Jim Grayson, Ph.D. Management Science and Operations Management Professor

Agenda What is Analytics? Why should you care? What should you do? 2

Why Should You Care? JOBS! MONEY! 3

“THE EXTENSIVE USE OF DATA, STATISTICAL AND QUANTITATIVE ANALYSIS, EXPLANATORY AND PREDICTIVE MODELS, AND FACT-BASED MANAGEMENT TO DRIVE DECISIONS AND ACTIONS.” DAVENPORT AND HARRIS (2007) COMPETING ON ANALYTICS: THE NEW SCIENCE OF WINNING 4

What is analytics? 5 In that sense, then, “business analytics” can be defined as the broad use of data and quantitative analysis for decision- making 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.

6 Big Data IS CHANGING THE WHOLE EQUATION FOR BUSINESS There's a ton of information out there. And businesses are figuring out how to put it to work. HOW WSJ Journal Report

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8 Every two days, as much data is now generated as in all of human history up to This is “Big Data,” and it constitutes a vast new natural resource that can revolutionize industries and societies—with the right technology, capable of analyzing and extracting value and insight from it. This is one reason IBM’s analytics business is growing so strongly, as we work with clients to drive intelligence into every aspect of their operations.

9 Data Explosionhttp://tedxtalks.ted.com/video/TEDxPhilly-Robert-J-Moore-The-d

10 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.”

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17 But you have to change your decision-making culture

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20 Source: SAS

21 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

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Competitive Advantage Basic Reporting What happened? Ad Hoc Reporting How many, how often, where? Dynamic ReportingWhere exactly are the problems? Reporting with Early WarningWhat actions are needed? Basic Statistical Analysis Why is this happening? Forecasting What if these trends continue? Predictive Modeling What will happen next? Decision OptimizationWhat is the best decision? Data Information Intelligence Advanced Analytics Basic Analytics Reporting Decision Support Decision Guidance Achieving Success with Analytics SAS, Advanced Business Analytics Course 27

28 Prescriptive Models Test and Learn (Business Experiments) Wanted to test different variations of five main attributes

29 Predictive Models

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. 30 SAS, Advanced Business Analytics Course

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Now What Should You Do? 32 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

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