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Eight levels of analytics

Jennifer Kavur - October 29, 2009

AS VEGAS Analytics is the most used and abused term in the marketplace right now,
according to Jim Davis, senior vice-president and chief marketing officer of SAS Institute Inc.

Speaking at SASs Premier Business Leadership Series in Las Vegas, an invitation-only event for
senior executives, Davis questioned whether there is a vendor or supplier out there today that doesnt
have analytics.
Everybody has analytics, he said. But what they are actually offering in terms of analytic capacity in
support of solving business problems remains in question.
So you bring all the data together and you put it in some form in which the end user can gain access to
it, but what are you doing with it? he asked.
There are eight levels of analytics, according to Davis. The first four encompass what he considers the
classic definition of business intelligence and what the majority of organizations are actually doing.
What the first four levels all have in common is that they look at past activity, Davis pointed out. They
support reactive decision-making understanding the facts after things occurred and now reacting,
he said.
The last four levels, which support pro-active decision-making, keep innovation and optimization on
track. These are predictive in nature and keep things headed in the right direction, he said.
It is the last four that are really going to help change the future for business, said Davis.
But analytics alone doesnt guarantee success for an organization.
To actually solve business problems, companies must address areas of data integration, analytics,
report the results and put it all in the context of a business solution, according to Davis.
While this requires a framework to capture data and allow people to gain access to that data on a
consistent basis, its not about simply building a data warehouse and putting a BI front end on it, he
said.
Its not about going out and buying the fastest database or the coolest interface or the best piece of
hardware. Its about solving a very focused business problem, said Davis.
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did it happen? said Davis. Thats analytics, but not enough.

2) Ad hoc reports
Ad hoc reports answer questions like, How many? How often? Where? he said. They provide a level
of independence on desktops that allow an individual, for example, to see sales in a particular region or
at a particular point in time without needing to go to an IT governance counsel and wait three months
for the result.
3) Query drill-downs
Also referred to as OLAP, query drill-downs answer questions like, Where exactly is the problem? and
How do I find the answers? said Davis. This is for when an organization wants to see not only the
results, but what the results mean and what backs it up, he explained.
4) Alerts
Alerts answer questionas like, When should I react? and What actions are needed now? said Davis.
This is when you reach a particular threshold something changes from green to red, so you do
something about it.
5) Statistical analysis
Statistical analysis answers the questions, Why is this happening? and What opportunities am I
missing? he said. You begin to take the data and you begin to understand why things are
happening.
6) Forecasting
A popular level, forecasting answers questions like, What if these trends continue? How much is
needed? When will it be needed? he said.
7) Predictive modeling
Predictive modeling tells users what will happen next and how it will affect the business, Davis said.
8) Optimization
Optimization answers the questions, How do we do things better? and What is the best decision for a
complex problem? said Davis. This includes areas such as price optimization, markdown optimization
and size optimization. This isnt just about cost-cutting and can be the difference between success and
failure for an organization, he noted.

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