have great potential (insights that can be
extracted) but they create difficulties in storing, searching,
sharing, and analysing

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 5. Social media analytics
Social media analytics: how to analyze conversations, tweets,
blogs, etc. – note: it is easier to measure the number of hits,
click-through, likes, shares, etc.

Google analytics and Saleseforce.com offer platforms with

social media analytics tools for
Listening to the community
Learning who is in the community (e.g., demographics)
Engaging members of the community (communicating with them
on FB, twitter, etc.)
Tracking what is being said
Building an audience

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 6. Sentiment analysis
“Sentiment analysis uses algorithms to analyze text to
extract subjective information such as emotional
statements, preferences, likes/dislikes, and so on” in
order to “understand what is being said in social
media”
Usually the analysis is done in real-time to allow
dynamic changes in the way business is done
Sentiment analysis helps answer questions such as
 What do our customers think about our position on this issue?
 How well received is our latest marketing campaign?
 What is our customers’ experience with this problem?

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 7. BA – some challenges
Data often needs a lot of cleaning, and needs to be
converted to the right format for analysis
If it does not all come from databases and spreadsheets,
data is much more unstructured (txt, pdf, mp3, jpg, etc.)
Data volumes are growing fast (traditional models can’t
handle those volumes)
Competition is so fierce that decisions need to be taken
faster
Garbage in / garbage out: there is always the possibility
that BA delivers noise instead of useful insights
Source: [2]

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 8. BA – some tips
Provide actionable recommendations, not just
information
Allow (encourage) your business to explore various
data sets by providing guidance, governance, and
tools
Break problems into smaller pieces and deliver data
insights often in order to keep momentum and create
excitement
Keep data dictionary (it describes your data) to (1)
avoid sourcing data that is already available; (2)
determine if existing data meets the requirements
Source: [2]
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 Discussion: PBS Big Data Video
A 2016 PBS documentary shows the ‘Human Face of
Big Data,’ and how it’s transforming our lives
http://www.geekwire.com/2016/new-documentary-explo
res-the-human-face-of-big-data/

Watch the video here

https://www.youtube.com/watch?v=bIY3LUZ7i8Y

Prepare a short paragraph (to be shared in class)

describing your understanding of big data, the benefits,
the challenges, the possible solutions, etc.
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 Big Data Benefits

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 The six Vs of Big Data

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 Top Big Data Trends

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 Top Big Data Trends
Riding the wave of digital transformation
Big data to help climate change research
Real-time analytics gains more traction
Big data is heading to stores near you
Usher businesses to new areas of growth
Big data to search for novel medical cures
Driverless technology and big data
Simulate oil fields or the quantum realm
More natural language processing
Data governance moves forward
Cybersecurity remains a challenge

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11 Big Data Trends for 2021/2022: Current Predictions You Should Know - Financeso
nline.com
 Questions
Identify some knowledge management systems (KMS) and explain how they fulfill the mission
of managing knowledge
The terms data, information, and knowledge are often used interchangeably. But they can be
seen as three points in a continuum. What, if anything, in your opinion, is next on this
continuum?
What is the difference between tacit and explicit knowledge? Give an example of each. How
might an organization manage tacit knowledge?
Give examples of descriptive, predictive and prescriptive analytics
Give examples of useful data coming from a device that is part of the Internet of things (IoT)
Discuss the power of data visualization
What is a data artist?
What can be learned from analysing what people search for online?
What is the difference between data and big data?
How can social media analytics aid an organization?
Discuss the role of data analytics in healthcare
Discuss the role of big data in Smart Cities
According to the video, what did Target do? How can the situation in question be avoided?

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 In-class exercise: predictive vs. prescriptive
analytics
Is there a difference between predictive and prescriptive analytics?
Let us look again at the definitions
 “predictive analytics describes what will happen while prescriptive analytics
describes what should happen.” “prescriptive is about improving the outcome.”
[3]
Example [3]:
 A current customer calls a bank and talks to a CSR. After the question is
answered, what other product should the CSR suggest to the customer?
 Predictive modeling and a simple scoring model will reveal that the customer is
most likely to buy X if he already has Y. 
 So “X should be offered at the end of the call” is displayed on the CSR’s screen
 This example described both what will happen (the probability of a cross sell of
X) and what should be done to improve the outcome (displaying this information
to the CSR)

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 In-class exercise: predictive vs. prescriptive
analytics

Based on historical data such as people’s demographics (where they

live, their income, credit history, etc.) Capital One figures out what
those types of people bought, and tailors future offers to new customers
Capital One does that by running its model against a prospective customer’s
information, which tells them (with more than 70% accuracy) what product
the customer is likely to buy (predictive BA), so they offer him/her that
specific product (prescriptive BA)
38 Source: [2]
 In-class exercise: predictive vs. prescriptive
analytics
In-Class Exercise:
What Exactly The Heck Are Prescriptive Analytics?
https://go.forrester.com/blogs/17-02-20-what_exactly_th
e_heck_are_prescriptive_analytics/

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 In-class exercise: predictive vs. prescriptive
analytics
“Prescriptive analytics is a branch of data analytics
that uses predictive models to suggest actions to take
for optimal outcomes. Prescriptive analytics relies on
optimization and rules-based techniques for decision
making.” [4]
E.g., “Forecasting the load on the electric grid over the
next 24 hours is an example of predictive analytics,
whereas deciding how to operate power plants based on
this forecast represents prescriptive analytics.” [4]

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 References
[1] Managing and using Information Systems by K E Pearlson et al, Sixth
Edition, Wiley 2016 (pages 258-277)

[2] Introduction to Business Analytics by Cody Baldwin (YouTube Video)

https://www.youtube.com/watch?v=9IIgH0hNtgk

[3] Prescriptive versus Predictive Analytics - A Distinction without a

Difference?
https://www.datasciencecentral.com/profiles/blogs/prescriptive-versus-pre
dictive-analytics-a-distinction-without-a

[4] Predictive Analytics: 3 Things You Need to Know

https://www.mathworks.com/discovery/predictive-analytics.html
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