BUSINESS ANALYTICS. “THE EXTENSIVE USE OF DATA, STATISTICAL AND QUANTITATIVE ANALYSIS, EXPLANATORY...
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Transcript of BUSINESS ANALYTICS. “THE EXTENSIVE USE OF DATA, STATISTICAL AND QUANTITATIVE ANALYSIS, EXPLANATORY...
BUSINESS ANALYTICS
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“THE EXTENSIVE USE OF DATA , STATISTICAL AND QUANTITATIVE ANALYSIS,
EXPLANATORY AND PREDICTIVE MODELS, AND FACT-BASED MANAGEMENT TO DRIVE
DECISIONS AND ACTIONS.”
DAVENPORT AND HARRIS (2007) COMPETING ON ANALYTICS:
THE NEW SCIENCE OF WINNING
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Back in Business, by Ronald K. Klimberg and Virginia Miori, OR/MS Today, Vol 37, No 5, October 2010, [http://www.informs.org/ORMS-Today/Public-Articles/October-Volume-37-Number-5/Back-in-Business]
“The essence of analytics lies in the application of logic and mental processes to find meaning in data.”
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ANALYTICS
• Big Data
• Big Money
• Big Change
• Big Benefits
• Big Demand
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Data Explosion http://tedxtalks.ted.com/video/TEDxPhilly-Robert-J-Moore-The-d
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11Competing on Analytics by Thomas Davenport, HBR (January 2006)
12http://www.moneyball-movie.com/ trailer
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http://movies.yahoo.com/feature/moneyball.html
Competing on Analytics by Thomas Davenport, HBR (January 2006)
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CHANGES IN THE ANALYTICAL LANDSCAPE
Analytical Modelers Management
Historically…
Historically, analytics have typically been handled in the “back office,” and information was shared only by a few individuals.
Models
SAS, Advanced Business Analytics Course
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CHANGES IN THE ANALYTICAL LANDSCAPE
Analytical Modelers
CustomerService
Retail
Logistics
Promotions
OPERATIONS TARGET
Customers
Stockholders
Suppliers
Employees
Now…
Now analytics are being pushed out to the “front office” and are directly impacting company performance. There are clear, tangible benefits that management will track. Data mining is a critical part of business analytics.
Proliferation of Models
SAS, Advanced Business Analytics Course
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THE DATA
Experimental Opportunistic
Purpose Research Operational
Value Scientific Commercial
Generation Actively Passivelycontrolled observed
Size Small Massive
Hygiene Clean Dirty
State Static Dynamic
SAS, Advanced Business Analytics Course
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THE METHODOLOGY: WHAT WE LEARNED NOT TO DO
• Prediction is more important than inference.• Metrics are used “because they work,” not based on
theory.• p-values are rough guides rather than firm decision
cutoffs.• Interpretation of a model might be irrelevant.• The preliminary value of a model is determined by its
ability to predict a holdout sample.• Long-term value of a model is determined by its ability to
continue to perform well on new data over time.• Models are retired as customer behavior shifts, market
trends emerge, and so on.
SAS, Advanced Business Analytics Course
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USING ANALYTICS INTELLIGENTLY
• Intelligent use of analytics results in the following:• Better understanding of how technological, economic,
and marketplace shifts affect business performance• Ability to consistently and reliably distinguish between
effective and ineffective interventions• Efficient use of assets, reduced waste in supplies, and
better management of time and resources• Risk-reduction via measurable outcomes and
reproducible findings• Early detection of market trends hidden in massive data• Continuous improvement in decision making over time
SAS, Advanced Business Analytics Course
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Co
mp
etit
ive
Ad
van
tag
e
Basic Reporting What happened?
Ad Hoc Reporting How many, how often, where?
Dynamic Reporting Where exactly are the problems?
Reporting with Early Warning What actions are needed?
Basic Statistical Analysis Why is this happening?
Forecasting What if these trends continue?
Predictive Modeling What will happen next?
Decision Optimization What is the best decision?
Data Information Intelligence
Advanced Analytics
Basic Analytics
Reporting
Decision Support Decision Guidance
Achieving Success with AnalyticsSAS, Advanced Business Analytics Course
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HIRING SUCCESS
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QUAN 4630: Business Analytics
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OPPORTUNISTIC DATA
• Operational data is typically not collected with data analysis in mind.
• Multiple business units produce a silo-based data system.
• This makes business analytics different from experimental statistics and especially challenging.
SAS, Advanced Business Analytics Course