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Business Analytics

This document provides an introduction and overview of analytics as a career field. It discusses how analytics uses data mining and statistical analysis of existing databases to reveal patterns and insights. The document outlines the key differences between analytics, market research, and business intelligence. It then describes the main types of analytics including reporting, predictive modeling, and data-driven strategy. Finally, it discusses some of the major domains for analytics careers, such as retail sales analytics and financial services analytics.

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100% found this document useful (1 vote)
734 views8 pages

Business Analytics

This document provides an introduction and overview of analytics as a career field. It discusses how analytics uses data mining and statistical analysis of existing databases to reveal patterns and insights. The document outlines the key differences between analytics, market research, and business intelligence. It then describes the main types of analytics including reporting, predictive modeling, and data-driven strategy. Finally, it discusses some of the major domains for analytics careers, such as retail sales analytics and financial services analytics.

Uploaded by

pavan9587
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Introduction to Analytics

Would you like to be part of a domain that promises huge growth, rapid rises and, best
of all, a shortage of demand for experienced resources in the US and India. Are you
better

at analyzing numbers than shooting e-mails? Then careers in a niche industry like
Database Mining & Analytics may just help get you there.

Database mining and analytics are one of the new sunrise careers of not just the Indian
economy but also the global digital economy. While careers in Database mining and
analytics have typically been offered by the business process outsourcing sector under
the sub-brand of Knowledge Process Outsourcing, increasingly robust demand for
analytics professionals have prompted both Information Technology firms and domestic
firms based in India.

Database mining and analytics are defined as using the power of hidden information
locked in databases to reveal consumer and product insights, trends and patterns for
future tactical and operational strategies.

A key differentiator between Analytics and Market Research is that analytics relies on
data which is existing within a database while market research generally involves
collection, collation and tabulation of the data. Market research involves mostly dealing
with survey level data, as in questionnaires that measure consumer response to
marketing stimulus. It includes link analysis for websites, manipulating data to be easy
to read by softwares like SPSS, creating cross tabs and statistical analysis including
factor analysis and cluster analysis. However, it is wholly centered on questionnaires
and deals exclusively with customer level data that answers questions related to
marketing. There is no market research in risk, credit, or collections. Thus, market
research is limited in the kinds of analytical questions it tries to answer and, thus, the
breadth of analysis as well.

Business Intelligence is defined as the seamless dissemination of information


throughout the organization and is a broader term, which involves and includes
analytics as well as reporting systems. It includes softwares like customer relationship
management, supply chain management, planning as well as reporting systems.
Business intelligence broadly includes analytics within a company but it can also include
areas that deal more with flow of information or knowledge management as well. While
database analytics assumes data is present, business intelligence focuses more on
strategy.

The field of data analytics is vast and it comprises the following types. -
Types of Analytics

1) Reporting or Descriptive Analytics

Each organization relies on series of Management Information Systems (commonly

called MIS) to gather the current state of business as well as any emerging trend. This
typically involves sales, finance, customer and competitor data, which is presented
within spread-sheets and presentations. Reports tend to be either regular (like monthly
and quarterly) or ad-hoc (for special investigative analysis). This is known as
Descriptive Analytics simply because it describes the data which is present. While
reporting or descriptive analytics is often the starting point in analytics careers, a proper
grounding in this domain is necessary both to build an eye for detail in dealing with large
amounts of data and for polishing the presentation skills for presenting insights from the
data.

2) Modeling or Predictive Analytics

Predictive Analytics refers to the art and science of using statistical tests, hypotheses
and methods to build-up predictive recommendations. These recommendations can
range from which type of customer to call by phone for a credit card or insurance, to
which type of mobile scheme to offer to a cell phone customer by a short message
(SMS), or to what kind of customers are likely to default on the loans they have taken.
Predictive analytics includes techniques like segmentation and regression modeling. It
is generally considered both high value, and a background in statistics helps in
preparing for predictive analytics careers.

3) Data-Driven Strategy

This is also called Test-Control or Champion-Challenger Testing. This is done by


segmenting the data population into test (on which a new strategy called the Challenger
Strategy is to be tested) and control (which uses existing strategy called Champion
Strategy). Building association rules which describe which parts of the product or
customer data are clustered or co-related together are also part of analytics.

Basic Domains Within Analytics

Data-Driven Analytics, by definition, thrives in industries, which have large amounts of


data and high volume transactions, which need systematic and scientific analytics to cut
costs and grow sales. The following domains offer employment opportunities to both
new-comers and experienced analytics professionals. These can be both in domestic
firms, captive outsourcing firms, or third party business process outsourcing companies.
1) Retail Sales Analytics

Retail Sales Analytics deals with the handling of vast amounts of Point of Sales data,
inventory data, payment data, and promotional data, to help increase sales in retail

stores, especially in organized retail. The use of RFIDs, Electronic Payment and Bar
Scanning helps capture the data better and store it in vast databases. An example of
this is the famous Thursday baby diaper-beer sales phenomenon. A big retailer found
that on Thursday evenings, sales of beer and baby diapers were highly co-related. He
then found that is was due to young couples preparing for the week-end by buying
supplies of diapers and beer. Thus, by placing diapers and beer closer together sales
could be boosted up. This is an example of market basket analytics in which a large
amount of data is scrutinized to see which products sell well together. Wal-Mart, the
American retail giant, established a competitive edge over its rivals by proactively using
data driven analytics to cut costs and, thus, offer goods cheaper than others. Another
example of a big retailer is Target, which has it's own captive back-end analytics in
India.

In India, since Reliance Retail, Future Group, Walmart-Bharti have started setting up
shop, this is a sector that is bound to grow even within the domestic sector, as these
high volume retailers need data driven decisions to squeeze the maximum from their
retail stores.

2) Financial Services Analytics

Financial services use analytics extensively. This is because they are in a very
competitive field, have millions of customers and a lot of transactions. It is extremely
important for them to store data for billing purposes and to recover the money they lend
out as well as the deposits they collect. An incremental gain of a few basis points (one
hundredth of 1 percentage is a basis point) in profitability can lead to millions of dollars
in aggregate profits. Within financial services analytics, the broad sub-categories are: -

a. Risk & Credit Analytics - Risk and credit functions measure the ability of a customer
to pay back loans or debt owed by them. Delinquent customers are those that have
fallen behind in paying back debt as per agreed schedule. Debt can be fixed installment
like EMIs for a personal loan, and debt can be revolving as in variable amounts that can
be paid for credit card outstanding including the minimum balance. Debt can also be
secured debt as secured against houses, consumer durables, two-wheelers,
automobiles as collateral, or it can be unsecured as in personal loans or credit card debt
that have no collateral or backing.

A risk analyst develops scorecards that help measure the risk worthiness of both new
and existing customers. As financial service instruments are priced against risk, the
riskier the customer, the more they are charged in terms of interest rate. But this has

to be balanced with total repaying ability of the customer, including sources of income
and current leverage. In addition, the income of customers, especially in India, is
changing rapidly and there is also un-declared income as black money.

Doing the analysis for millions of customers is what makes risk and credit analytics one
of the hottest sectors to be in, as credit analysts are in demand with all banks,
outsourcing corporate and finance companies. ICICI has a big analytics unit (called
Business Intelligence Unit) and Citigroup has both domestic analytics (in Chennai) and
international analytics centers (in Bangalore).

An example is a bank using repayment behavior to automatically increase credit limit


selectively based on types of purchases made and repayment behavior. This offer is
then conveniently sent to the customer in the form of an SMS. By increasing credit
limits, the bank tries to encourage spending and average receivables.

b. Marketing Analytics - Marketing Analytics helps in customer acquisition and retention.


It does so by helping choose more responsive customers and selling through a wide
variety of channels like call centers, direct mail, SMS through mobiles, and e-mail. It is
marketing analytics which helps to bring in new customers by giving inputs to the
marketing team and feedback to sales and distribution channels. An example of using
analytics is that some banks use ATMs screen to offer home loans, personal loans
based on details of savings bank account with that bank. This is enabled because that
particular bank has

well-established data centers in which each customer touch point is automatically


mapped and then modeled to give customers targeted offers.

Another example is an international bank using its closed loan customers database and
selling nearly 1 lakh credit cards by calling all customers who paid back the loan without
default and getting a 10% response rate through datamining and analytical scorecards.

c. Collections Analytics - Collections Analytics focuses on recovery from delinquent


customers using optimized efforts like telephones, direct mails, e-mails or visits. Its aim
is to maximize recovery at minimum costs.

d. Fraud Analytics - Fraud Analytics seeks to build in triggers or automated alarms, if


there is any unusual trend or behavior in spending by the customer especially in credit
cards.

. Pricing Analytics - Pricing Analytics tries to give the most optimized price, adequately
compensating for risk as well as the competition. Pricing Analytics is a vast field, and is
also a part of financial services analytics, especially in
products like insurance.

3) Telecommunications

Telecom Analytics has the fields of marketing analytics defined above, but an important
part is also attrition modeling or churn analytics. It also analyzes the wide variety of
pricing schemes and options and the customer response to them. In addition, it has
delinquency analytics as well.

4) Pharmaceutical or Clinical Analytics

Clinical trials depend on test and control of thousands of patients on new drugs. Clinical
Trial Analytics focuses on large number of variables that may or may not affect the drug
response.

5) Supply Chain Analytics

Supply Chain Analytics comprises inventory optimization, tracking turn-around time,


multiple reports, and how to minimize the distribution costs.

6) Transportation Analytics

Transportation Analytics, while covered more extensively in the field of operations


research, seeks at minimizing route length or fuel costs, or pricing of fares.

7) Online or Website Analytics

Website Analytics focuses on analyzing traffic to the website from sources, and how to
retain them on the website for longer time or purchase more goods. It also involves a bit
of search engine optimization to make sure the website is relevant in searches by
search engines.

Success Stories

ICICI Bank has been a pioneer in using analytics for cross-selling in financial services in
India through ATMs, Internet, Home Loans and Deposits. It has done so by leveraging
its investments in data centers through Tera Data, a world leader in data storage and
building an ecosystem, which uses flow of information to capture customer level data,
and then work with its in-house business intelligence unit (analytics) team to build
models to target customers.

Page - 6

Google.com is a pioneer in analyzing the ranking or importance of a website (text


mining) and is also a leader in online advertising because of better targeting of ads. It
does so by creating a mathematical formula for the importance of a website by
measuring the importance of links linking to the website, location of the links through its
proprietary page ranking system. It also searches websites to place relevant ads, thus,
helping its advertising business.

Careers in Analytics

 Basic Qualifications Required - A Master's Degree in Statistics, Engineering,


Mathematics, Economics or in Management is a requirement for careers in analytics.
Exposure to programming and quantitative subjects is essential for this domain. Prior
knowledge of softwares like SAS, SPSS and VBA is a definite plus. SPSS is taught in
many MBA colleges as part of the curriculum.

 Job Attributes - Analytics requires strong attention to detail, quantitative acumen,


hard work, and ability to think creatively in terms of how to design test and control for
strategy building. An ability to pick up programming language fast is a must as the large
amounts of data is manipulated using softwares.

Rewards & Challenges of an Analytics Career

Sweet Pros - The rewards of being in analytics is international opportunities, rapid


rises, exposure to the best softwares and top management, and a lucrative
compensation options as it is still a niche field with terrific demand. The opportunities in
analytics careers are evolving, as domestic demand for analytics is picking up. People
with expertise are widely respected and paid handsomely. Due to international demand
for analytics being strong, there are opportunities in trips or on site stints as well. Since
most analytics decisions affect companies strategically, this career also gives exposure
to people to interact and work closely with senior management, thus, getting chances at
learning and exposure very well.

Sour Cons - Challenges in this domain lie in tieing statistical knowledge with business
application and programming acumen in analytics software. The work is detail-oriented
and requires careful use of data to prevent costly errors or data
privacy issues. In initial years, the role of an analyst can be quite similar to
programming or poring over huge amounts of data. The field of analytics is best suited
for people with a very good quantitative aptitude due to the nature of the domain.

As a fresher, you can also improve your knowledge of statistics especially in regression,
distributions and hypothesis testing to improve your chances of getting selected.
Knowledge of the following software can be helpful in initial stages of your career in
analytics: -

 SQL

 SAS (www.sas.com)

 SPSS (www.spss.com)

 Business Objects

 Cognos

 Crystal Reports

 KXEN

Career Paths for Analytics Professionals

Career progression in analytics follows the broad pattern as follows: -

 Fresher - As an entry level programmer or analyst, you would be required to write


code to generate reports, or clean data to prepare it for analysis. You would also be
expected to pick-up nuances of business data, what data is usually wrong, what are the
outliers to spot, besides learning the programming language to retrieve and manipulate
data. This phase will last for upto two years. As you become more senior, you will also
assist in recruiting and training fresher.

 Experienced Analyst - For a period of three to five years of total relevant


experience, you would then be working as a senior analyst / assistant manager with
official duties in data analysis with some people responsibilities. Depending on your
aptitude and organization, you can tweak the level of business exposure, people
management with amount of technical analysis / skills.

 Managerial Roles - After a period of upto five years, you would be full-time into
client interfacing, people management, requirements gathering, and translation to
technical details for your team. This will also involve recruiting, mentoring junior
members and technical training.
 Head (Analytics) / Associate Vice President / Business Leaders - You can
expect to be a business leader within eight to ten years of total experience. The focus
will be to grow your team size, maximize customer satisfaction, and deliver innovative

analytics that impact business revenue positively.

Corporate Recruiters

 Genpact

 GE Money

 ABN AMRO

 ICICI Bank

 EXL Service

 WNS Global Services

 Progeon (Infosys BPO)

 HCL

 American Express

 Target

 Amazon

 Mu-Sigma

 HSBC Bank

 Deloitte

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