Analytics and O.R. in the US: Making the Connection

Don N. Kleinmuntz, Ph.D.Principal, Kleinmuntz Associates LLC

President, INFORMS Section on Analytics

Developments in Advanced Analytics and Big Data 2014London, 30 April 2014

Analytics

“The scientific process of transforming data into insight for

making better decisions”

As defined by:

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Relative Search Volumes via Google Trends

Source: http://www.google.com/trends/explore#q=analytics%2C%20big%20data%2C%20operations%20research&cmpt=q

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Relative Search Volumes via Google Trends

Source: http://www.google.com/trends/explore#q=analytics%2C%20big%20data%2C%20operations%20research&cmpt=q

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Source: IDC

20002002

20042006

20082010

20122014

20160

20

40

60

80

100

120

140

160

Analytics Market Size

(US$ Billion)

Hardware & Services

Software

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BUSINESS ANALYTICS

BUSINESS INTELLIGENCE

DATAWAREHOUSE

DECISIONSUPPORT

BIG DATA

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BIG DATA

• Happening NOW– Not just another way to say “Analytics”

• New challenges in data management and analysis require new approaches– Can’t just buy more storage and bigger database servers

Volume

Velocity

Variety

• More data crosses the internet each second than was stored on the internet 20 years ago

• Increasing need to capture data on a real-time or near-real time basis

• Not just text and numbers in a structured relational database – images, free text, transactional feeds, etc.

SAS Institute’s BI & Analytics Hierarchy

• What’s the best that can happen?Optimization

• What will happen next?PredictiveModeling

• What if these trends continue?Forecasting &Extrapolation

• Why is this happening?StatisticalAnalysis

• What actions are needed?Alerts

• Where exactly is the problem?Query/Drill Down

• How many, how often, when?Ad Hoc Reports

• What happened?Standard Reports

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Inte

llige

nce

/ So

phis

ticati

onCo

mpe

titive

Adv

anta

ge

Prescriptive

Predictive

Descriptive

But Where is the Rest of Operations Research?

Prescriptive Analytics – Optimization/Decision Models

Predictive Analytics – Extrapolation/Prediction

Descriptive Analytics – Report/Query/Alert

Data Warehouse

OtherData

MarketData

WorkforceData

OperationalData

FinancialData

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Healthcare Business Analytics – Lessons Learned

Founded: 1996 by Drs. Catherine and Don Kleinmuntz

Headquarters: Chicago, IL

Employees: Approximately 110

Client Base: About 1,000 hospitals

Portfolio:

Software-as-a-Service solutions for financial analytics and decision support in healthcare providers c

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National Client Base…

Where is Strata Decision Now?

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OPERATIONAL STRATEGIC

DES

CRIP

TIVE

P

RED

ICTI

VE

PRES

CRIP

TIVE

DSS – COST ANALYTICS DSS – CONTRACT

ANALYTICS

SERVICE LINE ANALYTICS

PRODUCTIVITY REPORTING

MANAGEMENT REPORTING

ROLLINGFORECASTING

CAPITAL TRACKING

EQUIPMENT REPLACEMENT

OPERATINGBUDGETING

CAPITAL BUDGETING

STRATEGIC PLANNING / LRFPHC REFORM

MODELING

Data-InformedForecasting and

Risk Analysis

Value-Focused Thinking& Optimization-Enabled Decision and Resource

Allocation Models

Opportunities for Advanced Analytics

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OPERATIONAL STRATEGIC

DES

CRIP

TIVE

P

RED

ICTI

VE

PRES

CRIP

TIVE

DSS – COST ANALYTICS DSS – CONTRACT

ANALYTICS

SERVICE LINE ANALYTICS

PRODUCTIVITY REPORTING

MANAGEMENT REPORTING

ROLLINGFORECASTING

CAPITAL TRACKING

EQUIPMENT REPLACEMENT

OPERATINGBUDGETING

CAPITAL BUDGETING

STRATEGIC PLANNING / LRFPHC REFORM

MODELING

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Why invest in advanced analytics?

Companies that invest in advanced analytical

capabilities outperform the S&P 500 by an average of

64%

What is preventing investment?

Companies listing “inadequate staffing or skills” as the top barrier

for implementing big data and analytics:

46%

Research Sept 2013

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Two Propositions

“Analytics doesn’t take anything away from Operations Research (OR). Outside our community, OR is seen as a toolkit but Analytics is seen as a process.”

-Anne Robinson Director, Supply Chain Analytics Strategy Verizon Wireless Past President of INFORMS

1. Analytics practice can benefit from OR knowledge and experience

2. OR can benefit from interest and enthusiasm for Analytics

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About INFORMS

• Largest membership association in the world for advanced analytics professionals

• Mission: lead in the development, dissemination and implementation of knowledge, basic and applied research and technologies in operations research, the management sciences, and related methods of improving operational processes, decision-making, and management.

• 11,000 members – Primarily (but not exclusively) academic: 50% academic, 30% practitioner, 20%

student– Highly educated: 51% doctorate, 96% earned or pursuing Masters or higher– Global: 79% North America, 10% Europe, 7% Asia– Growing both in number and diversity– Publisher of 13 scholarly journals– Annual conference with around 4,000 participants– Numerous interest-focused subdivisions– www.informs.org

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Analytics Initiatives at INFORMS

• Explicit strategic focus– Use Analytics as lever for increased engagement with individuals and

organizations in industry and government

• Existing:– Annual Conference on Business Analytics and Operations Research

• Formerly Conference on OR Practice• Boston, 30 March to 2 April 2014

– Analytics Magazine – bimonthly web publication– Section on Analytics– Certified Analytics Professional (CAP) credential

• In development:– Conference on the Business of Big Data

• San Jose, 22 to 24 June 2014

– Continuing Education Course offerings– Analytics Maturity Model

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Section on Analytics

2011• Bylaws

approved• 500 members

2012• 750 members• Innovative Applications in

Analytics (IAA) Award• Student Analytics Scholar

Competition (with SAS)• Integration with Analytics

eMagazine• LinkedIn Group

2013• 830 members• 1000+ LinkedIn Group• Regional conference with

Chicago Chapter & Univ. of Chicago

• IAA and Student Competition with SAS

• Engagement with certification (CAPTM) and other INFORMS Analytics initiatives

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Section Objectives

1. OUTREACH BEYOND INFORMS– Reach the vast and growing community of analytics

professionals outside INFORMS – Help them understand the tremendous value provided by

OR/MS

2. OUTREACH WITHIN INFORMS– Communicate about analytics with fellow INFORMS members– Explain how analytics can advance the use of OR/MS tools

and techniques

3. NETWORK AND DEVELOP– Develop a portfolio of Analytics Section member services– Attract a growing community of like-minded professionals for

networking and professional growth

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Certified Analytics Professional (CAP®)

• Certification Objectives– Advance use of analytics by introducing standards of

quality– Identify individuals with appropriate breadth of

knowledge– Encourage continued competency– Be software and vendor neutral– Be available to all who are eligible– Meet accreditation standards

(ISO/IEC 17024 & NCCA)

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Analytics Professional Job Task Analysis

• Certification requirements are based on a delineation of common or typical tasks performed and knowledge applied by Analytics Professionals

• Developed by 12 subject matter experts selected to be:

– Highly regarded – Diverse in geography, sector

(public-private), organization type and size, and application area (e.g., finance, logistics, software, consumer goods, etc.)

– Representing descriptive, predictive, and prescriptive segments of analytics

• Exam designed to test across a variety of domains

Domain

Description Weight

IBusiness Problem (Question) Framing

15%

II Analytics Problem Framing 17%

III Data 22%

IVMethodology (Approach) Selection

15%

V Model Building 16%

VI Deployment 9%

VII Life Cycle Management 6%

    100%

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5 E’s: Components of CAP® Certification

• Education:

• Experience:

• Exam: Tests skills and knowledge in the 7 domains of the Job Task Analysis

• Effectiveness: “Soft” skills confirmed by employer or client

• Ethics: Must agree to a Code of Ethics

See: www.INFORMS.org/Certification

Degree Level Degree Area Experience

MS/MA or higher Related Area 3 years

BS/BA Related Area 5 years

BS/BA Non-Related Area 7 years

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Analytics Certification Board

- Scott Nestler, CAP, US Army (Chair)- Polly Mitchell-Guthrie, SAS (Vice Chair)- Tom Davenport, Babson College- Bill Franks, Teradata- Jeanne Harris, Accenture- Terry Harrison, CAP, Penn State University- Lisa Kart, CAP, Gartner- Kathy Kilmer, Disney- Don Kleinmuntz, Kleinmuntz Associates- Jack Levis, UPS- Paul Messinger, CAP, University of Alberta- Jonathan Owen, General Motors- Melissa Moore, INFORMS Exec. Director

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Maintaining the CAP® Designation

• Certification requires that knowledge be kept current

• Recertification every 3 years • Based on earning at least 30

hours of professional development or equivalent– 1 Professional Development Unit

(PDU) = 1 hour of activity – PDUs can be maintained online

at INFORMS

PDU Category PDUs Allowed

Education/Training programs

1 PDU/hour of activity: must earn 8

Self-directed learning 1 PDU/hour of activity:maximum of 10

Creating new analytics knowledge

1 PDU/hour of activity:maximum of 10

Volunteer service 1 PDU/hour of activity:maximum of 10

Analytics professional work experience

5 PDUs/year of employment

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Test Available Worldwide (1 May 2014)via Computer-Based Administration

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For More Information

• INFORMS: www.informs.org

• INFORMS Analytics Section: www.informs.org/Community/Analytics

• Becoming a Certified Analytics Professional:www.informs.org/applyforcertification

• My email: Don@KleinmuntzAssociates.com