I had met several senior executives last month to help them create strategy for implementing business analytics framework. I would like to address some of frequently asked questions by them in this blog.
Q: How do I embark on Business Analytics Journey?
For companies just embarking on the analytical journey, a specific business problem may be a good initial target. Perhaps customers are complaining about service or quality, or performance benchmarks show that a business process is wasting resources, or a competitor has raised the bar and you need analytics to determine and execute a response.
For any analytics initiative to be successful, there are 3 pre-requisities
1. Definition of Problem
2. Availability of Good Quality data
3. Business Domain
There are several techniques available to address each business problem. Without having specific problem in mind, it is very difficult to determine which technique to apply on data. Quite often, organizations share their data with business analytics vendors and expect vendors to suggest suitable business analytics applications on their data. This approach is very time consuming and doesn't yield expected results as there is no problem definition.
Problem definition can be as simple as
1. Share of wallet is very low with existing customers
2. Frequent stock outs at stores or excess inventory in plant
3. Transportation cost is very high
Each of the above problems can be addressed using different analytics techniques.
To increase share of wallet, you need to do segmentation & use Cross Sell/Up Sell predictive techniques.
To prevent stock outs or excess inventory, you need to use different forecasting techniques to accurately forecast demand.
To optimize transportation cost, you need to use different optimization algorithms.
Q: I am still in process of implementing data warehouse. Can I implement Business Analytics framework without having data warehouse in place?
Yes. We can implement business analytics framework without having data warehouse in place. You need good quality data to perform any analytics. Richness of data is also very important to use any analytics techniques effectively.
You need to have single view of customer in place to use Cross Sell/Up Sell predictive techniques effectively. If you have duplicate customer information then you may end up sending two different offers to same customer.You need to have customer demographic information such as birth date and occupation filled up properly in your data to use segmentation techniques effectively. You need minimum 36 data points to use forecasting techniques effectively.
I shall address the following questions in my next blog
1. How do I uncover Analytics Problem? I do not have analytics expertise in house.
2. Should I outsource Analytics work or should I build that capability inhouse?
3. How do I go about setting up Analytics CoE?
I had received execellent response for my earlier blog "Business Intelligence Vs Business Analytics". Thanks all for your encouraging commments. Do let me know if you want me to address any questions/doubts that you may have about business analytics.
Showing posts with label BAF. Show all posts
Showing posts with label BAF. Show all posts
Saturday, April 17, 2010
Monday, March 1, 2010
Business Intelligence Vs Business Analytics
Last week I was presenting business analytics framework to a large audience at one of the partner organizations. There were a lot of questions around business analytics and business intelligence reporting. I think there is lot of confusion between business intelligence & business analytics. I would like to address some basic questions about business analytics in this blog.
What is difference between Business Intelligence(BI) & Business Analytics(BA)?
Business Intelligence word was first coined decades ago. Business intelligence converts data into information. It includes query & reporting, OLAP, interactive dashboards and alerts. It's about analysis on past events, and more reactive in nature. It helps you address the following questions
1. What happened?
2. How many, how often, where?
3. Where exactly is the problem?
4. What actions are needed?
This is a first step towards creating intelligent enterprise.Today, there are many big organizations who are struggling to establish enterprise wide business intelligence reporting platform. It's not enough to compete using BI in today's economic scenario. You need much more than BI to create differentiation against your competitors in today's market place.
Business Analytics converts information into knowledge.It's about predicting future using past data and current events. It's more proactive in nature. It helps you address the following questions
1. Why is this happening?
2. What if these trends continues?
3. What will happen next?
4. What's the best that can happen?
Business analytics can directly impact top & bottom lines. It helps you to
1. Identify segment of people who are more likely to buy your product
2. Identify the best offer among the list of potential offers
3. Identify potential customers who can buy more products and services from you
4. Retain most profitable customers
5. Optimize resources based on various contraints
None of the above is possible using business intelligence tools. All of the above requires usage of statistical algorithms and processes.
BI will give you information like number of stock outs in a store where as BA will give you knowledge like optimal quantity of stock that you need to keep in your store to prevent stock out situations and minimize inventory cost. BI will give information like amount of withdrawals and cash out instances of a particular ATM where as BA will give you knowledge like optimal amount of cash that you need to keep in your ATM based on location, and withdrawal patterns so that you prevent cash out situations and minimize cost. There are several such examples available.
Do you need a Data warehouse to implement Business Analytics framework?
No. It's not necessary to source data from data warehouse for business analytics. You can apply business analytics techniques on data which is directly extracted from source system. You do not have to wait till your data warehouse is implemented as it usually takes anywhere from 12 - 24 months. One of pre-requistite for business analytics is availability of good quality data. It's doesn't matter where it comes from.
How much data do you need to perform Business Analytics?
It's depends on type of analytics that you want to perform. Typically, business analytics techniques requires data from last 3 to 36 months. As mentioned earlier, you need to have good quality data to derive effective results out of business analytics techniques.
According to me business intelligence is a subset of business analytics framework. You must have strategy in place to implement business analytics framework to compete in today's economics conditions. Business Intelligence is just not enough. Be aware of vendors who supply query & reporting tools in name of "Analytics".
You can find more info about business analytics @
http://www.sas.com/businessanalytics/
What is difference between Business Intelligence(BI) & Business Analytics(BA)?
Business Intelligence word was first coined decades ago. Business intelligence converts data into information. It includes query & reporting, OLAP, interactive dashboards and alerts. It's about analysis on past events, and more reactive in nature. It helps you address the following questions
1. What happened?
2. How many, how often, where?
3. Where exactly is the problem?
4. What actions are needed?
This is a first step towards creating intelligent enterprise.Today, there are many big organizations who are struggling to establish enterprise wide business intelligence reporting platform. It's not enough to compete using BI in today's economic scenario. You need much more than BI to create differentiation against your competitors in today's market place.
Business Analytics converts information into knowledge.It's about predicting future using past data and current events. It's more proactive in nature. It helps you address the following questions
1. Why is this happening?
2. What if these trends continues?
3. What will happen next?
4. What's the best that can happen?
Business analytics can directly impact top & bottom lines. It helps you to
1. Identify segment of people who are more likely to buy your product
2. Identify the best offer among the list of potential offers
3. Identify potential customers who can buy more products and services from you
4. Retain most profitable customers
5. Optimize resources based on various contraints
None of the above is possible using business intelligence tools. All of the above requires usage of statistical algorithms and processes.
BI will give you information like number of stock outs in a store where as BA will give you knowledge like optimal quantity of stock that you need to keep in your store to prevent stock out situations and minimize inventory cost. BI will give information like amount of withdrawals and cash out instances of a particular ATM where as BA will give you knowledge like optimal amount of cash that you need to keep in your ATM based on location, and withdrawal patterns so that you prevent cash out situations and minimize cost. There are several such examples available.
Do you need a Data warehouse to implement Business Analytics framework?
No. It's not necessary to source data from data warehouse for business analytics. You can apply business analytics techniques on data which is directly extracted from source system. You do not have to wait till your data warehouse is implemented as it usually takes anywhere from 12 - 24 months. One of pre-requistite for business analytics is availability of good quality data. It's doesn't matter where it comes from.
How much data do you need to perform Business Analytics?
It's depends on type of analytics that you want to perform. Typically, business analytics techniques requires data from last 3 to 36 months. As mentioned earlier, you need to have good quality data to derive effective results out of business analytics techniques.
According to me business intelligence is a subset of business analytics framework. You must have strategy in place to implement business analytics framework to compete in today's economics conditions. Business Intelligence is just not enough. Be aware of vendors who supply query & reporting tools in name of "Analytics".
You can find more info about business analytics @
http://www.sas.com/businessanalytics/
Subscribe to:
Posts (Atom)