Analytics:the new holy grail

Analytics will drive


By Roopen Roy May 31 2011

Tags: Op-ed

In our epic — the Ramayana, there is a thrilling description of how Hanuman saved the life of Lakshmana. In the battle of Lanka, Lakshmana received a mortal blow and was in a state of coma. Only ‘Sanjivani’, a powerful herb, found in the Gandhamardan mountains in the Himalayas could revive him, provided the medicine could be applied before sunset. Hanuman did not have the knowledge or ability to identify Sanjivani. But he “flew” at supersonic speed to the Himalayas and lifted an entire mountain, which contained the magic herb and brought it to Lanka in time. Lakshman was saved. Of course, there must have been an expert doctor who found the Sanjivani from the mountain by an efficient and skilful search.

In the world of business, actionable insight is similar to Sanjivani. It is hidden in mountains of data inside and outside the enterprises. Only a careful and expert analysis will reveal nuggets of knowledge and insight. The next holy grail of successful business decisions and actions will be insightful analysis of data. We will call this discipline ‘business analytics’.

Business analytics uses data to drive business strategy and performance. It includes a range of capabilities — from looking backward to evaluate what happened in the past, to forward-looking approaches like scenario planning and predictive modelling. Understanding your organisation’s vitals can lead to more effective strategies, improved performance and competitive edge.

Did you know that Amazon’s recommendation engine drives 30 per cent of its sales? Its recommendation engine is one of the most common types of collaborative filtering (people who buy x also buy y), an algorithm popularised by Amazon. Amazon uses the social process of asking a friend for a recommendation.

Analytics in retail has become a survival tool amid tough competition. Giant retailers, like Tesco in the UK, crunch billions of data items to target their promotions to the right customers and adjust prices. Tesco’s website carries this claim, “Price check at Tesco: Every week, we check thousands of prices across Asda and Sainsbury’s stores to guarantee you low prices every day.”

I went to their website and found that they are committed to refund the difference if you find the same product at a competitor at a cheaper price.

Business analytics is useful in creating pricing models. It helps to make decisions on billions of dollars of merchandise by providing insights into expected volume at new prices, key price points and changing price sensitivity.

However, analytics is not confined to retail. It is being applied to criminal investigation and forensics, fighting terrorism, drilling down into attrition of talent and segmenting customers for insurance. It has the potential of completely disrupting healthcare by combining with cloud-computing.

A good example is Microsoft’s HealthVault. It offers a central repository for health information — collected at home, the doctor’s office, pharmacy, gym, and anywhere in between. “As a technology platform, HealthVault supports a growing ecosystem of connected, user-friendly tools, so people can keep a comprehensive, up-to-date record of their health information in a place where they can view and share it with whomever they see fit,” HealthVault says on its website.

Last week, South London and Maudsley NHS Foundation Trust announced it is working in partnership with software giant Microsoft to develop a personal online health record for users of its mental health services. The trust’s present electronic patient record system is the largest of its kind in Europe, containing over 170,000 entries. The new re cord system will use the cloud-based HealthVault platform to offer a solution that will enable clinicians at the trust to work collaboratively with patients on both care and treatment by providing

patients secure access to their health records and the facility to contribute to them directly. Google offers a similar service called Google Health.

While the combination of cloud technology and analytics is affecting healthcare in a positive way, we are witnessing the mingling of sensor, imaging (f or example, closed-circuit cameras) technology and analytics in a myriad of applications from protecting borders, providing potential terrorist activity alerts to making your automobile smarter. Manufacturers have embedded 30 million sensors in their devices to acquire useful data that can be analysed by using smart programs and powerful computers. Last year, Google demonstrated the results of its research-and-development efforts to create a ”self-driven” autonomous vehicle. The small fleet of specially equipped cars — six Toyota Priuses and one Audi TT— has logged mo re than 140,000 miles of daytime and nighttime driving in California, including traversing the most crooked street, Lombard Street, in San Francisco.

If you can generate 30 per cent of your sales just through intelligent analytics, if you can make your car intelligent and even run by itself, if you can provide health services cheaper, faster, better and if you can beat your competitor with smarter, customer-specific strategies, then it is only a matter of time that analytics equity will become more important, or at least as important, as brand equity.

(The writer is managing director of Deloitte Consulting, India. These are his personal views)