M.S.

ENVERGA UNIVERSITY
FOUNDATION, LUCENA CITY,
PHILIPPINES

Business Analytics: A
New Paradigm in
Smart Business
Decisions
By:
Flormando P. Baldovino, DBA
Professor Statistics & Business Analytics
College of Business & Accountancy
 Objectives of the Presentation
▪ Analytics for decision-making
▪ Types of Analytics
▪ Building an Analytics Culture
▪ Business Administration
Programs with Specialization
Track in Business Analytics
Foundation of Analytics
Lets watch this clip about
business analytics
F:\MANDY - Presentations -\Business Analytics_ Drive sm
arter decisions.mp4
Types of Analytics
Descriptive
What has
happened?

Analytics
Prescriptive Predictive
What should What will
happen? happen?
 Descriptive Analytics
▪ categorizes, characterizes, consolidates and
classifies data.
▪ includes dashboards, reports (e.g., budget, sales,
revenue and costs) and various types of queries.
▪ are most commonly applied to structured data,
although there have been numerous efforts to
extend their reach to unstructured data, often
through the creation of structured metadata and
indices.
▪ help provide an understanding of the past as well
as events occurring in real-time.
Predictive Analytics

▪ Helps predict (based on data and statistical

techniques) with confidence what will happen
next so that you can make well-informed
decisions and improve business outcomes.
▪ This model is combined with historical data with
rules, algorithms and other external data to
predict the outcome or a situation.
▪ Uses simulation models to suggest what could
happen.
Prescriptive analytics

▪ Recommends high-value alternative actions or

decisions given a complex set of targets, limits,
and choices.
▪ Predicts future outcomes and prescribe or
suggests courses of actions to take so that you
can benefit from those predictions.
Analytics in Practice

Analytics increase the competitive

advantage of retailer from
displays, marketing, customer
service, etc.
Analytics in Practice

Example: Retail Markdown Decisions

▪ Most department stores clear seasonal inventory

by reducing prices. The question is:

When to reduce the price and by how much?

What kind of questions analytics can answer?
Building an Analytics Culture
Building an Analytics Culture

Analytics Solution Life

Cycle
Building an Analytics Culture

▪ Analytics culture can not be build everywhere in

an organization. To establish it, an organization
should be:
– Endowed with a great deal of data that is not
fully utilized
– Important to the business success
– Led by a manager who already understands the
importance of analytics
– Blessed with a cadre of people who have some
analytical skills
Four Dimensions of an
Effective Analytics Culture

Information
Business Analytics
Environment and
Skills and Resources
Infrastructure

Analytics
Culture

Internal Processes Organizational Culture

Four Dimensions of an
Effective Analytics Culture

Provide the right balance of

Business Analytics (human) resources
Skills and Resources
Make analytics more
approachable

Business Visualization

Visual Programming
 Four Dimensions of an
Effective Analytics Culture
Upgrade the Information Structure
Information
Environment and
Change the way data is
Infrastructure
formatted and
presented

IT really needs to
understand the analytical
life cycle
 Four Dimensions of an
Effective Analytics Culture
Upgrade the Information Structure
Information
Capitalized on Advanced
Environment and
Analytics, not just Reporting Infrastructure

Data Mining

Forecasting

Text Analytics

Optimization
 Four Dimensions of an
Effective Analytics Culture
Upgrade the Information Structure
Information
Capitalized on Advanced
Environment and
Analytics, not just Reporting Infrastructure
Bridge the gap between IT and
Business

IT doesn’t understand that the way

they collect the data is not the way
the business is going to use the
data.
Four Dimensions of an
Effective Analytics Culture

Manage Analytics as
an Ongoing Process,
Not a One-Off Project
Internal Processes
Facilitate Collaboration
Four Dimensions of an
Effective Analytics Culture

When the organization has

embraced analytics as the
foundation for business
decision making, integration Organizational Culture
across the organization will
likely follow
Four Dimensions of an
Effective Analytics Culture

People Technology

Analytics
Culture

Process Culture
How to Get Started?
▪ Be clear with the business priorities and objectives
▪ Assess the analytics environment on the four key
dimensions (people, technology, process, and culture)
▪ Make a gap analysis and determine what’s missing
▪ Choose a business area that:
– Represents a high business priority
– Has integrated and consistent data available
– Has enough historical data to create meaningful insights
– Offers the potential to generate tangible business value
– Has the skills and resources in place to effectively use
analytics
Where to Start—Identify the Opportunities

▪ Outside-In Thinking: Keeping tabs on what

others in your industry are doing.
– What makes the business tick?
– Where does the next breakthrough await?
▪ Inside-Out Thinking: Keeping a systematic
inventory of the key business processes
– How are key decisions made within?
– What are the key business decisions?
– How they can be made more process-oriented?
Where to Start—Identify the Opportunities
Industry Analytical Applications
Financial Credit Scoring, Fraud Detection, Pricing Optimization, Trading
Services Analytics, Claims Analysis, Customer Profitability, Shareholder
Metrics
Retail Product Promotions, Shelf Management, Space Optimization,
Demand Forecasting, Sales and Margin Rates, Seasonal Trends,
Product Pricing
Services Call Center Staffing, Service Optimization
Government Fraud Detection, Case Management, Crime Prevention,
Revenue Optimization
Transportation Scheduling Optimization, Routing Optimization, Yield
Management
Healthcare Drug Interaction, Preliminary Diagnosis Optimization, Disease
Management
Where to Start—Identify the Opportunities
▪ Samples of Most Common Business Challenges
– Increase market share (customer acquisition)
– Increase customer intimacy
– Increase customer satisfaction and retention
– Increase customer wallet share growth
– Increase customer profitability
– Increase traffic and conversion
– Increase employee productivity and performance
– Reduce cost
– Manage and anticipate competitors and gear up for
new competition
– Increase customer loyalty
What is Opportunity?

Business opportunity (bizopp) is

anything that involves leasing or sales
of products, service, equipment, etc.
that will enable the buyer-licensee to
begin the business.
Opportunity Recognition

What is opportunity?
How do you recognize opportunity?
How do you screen opportunity?
What is a business concept?
Opportunity Recognition

Opportunities are situational

Search for a product or service
Previous work
Hobbies
Casual Observation
Deliberate Search
SPOT, CREATE, EXPLOIT OPPORTUNITIES

▪ 1. Technological discoveries
▪ 2. Demographic changes
▪ 3. Lifestyle & taste changes
▪ 4. Economic dislocation
▪ 5. Calamities
▪ 6. Government rulings
Technological discoveries

▪ Discovery of new
products from
coconut.
▪ The DOST is a good
of source of new
technology and it
helps in the
development of
products, lease
facilities and provide
technical training.
DEMOGRAPHIC CHANGES

Changes in
population or
other socio
economic
factors like
gender, age or
income will
have an impact
on the
business.
LIFESTYLES AND TASTE

The changing
environment
and the access
to the world
wide web make
lifestyles and
taste globally
appealing.
ECONOMIC DISLOCATION

Displaced workers
created new
economic
opportunities to
some sectors.
Employees of a
closed company
increased self
employed people
like the tricycle
drivers or food cart
vendors.
CALAMITIES

Typhoons ,
floods or
earthquake may
dislocate
families but it
can also create
new
communities
and
opportunities to
some sectors.
GOVERNMENT INTERVENTION

Laws, policies
and other means
of government
interventions
creates
opportunities to
some sectors.
Opportunity Recognition

Opportunities are situational

Search for a product or service
From Previous work
From Hobbies
From Casual Observation
From Deliberate Search
 Case Work

The ABC Co. is a SEC registered manufacturing

company whose business is in providing “computer
chips” to a number of multinational computer giants
such as DELL, Acer and HP. Historically, the
company’s production output of computer chips is in
the upswing. Mr. Castro, the President of ABC Co., is
in a dilemma; knowing that he needs to purchase
additional equipment to meet production demand.
Currently, the company has 4 equipments which have
a combined maximum capacity of producing 80,000
units of computer chips (i.e. 20,000 units per
equipment). The following data set on production
output is exhibited below.
 Year Volume Production of Computer Chips (in 1,000 units)
2005 15.75
2006 26.32
2007 28.9
2008 33.7
2009 38.4
2010 41.03
2011 60.2
2012 63.72
2013 69.4
2014 70.6
SUMMARY OUTPUT (EXCEL)

Regression Statistics
Multiple R 0.980798871
R Square 0.961966425
Adjusted R
Square 0.957212228

Standard Error 4.068985578

Observations 10

ANOVA

  df SS MS F Significance F

Regression 1 3350.079011 3350.079011 202.3404673 5.8109E-07

Residual 8 132.4531491 16.55664364

Total 9 3482.53216      

Lower Upper
  Coefficients Standard Error t Stat P-value Lower 95% Upper 95% 95.0% 95.0%
Intercept -12760.46273 900.2178715 -14.1748605 5.97042E-07 -14836.36886 -10684.6 -14836.4 -10684.6

X Variable 1 6.372363636 0.447980568 14.22464296 5.8109E-07 5.339318594 7.405409 5.339319 7.405409

SUMMARY OUTPUT (EXCEL)

Regression Statistics
Multiple R 0.980798871
R Square 0.961966425
Adjusted R Square 0.957212228
Observations 10
ANOVA

  df SS MS F Significance F

Regression 1 3350.079011 3350.079011 202.3404673 5.8109E-07

Residual 8 132.4531491 16.55664364

Total 9 3482.53216      
 Standa
rd Upper Lower Upper
  Coefficients Error t Stat P-value Lower 95% 95% 95.0% 95.0%

-
900.21 14836.3688
Intercept -12760.462 78715 -14.1748605 5.970E-07 6 -10684.6 -14836.4 -10684.6

X
Variable
1 6.37236 0.4479
80568 14.22464296 5.810E-07 5.339318594 7.405409 5.339319 7.405409
 Sample Linear Regression

Sample regression line provides an estimate of the population regression line as well
as a predicted value of Y
Sample
Sample
Slope
Y Intercept Coefficient

Yi  b0  b1 X i  ei
Residual

ˆ Sample Regression Line

Y  b0  b1 X (Fitted Regression Line, Predicted Value)
44
Therefore … our regression model is –

Production = - 12,760.462 + 6.37236 Xi

Y-intercept
Slope
Production = - 12,760.462 + 6.37236 Xi
Volume of Production of Computer Plans/Decisions to
Year Chips (in 1,000 units) Undertake
79 K nil
2015  
86 K 1 add’l. machine
2016
2017 92.5 K nil

98.9 K nil
2018
2019 105 K 1 add’l. machine
 Volume of Production of Computer
Plans/Decisions to
Year Chips (in 1,000 units) Undertake
2015  79.84 No additional machine
One additional machine +
2016 86.22 etc

2017 92.59 No additional machine

2018 98.97 No additional machine

One additional machine +
2019 105.34 etc
 M.S. ENVERGA UNIVERSITY
FOUNDATION, LUCENA CITY,
PHILIPPINES

Thank You for

Listening
By:
Flormando P. Baldovino, MBA, DBA
Professor Statistics & Business Analytics
College of Business & Accountancy