The Analytics Revolution
A world in numbers
If you pay even the slightest attention to the world around us today, you have undoubtedly noticed the explosion of interest and activity in the field of analytics.
It is not hard to understand how this analytics revolution has come about. It is common sense that, when tackling a problem, more information is better. And, since Lotus 1-2-3 (look it up, kids) first showed up in 1983, the computer world has offered desktop business users ever greater tools to obtain and manage that information.
Whether it is the world of business, professional sports, even crime prevention, forward-looking professionals are realizing that they can do their jobs better with a mastery of the data that describes their world. While interest and awareness in the field of Analytics is growing rapidly, Analytics is not the next new thing. Analytics is here now, and it is here to stay.
Analytics in action
An educational event for “anyone who is serious about analytics”. This event brings together more than a thousand professionals, industry experts and leading researchers in the field of analytics.
This annual conference promotes the role of analytics in the sports industry. Started in 2007 in a classroom at MIT, last year’s event drew 3,200 attendees from every professional sports organization.
From the FBI, this is the most comprehensive analysis of crime in the nation. This analysis covers almost every type of crime statistic imaginable and is an invaluable resource to law enforcement.
New times, new terms
This awareness of the importance of data has converged with new technologies that make it ever easier (ha! and harder) to collect, analyze, and publish meaningful data. You’ve probably heard the terms… Business Intelligence, Business Analytics, Big Data, the Internet of Things, and so on.
They are all new ways of describing a world where data, and the things we do with it, are having a giant impact on our lives.
Business Intelligence and Business Analytics are two often-used, interwoven concepts that are worth spending just a minute on. They are similar in some ways, but have important differences as well.
ANALYTICS-TERMS TO KNOW
I had a great boss a number of years ago named Irv Cohen. Irv was the CFO and a driving force behind the increased use of analytics at the company where we were working. One day Irv told a bunch of us the way he thought of business intelligence. He said that information is like telling somebody there is a snake in the room; whereas intelligence tells you which chair it is under, and whether it is poisonous or not. It was a great line and it really captured the essence of what business intelligence is all about.
At Hudson, we define business intelligence simply as information that is both specific and actionable. Knowing there was a snake in the room was neither of these. First, the kind of snake is a pretty important detail in that scenario. The bite of a garter snake is completely harmless; whereas a black mamba’s bite can kill you in twenty minutes. Obviously, the specificity of knowing whether the snake in the room is a garter snake or a black mamba means an awful lot.
So, if we are unfortunate enough to find out there is a black mamba in the room, we do have some knowledge that we did not have before; and we certainly know we probably need to take action. We could fight, or we could run; but we cannot do either very well if we do not know where the snake is. So, the knowledge of which chair the snake is under provides us with the all-important actionable element of intelligence.
Our businesses will always face challenges, but having an intelligence-gathering and processing capability gives us the tools to face these challenges successfully. At the very least, good intelligence provides us the opportunity to formulate plans in response to the challenges we face, and affords the intelligent planner an optimum chance for victory.
At Hudson, we define business analytics as a set of tools that takes gathered intelligence (not just information, but intelligence) and puts it to use in several important ways. First is the maintenance of good health, or the prevention of problems. Analytics helps in this area by providing indicators, or clues, that the risk of something negative happening has increased. These often take the form of metrics that are designed to be an early warning system for potential problems.
Inventory growth is always a risk for manufacturers and merchandisers. Intelligence as to what is in your inventory today versus a year ago is obtainable, and useful, but if the comparison is showing significant unplanned inventory growth, then that intelligence is arriving too late. An inventory analytics system that includes a metric like projected inventory growth might have foreseen the unplanned growth and provided the company time to take action and prevent it from happening.
In addition to its preventative role, good analytics also has an important role in determining and monitoring corrective actions. They allow us to see patterns and trends that are not obvious to the naked eye. A simple look at our inventory, perhaps the standard inventory-by-product line report, might tell us where the unplanned inventory growth is coming from, but it is not going to tell us why that growth is occurring.
A more robust and disciplined analysis however may uncover trends in places where no person thought to look; perhaps something like a steady stream of purchases of safety stock relative to their current usage. A great analytics team can help you answer the questions that nobody thought to ask.
In the cases above and in countless other scenarios, business intelligence and analytics are used together to help business people make better decisions. Whether it is looking backwards to better understand what happened, or to look forward to better forecast possibilities, business intelligence and analytics are fast becoming recognized as indispensable weapons in any company’s arsenal.
“Adapt or die!”
While some of the world’s largest organizations have made giant investments in the areas of business intelligence and analytics, small to medium size corporations, think those in the $30 million to $700 million level, are just starting. Forbes recently reported that organizations are now increasing their spending on self-service business intelligence and data discovery tools big-time, with some areas seeing incredible growth of over 77%.
Their conclusion: “We must adapt or die!”
In order to take full advantage of the powerful analytics tools that are now available in business areas as diverse as risk analysis, customer targeting, manufacturing efficiency, and marketing or sales operations, businesses are going to need to identify the processes and the resources to develop and manage this new opportunity.
What does it all mean?
All this has serious consequences for the small to medium size corporation. These companies are often too small to make multi-million dollar investments in challenging times, but too engaged in tough competition to risk being left behind. You may not be managing your business with the benefit of the best information tools available to you, but your competitors just might be.
And, as with most new capabilities, it helps to have an experienced and capable team to guide one through the possibilities.
Hudson Business Analytics’ background, talent, and experience makes it a perfect choice to help your organization master this new world.
Hudson can help
Let Hudson Business Analytics show you how we can help you transform your business into an analytics-based, data-driven powerhouse.