Week 01: BAFBAN1: Fundamentals of Business Analytics

BAFBAN1:
Fundamentals of Business Analytics

Week 01
© 2013 IBM Corporation

IBM Global Center for Smarter Analytics
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Agenda
§Course Overview
•Introduction to the Course
•Setting of Course Objectives
•Administrative Matters
•Project Introduction
§Module 1: Analytics in Practice
•What do we mean by Analytics?
•What kinds of questions can analytics answer?
•Analytics in Practice
•Business Users and Their Challenges
•Trends in Business Analytics
•Analytics for the rest of us
•Why its time to put analytics to work?
•Where does Analytics Apply?
•Power of Information
•Metrics and Measurements
•When are Analytics Not Practical?
3 © 2013 IBM Corporation

Agenda
§Overview
•The Challenge of Business Analytics
•The Challenge from Outside
•The Challenge from Within
§Information
•The Secret of Success

BAFBAN1: Fundamentals of Business Analytics
Course Overview

Course Description
The course provides students with an overview of the current trends
in information technology that drives today’s business. The course
will provide understanding on data management techniques that
can help an organization to achieve its business goals and address
operational challenges. This will also introduce different tools and
methods used in business analytics to provide the students with
opportunities to apply these techniques in simulations in a
computer laboratory.

Course Objectives
The course will enable the student to:
§Describe the various sources of data (structured, unstructured) and the
concept of data management
§Describe the importance of data, how data can be used by an
organization towards competitive advantage, and how it enables
organizations to make quicker and better business decisions
§Describe basics of business intelligence including data gathering, data
storing, data analyzing and providing access to data
§Describe how statistical analysis can help to better understand past
events and predict future events
§Understand the fundamentals of project risk management, various
methods used for effort and cost estimation, various phases within a
project, dependencies and critical path
§Describe various database models like the hierarchical database model
and network model

Learning Outcomes
Upon completion of this course, the student should be able to:
§Understand data management concepts and criticality of data
availability in order to make reliable business decisions
§Demonstrate understanding of business intelligence including the
importance of data gathering, data storing, data analyzing and
accessing data
§Describe where to look for data in an organization and create
required reports
§Perform high-quality tasks required by the organization in
particular, and the industry in general

Course Modules
§Module 1: Analytics in Practice
In this module, the concept of analytics is introduced. The business
reasons behind undertaking an analytics initiative are outlined. What
challenges business users face today, what are the trends in analytics, and
what factors are important to put analytics in practice are explained.
§Module 2: Overview of Data Mining and Analytics
In this module, the basics of data mining and analytics are touched upon.
The foundational techniques of analytics are explained at length. This
module also covers the scope of analytics and next generation analytics
techniques with examples and case studies.

Course Modules (continued)
§Module 3: Effective Decision Making and Analytics
This module aims at establishing the role of analytics in effective decision
making. Various approaches to analytics are also explained with a realistic
point of view on how to identify analytics opportunities through inside-out
and outside-in concepts.
§Module 4: Implementing Analytics Solutions
This module provides a step-by-step approach to the implementation of
analytics solutions. There are also several best practices discussed
providing invaluable tips and tricks to the students.
§Module 5: Putting It Together—Integrated View of Customers
This module provides a perspective of the customer life-cycle value chain,
how it influences and impacts business performance, and how we bring in
analytics to understand the customer better.

Readings
Davenport, T. , Harris, J. and Morison, R. (2010). Analytics at Work:

Smarter Decisions, Better Results. Harvard Business School
Publishing.
Isson, J. and Harriot, J. (2013). Win with Advanced Business
Analytics. John Wiley & Sons.
Stubbs, E. (2011). The Value of Business Analytics: Identifying the
Path to Profitability. John Wiley & Sons.
Mohanty, S. (2011). Analytics in Practice. McGraw-Hill Education
India.
What do we mean by Analytics?

What do we mean by Analytics? [1]
Three types of analytics
Descriptive analytics answers

Descriptive
the questions what happened
Analytics
and why it happen
Predictive analytics answers

Predictive Analytics
the question what will happen
Prescriptive analytics anticipates

Prescriptive what will happen, when it will
Analytics happen, and also why it will happen

What do we mean by Analytics? [1] (continued)
Predictive analytics
Prescriptive analytics
Descriptive analytics
All product and company names are trademarks™ or registered® trademarks of their respective holders. Use of them does
not imply any affiliation with or endorsement by them

Provides and
Data Analyze Generate
(Descriptive
Model) Reports
Smart Decisions
Process involved using Descriptive Analytics.

§Descriptive analytics answers the questions what happened and why it happened.
§A sample picture shows data of the context of the source data Course Pro Campaign
used in a report.

Provides
Data Analyze Predictions and
(Predictive Forecasting
Model)
Smart Decisions
Process involved using Predictive

Analytics.
§Predictive analytics answers the question what will happen, A sample picture shows
predictive analytics workbench. A predictive analytics workbench allows a user to create,
validate, manage, and deploy predictive analytic models. A predictive analytics workbench
consists of these components [4]
Predictive
Analytics

Provides ,Generate
Recommendation
Data Analyze using Mathematical
(Prescriptive
Algorithms
Model)
Smart Decisions
Process involved using Prescriptive

Analytics.

§Prescriptive analytics not only anticipates what will happen and when it will
happen. but also why it will happen. Prescriptive analytics software has the potential to
help during each phase of the oil and gas business through its ability to take in seismic
data, well log data, and their related data sets to prescribe where to drill, how to drill there
and how to minimize the environmental impact.
Prescriptive
Analytics

Analytics in Practice
What Kinds of Questions Can Analytics Answer?

What Kinds of Questions Can Analytics Answer? [1]
Figure 1-1 Degree of Complexity

Analytics in Practice

Analytics in Practice: What It Means[3]
Analytics is defined as the extensive use of data, statistical and quantitative
analyses, explanatory and predictive modeling, and fact-based management
to drive decision making.
§Analytics is all about providing business users with better insights, particularly from
operational data stored in transactional systems.
§Fortunately, data mining, analytic applications, and business intelligence systems are
now being better integrated with transactional systems.

Business Users and Their Challenges[3]
§The following challenges highlight characteristics of this gap:
•The time to perform the overall cycle of collecting, analyzing, and acting on enterprise
data must be reduced.
•Clear business goals and metrics must be defined.
•Analytics results must be distributed to a wider audience.
•Data must be integrated from multiple sources.
•Acceptance criteria of the analysis models must be clearly stated.

Trends in Business Analytics[3]
Verticalization
•Analytics solutions are becoming increasingly focused on industry specific problem
solving.
Comprehensive Models and Transformations for Insight

•Rich visualization functionalities that show only a few and the most important attributes.

Why It's Time to Put Analytics to Work

Why It's Time to Put Analytics to Work [1]
Most companies today have massive amounts of data at their disposal. We can see this by
just accessing the net, social media and other surveys out there holds a very vast amount
of Data. On the next slide we will cite a sample analytics at work
All product and company names are trademarks™ or registered® trademarks of their respective holders. Use of them does not imply any affiliation
with or endorsement by them

Why It's Time to Put Analytics to Work [1] (continued)
Managers we interviewed at a retail grocery chain confessed to this deficiency
when we asked them what they did with their data. One manager said,
We store it on a disk,
then we put it on tape, What else do
Well, we sell it. In fact, then we store it under a you do with it?
we make more money mountain so that it’s safe
selling data to retail data from nuclear attack.
syndication firms than
we do selling meat. But what do
you actually do
with it to manage
Not much, your business?
That s why we
wanted to talk with
you.

Where Does Analytics Apply?

Where Does Analytics Apply? [1]
§Analytics can help to transform just about any part of your business or organization.
§Some processes and example of data analytics transformations:[5]

Where Does Analytics Apply? [1]
We can divide IT systems into transactional (OLTP) and analytical (OLAP). In
general we can assume that OLTP systems provide source data to data
warehouses, whereas OLAP systems help to analyze it.

Information: The Power of Information

THE POWER OF INFORMATION [2]
§Information has always been power,
but the past few decades have seen a
subtle shift occur, fundamentally
altering the way we perceive it.
§It has been only relatively

recently that the amount of data
available to us has outstripped
our ability to investigate that data.

Metrics and Measurements

Metrics and Measurements[6]
§Metrics will translate the business challenges into operational measures that can be monitored over time, not only
for analytics impact, but for the entire company.
§Objective means by which your company can measure progress and business analytics impact.
•Increase productivity and market share
•Increase retention and conversion rate
•Increase wallet share
•Increase customer satisfaction
•Increase average order size/number of products
•Increase average spend per customer
•Decrease operational costs
•Decrease time-to-decision
•Optimize human capital

When Is Analytics Not Practical?

When Is Analytics Not Practical? [1]
§When There's No Data.
§When There's No Precedent.
§When History Is Misleading.
§When the Decision Maker Has Considerable Experience.
§When the Variables Can't Be Measured.

Overview: The Challenges of Business Analytics

The Challenges of Business Analytics [6]
§Effective business analytics is a focus for business leaders across the globe in ever-increasing
numbers. A 2011 report by the McKinsey Global Institute projects that the United States needs 1.5
million more data-literate managers to meet the demands of the data-driven enterprise. In addition,
during IBM's 2012 IBM Partner World Conference, its CEO predicted that analytics will be the thread
that weaves together front- and back-office systems in order to give companies that harness huge
volumes of unstructured data a competitive business advantage.
§ACTIVITY: Challenge of Business Analytics.

The Challenges of Business Analytics [6] (continued)
§Must be grounded in key business questions.
§The most impact on the organization when it is forward looking—not backward looking.
§New age of business analytics requires the integration and synthesis of various
information disciplines across the organization.

Overview:
Challenges from Outside

CHALLENGES FROM OUTSIDE [6]
We see several business challenges that led up to the newfound focus on business
analytics, as well as several challenges that business analytics must rise to meet.
§Environment
§Competition
§Customers

Overview:
Challenges from Within

CHALLENGES FROM WITHIN [6]
To ensure that data being published from various systems is accurate and reliable, Here are
the challenges encountered from within
§Evolving Business Analytics
§Less Subject Matter Experts
§Internal Factors

Information:
The Secret of Success

The Secret of Success [2]
Possibly the best-guarded secret in business analytics is that in practice, they must
§Establish business analytic culture
§Understand analytics in play
§Recognize the insights as a competitive advantage.

Analytics for the Rest of Us

The Journey of a Smarter Student

Analytics for the Rest of Us [1]
§Many of our practitioners worked in companies that didn t want to become analytical competitors,
but rather wanted to move their organizations toward greater analytical maturity. They believed that
making decisions on facts and analytics was beneficial, but they didn t necessarily want to build their
companies and value propositions around doing so.
§In this module we occasionally refer to analytical competitors, such as Cincinnati Zoo , Papa Gino s ,
Kraft Vegemite, Boerse Stuttgart, Globe Telecom, University of Maryland and other business, because
they are great repositories of leading analytical practices.

For the Next Session

For the Next Sessions
§Advanced Readings
•Retail: Papa Gino s
•Consumer Products: Kraft Australia
•Media and Entertainment: Cincinnati Zoo and Botanical Gardens
•Life Sciences: Harvard Medical School

References
[1] Davenport, T., Harris, J. and Morison, R. (2007) Analytics at Work: Smarter Decisions,
Better results.
[2]: Stubbs, E. (2012) , The Value of Business Analytics: Identifying the Path to Profitability
[3] : Mohanty, S. (2012) , Analytics in Practice
[4] : Taylor, J. (2012) Decision Management Systems: A Practical guide to Using Business
Rules and Predictive Analytics
[5] : Wrembal, R. Koncilla, K. Data Warehouses and OLAP: Concepts, Architectures and
Solutions
[6] : Isson, J.P. and Harriott, J. (2012) Win with Advance Business Analytics


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© 2013 IBM Corporation

© 2013 IBM Corporation

3 © 2013 IBM Corporation

4 © 2013 IBM Corporation

5 © 2013 IBM Corporation

6 © 2013 IBM Corporation

7 © 2013 IBM Corporation

8 © 2013 IBM Corporation

9 © 2013 IBM Corporation

10 © 2013 IBM Corporation

Davenport, T. , Harris, J. and Morison, R. (2010). Analytics at Work:

What do we mean by Analytics?

20 © 2013 IBM Corporation

Descriptive analytics answers

Predictive analytics answers

Prescriptive analytics anticipates

21 © 2013 IBM Corporation

22 © 2013 IBM Corporation

Process involved using Descriptive Analytics.

23 © 2013 IBM Corporation

24 © 2013 IBM Corporation

Process involved using Predictive

26 © 2013 IBM Corporation

Process involved using Prescriptive

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28 © 2013 IBM Corporation

29 © 2013 IBM Corporation

30 © 2013 IBM Corporation

31 © 2013 IBM Corporation

32 © 2013 IBM Corporation

•Clear business goals and metrics must be defined.

•Analytics results must be distributed to a wider audience.

•Data must be integrated from multiple sources.

•Acceptance criteria of the analysis models must be clearly stated.

33 © 2013 IBM Corporation

Comprehensive Models and Transformations for Insight

34 © 2013 IBM Corporation

Why It's Time to Put Analytics to Work

35 © 2013 IBM Corporation

36 © 2013 IBM Corporation

37 © 2013 IBM Corporation

Where Does Analytics Apply?

38 © 2013 IBM Corporation

§Some processes and example of data analytics transformations:[5]

39 © 2013 IBM Corporation

40 © 2013 IBM Corporation

Information: The Power of Information

42 © 2013 IBM Corporation

§It has been only relatively

43 © 2013 IBM Corporation

Metrics and Measurements

44 © 2013 IBM Corporation

•Increase productivity and market share

•Increase retention and conversion rate

•Increase wallet share

•Increase customer satisfaction

•Increase average order size/number of products

•Increase average spend per customer

•Decrease operational costs

•Optimize human capital

45 © 2013 IBM Corporation