Embed Size (px)
Citation preview
Business Analytics DiscussionPresentation to the
CPCU Spring Workshop (Draft v1)
Room C-130 - State Farm Corporate Headquarters One State Farm Plaza - Bloomington, IL
Tuesday, May 22, 2012
Katie SchoolOF INSURANCE AND FINANCIAL SERVICES
1
Matthew L. Nelson, CPA, Ph.D.Associate Professor
Department of Accounting & BIS(309)438-7794
Bryan Hosack, Ph.D.Assistant Professor of Information Systems
School of Information Technology(309) 438-8133
Peter Kaufman, Ph.D.Assistant Professor of Marketing
College of Business(309) 438-8995
2
Business Analytics (BA) DiscussionAgenda
• What We are Hearing! – Business Analytics Background– Highlight Select “Landmark” BA Studies
• The Business Analytics Value Proposition• BA Skills Needed
– Interdisciplinary (biz-gene, mild IT, statistics, quant. methods, CRM, others)– Practice (domain experience, insurance, marketing, acc / finance, etc.)– Context Computing
• BA Employment Opportunities• BA Curriculum Illustrations & Needs• ISU BA Curriculum Integration• Q&A and Discussion
3
What We are Hearing about BA!
What is Big Data?“The microscope was invented four centuries ago and allowed
people to see and measure things as never before — at the cellular level. It was a revolution in measurement.”
“Data measurement is the modern equivalent of the microscope.”
– Professor Brynjolfsson, Massachusetts Institute of Technology (MIT)
Steve Lohr, New York Times, February 11, 2012 (http://www.nytimes.com/2012/02/12/sunday-review/big-datas-impact-in-the-world.html?_r=1&pagewanted=all)
4
What We are Hearing about BA!
Steve Lohr, New York Times, February 11, 2012 (http://www.nytimes.com/2012/02/12/sunday-review/big-datas-impact-in-the-world.html?_r=1&pagewanted=all)
“It’s a revolution. We’re really just getting under way. But the march of quantification, made possible by enormous new sources of data, will sweep through academia, business and government. There is
no area that is going to be untouched.”
Gary King, Director, Harvard’s Institute for Quantitative Social Science
“Big Data has the potential to be “humanity’s dashboard,” an intelligent tool that can help combat poverty, crime and
pollution.”
Rick Smolan, creator of “The Human Face of Big Data”
5
What We are Hearing about BA!
Economic Conditions
Technology Innovations
Socio/Culture Forces
Regulatory / Legislative
Macro / Micro ConditionsRecovery & Rebuild Balance Sheets, Reserves
Social, Mobile, Context, New & emerging e-Biz Models, Rapid Pace, Rapid adoptions
Crowd sourcing, Social Circles, Mobile, Thank-you Economy, CRM 1:1, Always On Expectations
Legislative, Regulatory Constraints, IP, Privacy, Data Security, Context Vulnerabilities
Competitive Pressures
The Data Deluge, Discovery, Platform strategies, e-Commerce (f & l & m-comm)
Pressures to Act with Business Analytics
BA Must Haves…•Cross functional•Faster decisions •More accurately •More efficiently•Strategic insights•With no blinders
• Do more, with less
6
The Business Analytics Value Proposition
Apple’s New Siri Human-voice commandsUsing analytics to build recognition with regional dialects, slang terms, continuous development
Two Focus Areas with Initial BA Launch:-Which customers are we about to lose?- How do we grow our business with current customers?Later deployments focused on product distribution, mix, delivery, fulfillment, pricing
The NY Yankees have a $100 mill larger payroll than the Oakland As.How do small market teams compete? The Moneyball Movie!Sabremetrics. Shifted Metric Tracking from counting Wins to manufacturing more runs than your opponent, at the least possible cost
Mine data on truck delivery times and traffic patterns to fine-tune routing
Steve Lohr, New York Times, February 11, 2012 (http://www.nytimes.com/2012/02/12/sunday-review/big-datas-impact-in-the-world.html?_r=1&pagewanted=all)
7
The Business Analytics Value Proposition
Analyze sales, pricing and economic, demographic and weather data to tailor product selections at particular stores and determine the timing of price markdowns
Dating alignments and “matching” algorithms
Web Analytics, Platform Integration & Recommendations, Google Scholar / Academic Research Analytics, Mapping, Flu Outbreaks, Real Estate Market Valuations, The “Thank-you Economy”, on and on and on
8
Business Analytics Defined
Business analytics (BA) refers to the skills, technologies, applications and practices for continuous iterative exploration and investigation of past business performance to gain insight and drive business planning.
Business analytics focuses on developing new insights and understanding of business performance based on data and statistical methods.
Business analytics makes extensive use of data, statistical and quantitative analysis, explanatory and predictive modeling, and fact-based management to drive decision making. Analytics may be used as input for human decisions or may drive fully automated decisions.
Davenport, Thomas H.; Jeanne G. Harris (March 2007). Competing on Analytics: The New Science of Winning. Harvard Business School Press.
9
Decisions without Blinders
The “Bounded Awareness” phenomenon causes people to ignore critical information when making decisions.
Learning to expand the limits of your awareness before you make important decisions will save you from asking yourself “How did I miss that?” after the fact
See, Seek, Use and Share Information
Harvard Business Review, Bazerman and Chugh, Jan. 2006
The Business Analytics Value Proposition
10
Decisions without Blinders
See Information
Seek Information
Harvard Business Review, Bazerman and Chugh, Jan. 2006
• Failure to See Information• EMBA groups asked to watch video and count # of
ball passes. 80% failed to notice a women w/ umbrella on the court weaving between players.
• Develop a culture, empower & establish reward mechanisms to see unexpected events / information
• Professor writes 2 – 4 – 6 on the board. EMBAs asked to write the sequence rules on the board.
• No EMBAs asked for additional samples, nor questions
• All guessed the sequence wrong. It was three numbers that increase in value
The Business Analytics Value Proposition
11
Decisions without Blinders
Use Information
Share Information
Harvard Business Review, Bazerman and Chugh, Jan. 2006
• Failure to Use Information Bounded Awareness• Success in a given technical area, impairs firms from
adopting newer technologies (even when the available in-house). E.g. Swiss Quartz Watches, Kodak Film, Borders Books, K-Mart
• Immediate Red Flag signaling “Bounded Awareness”• No employees, nor managers are raising counter-points to
an important upcoming decision
• Failures to Share Information • Events around 9/11 FBI, CIA, FAA, Military…borders• Traditional bonus / compensation plans discourage the
sharing of information• Establish reward mechanisms that foster sharing• Triangulation, Speak Truth to Power
The Business Analytics Value Proposition
12
Business Analytics Skills Needed
BUSINESS INFORMATION TECHNOLOGY
• The “B-gene” Foundations• Foundational Math & Economics• Solid Business Acumen & Strategy• Business Statistics & Analysis• Some MQM & Methods• Some Domain Experience
• Insurance• Finance• Marketing• Accounting
• Solid Excel Proficiency• SPSS, SAS or Equivalent Experience• Solid e-Business & Web Search• Some Data Management & Web
Services• Some Data Mining & Discovery• Some ERP and DSS
Ability to discuss at 3,000 foot level
Ability to Drill-down when necessary
The T-Career Path
13
Business Analytics Skills Needed
• Faculty members, school administrators and corporate recruiters are questioning the value of a business degree at the undergraduate level.– 20% of US undergraduate degrees are in business
• The proportion has held steady for 30 years
• The biggest complaint: The undergraduate degrees focus too much on the nuts and bolts of finance and accounting and don't develop enough critical thinking and problem-solving skills through long essays, in-class debates and other hallmarks of liberal-arts courses.
• Companies say they need flexible thinkers with innovative ideas and a broad knowledge base derived from exposure to multiple disciplines.
Melissa Korn, Wall Street Journal, April 5, 2012, Wealth or Waste? Rethinking the Value of a Business Major
Wealth or Waste? Rethinking the Value of a Business Major
14
New skills needed Critical thinking related to what data to query? Critical thinking related to understanding the data, what it says and what it
doesn’t Ability to create the “dashboard” Ability to tell the story of numbers graphically Ability to “sell the story” that may be counter- intuitive or untried Business decision-making morphed from intuition to business intelligence Pace of change requires constant monitoring of environment, product
performance, etc. More data available with technology to capture and analyze data No longer just in the realm of “bean counter” functions. All business functions
must be able to query a database, look for correlations, and tell a story
Business Analytics Skills Needed
15
Gartner Magic Quadrant for BI Platforms, 2012
Analysts Report Comments / Highlights
“Ease of use" now surpassing "functionality" for the first time as the dominant BI platform buying criterion
Vocal, demanding and influential business users are increasingly driving BI purchasing decisions
most often choosing easier to use data discovery tools with or without IT's consent
Software market size $14 billionMega-vendors acquisitions / consolidations
increased frequency in recent years IBM Acquires (SPSS, Cognos, ILOG)SAP Acquires (Business Objects)Oracle Acquires (Hyperion, SAS??)
Business Analytics Tools
16
The Thank-you Economy– Gary Vaynerchuk - The Thank You Economy
• http://www.msnbc.msn.com/id/3036789/
– The DNA of Grandparents is old, but new again– Small town, intimate personalization, era of big-box mega-marts is gone– How scalable is this intimate experience?– Why would Nike be concerned / scared of this?– Would Big Box Retailers be concerned / scared of this?– Is Social Media the next big “Internet explosion” of your generation?– What about technology adoption / enablers / obstacles?
A good read, but not a must
read
17
Customer Intimacy?
Your customer
You
Your competition
Your problem
18
The Thank-you Economy
19
Customer Intimacy… The Value of a Lifetime Customer
20
Hype Cycle for Context-Aware Computing, 2011
Context-aware computing is about improving the user experience for customers, business partners and employees by using the information about a person or object's
environment, activities, connections and preferences to anticipate the user's needs and proactively serve up the most appropriate content, product or service. Enterprises can
leverage context-aware computing to target prospects better, increase customer intimacy and enhance associate productivity and collaboration.
21
• IBM Invested $14bill in BI Capabilities since 2005• McKinsey & Co. Predictions
– By 2018, US will face shortage of 1.5 mill managers who can use data to shape business decisions (whether retrained or hired)
– The US needs 140,000 to 190,000 more workers with “deep analytical” expertise
• Teradata… Analytics is in the top 5 of skills sought of all new hires• CIO.com (Annual Survey of 500 CIOs)
– Business Intelligence is top priority anticipated for the following five years
• In Robert Half’s Top 5 of IT Skills in Highest Demand• Gartner’s Survey of 1,500 CIOs
– Business Intelligence (BI) is the top priority– Economic Down-turn has added greater pressure to further use of BI for organizational efficiencies
and strategic decision
• RHT Starting Salary for Business Intelligence Analysts Range for – 2011 $82,500 ~ $116,250 – 2012 $87,750 ~ $123,500.
Business Analytics Employment Outlook
22
Business Analytics Employment Outlook
CNN/Money Magazine? ?
?
23
Big Data, Analytics and the Path from Insights to Value
About the study• Partnership with IBM & MIS Sloan Management Review• Surveyed 3,000 managers & business executives• 108 different countries represented• 30 different industries
One of the most comprehensive studies of the breadth & depth of Business Intelligence use in industry that has ever been conducted.
Business Analytics Employment Outlook
MIT Sloan Management Review, Lavelle, Lesser, Shockley, Hopkins, Kruschwitz (Winter 2011)
24
Big Data, Analytics and the Path from Insights to Value
MIT Sloan Management Review, Lavelle, Lesser, Shockley, Hopkins, Kruschwitz (Winter 2011)
Business Analytics Employment Outlook
How Analytics Propagates Across Functions
25
• B-Schools Trying to Fill BI Skills Gap– Workshops, Certificates, Elective Courses, Degree Programs
• Fordham University started Marketing Analytics course for all MBAs• Indiana Kelly School of Business & Fordham University offering Masters Degrees in
Business Analytics beginning in 2012.• Villanova Business School requiring all incoming Freshman to take Introduction to
Business Analytics course• Yale School of Management Center for Customer Insights (May 2011)
– Stresses the importance of the emerging role of Business Analytics in industry. – Video Link (http://www-03.ibm.com/press/us/en/pressrelease/34394.wss)
• Harvard Medical School Analytics Study– Business Analytics Software (Netezza) in Presciption Drug effectiveness. – Video Link (http://www-03.ibm.com/press/us/en/pressrelease/34439.wss)
• Clemson University Cyberinstitute– Social Media Listening Center (Spring 2012)– Web URL (http://cyberinstitute.clemson.edu/projects/42)
BA Curriculum Illustrations & Needs
26
• A statistical Correlation does not necessarily imply causation• Privacy at all levels
– An oldy, but goody (http://www.youtube.com/watch?v=-4LtYMNl4yw)
• Security at all levels• “Fat finger” mistakes
– Flash Crashes
• Big Data also supplies more raw material for statistical shenanigans and biased fact-finding excursions.
• May misuse data or fail to understand the limitations of software, data integrity, correlations, etc
• It offers high-tech twist on an old trick: I know the facts, now let’s find ’em.
Risks and Downsides
27
ISU BA Curriculum Integration…
Workshops Courses
BA Minor Program Research & Sponsored Programs
BA Internships- Interdisciplinary Academic
Alliances
- Intro to Bus Analytics- Acctg Info Systems- Critical Thinking- Communications -Others
- Bus Analytics Workshop- Cross COB inter-disciplinary- Industry Participation
- Some Possibilities- In development- Cross-campus inter-disciplinary
- IBM Academic Imitative- SAP University Alliances- Microsoft Dynamics
Thank-you!Questions & Answers
Discussion
Katie SchoolOF INSURANCE AND FINANCIAL SERVICES
28
Business Analytics Discussion
Matthew L. Nelson, CPA, Ph.D.Associate ProfessorISU COB - Department of Accounting & BIS(309)[email protected]
