BUSINESS

ANALYTICS /
Intelligence
IBM
 Module 1
Changing business with data insight Overview
WHAT IS BUSINESS INTELLIGENCE?
• BI(Business Intelligence) is a set of processes, architectures, and technologies that
convert raw data into meaningful information that drives profitable business
actions.It is a suite of software and services to transform data into actionable
intelligence and knowledge.
• BI has a direct impact on organization's strategic, tactical and operational business
decisions. BI supports fact-based decision making using historical data rather than
assumptions and gut feeling.
• BI tools perform data analysis and create reports, summaries, dashboards, maps,
graphs, and charts to provide users with detailed intelligence about the nature
of the business.
 Business
Analytics
Decision Making

Business
Business Modeling “Actionable” Information
Intelligence

Data Report
Warehouse Warehouse
And
Knowledge
And Management
Data Marts Document
Mart

PROJECT MANAGMENT
Data can be categorized into three main types: structured, unstructured, and
semi-structured:

• Structured Data: Structured data is highly organized and follows a predefined format.
It is typically stored in databases or spreadsheets and can be easily processed by
computers using fixed fields and columns. A customer database of an online store,
where each entry includes fields like "Name," "Email Address," "Phone Number,"
"Purchase History," and "Shipping Address.“

• Unstructured Data: Unstructured data lacks a specific structure or predefined

format, making it more challenging for traditional databases to handle. It often
includes text-heavy content, multimedia files, and free-form information.
Social media posts, emails, images, videos, and audio recordings are all examples of
unstructured data. These data types do not have a fixed structure and require
advanced techniques like natural language processing or computer vision to analyze.

• Semi-Structured Data: Semi-structured data has some organization or structure, like

sections or categories, but the specific details within those sections may not follow
a strict format. It allows for flexibility in how the information is presented, making it
easier for people to understand and share information in a way that suits their needs.
Movie Reviews.
How is data analytics transforming the world?

The analytics play a vital role in every kind of business because it takes
every organization to the next level by reducing major stress in
business.There are so many analytics tools has been introduced in the
market to analyze data rapidly where this leads to tackle so many
trolls in business without relying on others. The data Analytics lets you
track business such as your store and generates reports that will help
you with current updates on your business.

It also derive the right insights of your business and able to visualize
effectively with search based analytics. It gives the ability to analyze
all the disparate data sources that companies deal with every day and
now the executives iterate and drive solutions in seconds instead of
letting months or weeks,Through this insight, businesses may be able
to gain an edge over their rivals and make superior business decisions
and thus changes the world in all way.
1)Health department : Big data and analytics provides a significant
support in the field or area of health care. For eg : U have a huge data
of the patients of a particular country or state . Now by the proper
analysis of this huge amount of data u can classify the kind of diseases
, health problems and the percentage of it in that particular area .
Based on your results , a proper healthcare plan for that area can be
summoned and prepared . Seeing the business perspective , a
particular medical company can provide specific medics to that area
based on the analysis .

2) Crime : Getting the data of how many prisoners are there in a

particular area
, the number of crimes committed , cases registered , weapons
confesticated and drug trafficking . Analysing all these data and than
planning a different model for different regions .The security
departments can use this analysis to deploy a team with the particular
skills for that location .
3)Science : scientists are using big data analytics to predict the upcoming
events in nature like , earthquakes , tornados , floods , rain , draught ,
Particular weather data of any area is collected and than by the use of
analytics , a result is generated to know about the near future
happenings .

4)Business : This is the area where big data and analytics is playing the
most significant and profitable role . Analysing the market trend
based on sales data , demand data etc and than setting a road map
for the future of the company . Stock market analysis ( predictive
analysis ) helps investors to judge that particular stock in which they
can invest or withdraw . Big data analytics help in improving the
customer satisfaction policies for various companies and brands like
Mac D ,Wallmart and various other brands
WHY IS BI IMPORTANT?

• Measurement: creating KPI (Key Performance Indicators) based on historic data

• Identify and set benchmarks for varied processes.
• With BI systems organizations can identify market trends and spot business
problems that need to be addressed.
• BI helps on data visualization that enhances the data quality and thereby the quality
of decision making.
• BI systems can be used not just by enterprises but SME (Small and Medium
Enterprises)
HOW BUSINESS INTELLIGENCE SYSTEMS
ARE IMPLEMENTED?
• Step 1) Raw Data from corporate databases is extracted.The data could be spread
across
multiple systems heterogeneous systems.
• Step 2) The data is cleaned and transformed into the data warehouse.The table can
be linked, and data cubes are formed.
• Step 3) Using BI system the user can ask quires, request ad-hoc reports or conduct
any other analysis.
Examples of Business Intelligence System used in Practice
• In an Online Transaction Processing (OLTP) system information that could be fed into product
database could
be
– add a product line
– change a product price
Correspondingly, in a Business Intelligence system query that would beexecuted for the product
subject area could be did the addition of new product line or change in product price increase
revenues
In an advertising database of OLTP system query that could be executed
– Changed in advertisement options
– Increase radio budget

• Correspondingly, in BI system query that could be executed would be how many new clients
added due to change in radio budget
• In OLTP system dealing with customer demographic data bases data that could be fed would be
– increase customer credit limit
– change in customer salary level
• Correspondingly in the OLAP system query that could be executed would be can customer
profile changes support support higher product price
ADVANTAGES OF BUSINESS
INTELLIGENCE
• 1. Boost productivity
• With a BI program, It is possible for businesses to create reports with a single click
thus saves
lots of time and resources. It also allows employees to be more productive on their
tasks.
• 2.To improve visibility
• BI also helps to improve the visibility of these processes and make it possible to
identify any areas which need attention.
• 3. Fix Accountability
• BI system assigns accountability in the organization as there must be someone
who should own accountability and ownership for the organization's
performance against its set goals.
• 4. It gives a bird's eye view:
• BI system also helps organizations as decision makers get an overall bird's eye
view through typical BI features like dashboards and scorecards.
• 5. It streamlines business processes:
• BI takes out all complexity associated with business processes. It also automates
analytics by offering predictive analysis, computer modeling, benchmarking and
other methodologies.
• 6. It allows for easy analytics.
• BI software has democratized its usage, allowing even nontechnical or non-analysts
users to collect and process data quickly.This also allows putting the power of
analytics from the hand's many people.
BI SYSTEM DISADVANTAGES

1. Cost:
• Business intelligence can prove costly for small as well as for medium-sized enterprises.The use of
such type of
system may be expensive for routine business transactions.
2. Complexity:
• Another drawback of BI is its complexity in implementation of datawarehouse. It can be so
complex that it can make business techniques rigid to deal with.
3. Limited use
• Like all improved technologies, BI was first established keeping in consideration the buying
competence of rich firms.Therefore, BI system is yet not affordable for many small and medium
size companies.
4.Time Consuming Implementation
• It takes almost one and half year for data warehousing system to be completely
implemented.Therefore, it is a
TRENDS IN BUSINESS INTELLIGENCE

• Artificial Intelligence: Gartner' report indicates that AI and machine learning now take
on complex tasks done by human intelligence.This capability is being leveraged to
come up with real- time data analysis and dashboard reporting.
• Collaborative BI: BI software combined with collaboration tools, including social media,
and other latest technologies enhance the working and sharing by teams for
collaborative decision making.
• Embedded BI: Embedded BI allows the integration of BI software or some of its features
into
another business application for enhancing and extending it's reporting functionality.
• Cloud Analytics: BI applications will be soon offered in the cloud, and more businesses
will be shifting to this technology. As per their predictions within a couple of years, the
spending on cloud- based analytics will grow 4.5 times faster.
WHAT IS ANALYTICS?

• Business analytics (BA) is the practice of iterative, methodical exploration of an

organization's data, with an emphasis on statistical analysis. Business analytics is
used by companies committed to data-driven decision-making.
• BA is used to gain insights that inform business decisions and can be used to
automate and optimize business processes. Data-driven companies treat their data
as a corporate asset and leverage it for a competitive advantage. Successful
business analytics depends on data quality, skilled analysts who understand the
technologies and the business, and an organizational commitment to data-driven
decision-making.
• The second area of business analytics involves deeper Descriptive analysis.This
may mean doing predictive analytics by applying statistical algorithms to
historical data to make a prediction about future performance of a product,
service or website design change. Or, it could mean using other advanced
analytics techniques, like cluster analysis, to group customers based on
similarities across several data points.
• Business analytics techniques break down into two main areas.The first is basic
business intelligence.This involves examining historical data to get a sense of how
a business department, team or staff member performed over a particular
time.This is a mature practice that most enterprises are fairly accomplished at
using.
Various types of analytics
1. Descriptive Analytics
Descriptive analytics is like telling a story about what has already happened. It uses data to
summarize and show the most important facts and figures. It's like making a movie of the past to
understand how things went and what the situation looks like right now.
2. Diagnostic Analytics:
Diagnostic analytics is like being a detective. It looks at past data to figure out why things
happened the way they did. It digs deeper to uncover the reasons behind trends and patterns.
It's like finding out why the main character in a movie made certain decisions.
3. Predictive Analytics:
Predictive analytics is like fortune-telling using numbers. It uses past data to make educated
guesses about what might happen in the future. It's like using clues from a mystery story to
predict what might happen in the next chapter.
4. Prescriptive Analytics:
Prescriptive analytics is like giving advice to the characters in a story. It uses data and
information to suggest the best actions to take to get the desired outcome. It's like having a
guide that tells you what choices to make to make sure the story ends well.
 Example for each type of analytics in a business context
1. Descriptive Analytics: A retail store uses descriptive analytics to summarize its monthly
sales data. They create a visual chart showing the total sales for each product category over the
past year. This helps them see which categories are the most profitable and identify seasonal
trends.
2. Diagnostic Analytics: The retail store notices a sudden drop in sales for a specific product
category. They use diagnostic analytics to investigate further. They find out that the drop in
sales is due to a recent price increase for those products. This insight helps them understand the
cause of the decline.
3. Predictive Analytics: The retail store analyzes historical sales data and customer
behaviour. They predict that during the holiday season, based on past years, there will be a
surge in demand for certain products. This enables them to stock up on those items and be
prepared for the increased sales.
4. Prescriptive Analytics: The retail store wants to optimize their inventory management.
Prescriptive analytics suggests an action plan based on historical sales, inventory levels, and
upcoming promotions. It recommends adjusting the order quantities for specific products to
minimize overstocking and stockouts while maximizing profits.
In the business world, these types of analytics work together to help companies make
informed decisions, improve operations, and stay competitive by understanding the past,
addressing challenges, and preparing for the future.
HOW BUSINESS INTELLIGENCE WORKS?

• Through a data capture process, the information is acquired from any system and
recorded in a
database specifically modelled for your business.
• With this modeling, known as Dimensional Modeling, it is possible to work with a
large mass of data keeping a high performance.
STEPS FOR ANALYZING UNSTRUCTURED
DATA
• Data analysis is becoming an important part of businesses growth. It is important
for businesses to understand structured and unstructured data in order to make a
right decision for their businesses to grow.
• Below are 10 steps to follow that will help analyze unstructured data for
successful business enterprises.
1. Decide on a Data Source
• It’s very important to understand the source of data that is beneficial for your small
business enterprise.You may use one or more data source to collect the information
that is relevant to your business. Collecting data from random sources is never a
good idea because you might
corrupt the data or even lose some. Hence it’s recommended to survey the relevant
data
source before you start collecting data.There are some online big data development
tools that you can use to collect the data.

2. Manage Your Unstructured Data Search

• Collected data will vary in usage if it’s structured or unstructured. Finding and
collecting data is only one step; structuring your unstructured data search and
making it useful is entirely another thing.The second step is as important as
collecting the data but can have a negative impact on your clients and your own
business if not managed properly. Invest in a good business management tool before
you have too much unstructured data.
3. Eliminating Useless Data
• After collection and structuring the data comes the third step of eliminating data.
Although most data is going to only further your company's growth, sometimes it can
also be detrimental. If your unstructured data takes up too much space on your
businesses hard drives, storage, or backups, this may affect your business' ability to
strive.This reduces further confusion and saves you from wasting your time on data
that are not beneficial.

4. Prepare Data for Storage

• Preparing data means to remove all the whitespace, formatting issues, etc. from
the data. Now when you have all the data, no matter useful for the business or
not, you can start making a stack of useful data and indexing unstructured data
once the data is prepared.
• 5. Decide the Technology for Data Stack and Storage
• After the elimination of useless data, stacking your data is the ideal next step. Be sure
to use the latest technology to save and stack data so that it is easy for you and your
employees who are also working with data to fetch the most important and mandatory
data in no time. Also, ensure that you have a maintained and updated data backup and
recovery service.
• 6. Keep All the Data Until It Is Stored
• Seems obvious, but always make sure you save data — whether it is structured or
unstructured — before deleting anything! Recent natural disasters around the globe have
proven that a current and updated data backup recovery system is essential and
necessary, especially during times of crisis.You may not know that all of your data is
about to get deleted. So, think ahead and save your work often.
• 7. Retrieve Useful Information
• After a proper data backup, you can recover data.This step is useful because you
will need to
retrieve data after converting unstructured information as well.

• 8. Ontology Evaluation
• It’s good if you can show a relationship between the source of information and the
data extracted.This will help you in providing useful insights in regards to the
organization of data. Your company will need to be able to explain the steps and
processes you took, so keep a record in order to recognize patterns and keep
consistent with the process.
• 9. Record Statistics
• Once you have made the unstructured data search into the structured data through
all the
steps mentioned above, it’s time to create statistics. Classify and segment the data
for easy use and study in order to create a great flow for future use.

• 10. Analyze the Data

• This is the last step of indexing unstructured data. After all the raw data are
structured, it comes the time to analyze and make decisions that are relevant and
beneficial for the business. Indexing also helps your small business make consistent
patterns for future use.
HOW ANALYTICS IS MAKING THE
WORLD SMARTER
• Citizen feedback
Alberta Parks manages about 250 campgrounds and 14,000 campsites that receive more than 1.8
million overnight visitors every year. From May to mid-October, the Parks department receives
15,000 customer survey replies.With the help of software that analyzes text, the department
doesn’t have to wait until a post- season quiet time to sift through the surveys. It is able to
quickly identify trends in the feedback comments and make adjustments dynamically to improve
the camping experience for visitors.

• Criminal justice and public safety

One of the UK’s largest police forces deployed an intelligence analytics platform across the entire
enterprise. The mission-critical system contains 12 million documents, 9 million structured records
and provides real-time intelligence 24 hours a day. It is used by more than 40,000 officers and
police personnel daily and can be accessed securely by other government agencies.The platform
provides integration with confidential, highly specialized and highly secure protected units.With
the intelligence management system in place, information can be acted upon in real time to
protect the public around the clock.
• Child well-being
In New Zealand, the Ministry of Social Development is using analytics as a
transformation tool that helps struggling young people create a better future.This
is a perfect example of inclusive
growth: It helps the individual, the society and the economy alike. Better targeting
empowers welfare beneficiaries with confidence and life skills, and reduces the
cycle of long-term benefit dependency.

• Economic development
Local government agencies in the Campania region around Naples, Italy, rely on
analytics to evaluate and respond to more than 7,000 applications for regional
projects; verify compliance with tender specifications; and manage the financing
phases and progress toward completion – all while operating with maximum
transparency and speed. In the past few years, officials have transitioned from
manual processes to an integrated monitoring system (IMS) that manages the
financing of its scientific research initiatives.
• Education
The Fox Chapel Area School District outside Pittsburgh has earned numerous
accolades, with each school in the district winning the US Department of
Education’s coveted Blue Ribbon award.Yet there was one group of students the
district wanted to serve better: those with learning disabilities. By using
Pennsylvania’s Value-Added Assessment System (PVAAS), the district was able to
better track year-to-year growth of all students.The result: A decade ago,
learning-disabled 11th graders showed 14 percent proficiency in math and 29
percent proficiency in reading on state-mandated tests.Today, the proficiency level
is 69 percent for both subjects.

• Citizen services
In France, job seekers who collect unemployment benefits are receiving assistance
that is customized to their unique situations.Analytics helps empower local service
branches to design personalized pathways to employment, helping the branches
customize for citizen needs while still meeting statewide quality and consistency
standards and goals.
• Fraud detection
In Los Angeles County, the Department of Public Social Services (DPSS) offers a range of
programs
to alleviate hardship and promote health, personal responsibility and economic
independence.
Across the county’s many communities, DPSS offers temporary financial assistance,
employment services, free/low-cost health insurance, food benefits, in-home services
for the elderly and disabled, and other financial assistance.To support program integrity
efforts in the CalWORKs Stage 1 Child Care Program, LA County turned to SAS® Analytics
to identify potential fraud, enhance investigations and prevent improper payments. By
doing so, it has helped the most vulnerable members of the community while protecting
millions in taxpayer dollars.

• Health care
In Wake County, North Carolina, cardiac arrest victims have a better chance at survival
thanks to new, analytics-driven recommendations from the county’s Emergency Medical
Services (EMS). Based on an analysis of 20 years of data about cardiac arrest
patients,Wake County EMS changed its recommendations for how long to conduct CPR
from 25 minutes (the industry standard) to 60 minutes or more – if EMTs see cardiac
activity during CPR. A study found that using the new CPR guidelines saved 100 people in
the first year.
• Natural resources and conservation
Cary, NC, helps citizens monitor water usage and saves millions of dollars in the process
with an automated water meter system. Aquastar replaced monthly manual readings
with a wireless IoT system that collects hourly meter data, allowing the town to operate
more efficiently and provide citizens with in-depth water usage reports powered by SAS
Analytics. Cary replaced approximately 60,000 residential and commercial water meters
with new, state-of-the-art meters and radio transmitters.Through operational savings,
Aquastar will save the utility more than $10 million above the cost of the project.

• Transportation
The resundsbron between Denmark and Sweden is a five-mile expanse of bridge and
tunnel that connects the two countries and two major metropolitan areas:
Copenhagen in Denmark and
Malmö in Sweden.With the help of analytics, it also connects its “customers” with
destination ideas based on their unique likes and dislikes – the bridge’s way of driving
the revenue-generating traffic it needs to support itself. Using SAS® Customer
Intelligence, the bridge’s marketing and customer- service teams share meaningful,
relevant offers unique to each of the 180,000 travelers who own toll passes. Open rates
for the weekly emails are 30 percent.
WHERE THE FUTURE OF ANALYTICS LIES

• The era of big data has witnessed a paradigm shift into analytics.Today, it’s no
longer sufficient to simply gather data from social media, IoT, and wearable
devices, and be unable to manage or filter it. It is more about delivering the right
data to the right person, at the right time.
• This trend is growing crucial as data is multiplying every day and pouring in from
various devices and smart machines including wearables, electronic gadgets, and
other devices. Such factors call for the treatment of vast pools of structured and
unstructured data with care and precision.This is precisely where invisible
analytics come in.
• Big Data was the Past; 2015 is the Start Point to Take Analytics to the Next Level
• By far, big data has remained as an enabler of the new wave of analytics solutions.
However, the challenge for big data analytics lies in the traditional hardware
storage capacity and processing rates that execrably lag during operations, thus
becoming inefficient in supporting the demand for handling large amounts of data.
• As we look into the future, more products and technologies are leaning towards
what can be possibly done with the large amounts of data that is already present,
without the need of harvesting more data.This time, analytics will be the enabler.
Market experts predict that analytics will become deeply, but invisibly embedded
everywhere.The increasing invisibility in analytics is in the same breath as the
growth of the volume of data and the rising trend toward embedded business
intelligence (BI).
• Pervasive BI is gaining immense traction these days.The adoption rates of BI
hover at approximately 30 percent in a typical business or enterprise
environment.
• The Future is All about Advanced, Pervasive, and Invisible Analytics
• Analytics will continue to grow due to the Internet of Things (IoT), creating large
pools of data. Analytics will be deeply embedded and virtually invisible in the
coming years. It will be the major highlight in the future as the volume of data
generated by various embedded systems is rapidly increasing. Every application will
need to be an analytic application and the value will be in the answers, not the
data.
• With the help of advanced analytics techniques such as natural language
processing, data mining, text analytics, statistics, predictive analytics, and
machine learning, organizations will utilize big data analytics and similar
analytical tools to gain deeper insights and make significantly better business
decisions.
HOW BUSINESS ANALYTICS CAN HELP
TURN DATA INTO INSIGHT
• Being able to collect the right data is one thing, but making it extremely useful
requires a
different skill- and mindset.
• Based on surveying 49 Analytics experts here we have compiled a list of the top 10
strategies to turn data into actionable insights.
• 1. Measure the right things
• You can't optimize what you don't measure.There is not a one-size-fits-all solution.
Every
business is different and should be treated in a unique way.
• Let's assume you run an ecommerce site. In this case you probably want to know:
• Which channels drive the most conversions?
• What are your leaking buckets (places where people leave your website)?
• Whether people use multiple devices before purchasing your products?
• What are the look-to-buy ratios for your individual products and product categories?
• What landing pages need to be improved and in which channel?
• You need to think in advance about what is important for your business. It all starts
with a clear and concise measurement plan for your business
• 2. Ask the right questions to stakeholders
• Go the extra mile to answer all of your stakeholderís questions.This means
tapping into the stakeholderís aspirations and challenges by asking the right
questions.
• It's a must to formulate a clear business question before you start your next data
analysis.You can easily waste hours of your time by getting lost in your data. And
coming up with "insights" that are already known or not deemed important can be
highly frustrating as well!

• 3. Use segmentation to drive action

• Go for segmentation if you want to take action on your data! By grouping visitors
that have some attributes in common, you can start digging deeper. Choosing
which segments to study depends on the business question you are trying to
answer.
• Identifying segments will greatly enhance your understanding of how your
customers behave. You can use this information for setting up an optimization
plan.
• 4. Use clear visualizations to convey your message
• The way in which you present your data will make a huge difference in the
outcome. Do you remember these presentations that only include numbers and
words? And this compared to clear visualizations that promote cognition instead
of confusion.
• It's important to articulate your specific data story with as much what, how and why
behind it.
This will turn your data into insights and profitable business decisions.

• 5. Discover the context of your data set

• Everyone has got data and their own personal data driven insight (opinion). In
most cases superior understanding of context leads to the best decisions.
• Make sure to establish context for the data you are seeing.What do these numbers
mean? Are they important? Does it really affect the business? And how is the data
collected?
• Data without context isn't that meaningful and can actually lead to bad
business decisions because of interpreting it in the wrong way!
6. Build a solid optimization plan
• Use the "Define Measure Analyze Improve Control" process (DMAIC) to improve
your business. It's one of the Six Sigma concepts you can directly apply in
your situation.
• Define the problem or hypothesis, stakeholders and scope of analysis.
• Measure relevant data and conduct basic analysis to spot anomalies.
• Analyze correlations and patterns, put your statistics and visualization skills
to work.
• Improvement based on insights and showing several options to explore.
• Control the change by deploying (A/B) tests and monitoring KPIs.
7. Construct a great hypothesis
• A clearly articulated hypothesis is the start of any "analysis". And the hypothesis
should have the potential to drive action. Come up with your hypothesis by
completing two fill-in-the-blank statements: 1) I believe . (this is the hypothesis),
and 2) If I am right, we will
. (this is the qualification).
• Formulating these statements isn't always easy, but you will save a ton of time
wandering through your data and coming up with interesting - but not
actionable - findings.
8. Integrate data sources
• The integration of data sources leads to better and faster business decisions.Think
about integrating traditional databases with big data solutions (like Hadoop).
Mining through and connecting all your sources will enhance your customer
understanding and can deliver great insights.
• 9. Break down organizational silos
• A healthy organization is the foundation of everything. Communication instead of
confrontation. Inspire, motivate and be curious about the data and the
possibilities it has for your organization.Treat any obstacles first and improve the
communication between the business and analytics leaders.

• 10. Don't forget to hire smart people

• Tools can collect data, but people - who understand the business - build insights.
Smart people are required to find the useful data, translate it into data-driven
stories of useful knowledge - the insights. It's a team effort where combining
internal business experts with external analysts might be your best bet.
HOW PREDICTIVE AND DESCRIPTIVE ANALYTICS IS
TRANSFORMING ALL TYPES OF ORGANIZATIONS

• Manufacturing Machine Learning in a Predictive Environment

• Machine learning -- a type of artificial intelligence (AI) that provides computers with the
ability to learn without being explicitly programmed -- is part of nearly every aspect of
our day-to-day lives. Take credit card fraud alerts, for example. Machines learn your
regular activity over time, so when a suspicious transaction is made with your credit
card, the credit company immediately puts a hold on your account.
• Data is the theme behind this growing trend in technology. Simply put, there's more data
available
than ever before, so there's enough data to fuel predictive algorithms.
• Modern organizations are adjusting business practices in this predictive environment to
adapt to changing demands. For manufacturers specifically, there are several areas
where machine learning could positively impact their bottom line as well as the overall
customer experience with predictive analytics.
• Modern organizations are adjusting business practices in this predictive
environment to adapt to changing demands. For manufacturers specifically, there
are several areas where machine learning could positively impact their bottom
line as well as the overall customer experience with predictive analytics.
Forecasting the Predictive Analytics Future
• In the wake of these advancements, which industries are fertile ground for
transformation through predictive analytics? The Internet of Things (IoT) and
predictive analytics can deliver after-sales service value across innumerous
industries, but they are most attractive in industries with part-intensive products
that are field or depot repairable.
• As technology platforms mature and the cost of implementing IoT and predictive
analytics solutions decreases over time, manufacturers will begin to accelerate
their pace of turning predictive analytics into strategic advantage. Below are three
different areas of opportunity for predictive analytics to take hold.
• Area #1: Predictive Demand Forecast
• Efficient demand forecasting, which predicts future demand for products and
parts based on past events and prevailing trends, is a key component of
after-sales service success.With an accurate picture of demand, manufacturers
can improve service after the initial sale of a product without having to raise
costs.
• Predictive technologies such as machine learning and cloud-based inventory
management solutions eliminate overstocking and enable warehouses to work with
each other -- as opposed to each operating in individual silos -- to meet
demand.The ultimate results are high service-parts fill rates, high levels of product
uptime with minimal risk, and increased customer service levels.
• Area #2: Predictive Pricing
• Many manufacturers today rely on pricing practices of the past, such as cost-plus
models and Excel spreadsheets, to price service parts. Unfortunately, this leads to
parts and products being sold at different prices in different locations -- creating
poor customer experiences as well as a missed profit opportunity for
manufacturers.When using predictive algorithms to set prices for service parts,
manufacturers need to be mindful of the different factors that can affect sales,
including part location, seasonality, weather, and demand.With predictive
capabilities, manufacturers can incorporate all these factors and others to
automatically adjust prices based on what the market will bear.
• Area #3: Predictive Maintenance
• The break-fix service model is reactive and inefficient. Fifty percent of service
attempts fail because the needed service part was not available when needed,
which results in extended product downtime, lost revenue for the product
owner, and an unhappy customer.
• With IoT and predictive analytics, smart parts and sensors will detect when a part is
about to fail so the manufacturer can determine when and where parts are needed,
proactively routing them to a dealer or repair center instead of storing them in
stocking locations around the world.This enables manufacturers to reduce excess
inventory and costs, improve part fill rates, avoid the cost and disruption of
unscheduled downtime, and, ultimately, maximize customer loyalty.
• Optimizing After-Sales Service with Predictive Analytics
• It's no secret that the revenue and margins generated on a manufacturer's service
side of its business are attractive, especially when compared to the product side,
making optimizing the service side increasingly important to manufacturers'
long-term financial performance.
• Combined with the near-term financial benefits associated with service parts
inventory optimization, this is driving companies across multiple industries to
explore opportunities to increase the financial value from their service
organizations. Predictive analytics is key to after- sales service organizations'
success.
HOW ANALYTICS SUPPORTS RETAIL
COMPANIES
• 1. Going omnichannel
• Retail started to move beyond brick-and-mortar stores long ago. However, many
retailers still consider making the first step in this direction. If you are among
those, you need a proper data analytics solution.
• Let’s say, a consumer electronics retailer runs both physical stores and an online
one.The retailer’s brick-and-mortar stores are showing brilliant sales, while their
online store is terribly lagging behind. Naturally, the retailer is not happy with the
format that does not bring sales. However, is their e-store really useless and they
are just wasting money to keep it running?
• After scrutinizing customer big data for both channels, the retailer may find out
the following: 75% of website visitors are surfing the online catalog to compare
product features and finish their purchases in one of the physical stores. In this
case, if the retailer abandons an online store, they may also lose the majority of
customers who would prefer shopping with another retailer in a way that they find
convenient.
• 2. Creating unique customer experience
• Customers make purchases in brick-and-mortar and online stores, take part in loyalty
programs, create shopping lists and place orders in the apps. In a word, they interact
with a retailer in different ways and expect them to offer a personalized approach in
return. As a retailer, you must understand how precious customer data is, so you should
be striving to repay your customers with targeted marketing campaigns and product
offers.
• Let’s assume, you are a drugstore retailer.You collect and analyze customer data to
understand their behavior and preferences.Your analytical system knows that Customer
A used to visit your store once a month to buy 3 packs of nappies, a washing powder of
brand X and a dishwashing liquid of brand Y. But this month, Customer A didn’t
appear.To encourage him or her to visit your store, you may then send them a 5% coupon
for their favorite washing powder brand.
• As a real-life example of data analytics in action, we’ve chosen Nordstrom with their
initiative Reserve Online & Try In Store.Their app users can select items and book them
for trying on in a particular store and at a convenient time. Nordstrom has gone further:
the retailer can recognize if a customer is passing by their store and kindly invite them
to come in. How can anyone stay indifferent when they receive the message: Hello from
Nordstrom. It looks like you are nearby, and your item is ready to try! To crown it all,
once a customer is in the store, he or she will find their name on the door of a fitting
room. Here is the personalized approach in action.
• 3. Dynamic pricing to stay competitive
• Once competitive intelligence was a challenge for brick-and-mortar retailers.
Naturally, the
rivals were unwilling to share any information, and price monitoring at the
competitor’s stores was time-consuming, prone to mistakes and exhausting. In the
era of ecommerce, retailers can benefit from new approaches to competitive
intelligence. By definition, online stores are publicly available, and a lot of
information such as product details, promo offers, prices and category hierarchy is
always at hand.This all made dynamic pricing possible, when the system is able to
scan competitors’ prices in real time, run a complex analysis very quickly and
change a retailer’s prices automatically based on the defined rules. Now, if an
ecommerce retailer wants to be 5% cheaper than their competitors are, with big
data analytics they are able to do this.
• Brick-and-mortar retailers can also rely on big data analytics, though some time
ago they experienced some implementation limitations, as store employees had to
replace price tags manually, which was time-consuming.With the invention of
electronic price tags, dynamic pricing has become available to brick-and-mortar
retailers, too. In no time, the system can change prices based on analyzing the
sales, stock, competitors’ prices, customer demand, shelf life, etc.
4. Building effective relationships with suppliers
• An industry benchmark,Walmart laid the rules on how to collaborate with the
suppliers.And this policy can add $1 billion to Walmart's revenue.The retailer has
implemented a scoring system to assess the suppliers according to On-Time, In-Full
principle. In simple words, either delivery is late or early, the supplier should pay a
fine.The same scenario works if the supplier delivers timely, but the quantity of
goods is wrong, their quality is poor, or packaging is damaged.
• If you are to follow Walmart’s best practice, you can also think about tuning your
data analytics system to differentiate between strategic and non-strategic
suppliers, critical and non-critical product categories. Additionally, you can set
different thresholds. For instance, the critical number of troublesome deliveries
may be 10%.
• With such a scoring system, a retailer will easily identify whether a supplier is
reliable or not. Besides, this approach will contribute to a more efficient inventory
management. So, a retailer’s persistent headache caused by over-stocks and
out-of-stocks should finally subside.
THE DIFFERENCES BETWEEN BUSINESS
INTELLIGENCE AND BUSINESS ANALYTICS
• Business Intelligence (BI) and Business Analytics are similar, though they are not
exactly the same. Business Intelligence involves the process of collecting data from
all sources and preparing it for Business Analytics. Business Intelligence is more of a
first step for companies to take when they need the ability to make data-driven
decisions. Business Analytics, on the other hand, is the analysis of the answers
provided by Business Intelligence.While Business Intelligence answers what
happened, Business Analytics answers why it happened and whether it will happen
again. Business Intelligence includes reporting, automated monitoring and alerting,
dashboards, scorecards, and ad hoc query; Business Analytics, in contrast, includes
statistical
and quantitative analysis, data mining, predictive modeling, and multivariate
testing.
THE IMPORTANCE OF BUSINESS
ANALYTICS
• Business analytics is a methodology or tool to make a sound commercial decision.
Hence it impacts functioning of the whole organization.Therefore, business analytics
can help improve profitability of the business, increase market share and revenue and
provide better return to a shareholder.
• Facilitates better understanding of available primary and secondary data, which
again affect operational efficiency of several departments.
• Provides a competitive advantage to companies. In this digital age flow of information
is almost equal to all the players. It is how this information is utilized makes the
company competitive. Business analytics combines available data with various well
thought models to improve business decisions.
• Converts available data into valuable information.This information can be presented in
any required
format, comfortable to the decision maker.
HOW BIG DATA AND ANALYTICS CAN HELP IN
UNDERSTANDING
CONSUMER/CUSTOMER BEHAVIOR
• Customer behavior analytics is about understanding how your customers act across each
channel and interaction point — digital or non-digital – and what influences their
actions. It gives you a way to implement what I like to call, the “four rights” – talk to
the right audience, through the right channel, with the right message, at the right
time.
• Understanding customer behavior can help your organization in more ways than you
think.The
entire customer lifecycle can be optimized using behavior analytics:
• Customer acquisition: Marketing will target high-value customer segments identified by
behavior analytics and study behavior patterns to determine the best potential offers.
• Customer engagement: Behavior patterns will be used to generate personalized
next-best, cross-sell and up-sell offers, while behavioral customer segmentation will be
used for more general customer marketing offers.
• Customer retention: Behavior patterns will be used to detect possible customer
• The value of customer behavior analytics can be measured in a number of key
metrics:
• Increased customer acquisition and conversion rates
• Lower cost of acquisition
• Larger average sale on initial purchases
• Increased number of purchases per customer
• Larger order sizes on repeat purchases
• Lower cost per sale
• Increased lifetime value of customers
• Higher customer retention/Reduced churn
• Lower cost of service
• These are all metrics every organization strives to improve and can be
dramatically impacted by customer behavior analytics
EXPLAIN HOW ANALYTICS CAN HELP
MANAGE ASSETS
• Improved customer satisfaction – Some critical goals to enhance customer satisfaction include
managing asset risks, avoiding unexpected outages, and maintaining critical assets before failure
strikes. Consumers expect to be notified about planned outages well in advance to plan their utility
consumption. However, it is not possible to notify them when it comes to unexpected equipment
failure. Adding predictive intelligence capabilities to the existing systems can help Utilities to control &
avoid asset failures, outages, and penalties.Therefore, planning & prioritizing asset maintenance
activities and informing customers about it will help achieve improved customer satisfaction.
• Reduced asset maintenance costs - Predictive intelligence system provides an accurate prediction of
failures, events & outcomes. This would help avoid significant unexpected failure costs including lost
revenue, expense of field asset in service, disposal of damaged utility asset, collateral damage cost,
regulatory penalty, intangible costs, etc.Thus, eliminating the overhead of unplanned asset
maintenance and reducing fixed costs in millions of dollars.
• Improved safety & compliance system - Integrating data from various sources such as SCADA, CIS,
EAM-GIS, weather channels and online monitoring systems with Predictive asset analytics system
enables utilities to address possible safety risks.They can quickly take any appropriate operational
action and mitigate safety risks.
• Optimization of field force - Remote Asset Management & proactive maintenance
systems can help utilities to keep a watch on the health of field assets at
pre-scheduled intervals.This avoids the reallocation of field-force from existing
location to restore the encountered outage and a complete reorganizing of other
planned asset maintenance activities.
• Challenges in Implementing Predictive Asset Analytics
As utilities leverage predictive analytics for optimizing asset maintenance, they
must deal with
the following challenges:
BUSINESSES USE ANALYTICS TO:

• Find and act on business opportunities that may be discovered through

datasets.
• Improve process.
• Grow revenue.
• Be proactive on risk management.
• Derive a competitive advantage.
• Develop new services.
STEPS TO APPLYING DATA ANALYTICS

• Consistently seen across available literature are five common steps to applying
data analytics:
• Define your Objective
• Understand Your Data Source
• Prepare Your Data
• Analyze Data
• Report on Results
STEP 1 - DEFINE YOUR OBJECTIVE

Ask the following questions:

• What are you trying to achieve?
• What could the result look like?
• Before you even start looking at the data, figure out what it is you think the data could
tell you. Imagine what the results could be. For example, if you are going to look at a
listing of transactions from an accounts payables system, you might come up with
objectives like: look for transactions that are not supported by purchase orders, or look
at the days of the week the transactions posted. The result could show that not all
transactions were supported, or we may find transactions posted on the weekend when
no one should be working.The ACFE and The IIA both offer courses on data analytics
theory that provide examples on the types of analytics and when to use each one.
Starting with proper and realistic goals can reduce wasted time as you move through the
process.
STEP 2 - UNDERSTAND YOUR DATA
SOURCE
Ask the following questions:
• What information do I need?
• Can I get the data myself, or do I need to ask an IT resource?
• Depending on data availability, you may need to combine information from multiple sources. Many
times the, type of testing you can perform will be dictated by the information that is available to
you. For example, let’s say you are planning to look for transactions that were posted on the
weekend when no one is supposed to be working. At a minimum, the data you need for this test
must include a date/time stamp on each transaction.You will probably want more than just the
date/time stamp.You will also want to know who processed the transaction, what was the dollar
amount, and was there a supervisor approval.
• Your next question will be about actually getting the data. If you have the required access and
sufficient training on the systems involved, you may be able to get the information on your own.
Realistically, most IT departments do not want us all pulling our own information. It is perfectly
acceptable to ask for help. Have the IT department extract the information you need.When
involving someone else in this process, make sure you give them clear instructions on the data to
pull and set scoping parameters. If you ask for all the data, you may end up with 20 years’ worth
of transactions when you only wanted all of the transaction from this year.
STEP 3 - PREPARE YOUR DATA

Ask the following questions:

• Does the data need to be cleansed?
• Does the data need to be normalized?
• Data preparation includes many different aspects, so we will focus on two of the broadest, most encompassing points:
cleansing the data, and normalizing the data. Cleansing data addresses the quality of the information, while
normalization eliminates redundancies.
• Cleansing the data is especially true when the information is coming from multiple sources. Sometimes you will have a
column of text in a spreadsheet, but some of the cells also have numbers, or spaces in front of the letters, or symbols
in the data. Cleansing the data will remove all of the unrecognizable information from the cells.
• Normalizing the data is very closely related to cleansing. Normalizing looks for different version of the same data
entry. For example, you may have the last name O’Brien in your data six different ways: O’Brien, O_Brien, Obrien,
O’brien, O_brien, OBrien.These are probably all the same name, just input into systems in different ways. Normalizing
converts all of the variations into one format. If you don’t cleanse and normalize the data, the output will either
produce an error, or the results will be unusable or unreliable.
STEP 4 - ANALYZE DATA

Ask the following questions:

• What tests can I run on the data?
• Is help available to understand results?
• At this point, you will have come up with the objective, pulled the data, and spent some
time
cleansing and normalizing the information, and now it’s time to run the test.Your data
analytics tools will help you summarize the information. Again, look to the professional
organizations like The IIA and the ACFE for training if you are not sure which test to run.
• Once you run the tests, you may or may not understand the results.Your best resource
to understand the results will likely be the people you are auditing. If it is appropriate,
you should take the results back to the data owners for help understanding the output.
Keep in mind, this may not always be appropriate, especially if this is for a fraud
examination.
STEP 5 - REPORT RESULTS

• Ask the following questions:

• Will management understand the results?
• Can you represent the results visually?
• Avoid presenting management with tables full of numbers.We need to effectively communicate results without lengthy
explanations. Use charts and graphs with simple notes.
• One of the most important factors in helping management focus and understand the results is the amount of
information we present. We must be careful not to overwhelm management with endless information.Always present
summary information and provide any details as an appendix to the summary. Remember that these are busy people
with a very limited amount of time to dedicate to your data, so be succinct and provide your reports well in advance
of any meetings.
• In line with our basic audit process, we should provide more risk information to management.You should feel free to
have open, risk- based discussions with them as it relates to the results.
• Instead of getting mired in the details, where applicable, provide more trending information related to audit results.
Showing trends is more illustrative of the organization’s overall status. Examples could be trending by types of findings,
results by business unit, or trends in the status of different data classifications. However, if we are dealing with a fraud
examination, the exact opposite may be preferable. When we must present the details, be sure to make a clear,
unbiased presentation of the test results.