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Competitive Advantage: Business Analytics Provide Critical Tool

By Itzik Maoz, Director of Business Analytics Practice for Creative Computing, Inc.

Business analytics help organizations achieve many different strategic objectives — to compete in the marketplace, grow sales and retain customers, enforce integrity and security, improve business capacity, satisfy consumer expectations, learn more about the organization and/or implement necessary changes.

Whether we’re aware of it or not, we’re seeing business analytics at work on a regular basis in our daily lives. One of the most common examples is market basket analysis. Think of Amazon’s feature that tells you exactly what customers who bought a certain product were also likely to buy. This kind of data mining uses product and interest associations to predict groups of items that are more likely to be bought together.

Retailers use this method to stock shelves in situations where an item, say bread, is in close proximity to an item such as milk that is likely to be purchased together.

Another important type of analysis looks at “churn” rate — the number of customers who cut ties with a company in a given time period. Churn analysis helps companies distinguish the characteristics of likely-to-leave customers. They then can use that data to predict which customers are likely to churn in the future and offer incentives to those that generate more profits to keep their business.

In social media analytics, companies scan blogs, forums and comment sections to find out customers’ sentiments about their products. This data mining process will identify key words that might signify “good,” “bad” or “neutral” opinions. This is an emerging area but the technology for analyzing language is improving all the time.

Anyone with a credit card has probably come face to face with fraud detection analysis. If your bank has noticed red flag activity — say, a purchase at a store in a state you’ve never visited — it is using previously fraudulent patterns to raise the red flag. These processes have been improving and getting more efficient, so that now you may get a call within a very short time after a suspicious activity has occurred.

Personally, I’m most excited about healthcare data analysis applications. This is an area that can impact many lives, prevent illnesses, improve quality of life, shorten the treatment cycle when an effective drug is identified early in the process, etc.

This kind of analytics, of course, has much higher stakes than previous examples.
Think about the consequences of a false positive — a patient is diagnosed with a condition that he does not have — or a false negative — a patient with a condition that is not diagnosed. But with a careful and meticulous process, the risks can be mitigated.

If you are interested in learning more to understand what data science is all about, there are many books that can enlighten. For a technical understanding and implementation, IBM SPSS Modeler is a great way to get familiar with the subject without the need to be fluent in complex statistics. You can see a recommended LearnQuest course here.

Almost every organization can benefit from business analytics. While nobody can completely predict the future, companies that use analytics have been proven over time to be much more successful at what they do. The key is to identify which type will make strategic sense and to make the investment necessary to be a leader in your industry.

About the Author
Itzik Maoz is Director of Business Analytics Practice for Creative Computing and has more than 15 years of Business Analytics experience. Based in Providence, R.I., he has worked with many of New England’s most recognizable companies in Manufacturing, Retail, Healthcare and Higher Education. He is proficient in the entire IBM Business Analytics stack and is well versed in the entire Business Analytics project lifecycle.

 
 
 
 
 

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