Introduction

Jan 23, 2022

Data Analysis vs Data Analytics

Data Analytics is the transformation of:

Data
Creation of data from operational
and/or transactional sources

Information ● Data Warehousing

Consolidation of relevant data to a
● Business
single repository to answer what
Intelligence
happened
● Descriptive
Analytics

Insights ● Diagnostic
Finding patterns to answer why it
Analytics
happened and what could likely
● Predictive
happen next
Analytics

Imperatives (or ● Prescriptive

Development of various options to
Actionable Insights) Analytics
suggest what should be done next

Data Analysis is subcomponent of Data Analytics

Data Analysis answers the question, "What happened?" For a detailed examination
or a thorough study to take place, the data must exist and occur in the past. Data
Analysis is, therefore, a look back on past events.

Business Analysis vs Business Analytics

Business Analysis
Business Analysis is the practice of enabling change in an organizational context, by
defining needs and recommending solutions that deliver value to stakeholders.

Business Analytics
Business Analytics is a subcomponent of Business Analysis in that it enables change
in an organization through data.

Change in an organization can also come through:

● understanding end-user needs via User Experience (UX)

● deploying new technology via Systems Analysis (SA)
● process efficiencies and, possibly, automation via Robotic Process
Automation (RPA)

Business Analytics Life Cycle

The BA Model

Case Study
How to Make an Information Strategy Roadmap for a Radio Station
Pay attention to the following:

● Overall Strategic Targets of the Business

● Functional Strategy and Business Case
● Business Processes and Actions
● Analytical Processes and Front Ends
● Data Warehouse
● Data Sources: IT Operations and Development
● Evaluation of the Business Analytics Process

Maturity Models

A Maturity Model is a tool to assess your organization’s process capability in a

specific domain. It is typically divided into levels or stages. The idea is that you
cannot move to a higher stage until you have comprehensively met the
requirements of all stages below. The goal is to achieve the highest step.

The idea of a Maturity Model is nothing new. One of the earliest maturity models
developed, was in conjunction with the U.S. Department of Defense: the Capability
Maturity Model (CMM (1)), which focused on improving the software development
process. Carnegie Mellon University now administers and markets CMMI (2)
(Capability Maturity Model Integration) which is a process improvement training and
appraisal program.
 (1) The Capability Maturity Model (CMM) is a development model created in 1986
after a study of data collected from organizations that contracted with the
U.S. Department of Defense, who funded the research. The term "maturity"
relates to the degree of formality and optimization of processes, from ad hoc
practices, to formally defined steps, to managed result metrics, to active
optimization of the processes.
The model's aim is to improve existing software development processes, but
it can also be applied to other processes.

(2) Capability Maturity Model Integration (CMMI) helps organizations quickly

understand their current level of capability and performance in the context of
their own business objectives and compared to similar organizations.

Improve Business Performance

Business goals are tied directly to operations in order to drive measurable,
improved performance against time, quality, budget, customer satisfaction
and other key drivers.

Build Agile Resiliency and Scale

Direct guidance on how to strengthen agile with Scrum project processes
with a focus on performance.

Increase Value of Benchmarking

The performance-oriented appraisal method improves reliability and
consistency of benchmarks while reducing preparation time and lifecycle
costs.

Accelerate Adoption
Online access and adoption guidance make the benefits of CMMI more
accessible than ever.

The Analytical DELTA

DELTA refers to the five success factors for a successful analytics program/project in
an organization:

D for accessible, high quality data

E for (analytics coordinated in) an enterprise orientation
L for analytical leadership (understands the importance of analytics and advocates
their use in decision and actions)
T for strategic targets (organizational targets that will be the core of an analytics
roadmap)
A for (nurturing) analysts

Using the DELTA model, you can check if you have all the success factors in place in
equal strength before embarking upon an analytics project or program.

When these elements work together then you encounter fewer roadblocks to
success as a missing or a weak element will cause delay and wasted effort.

NOTE: There are many more variations that may be more comprehensive but these
are the basics.

The Analytical DELTA + TA

T for technologies (supporting analytics across the organization)

A for analytical techniques (ranging from descriptive statistics to machine learning)

Strategies of the Analytical DELTA

As enterprises of all shapes and sizes commit to harnessing the power of data and
analytics to transform all aspects of their businesses, leadership will inevitably ask
these questions:
• How good are we at using data and analytics throughout our enterprise? Are we
actually as good as we think?
• Are we ahead of or behind our nearest competitors? Are other industries ahead of
ours?
• Are we moving toward becoming an analytical competitor?
• How can we set a path forward without knowing where we stand today?

Hence, we take a look at the Stages of the Analytical DELTA. It is a gauge of an

organization's analytical competitiveness.

Stages of the Analytical DELTA

The five stages of analytics maturity were introduced in 2007 by Tom Davenport and
Jeanne Harris.

Organizations mature their analytical capabilities as they develop in the seven areas
of DELTA+TA. The maturity model helps companies measure their growth across the
DELTA+TA elements. This model enables an organization to assess which elements
are strengths and which are weaknesses.

For example, an organization may achieve a stage 4 in analytics leadership maturity,

but achieve only a stage 3 in its management and use of data. This assessment
enables targeted investment to mature analytics weaknesses based on the DELTA
Model.

(1) Stage 1: Analytically Impaired.

These companies rely primarily on gut feel to make decisions, and they have
no formal plans for becoming more analytical. They aren’t asking analytics
questions and/or they lack the data to answer them. Their leaders may be
unaware of analytics and what can be done with them.

(2) Stage 2: Localized Analytics

Analytics or reporting at these companies exist within silos. There is no
means or structure for collaborating across organizational units or functions
in the use of analytics. This often leads to “multiple versions of the truth”
across a company.

(3) Stage 3: Analytical Aspirations

These companies see the value of analytics, and intend to improve their
capabilities for generating and using them. Thus far, however, they have made
little progress in doing so.

(4) Stage 4: Analytical Companies

Companies in this category are good at multiple aspects of analytics. They are
highly data-oriented, have analytical tools and make wide use of analytics
with some coordination across the organization. However, there remains a
lack of commitment to fully compete on analytics or use them strategically.

(5) Stage 5: Analytical Competitors

These companies use analytics strategically and pervasively across the entire
enterprise. They view their analytical capabilities as a competitive weapon,
and they already see some competitive advantage resulting from analytics.

The factors described above drive the relative maturity and sophistication levels of
an organization’s approach to analytics. The table below describes typical attributes
of each DELTA+TA element for a given maturity level.
Transitions to Maturity
The next table outlines the conditions that are typically in place at each stage of
progress in building an analytics program (types of changes that typically
accompany a move from one maturity level to the next). Organizations that desire to
increase their maturity level can use this figure as a guideline for capabilities and
improvements to pursue. Of course, circumstances will vary across companies, but
these descriptions are illustrative of the most common attributes and change types.

Study this table with your current conditions and analytical ambitions in mind. What
do you need to do to leverage your strengths, shore up your weaknesses, become
more DELTA+TA ready, and increase the business impact and value of analytics?

As you consider your course of action, be sure to avoid these common pitfalls:

● Focusing too much on one dimension of analytical capability (most often

technology and data) at the expense of others
● Devoting too much time, energy and money to analytical initiatives that have
low business impact (less valuable targets - even if that’s what the business is
asking for)
● Attempting to do too much at once
Analytical DELTA Roadmap

Attribute Full-Steam Ahead Prove-It

Management Top General Manager/CEO Functional Manager
Sponsorship
Problem Set Strategic, distinctive Local, tactical, wherever there’s
capability a sponsor
Demonstrate Metrics of organizational Metrics of project benefits
Value performance to analytics (e.g., ROI, productivity gains
(e.g., revenue growth, cost savings)
profitability, shareholder
value)
Technology Enterprise-wide Proliferation of analytics tools,
integration challenges
People Centralized, highly elite, Isolated pockets of excellence
skilled
Access Embedded in process, Stand-alone or in functional
opportunity through silo
integration supply/demand
Culture Enterprise-wide, large-scale Departmental/Functional, early
change adopters

Maturing from One Stage to the Next

Jan 24, 2022

About Data
Structure. What is the nature of the data that you have: arrays, “cubes”,
non-numeric?
Uniqueness. How do you exploit data that no one else has?
Integration. How do you consolidate it from various sources?
Quality. How do you rely on it?
Access. How do you get it?
Privacy. How do you guard it?
Governance. How do you pull it all together? (Hint: you need executive decision
makers, stewards, and analytical data advocates)
Maturing Data

Stage 1 to 2
- Gain mastery over local data of importance, including building functional
data marts

Stage 2 to 3
- Build enterprise consensus around some analytical targets and their data
needs
- Build some domain data warehouses (e.g., customer) and corresponding
analytical expertise
- Motivate and reward cross-functional data contributions and management

Stage 3 to 4
- Build enterprise data warehouses (EDW) and integrate external data
- Engage senior executives in EDW plans and management
- Monitor emerging data sources

Stage 4 to 5
- Educate and engage senior executives in competitive potential of analytical
data
- Exploit unique data
- Establish strong data governance, especially stewardship
- For a Business Intelligence Competency Center (BICC) if you don’t have one
yet

About Enterprise
“The opposite of an enterprise-wide perspective isn’t a local or independent
perspective, but a fractured one. To develop an enterprise-wide view of Analytics, an
organization must do more than integrate data, combine analysts, or build a
corporate IT platform. It must eradicate all of the limited, piecemeal perspectives
harbored by managers with their own agendas, needs, and fears – and replace them
with a single, holistic view of the organization.”

Allies: one department to another → collaborate

FROM LAST WEEK
Data Analysis vs Data Analytics

Data analytics is the transformation of:

Data
- creation of data from operational and/or transactional sources

Information
- consolidation of relevant data to a single repository to answer what happened
Insights
- finding patterns to answer why is happened and what could likely to happen next
Imperatives (on actionable insights)
- development of various options to suggest what should be done next.

Data analysis
- Is a subcomponent of data analytics
- Data analytics answers the question “what happened” for a detailed
examination or a through study to take place, the data must exist and occur in
the past

Business Analysis vs. Business analytics

Business analysis
- the practice of enabling change in an organizational context, by defining
needs and recommending solutions that deliver value to stakeholders.
Business analytics
- Is a subcomponent of business analysis in that it enables change in an
organization through the use of data
- Change in an organization can also come through:
1. understanding end-user needs via User Experience (UX)
2. deploying new technology via Systems Analysis (SA)
3. process efficiencies and possibly automation via Robotic process
Automation (RPA)

Business Analytics lifecycle

Business analytics lifecycle (business analytics professional (roles in business

analytics)
1. Conception (Business analytics professional)
- Monitoring and measuring the effects of the change and planning for the next
iteration
5. Creation (IT professional, data steward)
- Creation of data from operational and/or transactional sources

4. Collection (data engineer)

- Consolidation of relevant data to a single repository to answer what
happened
3. Curation (data scientist)
- Finding patterns to answer why it happened and what could likely happen
next
2. Communication (data scientist, business analytics professional)
- Development of various options to suggest what should be done next and
selling them effectively
1. Conclusion ( decision maker)
- Deciding on a course of action, implementing it and enabling change

Business Analytics model

2. (top) management
3. Operational decision makers
4. Analysis, controllers, report developers
5. Etl developers, database specialists
6. It professionals

- Data analysis is therefore a look back on past events

And then the group work

Information Systems

Jan 27, 2022

The purpose of Information Systems

- Businesses use information systems to make sound decisions and to solve
problems
- Problem is any undesirable situation
- Decision arises when more than one solution to problem exists
- Problem solving and decision making require information
- Key to success in business are
- Gathering correct information
- Storing information
- Using information

Data, Information, and Information Systems

- “Data”, “information” and “system” are commonly used terms
- Important to understand their similarities and differences

Data vs Information
- Data: a given or fact; can be number, statement, or picture
- Information: facts or conclusions that have meaning within context;
composed of data that is manipulated

Data Manipulation
- Data is manipulated to make useful information
- Raw data is hard to read
- Survey is common method of collecting data
- Information is more useful to business than data

Information in Context
- Not all information is useful
- Useful information is relevant, complete, accurate
- Useful information is current, obtained economically (in business)
What is a System?
- System: array of components that work together to achieve goal or goals
- System accepts input, processes input, produces output
- Systems may have multiple goals
- Systems may contain subsystems
- Subsystems have sub-goals that meet main goal
- Subsystems transfer output to other subsystems
- Closed system: has no connections with other systems
- Open system: has no connections with other systems
- Often a subsystem of a bigger system
- Information system: processes data and produces information
Types of Information Systems
- Many types of information systems
- Capabilities of applications have been combined and merged
- Management Information System: supports planning, control, and making
decisions
- Transaction Processing Systems:
- Most widely used
- Records data collected at a point where the organization interacts with
other parties
- Encompasses cash registers, ATMS, purchase order systems
- Supply Chain Management Systems
- Supply chain: sequence of activities involved in producing and
delivering products
- Activities include marketing, purchasing raw materials,
manufacturing, shipping, billing, collection, and after-sale
services
- Also known as enterprise resource planning (ERP) systems
- Customer Relationship Management Systems
- Managing relations with customers
- Used in combination with telephones to provide customer service
- Often linked to web application that track online transactions
- Business intelligence systems
- Business intelligence: gather data to help organization compete
- Often contains statistical models
 - Access large pools of data
- Data warehouse: large database that usually store transactional records
- Geographic information systems
- Ties data to physical locations
- Represents data on a map in different formats
- May reflect demographic information in addition to geographic
- May use information from GPS satellites

Information Systems in Business Functions

- Functional business area: services within a company that support main
business
- Includes accounting, finance, marketing, and human resources
- Part of a larger enterprise system

Functional business areas

- Accounting
- Information systems help record transactions
- Produce periodic statements
- Create required reports for legal compliance
- Create supplemental reports for managers
- Finance
- Finance systems facilitate financial planning and business transactions
- Tasks include organizing budgets, managing cash flow, analyzing
investments, and making decisions
- Marketing
- Pinpoint likely customers and promote products
- Marketing information systems analyze demand for products in regions
and demographic groups
- Identify trends in demand for products and services
- Web provides opportunity to collect marketing data
- Human Resources
- Human resource management systems aid record-keeping
- Must keep accurate records
- Aids recruiting, selection, placement, and reward analysis
- Performance evaluation systems provide grading utilities
- Web Empowered Enterprises
- E-commerce: buying and selling goods and services through internet
- Internet is a vast network of computers connected globally
- Web has profound impact on information systems
Business Intelligence vs Business Analytics
Key differences between business intelligence and business analytics as well as inf
formation on how they work in tandem:

“The primary distinction between business intelligence and business analytics is the
focus on when events occur. Business intelligence is focused on current and past
events that are captured in the data. Business analytics is focused on what’s most
likely to happen in the future. The two practices use the same data, but the timeline
for applying the results is different.”

What is happening now and why? (Business intelligence) focuses on descriptive

analytics
What will probably happen next? (Business analytics) focuses on predictive
analytics

Jan 31, 2022

Quiz on thursday (information systems)

Business Analytics at a Strategic Model

Recall on Business Analytics Model:

Key questions:
1. How can the Business Analytics function influence the overall strategy
process in the organization
2. How does the overall business strategy subsequently influence the Business
Analytics function?

What is a strategy?
A strategy
- Is a description of the overall way in which an organization currently is, and is
to be, run
- Covers a year at a time
- Aligns the organization’s business area, resources, and activities to the
market in which the organization operates
- Attempts to handle company issues in the short run while, at the same time,
trying to create competitive advantages in the long run

Four degrees of integration

Separate: No Formal Link
- Focus is on the most visible aspect of the organization eg sales, production or
cost targets
- Business analytics, among other business units, is just a support function
- A filter exists since it is the individual process owners, on an ad-hoc basis,
and not the strategy, that defines the information to be generated
- The quality and the “value” of the Business Analytics function are measures on
how quickly a question is answered

Coordinated:
*NO NOTES*
Relationships between Strategic and Functional Level

Five Requirements for Targets

Dialogue: Supports Strategy Innovation

Holistic: Information as a Strategic Resource

Prioritizing Information
Three Paths to Market Leadership
- To succeed in the marketplace, organizations must embrace a competitive
strategy. Organizations must choose – and then achieve – market leadership
in one of the three disciplines and perform to an acceptable level in the other
two
Operational Excellence
- An operational excellence strategy aims to accomplish cost leadership
- Focus centers on automating manufacturing processes and work procedures
in order to streamline operations and reduce costs
- A strategy of operational excellence is ideal for markets where customers
value costs over choice
- Measuring the performance of key processes and benchmarking costs is an
integral part of the operation of these organization through disciplines such
as TQM, SCM, and Six Sigma

Customer Intimacy
- The customer intimacy strategy allows for the personalization of service and
the customization of products to meet differing customer needs
- Customer intimacy focuses on the needs of the individual customer
- The successful design of solutions requires vendors to possess deep
customer knowledge as well as insights into their customer’s business
processes
 - True customer intimacy can only arrive through aligning the product
development, manufacturing, administrative functions and executive focus
around the needs of the individual customer

Product Leadership
- The product leadership strategy builds a culture that continuously brings
superior products to market (innovate)
- Here product leaders achieve premium market prices thanks to the
experience they create for their customers
- Product leaders recognize that excellence in creativity, problem solving, and
teamwork is critical to their success
- Product leaders seek to leverage their expertise across geographical and
organizational boundaries by mastering such disciplines as collaboration and
knowledge management

Aligning the Business Analytics Strategy

Operational excellence
- Business analytics can provide the information and knowledge about which of
its processes to strengthen and develop in relation to its own requirements
and in relation to the strengths of the competition
Customer intimacy
- Business analytics can provide answers about how to compose and develop
individualized loyalty and income-generating customer programs
Product leadership
- Business analytics can deliver information about which products create the
business’ income as well as which product attributes it would be relevant to
develop for which customer segment

Four Key Decisions

- What is our vision
Feb 3, 2022

Business Analytics at the Functional Level

Information Requirement Analysis

- Is about identifying the information that is needed in order to operate and
manage and organization
- In so doing
Determining the information demand
Option 1: ask each business unit/department about their information requirements
- A wish list is provided
- No genuine priorities associated with the list
- No knowledge of the inherent demand in the overall organization strategy
Option 2: a group is in charge to “absorb” every written statement and “interpret”
them to deliver the information demanded by the organization
- Strategy is not well documented all the time inability to feed into the
development of the overall strategy
Option 3: develop the information in parallel with the organization strategy
- Best option
- Able to feed trends, ideas, opportunities into the top level organization
strategy
There is a need to obtain a profound understanding of the drivers for change:
- Needs and objectives
- The current situation (where are we)
- The situation being sought (where we want to be)
- The suggestions on how the gaps might be closed (how to get there)
These are achieved through a mixture of fact-finding and analysis focused on the
elements of the business and technical environments

The Rockart Model

Critical success factors
Lead and lag information: things you look at beforehand; review information and
events that have already happened
Critical Success Factors (CFS) Analysis
- CSF Analysis used for the purpose of interpreting the business objectives,
strategy, and operational activities in terms of key information needs of the
organization.
It is an effective technique in:
- Getting senior management involvement in information strategy planning
because it is wholly rooted in business issues
- Getting seniors management commitment to proposed information strategy
actions that contribute achievements in critical areas

Relationships between strategic level and functional level

The Rockart Model

Example:
The Stairway Chart: Lead and Lag Information
A lag indicator without a lead indicator will give no indication as to how a result wil
be achieved and provide no early warnings about tracking towards a strategic goal

A lead indicator without a lag indicator may make you feel good about keeping busy
with a lot of activities but it will not provide confirmation that a business result has
been achieved.

Competitive Advantage at the Functional Level

Strategy and operations with significant analytical potential

Operational processes with significant analytical potential

Key Take-Away Points
- An information strategy will only be effective when senior management is
involved in its planning and is committed to its actions
- The Rockart Model allows for the linking of an organization’s overall
objectives with the information requirements through the identification of
critical success factors
- In much the same way a Balanced Scorecard requires “balance” of measures
across organizational disciplines, so a “balance” of lead and lag indicators is
required to ensure the right activities are in place to ensure the right
outcomes

Feb 8, 2022

Business Analytics at the Analytical Level

Dialogue between the company and the analyst

- Overview of the types of information and knowledge the company can ask for
- Provides an understanding for the analyst of how the analytical method is
prepared and from which data
Outline of a specification of requirements – things to be covered in the dialogue

Data - carrier of information; it is often to specific to be useful to us as decision

support
- Ex: “bread”, “10.5”
Information - data that is aggregated to a level where it makes sense for decision
support
- Ex: “sales of bread in the last 3 months were $18,000, $23,000, and $19,000”
Knowledge - information that has been analyzed and interpreted
- Ex: “why bread sales have fluctuated in the past three months?”

Analyst’s Role in the BA Model

Importance of a balanced perspective and information strategy

Technical-oriented POV = “Data warehouse with a life of its own”

Symptoms
- Large volumes of poor quality/irrelevant data (investment is actually a cost)
- At the operational level - delivery of not user-friendly front ends
- Reluctance in the use of Data Warehouse Information which leads to further
fragmentation of data that feeds this loop
Importance of an information strategy to ensure coordination and future planning
between the business and data warehouse
Three Requirements the Analysts Must Meet
1. Business competencies (understanding how the business works)
a. Understand the business process
b. How the delivered information or delivered knowledge is value-adding
at a strategic level
c. Conveying the business potential suing the information as a
competitive parameter
d. Fundamental business insight to the deliveries to be made - to
maximize value creation
e. Independently optimize information/knowledge to give the best
possible decision support
f. Capable of continual dialogue with the business
g. Detecting and creating synergies across function
h. See their function in the bigger context
2. Method competencies: a tool kit that is in order
a. Statistics
b. Data visualization
c. Deliver more than information in a model and analyze the information
to ensure that relevant knowledge is obtained
d. Ensuring that users of the information derive the right knowledge from
it
e. Basic knowledge on which test to use when and be able to draw the
right conclusions from the test
f. Flexible to learn/test software packages and be able to recommend to
purchase or relay whether it integrates well with other software that
the company uses
3. Data competencies: technical understanding
a. Understanding of how to retrieve and process data
b. How to structure processes
c. Data warehouse competencies

More importantly…
The ability to listen and to convince
- Necessary if a task is to be understood, discussed with all parties involved,
and delivered in a way that makes a difference
Note, however, that these personal and professional skills do not necessarily need to
be encompassed in a single person; they just need to be represented in the
organization and linked when required
Analytical Methods (information domains)
The analytical function must possess methodical competencies to prevent loss of
information
- Occurs when the accessible data in a data warehouse, provided it is retrieved
and analyzed in an optimum way, has the potential of delivering business
support of a certain quality, but cannot because this quality is compromised
- Likely due to failure to collect the right information, which might, in
turn, be due to lack of knowledge of how to retrieve it
- Analyst not having the necessary tool kit in terms of methodology

How to select the analytical method

Strategy Mapping process

The Three Imperatives

The following 3 points can be useful in selecting the relevant method:

Question 1: what kind of competencies are needed? Data manager/Report

developer?

Question 2: Are hypothesis-driven analytics required?

Question 3: requires a large number of variables

Question 1:
- Analytical competencies: knowledge about statistical, exploratory data
mining, and operations research competencies with the objective of
generating knowledge and information
- Data manager or report developer competencies: ability to retrieve and
present the right information in list or table form (retrieving and presenting
the right information in the right way) but leaves interpretation to the users

Question 2:
- Hypothesis-driven analytics = statistical method domain (note: descriptive
statistics, means, min/max, std. Dev are within the data manager domain)
- Primary purpose is to create knowledge about correlations between different
factors (preferred to describe correlations of data in pairs)
 - Data-driven methods also have the purpose of creating knowledge about
some general correlations but are focused more strongly on creating models
for specific decision support at the customer or subscriber level
- (does not include descriptive statistics)
- Null and alternative hypothesis

Question 3:
- Describing a variable via a model
- Ex 1: is it a fraudulent claim (insurance)? – can train a model to look at variables
that might describe factors to help understand fraudulent claims
- Ex 2: target variable = price of a house; determinant variables = location, size,
when it was built, environment, etc.

Three Types of Reporting

1. Ad Hoc Reports - generated for a particular query when required (pag hiningi)
2. Manual updates reports – usually used in connection with projects and have a
limited lifetime; chosen as a solution because of ever-changing
requirements/changing dimensions or due to poor data quality that needs to
be manually sorted each time; company might not be able to deliver the
report periodically
3. Automated Reports
a. On demand – delivered in connection with data having access to a
multitude of information that is updated regularly
b. Event driven – similar to on-demand reports but differs in that they
remind users when to read them (i.e. when critical value is exceeded in
data)

Visual graphic on how reports flow

Feb 10, 2022

Types of research
1. Descriptive sciences: observe, describe and categorize the facts
2. Discovery science: measure variables to decide general patterns based on
inductive reasoning
3. Hypothesis-driven science: make a hypothesis and the n test the hypothesis
using deductive reasoning
4. Engineering science: use of theories and technologies to solve real world
problems

Descriptive Science
- Fishing expeditions / pattern recognition / descriptive science is just
information gathering, may not be a scientific method
- It can be an integral part of hypothesis formation, but it is open to the
criticism (KULANG)

Inductive vs deductive reasoning

- Inductive reasoning: goes from specific to general
- Deductive reasoning: goes from general to specific
 -

Hypothesis driven science

- Driven by deductive reasoning
- Involves statistical tests to examine the relationship between some variables
- Involves identifying variables to be included in the analysis as well as which
relations between variables that makes sense to terst
- Search for patterns (exploratory data anlaysis) - develop foundation for
hypotheses
- Prove or disprove assertions
- Once the results of the hypothesis are known, answer “why?”

Hypothesis driven approach

- What is a good hypothesis

- Based on observations, inferences and previous knowledge
- Is a predictable or logical conclusion/result
- Is testable
 - Found to be right or wrong at the end of investigation

Tests with several input values

- There are tests that can handle several input variables at a time
- Can reveal synergies between the input variables
- Ex: a company is thinking of changing its prices for a product in tandem with a
change in sales campaign. Both actions have a positive impact on sales but
there is supposedly a cumulative effect in undertaking the two initiatives at
the same time
- Methods: linear regression analysis, forecasting techniques

Data Mining with target variables

- Reveals correlations and patterns in data by means of predictive techniques
- These correlations and patterns are critical to decision-making because they
disclose areas for process improvement
- Data mining is a data-driven process
- It’s essential to have specialized data mining software that is managed by
analysts rather than conventional data warehouse people

Three steps of a data mining process

Data Mining algorithms

There are many different models that can be suitable to a certain degree for a certain
data set → check several different models and pick the one with the least error
Check if it is still relevant to the new data set or new data that would come in the
future

Explorative methods

Data Reduction
Cluster Analysis

Cross-sell models
Up-sell models

Business Requirements
 - A kind of interpreting and communicating task that is a substantial part of an
analyst’s tool kit
- It’s a “shelf product” in most large consultancy firms

Definition of the overall problem

Definition of delivery
How do you disseminate them

You always have to rethink your approach in terms of delivery in order to drive points
more effectively

Definition of content
What you are delivering in your reports
Cornerstone is data quality
Key points

Quiz on Tuesday (Feb 17)

Feb 15, 2022

Business Analytics at the Data Warehouse Level

Big Data
3 V’s
- High VOLUMES of data
- High VARIABILITY of data types
- High VELOCITY in data generation

Data Problems:
- Multiple data systems → data-driven optimization per process (not across the
full value chain)
- Low data quality → reluctance to trust and use the data

Data Warehouse
Benefits of data warehousing
1. Better business analytics: with data warehousing, decision-makers have
access to data from multiple sources and no longer have to make decisions
based on incomplete information
2. Faster queries: data warehouses are built specifically for fast data retrieval
and analytics. With a DW, you can very rapidly query large amounts of
consolidated data with little to no support from IT
3. Improved data quality: before being loaded into the DW, data cleansing cases
are created by the system and entered in a worklist for further processing,
ensuring data is transformed into a consistent format to support analytics –
and decisions – based on high quality, accurate data
4. Historical insight: by storing rich historical data, a data warehouse lets
decision-makers learn from past trends and challenges, make predictions,
and drive continuous business improvement.

What can a data warehouse store?

- When data warehouses first became popular in the late 1980s, they were
designed to store information about people, products, and transactions. This
data – called structured data – was neatly organized and formatted for easy
access. However, businesses soon wanted to store, retrieve, and analyze
unstructured data – such as documents, images, videos, emails, social media
posts, and raw data from machine sensors.
- A modern data warehouse can accommodate both structured and
unstructured data. By merging these data types and breaking down silos
 between the two businesses can get a complete, comprehensive picture for
the most valuable insights.

Distinction
Data warehouse vs database
Databases and data warehouses are both data storage systems; however, they serve
different purposes. A database stores data usually for a particular business area. A
data warehouse stores current and historical data for the entire business and feeds
business intelligence and analytics. Data warehouses use a database server to pull in
data from an organization’s databases and have additional functionalities for data
modeling, data lifecycle management, data source integration, and more.

Data warehouse vs data lake

Both data warehouses and data lakes are used for storing Big Data, but they are very
different storage systems. A data warehouse stores data that has been formatted or
which has not yet been defined. Data warehouses and lakes often complement each
other. For example, when raw data stored in a lake is needed to answer a business
question, it can be extracted, cleaned, transformed, and used in a data warehouse
for analysis. The volume of data, database performance, and storage pricing play an
important role in helping you choose the right storage solution.

Data warehouse vs data mart

A data mart is a subsection of a data warehouse, partitioned specifically for a
department or line of business – like sales, marketing, or finance. Some data marts
are created for standalone operational purposes as well. While a data warehouse
serves as the central data store for an entire company, a data mart serves relevant
data to a select group of users. This simplifies data access, speeds up analysis, and
gives them control over their own data. Multiple data marts are often deployed
within a data warehouse.
Key components of a data warehouse
1. Central database: a database serves as the foundation of your data
warehouse. Traditionally, these have been standard relational databases
running on premise or in the cloud. But because of Big Data, the need for true,
real-time performance, and a drastic reduction in the cost of RAM, in-memory
databases are rapidly gaining in popularity
2. Data integration: data is pulled from source systems and modified to align the
information for rapid analytical consumption using a variety of data
integration approaches such as ETL (extract, transform, load) and ELT as well
as real-time data replication, bulk-load processing, data transformation, and
data quality and enrichment services
3. Metadata: Metadata is data about your data. It specifies the source, usage,
values and other features of datasets in your data warehouse. There is
business metadata, which adds context to your data, and technical metadata,
which describes how to access data – including where it resides and how it is
structured.
4. Data warehouse access tools: access tools allow users to interact with the
data in your data warehouse. Examples of access tools: query and reporting
tools, application development tools, data mining tools, and OLAP tools.
Data Warehouse Architecture

Data layer: data is extracted from your sources and then transformed and loaded
into the bottom tier using ETL tools. The bottom tier consists of your database
server, data marts, integration tools, like data virtualization, are used to seamlessly
combine and aggregate data.
Semantics layer: in the middle tier, online analytical processing (OLAP) and online
transactional processing (OLTP) servers restructure the data for fast, complex
queries and analytics.
Analytics layer: the top tier is the front-end client layer. It holds the data warehouse
access tools that let users interact with data, create dashboards and reports,
monitor KPIs, mine and analyze data, build apps, and more. This tier often includes a
workbench or sandbox area for data exploration and new data model development.

Data warehouses have been designed to support decision making and have been
primarily built and maintained by IT teams, but over the past few years they have
evolved to empower business users – reducing their reliance on IT to get access to
the data and derive actionable insights. A few key data warehousing capabilities that
have empowered business users are:
1. The semantic or business layer that provides natural language phrases and
allows everyone to instantly understand data, define relationships between
elements in the data model, and enrich data fields with new business
information
 2. Virtual workspaces allow teams to bring data models and connections into
one secured and governed place supporting better collaborating with
colleagues through one common space and one common data set.
3. Cloud has further improved decision making by globally empowering
employees with a rich set of tools and features to easily perform data analysis
tasks. They can connect new apps and data sources without much IT support

Data Warehousing Best Practices

When you build a new data warehouse or add new applications to an existing
warehouse, there are proven steps for achieving your goals while saving time and
money. Some are focused on your business use, and other practices are part of your
overall IT program. The following list is a good starting point, and you will pick up
additional best practices as you work with your technology and services partners.

Business Best Practices

1. Define the information you require. Once you have a good understanding of
your initial needs, you can find the data sources to support them. Often, trade
groups, customers, and suppliers will have data recommendations for you.
2. Document the location, structure, and quality of your current data. Then, you
can identify data gaps and business rules for transforming the data to meet
your warehouse requirements.
3. Build a team. This includes executive sponsors, managers, and staff who will
be using and providing the information. For example, identify the standard
reporting and KPIs they need to do their jobs.
4. Prioritize your data warehouse applications. Pick one or two pilot projects
that have reasonable requirements and good business value.
5. Pick a strong data warehouse technology partner. They must have the
implementation services and experience needed for your projects. Make sure
that they support your deployment needs, including both cloud services and
on-premise options.
6. Develop a good project plan. Work with your team on a realistic blueprint and
schedule that supports communications and status reporting.

Technical Best Practices

1. Monitor performance and security. The information in your data warehouse is
valuable, though it must be readily accessible to provide value to the
organization. Monitor system usage carefully to ensure that performance
levels are high.
2. Maintain data quality standards, metadata, structure, and governance. New
sources of valuable data are becoming available routinely, but they require
 consistent management as part of a data warehouse. Follow procedures for
data cleaning, defining metadata, and meeting governance standards.
3. Provide an agile architecture. As your corporate and business unit usage
increases, you will discover a wide range of data mart and warehouse needs. A
flexible platform will support them far better than a limited, restrictive
product.
4. Automate processes such as maintenance. In addition to adding value to
business intelligence, machine learning can automate data warehouse
technical management functions to maintain speed and reduce operating
costs.
5. Use the cloud strategically. Business units and departments have different
deployment needs. Use on-premise systems when required, and capitalize on
cloud data warehouses for scalability, reduced cost, and phone and tablet
access.

Feb 22, 2022

Business Analytics: A Business’ Collection of Data Sources

You cannot be analytical without data, and you can’t be really good at Analytics
without really good data.
Revisiting “D” in the Analytical DELTA

Key components of data management

1. Structure. What is the nature of the data that you have: arrays, “cubes”,
non-numeric?
2. Uniqueness. How do you exploit data that no one else has?
3. Integration. How do you consolidate it from various sources?
4. Quality. How do you rely on it?
5. Access. How do you get it?
6. Privacy. How do you guard it?
7. Governance. How do you pull it all together? (Hint: you need executive
decision makers, stewards, and analytical data advocates.)

Data in the Maturity Model

1. Inconsistent, poor quality, and unstandardized data; difficult to do substantial
analysis; no groups with strong data orientation
2. Standardize and structured data mostly in functional or process silos; senior
executives do not discuss data management
3. Key data domains identified and central data repositories created
4. Integrated, accurate, common data in central repositories; data still mainly an
IT matter, little unique data
5. Relentless search for new data and metrics leveraging structures and
unstructured data (e.g. text, video); data viewed as a strategic asset

Data through the stages

Stage 1-2: Gain mastery over local data of importance, including building functional
data marts.
Stage 2-3: Build enterprise consensus around some analytical targets and their data
needs. Build some domain data warehouses (e.g. customer) and corresponding
analytical expertise. Motivate and reward cross-functional data contributions and
management
Stage 3-4: build enterprise data warehouses (EDW) and integrate external data.
Engage senior executives in EDW plans and management. Monitor emerging data
sources.
Stage 4-5: educate and engage senior executives in the competitive potential of
analytical data. Exploit unique data. Establish strong data governance, especially
stewardship. Form a Business Analytic Competency Center (BACC) if you don’t have
one yet.
Aligning Business Strategy with Information Sets

Market Positioning and Information Sets

Operational Excellence: business analytics can provide the information and
knowledge about which of its processes to strengthen and develop in relation to its
own requirements and in relation to the strengths of the competition
- Internet of things
- Reminder systems
- Business information
- Web logs
- Human capital management systems
- Product information
- Accumulation of KPIs
- ERP systems

Customer Intimacy: business analytics can provide answers about how to compose
and develop individualized loyalty and income-generating customer programs
- Billing systems
- Social media
- Geo data
- Reminder systems
- Debt collection systems
- CRM systems
- Campaign history
- Web logs

Product leadership: business analytics can deliver information about which

products create the business’ income as well as which product attributes it would
be relevant to develop for which customer segment
- Billing systems
- Social media
- Geo data
- CRM systems
- ERP systems
- SCM systems
- Product and consumption information
Data as an Enterprise Asset

“Organizations that do not understand the overwhelming importance of managing

data and information as as tangible assets in the new economy will not survive”
-Tom Peters Author, “In Search of Excellence”

RadioShack has reached agreement with US states over the sale of customer data.
RadioShack offered 67 million complete customer names and physical address files,
of which around 8.3 million records also included an email address.

LinkedIn Value per customer: with a sale price of US$26.2 billion and some 433
million users, a coarse measure of value is US$59.14 per user

So, even if accountants don’t recognize the value of your information, investors are
starting to. Gartner predicts by 2020, 80% of equity analysts will include corporate
information valuation methods in assessing your business’ overall market value.

The CEO Checklist for Data Assets

- Do you know what data resources are available in your organization?
- Who owns them? Who can change them?
- Are they secure for those with a need-to-know, both internally and
externally?
 - Can they be accessed either directly or through your network?
- Is there a central repository for all of these data resources?
- Who controls that?
- Is there a semantic map describing the data in such a way that those who
could benefit from it understand what is available?
- Do you know what “models” are used and by whom to add meaning to the
data?
- Who owns them? Who can change them? Are they even documented?
- Are they in the central repository as well?
- Have you mandated a semantic reconciliation of all the data with a CDO in
charge?
- Does your CDO update you on the ongoing status of the assets they are
responsible for and of any issues that might prevent progress?
- Are you aware of external data sources that might be helpful? If not, is your
CDO tasked with always searching them out?
- Do you regularly poll your business users to understand how well they are
doing in leveraging the corporate data assets?
- Are they able to be self-service or bottlenecked by needing heavy IT
involvement?

Introducing Infonomics

Information warrants its own strategy to ensure its economic benefits are fully
maximized. Infonomics, the theory, study, and discipline of asserting economic
significance to information can provide a framework to apply both economic and
asset management principles and practices to the valuation, handling and
deployment of information assets.

Why do WeQuantify the Value of Information

- Create a supplemental revenue stream or new line of business
- Barter for goods/services at discount or with favorable terms and conditions
- Compel enterprise information management/governance improvements
- Defray costs of enterprise information management and business analytics
- Impress investors; improve market-to-book corporate valuations
- Enable competitive differentiation
- Strengthen partner, supplier, and customer relationships

Three degrees of Information Value

*Realized, Probable, Potential

How can measuring information’s value help close these gaps?

The Garter Information Valuation Models

*Foundational Measures, Financial Measures

Foundational Measures
- Intrinsic Value of Information (IVI)
- Looks at the characteristics of the data itself
- Quantifies data quality by breaking it into characteristics such as
accuracy, accessibility and completeness
- Business Value of Information (BVI)
 - Looks at the impact that data has
- Measures data characteristics in relation to one or more business
processes
- Performance Value of Information (PVI)
- Looks at the feedback loop that the data provides
- Measures the data’s impact on one or more KPIs over time

Financial Measures
- Cost of value information (CVI)
- Looks at the cost to acquire data, the cost to replace it, and the cost to
run it
- Measures lost revenue and how much it would cost to re-acquire the
data
- Market value of information (MVI)
- Looks at the value of the data if it is sold or traded
- Measures revenue generated by selling, renting, or bartering corporate
data
- Economic Value of Information (EVI)
- Looks at the overall financial impact of that data to the organization
- Measures how an information asset contributes to the revenue of an
organization

Using Models in Combination

- Investment
- Prioritize and fund information management initiatives for information
assets with low intrinsic value and high business value

-
- Governance
- Gauge how improving data quality metrics (intrinsic value) affects key
performance indicators
 -
- Innovation/DIgital
- Identify information with high potential business relevance that could
be driving more economic benefits

-
- Monetize/Analytics
- Determine the market ability of information assets, i.e., those with high
quality, low cost and high external business relevancy
 -
- Enhanced Value
- Determine how much additional economic value can be achieved by
monetizing information assets

-
- Life Cycle Expense
- Dispose off information that costs more to capture and retain than its
economic benefits

Measuring Information Value

 1. Inventory of your information assets
2. Treat information as an asset – connect, not collect
3. Adapt high-value monetization ideas from other industries
4. Focus on the desired business outcomes
5. Evaluate both direct and indirect monetizing
6. Test ideas for feasibility
7. Establish and cultivate the market for information products

Step 1: Inventory of your information assets

We need to understand what data we have. Whether they come from within or
outside the organization, we must get better at coordinating, understanding, and
communication building out a catalog of what information is available to us.

Who: dollar general

Opportunity: gain free strategic advice on promotions, stocking, and so on from
CPG partners
Data and Analytics: Placed billions of rows of POS, inventory, promotion, and other
data into spreadsheet-like format
Results: CPG partners (e.g., P&G) subscribed to the data to help them better market
and promote their products
Dollar General was able to eliminate its complex, expensive RDBMS-based
enterprise data warehouse

Step 2: Treat information as an asset–connect, not collect

We need to start to communicate what that data means. We need to start engaging
stakeholders to ask how these information affect them and what governance should
be put in place. We need to communicate a shared understanding of the
information. In doing so, we act as facilitators, brokers, and enablers of business
performance through data.

Who: Food genius

Opportunity: monetizing the data in online restaurant menus
Data and analytics: aggregated menu data from GrubHub and restaurant review
websites into its database of over 23,000 food terms and 22 million menu items;
analyzed menu item, ingredient and ingredient pairing trends
Results: Food producers and suppliers can anticipate increases or decreases in need
for certain ingredients by geography and restaurant type; restaurants and chefs can
identify restaurant opportunities, craft unique items, and align with ingredient or
terminology trends
Step 3: Adapt high-value monetization ideas from other industries
We need to get more creative, more curious to go out and look for scenarios where
data can be applied into new situations. The impetus, that inspiration can come
from other industries.

Who: BBC
Opportunity: BBC wanted to move away from traditional viewership measurement to
identify new markets and find new niches in existing ones
Data and analytics: integrated and analyzed ever daya source that can reveal
underlying demand, including social media interactions

Mar 1, 2022
Business Analytics Competency Center

Through computers and data, they drive analytical decision making; they are not
nearly as vital as people; there is no analytically-oriented organization without
plenty of analytically oriented people.

Finding, developing, managing, and deploying analytics professionals – the people

who make the day-to-day work of such an organization possible – is critical to an
organization’s success.

A Business Analytics Competency Center is a forum that includes analytical

business competencies as well as IT competencies. This combination of
competencies ensures that business analytics has the necessary impact on the
organization. Its purpose is to maximize the revenue flow from business analytics
initiatives and to make business analytics ???
The information wheel
- Establishing the information wheel
- First, we specify which knowledge and which information the business
requires, based on its chosen strategy
- Data is then retrieved and condensed to information and knowledge,
which is delivered to users.
- In this model, knowledge management seeks to create and retain
learning over time – in this context, to be activated at the strategic level
- Knowledge management is essentially being able to summarize overall
learning about how we establish, improve, maintain, or close down
business processes and store them for the use of others
- Creating synergies between information wheels
- The processes in the information wheel are not necessarily performed
in just one place in the organization; they can easily be performed in
several places
- It is easy then to create information islands which occur when the
different business units create and maintain their business analytics
systems without any coordination
- The BACC should coordinate all these information wheels in order to
create synergy on the data side via the correction combination of data.
 In addition, synergies must be created across analysts as well as on the
IT side

Revisiting “A” in the Analytical DELTA

Analysts in the maturity model

1. Few skills that are attached to specific functions
2. Unconnected pockets of analysts; unmanaged mix of skills
3. Analysts recognized as key talent and focused on important business areas
4. High capable analysts explicitly recruited, developed, deployed, and engaged
5. World-class professional analysts; cultivation of analytical amateurs across
the enterprise

Organizing Analysts
Analysts through the stages
10 APEC Competencies

Mar 10, 2022

Business Analytics: Opportunities and Picking your spots

Every organization can benefit from becoming more analytical across the board—in
how it understands its customers, develops its products, or performs its operations.
But even the most analytically-oriented organization needs to target its analytical
efforts where they will do the most good, because resources, especially talent, are
always constrained.

Finding Your Opportunities

From the organization's strategic plan

* may indicate what business domain is important, but not what activities in that
domain to target with analytics
* will need strategy formulation process to incorporate an appreciation of analytics
and to get specific about analytical targets

From what's happening elsewhere in the industry

* may suggest the need or opportunity for change from current business and
industry trends
Note, however, that looking within your own industry will only take you so far. In fact,
it can be limiting.

Your industry will tell you what it takes to maintain parity of performance, but you
must be more creative to discover opportunities for differentiation.

Following your industry means running with the pack, not getting ahead.

Finding Your Opportunities

D Big-Picture Thinking
* thinking about the shape of your organization and the trends affecting it:
demographic shifts, economic trends, and changes in what customers want
* assessing where performance can improve and what factors drive performance
* exploring hunches about the business, what makes it tick, and where the next
breakthrough may await

A Systematic Inventory
* creating a list of key business processes, the methods for decision making within
them, and the business decisions that could benefit from more and better analytics
The Service-Profit Chain

The service-profit chain establishes relationships

between profitability, customer loyalty, and employee
as follows:
- Profit and growth are stimulated primarily by customer loyalty.
- Loyalty is a direct result of customer satisfaction.
- Satisfaction is largely influenced by the value of services provided to
customers.
- Value is created by satisfied, loyal, and productive employees.
- Employee satisfaction. in turn, results primarily from high-quality support
services and policies that enable employees to deliver results to customers.

Big-Picture Thinking: Value-Based Analysis

Value-Based Analysis
* can help you focus on the fundamental objectives of the organization and the ways
analytics can serve them
* can suggest places to look outside your industry for fresh examples of analytical
applications; these are from organizations that face analogous problems but in
different contexts
Intuition … YES, gut feel!
* something you've always suspected about your industry but have been unable to
explore or verity
* something innovative that seems logical and doable, but for which you have no
evidence to prove feasible
* something that you passionately believe is important to customers

A Systematic Inventory
​If the big-picture frameworks ask how the major pieces of the business fit together,
a systematic inventory looks more closely at:
* how business processes are structured and how they function
* how decisions are made within them
* where the opportunities for dramatic improvement may be

A Systematic Inventory: Business Approach

A Systematic Inventory: Business Decisions

Look for the following six conditions:
- complex decisions with lots of variables and steps
 - simple decisions in which consistency is either desirable or required by law
(like non- discriminatory credit and lending)
- places where you need to optimize the process or activity as a whole
(especially when decomposing and optimizing locally cause you to
sub-optimize the whole)
- decisions in which you need to understand connections, correlations, and
their significance
- places where you need better forecasts, anticipation or downstream visibility
- current low average of success

Systematic Inventory: Business Opportunities

Taking an analytical approach begins with anticipating how information will be used
to address common questions. The matrix below identifies the six key questions
that data and analytics can address in organizations.
Together, these questions encompass much of what an organization needs to know
about itself. The matrix can also be used to challenge existing uses of information.
You may find, for example, that many of your "business intelligence" activities are in
the top row. Moving from purely information-oriented questions to those involving
insights is likely to give you a much better understanding of the dynamics of your
operations.
Analytical Questions: Supply Chain
When you now have plenty of candidates for improvement through analytics, how
do you then prioritize and zero in on your best targets?

By carefully calibrating both your expected available capability.

Establish Your Ambition: Benefits

- Is the business process a strategic or otherwise high priority?
- How big a difference might the analytical application make in business
performance?
- Will excelling at the process yield marketplace advantages, such as setting a
difficult-to-match performance standard or building a differentiated
capability?
- Is the process high-volume enough to generate significant cost savings from
speeding decisions, eliminating steps, or selecting the best process
variation?
- If the business potential is large enough to pursue, what level of effort and
investment does it warrant?
- How fast must you act to realize the benefits?
Establishing Your Ambition: Capabilities
- Are the necessary pieces in place especially if the application is new?
- If you do lack ingredients, is there a way to "build, buy, borrow" them in time?

Keep in mind that the DELTA+TA elements are all interrelated, but targets may be the
most dependent variable. They may need to be adjusted based on the availability of
data and skilled analysts, the scope of an enterprise perspective, and the
commitment of enterprise and business unit leadership.

The Ladder of Analytical Ambitions

The Ladder of Analytical Ambitions

It is instructive to visualize potential ambitions on a "ladder" of analytical
applications. Going up the ladder entails more sophisticated analytics. Skipping
rings, like on any ladder, can lead to nasty falls. Starting at the bottom rung:
- The foundation is good data-it is accurate, consistent, integrated, accessible,
and relevant.
- Statistical analysis of that data yields useful segmentation-of customers,
products, and transactions of other business events.
- Segmentation in turn enables differentiated action-treating individual
customers differently, or choosing the most efficient path in a flexible
business process.
 - Incorporating predictive action enables a business to marshal its resources
where opportunity is greatest.
- At the institutional action rung, differentiation and prediction are embedded
in ongoing business processes and accomplished automatically.
- The top rung is the domain of real-time optimization, where the process
adjusts on the fly to maintain optimal business yield.

The Ladder of Analytical Ambitions: Marketing

The Ladder of Analytical Ambitions: Supply Chain

The Ladder of Analytical Ambitions
The ladder is the general pattern. Within any major business process area, it's
enlightening to ask:
- How high have we climbed?
- How high can we climb?
- How high does the market want us to climb?
- Have we compromised our performance by skipping or only partially covering
a rung?
- Can we boost performance or gain advantage by moving up a rung?

Revisiting “T” in 2 the Analytical DELTA

Having a GoodTarget
- Is it aimed at a distinctive capability that can make a difference in business
performance, competitiveness, and profitability?
- Are executive management and relevant business area managers behind the
initiative?
- Does it contain elements of innovation and differentiation?
- Does it have specific goals and metrics, including ways to gauge both
progress and eventual success?
 - Is it feasible given the availability of resources and capabilities (including the
other DELTA+TA elements)?

After Targeting, What's Next?

- The targeting methods will not yield a scoped and specified project,
complete with resource plan, timetable, and metrics. You've got more work to
do at that level.
- Chances are, your targeting will trigger commitment to a pilot or experiment
that can enable you to further refine the target.
- And even after a major analytics project is under way, you'll want to revisit the
targeting questions periodically and adjust accordingly.
- As your organization grows more analytical, targeting becomes a continuous
exercises-seeking additional opportunities in areas where you're already
applying analytics, as well as keeping an eye out for opportunities not yet
conceived.

Targets Through the Stages

Putting Analytics to Work

When Analytics is Not Practical
There are some times when being analytical just doesn't fit the situation. These
include the following:
- When there's no time
- When there's no precedent
- When history is misleading
- When the decision maker has considerable experience
- When the variables can't be measured

When Analytical Decisions Need Scrutiny

If we are going to use analytics, we have to do it well and avoid these typical
decision-making errors;
Logic Errors
* Not asking the right questions
* Making incorrect assumptions and failing to test them
* Using analytics to justify what you want to do (gaming or rigging the model/data)
instead of letting the facts guide you to the right answer
* Failing to take the time to understand all the alternatives or interpret the data
correctly

If we are going to use analytics, we have to do it well and avoid these typical
decision-making errors:
Process Errors
* Making careless mistakes (transposed numbers in a spreadsheet or a mistake in a
model)
* Failing to consider analysis and insights in decisions
* Failing to consider alternatives seriously
* Using incorrect or insufficient decision-making criteria
* Gathering data or completing analysis too late to be of any use
* Postponing decisions because you're always dissatisfied with the data and analysis
you already have

Key Take-Away Points

- Look beyond what's happening in your industry. Better to differentiate that
just run with the pack. Be willing to experiment to discover what's possible.
- Don't spread your analytical efforts too thin across too many targets.
Especially while the organization is still learning, focus on one major target
and perhaps a few minor ones.
- Don't ignore your hunches about analytical opportunities. Just be sure to test
them!