Business Analytics
Business 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.
The field of data analytics is vast and it comprises the following types. -
Types of Analytics
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.
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
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.
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).
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.
. 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.
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.
6) Transportation 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.
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Careers in Analytics
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
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
Corporate Recruiters
Genpact
GE Money
ABN AMRO
ICICI Bank
EXL Service
HCL
American Express
Target
Amazon
Mu-Sigma
HSBC Bank
Deloitte