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Building an Analytics CoE
Rahul Saxena
Workshop at IIM Bangalore
July 20, 2013
This presentation is based on the material available in the book:
Business Analytics: A Practitioner's Guide by Rahul Saxena & Anand Srinivasan
Springer International Series in Operations Research & Management Science
http://www.amazon.com/dp/1461460794
Agenda
Introductions – about the group, about me. What is "analytics"? What is an "Analytics CoE"?
What does the organization want to do with analytics? What is the role of the CoE that they envision?
What is the organizational context? Current providers of analytics? Leadership support?
What will the Analytics CoE need to be like (now and in the future, up to the planning horizon)?
Where do we stand with analytics capabilities now, compared to what we need?
How will we evolve the CoE? Set expectations, drive the evolution, establish the value.
Confidential 2CobotSystems.com
About the group …
Confidential 3CobotSystems.com
STUDENT WORKING
0-5 Years
5-10 Years
10-20 Years
>20 Years
Full-time
student, 0-5
years of
experience
Currently
working, 0-5
years of
experience
Demographics TEACHING
Currently
teaching, 0-5
years of
experience
PROVIDER
ANALYTICS
IT
(BI, DW)
BUSINESS
OTHER
(Academic,
etc.)
Provided analytics
as an analytics
professional
Provided analytics
as part of an IT role
Provided analytics
as part of a
business role
Provided analytics
as part of an
academic or other
role
CONSUMER
Consumed
analytics from
professional
analytics provider
Consumed
analytics from IT
provider
Consumed
analytics from
business provider
Consumed
analytics from
other provider
Perspectives
About me
Confidential 4CobotSystems.com
No
wC
ob
ot Syste
ms
2013C
isco
2012C
isco
2011C
isco
2010C
isco
2009C
isco
2008M
cAfe
e
2007M
cAfe
e
2006Ep
iance
2005Ep
iance
2004IB
M
2003IB
M
2002IB
M
2001IB
M
2000IB
M
1999IB
M
1998IB
M
1997IB
M
1996Laitram
Co
rp
1995Laitram
Co
rp
1994Tu
lane
MB
A
1993Tu
lane
MB
A
1992In
dian
Railw
ays
1991In
dian
Railw
ays
1990In
dian
Railw
ays
1989In
dian
Railw
ays
1988In
dian
Railw
ays
1987SC
RA
Jamalp
ur
1986SC
RA
Jamalp
ur
1985SC
RA
Jamalp
ur
1984SC
RA
Jamalp
ur
1983IIT K
anp
ur
1982
1981
1980
1979
1978
1977
1976
1975
1974
1973
1972
1971
1970
1969
1968
1967
1966
1965
Engineering
Mgmt
ERP, e-Biz,
CRM
MB
A
Analytics
ManagementManagement
Consulting
US based
A timeline diagram
Business
Architecture
Business
Analytics
What is “analytics”?
Confidential 5CobotSystems.com
Management
Information
Systems
Industrial
Engineering
Operations
Research
Finance
Planning &
Analysis
Statistics
Business
Intelligence
Strategy &
PlanningBiz Ops
(SCM, CRM,
Svc, etc.)
ANALYTICS
Computer
Science
… diverse
antecedentsBusiness
Strategy
Psychology
6 sigma,
Quality, Lean
What is “analytics” used for?
Confidential 6CobotSystems.com
… create value by
driving decisions from
idea to execution
• Frame
• Inform
• Forecast
• Deliberate
• Recommend
What methods/techniques does “analytics” use?
Confidential 7CobotSystems.com
ILLUMINATE DIAGNOSE FORECAST OPTIMIZE
• Charts & Tables in Reports & Dashboards
• Alerts, Visualizations, and Simulations
• Analysis, Interpretation & Recommendations
• Multi-Criteria Decision Models (MCDM), etc.
… use any method
that helps to drive
from idea to execution
MCDM, etc.
What data does “analytics” use?
Confidential 8CobotSystems.com
TRANSACTIONS CONVERSATIONS OBSERVATIONS
• Structured
• ERP
• CRM
• HRMS
…
• Unstructured
• Documents
• Websites
• Social Media sites like
Facebook, Twitter,
LinkedIn, YouTube,
Blogs
…
• Sensors & Signals (M2M)
• Scans (Bar-codes, RFID,
proximity, etc.)
• SCADA (Control Systems)
• Temperature, pressure,
illumination, etc.
• Location (GPS, etc.)
• Smart-phone data feeds
• Network monitors
• Video feeds
…
… use any data as
needed, internal &
external
What domains is “analytics” used in?
Confidential 9CobotSystems.com
Decision LayersStrategy, Capacity, Scheduling, Execution
… use wherever there
is a need for making
rational decisions
VerticalsTelecom, High-Tech, BF&S, Oil &
Gas, Healthcare, Government, etc.
FunctionsMarketing, Sales, e-Commerce, Fulfillment,
Supply Chain, Product Lifecycle, Strategy,
Finance, etc.
What systems/tools does “analytics” use?
Confidential CobotSystems.com
… use whatever
tools are needed
BusinessEPM, Collaborative
Decision Making,
Decision-Support,
Alerts & Feedback
ITData Warehouses, ETL (Extract, Transform, & Load)
Business Intelligence (Dashboards, Reports, Self-service)
Big Data
AnalyticsInnovation: from idea to value
Operations: continuous value realization
10
… a working definition
Confidential CobotSystems.com
Analytics is used to
create value by driving
decisions from idea to
execution
… use any method
that helps to drive
from idea to execution
… use any data as
needed, internal &
external
… use wherever there
is a need for making
rational decisions
… use whatever
tools are needed
11
What is an "Analytics CoE"?Applies insights to data to produce analytics deliverables and drive business value
Confidential 12CobotSystems.com
Variety of Analytical Insights
Process
System
Skills
Knowledge
Decision
SupportData
Variety of
Deliverablesfor various Business
Decision Contexts &
Processes
Drive
Business
Value
Variety
of Data
Sources
&Errors
New
sources
& errors
New
insights
New
Opportunities
& Issues
Agenda
Introductions – about the group, about me. What is "analytics"? What is an "Analytics CoE"?
What does the organization want to do with analytics? What is the role of the CoE that they envision?
What is the organizational context? Current providers of analytics? Leadership support?
What will the Analytics CoE need to be like (now and in the future, up to the planning horizon)?
Where do we stand with analytics capabilities now, compared to what we need?
How will we evolve the CoE? Set expectations, drive the evolution, establish the value.
Confidential 13CobotSystems.com
What do leaders talk about when they talk of analytics?
Confidential 14CobotSystems.com
Supply DemandC
urr
ent
Sta
te
Fu
ture
Sta
te
How should we manage
analytics investments to
gain efficiency?
Why do we need so many
reports? Why does it take
so long or cost so much?
How can we develop
analytics capabilities to
meet demands? My peer
has this, I want one too!
What can analytics do to
improve our business
results? Beat the
competition?
What do the leaders want to do with analytics?
The CEO asked for it The CIO has plans for it XYZ business leader wants it
Confidential 15CobotSystems.com
FOR WHOM?
Finance
Planning &
Analysis
Strategy &
Planning
Biz Ops
(SCM, CRM,
Svc, etc.)
… for whom will you
create value?
… what decisions will
you drive?
… do the current
decision-owners think
you’re helping?
What decisions will you drive with analytics?
Confidential 16CobotSystems.com
Analyze contract renewal
data to find opportunities
Feed the workload (renewal
opportunities) to Sales
Schedule follow-ups by the
Sales Call Center
Get the renewals, improve
renewal rate
Finance
Planning &
Analysis
Sales Ops
Call Center
Ops
Call Center
Ops
Answer the “what”, enlist the “who”
Confidential 17CobotSystems.com
Opportunity Pipeline
Bookings Backlog Delivery
Deal P&LImpact
Analytics
Strategic Account Analytics
Delivery Optimization
Analytics
Revenue
Revenue Gap
Analytics
Bookings Trend
Analytics
Talent & Skills
Analytics
Resource Planning Analytics
Revenue & Cost
Alignment
… get clients by offering business value
Confidential 18CobotSystems.com
Protect margin using deal analysis
Improve quality of business by targeting deals
• Analyze each deal for timing of costs (COGS & PCOGS), revenues (milestones), & risks (e.g., pay per SLA); assess FMV and VSOE impacts; calculate deal impact on the P&L
• Plug-in deals pipeline into the P&L projections, provide updates based on actual deals and run-rate
• Work with Geo leaders to drive decisions to improve the Sales P&L
• Approve or modify deals based on insight into P&L impact
• Deal targeting to actively manage and improve the Geo P&L
P&LDeals
Analysis
Improved P&L
Control
M1 M2 M3 M4 M5 M6
COGS $33 $33 $33 $33 $33 $33
PCOGS $21 $21 $21 $21 $21 $21
COSTS $54 $54 $54 $54 $54 $54
DELIVERY HLD LLD NRFU
REVENUE $50 $270 $310
Q1 Q2 Q3 Q4 Full Year
PROJECT MARGIN ($8) $34 $56 $43 $125
P&L IMPACT -1% 4% 7% 5% 4%
Q1 Q2
Deal P&LImpact
AnalyticsPROJECT
METHOD
DECISION
• Geo P&L Owner
• Geo Vertical LeadsOWNERS • Geo Finance Lead
• Geo Sales Ops Lead
… also track costs & value … keep clients by delivering business value
What is the role of the CoE that they envision?
Confidential 19CobotSystems.com
… provide us the analysis,
we promise to use it to
create business value
… help us throughout the idea
to execution cycle to deliver
business value
… provide us decision advice
based on analytics
Agenda
Introductions – about the group, about me. What is "analytics"? What is an "Analytics CoE"?
What does the organization want to do with analytics? What is the role of the CoE that they envision?
What is the organizational context? Current providers of analytics? Leadership support?
What will the Analytics CoE need to be like (now and in the future, up to the planning horizon)?
Where do we stand with analytics capabilities now, compared to what we need?
How will we evolve the CoE? Set expectations, drive the evolution, establish the value.
Confidential 20CobotSystems.com
What is the organizational context?
Confidential 21CobotSystems.com
DRIVE
DECISIONS
Analytics
Providers
• Meetings (with customers, suppliers,
project teams, colleagues, etc.)
• Walking around, observing
• Mass media (Newspapers, TV, etc.)
• Internet, Books, Gut Feel, etc.
Suppliers
Substitutes
Relevant
True (data is correct, models are verified)
Actionable (provides the basis for specific action)
… apply the noise filter
What do analytics deliverables look like?
Confidential 22CobotSystems.com
CommunicationDeliverable
Messages (email, SMS) to
Inform & Recommend
Documents (Reports,
Dashboards) to Inform,
Forecast, & Recommend
Decision Explorers to
Frame & Deliberate
Where will we find Analytics Providers?
Analytics providers are
found in many places, it
helps to cluster them
into these five domains
1. Business: managers
and their assistants
2. Analytics: analysts in
“analytics” teams
3. IT: in the BI, DW, or
Reporting teams
4. External BI Providers
5. External Analytics
Providers
Confidential CobotSystems.com 23
Who are the current providers of analytics?
Confidential 24CobotSystems.com
Leader &
Department
Data Providers Noise Filter Analytics
Providers
Tom, VP, Sales IT, BizA-CoE,
MktDudes.com
Jack, Director Sales
Ops
Jack, Director Sales
Ops, MktDudes.com
Jim, VP, Engineering IT, PLM-Specialists.com PLM-Specialists.com Mary, PLM Manager
Harry, CFO BizA-CoE BizA-CoE BizA-CoE
Not
Used
Data
Provider
Trusted &
Relevant
Decision
Modelers
Decision
Advisors
Inconsistent
Decisions
Leadership support?
Confidential 25CobotSystems.com
SUPPLY
Consistent
& Disciplined
Data
Oriented
Decision
Models
Learn &
IngrainD
EM
AN
D
Harry
0% to
+10%
More
than
10%
Reduce
Jim
• The size of the bubble
denotes $ funding
• The color of the
bubble denotes growth
Tom
Agenda
Introductions – about the group, about me. What is "analytics"? What is an "Analytics CoE"?
What does the organization want to do with analytics? What is the role of the CoE that they envision?
What is the organizational context? Current providers of analytics? Leadership support?
What will the Analytics CoE need to be like (now and in the future, up to the planning horizon)?
Where do we stand with analytics capabilities now, compared to what we need?
How will we evolve the CoE? Set expectations, drive the evolution, establish the value.
Confidential 26CobotSystems.com
Analytics Provider Network
The analytics function
cannot be the locus of
all the analytics assets
(and talent) for the
organization – it is,
instead, a capability that
enables the effective
use of analytics
… understand the
network, figure out your
partnering strategy
Confidential CobotSystems.com 27
Enable the Analytics Network for the organization
Confidential 28CobotSystems.com
DRIVE
DECISIONSBICC
(IT)
ERP
(IT)
CRM
(IT)
BizA
CoE
Sales
Ops
PLM
Mgr
SAS
D2
IIM B
PLM.com
Dir
FP&A
Zoom out of the “centralized / distributed / hybrid” debate … it’s a network
Is analytics
everyone’s job?
Isn’t it?
Enable the Analytics Network for the organization
Confidential 29CobotSystems.com
Shared Data in an Agile Data Platform, Rapidly Extensible
Relevance & Trust built into Deliverables via a Rules-base
Decision Models built and provided where Relevant
Learn & Ingrain, rapidly adapt/evolve all layers
Data, in context
Relevance
Data-driven Decisions
Adapt & evolve
Provide the analytics platform to enable everyone in the network
… make “analytics” work for your organization
Where is the bottleneck? Demand or Supply?
Confidential 30CobotSystems.com
Actual demand = Low
Potential demand = High
Actual supply = High
Potential supply = Low
Demand is a function of leadership
& imagination: stimulate the
imagination, deliver successes,
make analytics accessible with a
clear business value proposition
… transform the organization
culture to use analytics
... align supply to demand
Not
Used
Data
Provider
Trusted &
Relevant
Decision
Modelers
Decision
Advisors
Harry
Align supply to demand, and also stimulate demand
Confidential 31CobotSystems.com
SUPPLY: Processes, Skills & Systems
Jim
Tom
Jim
Tom
Harry
Shared Data, Agile Data Platform
Relevance & Trust
Decision Models
Learn & Ingrain
… provide the
analytics platform
… stimulate demand:
in-house successes,
industry examples,
conferences, peer-to-
peer networks,
decision advisors
Analytics Network dynamics
Nodes Evolve: Mature, Add, Re-organize, Disappear
Deliverables Evolve: Innovation Operation
Data Evolves: Federate the data to keep pace
Platforms Evolve: Avoid obsolescence, embrace agility
Talent Flows: Enable people with career paths
Funds Flow: Manage funding for nodes & the platform
Confidential 32CobotSystems.com
Deliverables Evolve: Innovation Operation
Confidential 33CobotSystems.com
INNOVATE
CULTIVATE
EXECUTE
Work with data providers to improve data
Drive value realization through analytics usage
Ensure ongoing validity of the analytics
Provide analytics deliverables per SLA
Develop new insights & concepts
Drive from Idea to Execution
Assess value & need
Explore and Fail-fast
Continual creation of Analytics Deliverables
Continual assessment of Data & Model Validity
Continual governance of Policies
Continual monitoring of Usage
INNOVATION: TALENT-DRIVEN
OPERATIONS: PROCESS-DRIVEN
Deliverables Evolve: Innovation Operation
Confidential 34CobotSystems.com
Junk 1-time Useful
1 100% 0% 100% 80% 16% 4%
2 100% 4% 96% 77% 15% 4%
3 100% 8% 92% 74% 15% 4%
4 100% 12% 88% 71% 14% 4%
5 100% 15% 85% 68% 14% 3%
6 100% 18% 82% 65% 13% 3%
7 100% 22% 78% 63% 13% 3%
8 100% 25% 75% 60% 12% 3%
9 100% 28% 72% 58% 12% 3%
10 100% 31% 69% 55% 11% 3%
11 100% 34% 66% 53% 11% 3%
12 100% 36% 64% 51% 10% 3%
13 100% 39% 61% 49% 10% 2%
14 100% 41% 59% 47% 9% 2%
15 100% 44% 56% 45% 9% 2%
16 100% 46% 54% 43% 9% 2%
17 100% 48% 52% 42% 8% 2%
18 100% 50% 50% 40% 8% 2%
Repeat
Delivery
Total
Capacity
Capacity
for New
New Delivery
The suppliers’ dilemma: the more useful analytics
you produce, the more you get mired in repeat delivery
… which is valuable repeat business but boring workJunkAlways
Useful
1-time
Useful
Repeat
Operations
Repeat
Operations
over time, the operations workloads pile up
… this is a mark of success: your stuff is useful!
… manage it with automation
TIM
E
100% Innovation
Agenda
Introductions – about the group, about me. What is "analytics"? What is an "Analytics CoE"?
What does the organization want to do with analytics? What is the role of the CoE that they envision?
What is the organizational context? Current providers of analytics? Leadership support?
What will the Analytics CoE need to be like (now and in the future, up to the planning horizon)?
Where do we stand with analytics capabilities now, compared to what we need?
How will we evolve the CoE? Set expectations, drive the evolution, establish the value.
Confidential 35CobotSystems.com
Analytics roles and functions
Confidential 36CobotSystems.com
Agile & Production Analytics: Innovation & Operation
Confidential 37CobotSystems.com
Workloads: what do your "Analytics" people do?
Confidential 38CobotSystems.com
Strategic Scorecards, Metrics Portfolios, & Scenarios
Reports & Commentaries; including Forecasts
Consultative Analysis Projects (Stats, Optimization, Simulation, etc.)
Enterprise Modeling, Business Modeling, Industry/Market Analysis
Data Stewardship (Assess, Cleanse, Enrich)
Business Case Modeling, Business Value Analysis, Valuation (Financial)
Dashboards
Governance Meetings & Follow-ups
Target, Actual, Outlook, and Revision
Alerts & Follow-ups
Communication & Driving Adoption of Data-driven Management
o Frame the Decision Need
o Generate Ideas
o Support Decision Making
o Monitor Execution
o Drive Results
Regression & Correlation
Propensity Models (Logistic Regressions, Multinomial Models)
Statistical Hypothesis Testing
Forecasting
Clustering and Segmentation
Optimization (LP, NLP, etc.)
Sampling & Surveys
Benchmarking
Pricing Optimization & Revenue Management
Design of Experiments
Financial & Risk Management
Search & Search Optimization
Queuing, Simulation
Statistical Process Control (R Charts, P Charts, etc.)
Planning, Scheduling, & Dispatch; Campaign Tracking
Decision Analysis, Multi-Criteria Decision Making, Game Theory
Project & Program Management, PERT, CPM
Quality Management (TQM, 6Sigma, ZeroDefect, etc.)
Business Architecture & Systems Modeling
Controls & Compliance (SOX, Basel, ISACA, etc.)
Organizational Behavior, Organization Theory, and Strategic Mgmt
Techniques: what methods & techniques do you use?
Confidential 39CobotSystems.com
o Frame the Decision Need
o Generate Ideas
o Support Decision Making
o Monitor Execution
o Drive Results
Systems: what tools do you use? … the BI view
Data Loading & Processing Batch Stream
Data Sourcing Transactions Conversations Observations
Data Marts & Warehouses Closed Access (only via IT) Open Access
Offline Analytics Tools Reporting Dashboards Self Service, Slice/Dice, Drill-down
Data Quality In-line Analytics Surveying & Feedback
Confidential 40CobotSystems.com
Systems: what tools do you use? … the Analytics gap
Confidential CobotSystems.com
Innovation Frame decision needs in an enterprise model Manage idea-to-execution pipeline Visualize, Explore, Cluster, Segment, Forecast,
Optimize, Simulate, Machine Learning, etc. Decision support (AHP, MCDM, Bayes, etc.)
Operations Execution (Trusted, Actionable, Responsive) Learn & Ingrain
Data Provisioning Agility, Reliability & Serviceability Traceability & Fidelity
Data Assessment & Scrubbing Manage Data Problems Manage Data Dictionary
Master Data & Hierarchies Enterprise Ontology Model Shared Ontology & Enrichments Privacy, Security and Availability
41
Capability: does the analytics team leverage the spectrum of analytics techniques
1. Get/provide data, measure and improve data quality2. Observe, understand and explain business issues – create analyses,
generate insights, monitor execution, guide value realization
3. Forecast trends, predict outcomes and behaviors (assess possibilities)
4. Formulate, simulate, and assess scenarios, develop ideas and courses of action (develop ideas)
5. Recommend courses of action (select the best ideas: feasible and optimal or Pareto optimal)
Confidential 42CobotSystems.com
Statistics
OR
Decision Advice
Culture: how readily do business people use the analytics?
1. Unaware of how analytics can be used
2. Aware of analytics but do not use it for various reasons
3. Use analytics for specific decisions and actions
4. Support the creation and usage of analytics, metrics and decision rules in an organizational model, can assess the value of analytics
5. Leader in using analytics, recognize applicability, & demand the best analytics; innovate, learn, & ingrain analytics in business processes
Confidential 43CobotSystems.com
Trusted
Actionable
Responsive
Learn
Ingrain
Technology: do the analytics teams get the systems, tools and infrastructure support they need?
1. Unable to provide analytics systems (data, tools & infrastructure)2. Partially provides the analytics systems and data required and
refreshes the data periodically for off-line analyses
3. Fully provides analytics systems and refreshes the data periodically for off-line analyses
4. Enables analytics to be executed in-line, i.e., used seamlessly within business processes
5. Delivers enterprise-wide in-line analytics, so the organization can use analytics at scale and without delay
Confidential 44CobotSystems.com
Shared data
Trusted, Actionable,
& Responsive
Fast decisions
Closed loop
Agenda
Introductions – about the group, about me. What is "analytics"? What is an "Analytics CoE"?
What does the organization want to do with analytics? What is the role of the CoE that they envision?
What is the organizational context? Current providers of analytics? Leadership support?
What will the Analytics CoE need to be like (now and in the future, up to the planning horizon)?
Where do we stand with analytics capabilities now, compared to what we need?
How will we evolve the CoE? Set expectations, drive the evolution, establish the value.
Confidential 45CobotSystems.com
How will we evolve the CoE?
Confidential 46CobotSystems.com
What is the organizational context? Current providers of analytics? Leadership support?
Where do we stand with analytics capabilities now, compared to what we need?
TARGET
STATE
CURRENT
STATE
What does the organization want to do with analytics? What is the role of the CoE that they envision?
What will the Analytics CoE need to be like (now and in the future, up to the planning horizon)?
How will we evolve the CoE? Set expectations, drive the evolution, establish the value
Establish the value
Experimentation (A/B Compare)
The model is used in an “experimental” setting, against the current “gold standard” method
Compare the results of the model to the “gold standard”
Before/After Compare
The model is deployed globally
Compare the results before and after the model is deployed (problem remains that there can be other explanatory factors)
Confidential 47CobotSystems.com
Move fast & patiently
What can be done fast
Bring right expertise (skills) into the analytics network
Set up the analytics platform
What takes time
Change the decision-making culture of the organization
Confidential 48CobotSystems.com
Produce relevant, trusted & actionable analytics
Help people to use the analytics deliverables
Track the value created
What must be done right
Evolve the analytics process capabilities
Failure is part of innovation
… manage it by ensuring it occurs in the context of the analytics platform and processes (back those innovation efforts that have an idea-to-execution perspective, remember and learn)
Confidential 49CobotSystems.com
Concept to Value Realization
Process Value Management
Capability Value Management
Organizational Value Management
INNOVATION: TALENT-DRIVEN
OPERATIONS: PROCESS-DRIVEN
EVOLVE
Role
CoverageObsolescence is part of operations
… manage it by ensuring it occurs in the context of long term relevance (don’t lose memory)
Today 1 year 2 years 3 years 4 years
Inconsistent
Decisions
Change the decision-making culture of the organizationConsider leadership, trajectory, overshoot and undershoot
Confidential 50CobotSystems.com
SUPPLY
Consistent
& Disciplined
Data
Oriented
Decision
Models
Learn &
IngrainD
EM
AN
D
Jim
Harry
Tom
Jim Harry
Tom
This presentation is based on the material
available in the book:
Business Analytics: A Practitioner's Guide
By Rahul Saxena & Anand Srinivasan
Springer International Series in Operations
Research & Management Science
http://www.amazon.com/dp/1461460794