COMPETING ON

ANALYTICS

PRESENTED BY :

GROUP 6
Agenda
1. Introduction

2. Anatomy of analytics competitor

I. Wi d e s p r e a d u s e o f m o d e l i n g a n d o p t i m i z a t i o n .

II. An enterprise approach

III. Senior executive advocates.

3. Their Sources of Strength

I. The right focus.

II. The right culture

III. The right people

I V. The right technology

4. The long road ahead

5. Conclusion

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About the author
• Thomas H. Davenport is a renowned expert in the field of business analytics and
management. He co-authored the influential article "Competing on Analytics: The
N e w S c i e n c e o f Wi n n i n g , " w h i c h w a s p u b l i s h e d i n t h e H a r v a r d B u s i n e s s R e v i e w i n
2006.

• I n t h i s a r t i c l e , D a v e n p o r t a n d h i s c o - a u t h o r, J e a n n e G . H a r r i s , d i s c u s s e d t h e e m e r g i n g
trend of companies gaining a competitive advantage by leveraging data and analytics.

• Davenport's contribution to the article primarily revolved around highlighting the

significance of using data-driven insights to make informed business decisions. He
emphasized how organizations could outperform their competitors by systematically
applying analytics to their operations, thereby optimizing their strategies, operations,
and overall performance.

• The article outlined how companies could transform themselves into analytical
competitors by integrating analytics into their business processes, culture, and
s t r a t e g y.

• Davenport's insights in the article have had a profound impact on how businesses
perceive and utilize data analytics to enhance their competitiveness in the market.
​

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Importance of data analytics and its transformative
power in various industries and organizations.

•Killer Apps' Impact : Innovative systems, like electronic reservations and

predictive maintenance, have transformed data into a strategic weapon,
boosting revenues and reshaping industries.
•Analytics Competitors : Leading organizations like Amazon, Harrah’s,
Capital One, and the Boston Red Sox have achieved dominance by
deploying industrial-strength analytics across various activities.
•Competing on Analytics : Organizations are now competing on analytics
to extract maximum value from their business processes and differentiate
themselves in similar industries.

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• Success Stories: Capital One and Amazon have seen
significant growth through analytics, while sports teams
like the Boston Red Sox have used statistics for
success.
• Data as a Branding Tool : Virtuosity with data becomes
a brand identity, as seen with Progressive and Amazon.
• Characteristics of Analytics Competitors : Only a
handful of organizations have achieved high proficiency
in analytics. They manage data at an enterprise level
with top management support.
• Transformation Requirements : Success in
quantitative analysis requires technology investments,
data accumulation, and a commitment to change
workplace culture and thinking.

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Anatomy of an analytics competitor

Marriott International's Analytics Competence:

•One analytics competitor that’s at the top of its game is Marriott International.

•Marriott excels in establishing optimal guest room prices through revenue management.

•The Total Hotel Optimization program expands their analytics expertise into areas like
conference facilities and catering.
•They provide related tools online to property revenue managers and hotel owners.

•Systems optimize offerings for frequent customers and assess customer defection likelihood.

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 I. Widespread use of modeling and optimization

Modeling refers to the process of
creating mathematical representations
of real-world systems, while
optimization refers to the process of
finding the best solution to a problem
given a set of constraints.
Analytics competitors use modeling and
optimization to gain insights into their
business operations and to make data-
driven decisions.
For example, they may use predictive
models to forecast demand for their
products or services, or they may use
optimization models to determine the
most efficient way to allocate
resources.
By using modeling and optimization,
analytics competitors can identify
opportunities for improvement, reduce
costs, and increase revenue.

Sophisticated Experiments: Analytics Progressive uses experiments with

Capital One conducts over 30,000
leaders use experiments to measure insurance industry data to set prices
experiments annually to maximize
the impact of intervention strategies and profitably insure high-risk customer
customer sign-ups and repayments.
and improve subsequent analyses. groups.

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II. Enterprise Approach
•Analytics competitors understand that various business
functions, including traditionally non-analytical areas like
marketing, can benefit from quantitative techniques.
•They don't rely on a single "killer app" but deploy multiple
applications across different parts of the business.
•These applications may extend to customers and suppliers,
enhancing the value of analytics.
•Example: UPS's Evolution: UPS transitioned from a targeted
analytics user to a comprehensive analytics competitor. They
leverage statistical skills to track package movement, predict
customer behavior, and reduce customer attrition.

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 III. Senior Executive Advocates

• It refers to top-level leaders within a company who champion the use of

analytics and data-driven decision making.

• They are crucial for analytics adoption, especially in competitive

settings.

• These leaders have a passion for the quantitative approach and an

appreciation of the subject matter.

• Statistical background is not required, but understanding quantitative

method theories is vital for them.

• They need authority, perspective, and cross-functional reach to reshape

the company's culture.

• They can help to drive changes in culture, processes, behavior, and skills
for many employees.

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 Analytics competitors use technology to solve
Their business problems, but they also focus on building
the right culture, hiring the right people, and

Sources of fi nding the right areas to focus on. In the end, it's
not just about technology, but also about people

Strength
and strategy that give these organizations strength.

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 I. The right focus
•T h e i m p o r t a n c e o f h a v i n g t h e r i g h t f o c u s w h e n c o m p e t i n g o n a n a l y t i c s .

•E x a m p l e s o f c o m p a n i e s t h a t h a v e c h o s e n t h e r i g h t f o c u s : O H a r r a h ’s , w h i c h
a i m e d m u c h o f i t s a n a l y t i c a l a c t i v i t y a t i n c r e a s i n g c u s t o m e r l o y a l t y, c u s t o m e r
service, and related areas like pricing and promotions. o UPS has broadened its
focus from logistics to customers, in the interest of providing superior service.

•A n a l y t i c s c o m p e t i t o r s m u s t b e c a r e f u l n o t t o b e c o m e t o o d i ff u s e i n t h e i r
initiatives or lose clear sight of the business purpose behind each.

•A n a l y t i c s c o m p e t i t o r s u s e t o o l s l i k e m u l t i a t t r i b u t e u t i l i t y t h e o r y a n d
econometrics to quantify traditionally challenging areas like marketing and
advertising.

•P r o f i c i e n t a n a l y t i c s p r a c t i t i o n e r s a s s i s t n o t o n l y i n m e a s u r i n g t h e i r o w n
performance but also help customers and vendors measure theirs.

•P r o g r a m s l i k e " J o i n t Va l u e C r e a t i o n " e n a b l e c o m p a n i e s t o c o l l a b o r a t e w i t h
p a r t n e r s a n d e n h a n c e r e s p o n s i v e n e s s a n d c o s t - e ff e c t i v e n e s s t h r o u g h d a t a s h a r i n g
and analysis.

•I t s u g g e s t s t h a t c o m p a n i e s s h o u l d f o c u s o n t h e a r e a s t h a t p r o m i s e t o c r e a t e t h e
g r e a t e s t c o m p e t i t i v e a d v a n t a g e a n d a l l o c a t e r e s o u r c e s a c c o r d i n g l y.

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II. Right Culture:
Culture and Analytics:
•Analytics requires a culture that respects quantitative evidence
and data-driven decision-making.
•Employees are encouraged to base their decisions on hard facts,
with their performance measured in the same manner.

Impact on Human Resources:

• Human resource organizations within analytics-driven
companies employ rigorous metrics for compensation and
rewards.
•Transitioning to a performance-based culture is exemplified by
the transformation at Harrah's.

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Leadership and Analytics:
• Senior executives lead by example, demonstrating a hunger
for facts and analysis.
• Beracha's leadership at Sara Lee Bakery Group highlights the
importance of data-driven decision-making.

Balancing Innovation and Evidence:

• Tension can arise between innovation and the need for
evidence in an analytics-driven culture.

• Companies like Yahoo, Progressive, and Capital One

implement changes based on rigorous testing and
validation.

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III. Right People:
1. Ta l e n t A c q u i s i t i o n a n d A n a l y t i c a l S k i l l s :

• Analytical firms prioritize hiring individuals with strong analytical capabilities.

• Companies like Amazon recruit experts in optimization analytics to manage

c o m p l e x s u p p l y c h a i n s y s t e m s e f f e c t i v e l y.

2. Specialized Skill Sets in Analytical Firms:

• Specialized skill sets are essential for roles in analytics firms, as demonstrated
by the job description of a Capital One analyst.

• Analysts are expected to possess expertise in quantitative analysis, software

applications, and project management methodologies.

3. Emphasis on Communication and Relationship Skills:

• Good analysts should be capable of simplifying complex ideas and possess

strong relationship-building skills.

• Analytics groups within companies aim to be actively involved in business

discussions and contribute to the success of the business unit.

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4. C h a l l e n g e s i n F i n d i n g A n a l y t i c a l Ta l e n t :

• Finding individuals with a combination of analytical, business, and

relationship skills can be challenging.

• Some companies, like SAS, plan well in advance for hiring individuals
with expertise in advanced business applications.

5. G l o b a l Ta l e n t A c q u i s i t i o n S t r a t e g i e s :

• Due to the scarcity of analytically sophisticated job candidates in the

U.S. and Europe, some companies outsource work to countries like India.

• H o w e v e r, d i s t a n c e c a n b e c o m e a s i g n i f i c a n t b a r r i e r f o r o ff s h o r e a n a l y s t s
when iterative discussions with business decision-makers are required.

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 IV. Right Technology
1. C o m p e t i n g o n A n a l y t i c s a n d Te c h n o l o g y :

• S e r i o u s c o m p e t i t o r s p r i o r i t i z e c u t t i n g - e d g e t e c h n o l o g y a n d c o n s t a n t l y p u s h t h e I T f r o n t i e r.
Some companies go to extraordinary lengths, such as building their own supercomputers,
to meet their analytics demands.

2. Importance of a Data Strategy:

• Effective data strategies are critical, involving data integration, standardization, and
storage of inaccessible data warehouses. Accumulating substantial data over time is
necessary for reliable analysis and decision-making.

3. Business Intelligence Software:

• Business intelligence tools facilitate data collection, analysis, and dissemination,

enabling better decision-making.

4. Computing Hardware Upgrade:

• Upgrading to 64-bit processors is essential for handling the vast data volumes required for
analytics. Converting hardware ensures quick processing of large data sets.

• Extraction, transformation, and loading (ETL) processes are crucial for data analysis
and reporting. 16
 • It discusses challenges in implementing analytics strategies

• Analytics is not a quick fix, and takes years to yield results

• Example: Barclays Bank's UK Consumer Cards and Loans business

"The Long took 5 years for analytics in marketing Required process changes in
risk, credit limits, fraud control, etc.

Road
• Technical work included data integration for 10 million customers,
improving data quality, and building data systems.

• Emphasizes need for patience, persistence, and process changes and

Ahead" hiring people with quantitative skills essential. Stresses the long-
term investment nature of analytics implementation.

• Encourages small tests, learning culture, and skilled workforce

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THANK YOU
A m r i tha Vi jay

B ha dra n J N a i r

Itty D a ni el Sk a r i a

M eenu Sa nthosh

N av ya R S

Va r sha Pra k a sh

L eni n M

H a r i swa m i d a s

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