Download Document

Jim Grayson, Ph.D.
Management Science and Operations Management Professor
BUSINESS ANALYTICS
Agenda
• What is Analytics?
• Why should you care?
• What should you do?
2
Why Should You Care?
JOBS!
MONEY!
3
“ T H E E X T E N S I V E U S E O F D ATA , S TAT I S T I C A L A N D
Q U A N T I TAT I V E A N A LY S I S , E X P L A N AT O R Y A N D
P R E D I C T I V E M O D E L S , A N D FA C T - B A S E D
MANAGEMENT TO DRIVE DECISIONS AND ACTIONS .”
D AV E N P O R T A N D H A R R I S ( 2 0 0 7 )
C O M P E T I N G O N A N A LY T I C S :
THE NEW SCIENCE OF WINNING
4
What is analytics?
In that sense, then, “business analytics” can be defined as the
broad use of data and quantitative analysis for decisionmaking within organizations. It encompasses query and
reporting, but aspires to greater levels of mathematical
sophistication. It includes analytics, of course, but involves
harnessing them to meet defined business objectives.
Business analytics empowers people in the organization to
make better decisions, improve processes and achieve
desired outcomes. It brings together the best of data
management, analytic methods, and the presentation of
results—all in a closed-loop cycle for continuous learning and
improvement
The New World of “Business Analytics”,
Thomas Davenport, March 2010.
5
Better Decisions
“… because of big data,
managers can measure, and
hence know, radically more
about their businesses, and
directly translate that
knowledge into improved
decision making and
performance.”
6
7
8
“The essence of analytics lies in the application of logic and mental
processes to find meaning in data.”
IT
STATS
BUSINESS
Back in Business, by Ronald K. Klimberg and Virginia Miori, OR/MS Today, Vol 37, No 5, October 2010, [http://www.informs.org/ORMS-Today/PublicArticles/October-Volume-37-Number-5/Back-in-Business]
9
But you have to change your
decision-making culture
10
http://www.moneyball-movie.com/
trailer
11
12
Data Explosion
http://tedxtalks.ted.com/video/TEDxPhilly-Robert-J-Moore-The-d
13
Big Data: The Next
Frontier -- Demand for
deep analytical talent in
the United States could
be 50 to 60 percent
greater than its
projected supply by
2018
14
15
16
17
18
19
20
Changes in the Analytical
Landscape
Historically…
Models
Analytical Modelers
Management
Historically, analytics have typically
been handled in the “back office,”
and information was shared only by
a few individuals.
SAS, Advanced Business Analytics Course
Changes in the Analytical
Landscape
OPERATIONS
Now…
Proliferation of Models
Analytical Modelers
Customer
Service
TARGET
Customers
Suppliers
Retail
Now analytics are being pushed out
to the “front office” and are directly
impacting company performance.
There are clear, tangible benefits
that management will track. Data
mining is a critical part of business
analytics.
Logistics
Employees
Promotions
Stockholders
SAS, Advanced Business Analytics Course
22
SAS, Advanced Business Analytics Course
Achieving Success with Analytics
Competitive Advantage
Decision Optimization
What is the best decision?
Advanced
Analytics
Predictive Modeling
What will happen next?
Forecasting
What if these trends continue?
Basic Statistical Analysis
Why is this happening?
Reporting with Early Warning
What actions are needed?
Dynamic Reporting
Where exactly are the problems?
Ad Hoc Reporting
How many, how often, where?
Basic Reporting
What happened?
Data
Decision Support
Information
Basic
Analytics
Reporting
Intelligence
Decision Guidance
23
Value:
Ability to Predict
 Prediction is more important than inference.
 Metrics are used “because they work,” not based on





theory.
p-values are rough guides rather than firm decision
cutoffs.
Interpretation of a model might be irrelevant.
The preliminary value of a model is determined by its
ability to predict a holdout sample.
Long-term value of a model is determined by its ability
to continue to perform well on new data over time.
Models are retired as customer behavior shifts, market
trends emerge, and so on.
SAS, Advanced Business Analytics Course
24
25
Now What Should You Do?
• Manage your own set of
capabilities: what is your “personal
brand”?
• Proactively “manage” your
education – find a mentor; get
career help; be a learner
• “Begin with the end in mind”
• Don’t imagine you can avoid data
26
27
28
Core
QUAN 3600: Management Science
Electives
QUAN 4620: Spreadsheet Modeling
QUAN 4630: Business Analytics
QUAN 4640: Supply Chain Management
Come see me: Dr Jim Grayson, E138
29