This is smart Analytics! This is Smart Analytics вЂў WalMart finding out what sells in a hurricane вЂў Netflix finding out what movies a customer might want to watch вЂў An investor finding out anomalies exist in the stock market in order to make a profit to his/her customers вЂў Amazon personalizing and customizing websites вЂў Sprint finding out that a customer might want to drop its service before the customer even knows it вЂў Finding the best route for a packet in a network вЂў вЂў вЂў вЂў вЂў вЂў вЂў вЂў вЂў вЂў вЂў вЂў вЂў It helps Answers Key Questions What movies (or books) customers would like to watch (or read)? What movies to order from studio and how many? Who are our best customers? When is there a flu epidemic in region in the country? Which customers are most likely not to have an accident? When a customer is likely to jump ship & go to a competitor? When should we tell a customer to quit gambling? What is the one item you want to have in your store in case of a hurricane? What is the best criteria that predicts success when hiring a new Ph.D. student to become a faculty member? What is the one thing that will improve a lawyerвЂ™s chance to win a case? What are some questions one can answer with a loyalty card? What is the number one reason for the success of baseball player? Why should you always defer to the 2nd half to get the ball in college football? Strategic factors for the use of Smart Analytics вЂў More difficult to find and sustain competitive advantages (geographical barriers gone, product differentiation reduced, etc.) вЂў Becomes increasingly more important to execute on strategy and become operationally excellent particularly in serving customers вЂў Many more business are now data-driven (virtual companies) вЂў Speed of change and risk in marketplace вЂў Evidence of success by other companies (Monkey see .. Monkey do) Smart Analytics to the Rescue But really what is this Smart Analytics? вЂў Well academicians will say that Smart Analytics is the process of collecting and analyzing data in order to make better business decisions, develop better products and serve the customers better. Smart Analytics is: вЂў It is providing the right information at the right time to enable managers to make informed business decisions вЂў It fact-based rather than gut based decision making You might be asking though вЂў HavenвЂ™t we always done made decisions based on data? The answer is: вЂў Yes and no! вЂ“ Yes, we are deploying process analytics to manage some of our manufacturing facilities вЂ“ Yes, we are using basic data analytics in marketing вЂ“ No, we have not used it as a strategic weapon Let me show you what I mean вЂў MONEYBALL So in Baseball вЂў we have always used stats to manage the game вЂ“ RBI вЂ“ HR вЂ“ Fielding errors per game вЂ“ Batting averages vs. right or left handers вЂў But what was missed is the one measure that was most correlated with winning b-games So what we have to do is identify the key performance measures that directly affect our strategic objectives, track them and identify those factors that affect them using statistics and other quantitative techniques But why NOW? Why is analytics becoming more important now? вЂў Much more operational data is being created and captured because of the use of technology (structured) вЂ“ Enterprise software вЂ“ ERP вЂ“ CRM вЂ“ SCM вЂў Much more unstructured data is being captured and stored (social media data) вЂ“ Facebook вЂ“ Twitter вЂў Much more unstructured data being captured вЂ“ Web transactions вЂ“ Smart objects Data Overload Data Storage Terminology How Smart Analytics works! Strategic use of Analytics вЂў вЂў вЂў вЂў Strategic Employee Questions Strategic Product Questions Strategic Financial Questions Strategic Customer Questions Strategic Employee Questions вЂў Who are the most productive salespeople, employee? вЂў Who have the right skills for the next key product line? вЂў Which employees have the strongest customer relationships? вЂў Which managers have the highest retention rates? What do they do? вЂў Which hires work out the best (faculty)? вЂў What is our retention rate? Why do people leave? вЂў What is the cost of turnover? вЂў Why do people join the organization? Strategic Product Questions вЂў What are our most/least profitable products? вЂў What are our production costs & how can we lower them? вЂў What is our quality level & how can we improve that (Fed Ex)? вЂў What is our cycle time & how can we lower it? вЂў What are the sources of product innovation? вЂў What impacts the demand of our product? Strategic Financial Questions вЂў How accurate are the financial forecasts? вЂў How much financial data is used to answer business decisions? вЂў What items are affecting our margins the most (Wal-Mart)? Strategic Customer Questions вЂў вЂў вЂў вЂў вЂў Who are the most/least profitable customers? Who are the most/least satisfied customers? What is fastest/slowest customer segment? What type of ads bring most customers? What is our customer experience like & how can we improve it? вЂў What is the cost of customer acquisition? вЂў What are the reasons for losing customer? вЂў What are the costs of customer transactions? Has this technique been successful elsewhere? вЂў вЂў вЂў вЂў вЂў вЂў вЂў вЂў Revenue Management (airlines, hotels) Logistics (UPS) Customer turnover (Sprint) Customer service (Hannah Casino) Pricing (insurance) Trading (financial institution) Product selection (pharmaceutical companies) Employee performance (baseball) Dangers in Analytics вЂў вЂў вЂў вЂў вЂў Privacy Security Drawing decisions on incomplete data Drawing decisions on inaccurate data Using only data that supports our gut decisions вЂў Drawing the wrong conclusion from the data вЂ“ Stock prices example Analytic Tools вЂў вЂў вЂў вЂў вЂў вЂў вЂў вЂў вЂў Data mining Statistical analysis Predictive analysis Correlation Regression Forecasting Process Modeling Optimization Simulation What it takes to succeed using this technique? вЂў Your (Top brass) support and commitment and desire to implement findings вЂў Collecting the right data (historical perspective) вЂў Developing a Data Warehouse (all data in one place вЂў Having a staff to analyze the data вЂў Managers that understand the business & embrace managing by the numbers Managing using Analytics вЂў The success of analytics can only be measured in terms of how well they help the firm achieve their strategic objectives вЂў So a managers role is to: вЂ“ Identify business goals вЂ“ Find the matrices that are correlated with achieving the business goals вЂ“ Collect the data necessary to measure performance towards goals вЂ“ Analyze the data вЂ“ Establish weights for the each matrix element вЂ“ Draw conclusion based on the information generated Where do we go from here?