The Analytical Revolution

Transcription

1 Predictive Analytics World 19 October 2011 The Analytical Revolution Colin Shearer Worldwide Industry Solutions Leader SPSS Business Analytics software

2 Our world is becoming smarter Instrumented Interconnected Intelligent enabling organizations to make faster, better-informed decisions 2

3 With this change comes an explosion in information Volume of Digital Data Yet organizations are operating with blind spots Lack of Insight 1 in 3 managers frequently make critical decisions without the information they need Variety of Information Inefficient Access 1 in 2 don t have access to the information across their organization needed to do their jobs Velocity of Decision Making Inability to Predict 3 in 4 business leaders say more predictive information would drive better decisions Source: IBM Institute for Business Value

4 Predictive Analytics Evolution 1 st Generation: It s all about the algorithms Rule Induction Decision Trees Neural Networks Clustering Regression Support Vector Machines

5 Predictive Analytics Evolution 2 nd Generation: It s about the process

6 Predictive Analytics Evolution 3 rd Generation: More data sources for deeper insights and greater accuracy

7 Predictive Analytics Evolution 4 rd Generation: Deployment focus 5 th Generation: Automation and Industrialization

8 Predictive Analytics Evolution 4 rd Generation: Deployment focus 5 th Generation: Automation and Industrialization Key to delivering business value

9 Keys to revolutionising Predictive Analytics Automation Deployment Operational Analytics

10 Operational Analytics: Automation of Analytical Processes Business Analytics software

11 The issues Where do analysts spend their time? Assessing new analytical projects Building new models Monitoring model performance Repeating typical data prep Exploring improved analysis and modeling approaches Updating/refreshing models

12 The issues Where do analysts spend their time? Assessing new analytical projects Building new models Monitoring model performance Repeating typical data prep Exploring improved analysis and modeling approaches Updating/refreshing models These deliver the greatest value...

13 The issues Where do analysts spend their time? Assessing new analytical projects Building new models Monitoring model performance Repeating typical data prep Exploring improved analysis and modeling approaches Updating/refreshing models...but these consume the most time

14 The issues How do we scale to meet requirements? All of our branches have their own customer bases; local models would do better than a single centralised one We ve shown we can build demand forecasting models that give us potentially huge savings but we d have to forecast for tens of thousands of items!

15 The Operational approach Ability to automate analytical tasks Instant for most common tasks Able to automate the most complex processes Schedule/run without human intervention

16 The Operational approach Ability to automate analytical tasks Instant for most common tasks Able to automate the most complex processes Schedule/run without human intervention

17 Impact on Analysts Not de-skilling Focus on the tasks that require more skill and creativity Tackle new analytical challenges Design the processes which can be automated and replicated Frees analysts to be effective, productive and most valuable

18 Examples Australian mobile telco provider Model-targeted campaigns to prevent churn, stimulate increased usage, and cross-sell additional services Analysts owned models they created, responsible for maintaining them Moving to more frequent, smaller campaigns Increase number of models required Automated monthly rebuilding and scoring, implemented central management of assets and resources Results: Campaigns more timely Models always fresh and accurate Analysts save 30 days per model per year

19 Examples US police department Needed to make effective and efficient force deployment decisions to reduce violent crime Automation to Produce scores in real-time for each 4-hour shift Capture new/emerging crime patterns by model refresh Between 2006 and 2007, reduced Aggravated Assault by 18% and Murder by 32%

20 New Horizons Automation allows the application of analytics to be scaled beyond the capacity of human-driven analysis

21 Examples US auto parts retailer 3200 stores, required to predict demand for each product by store => correct product mix Thousands of models to manage Automated data preparation, modelling, updates and monitoring Reduced non-working inventory by $50M+, increased sales by $100M+

22 Operational Analytics: Deployment Business Analytics software

23 Degrees of Deployment Visualization & Reporting Batch Scoring Optimized Decisions Ad-hoc Discovery Manual Scoring Automating Decisions Degree of integration with operational systems and processes

24 Delivering ROI through improved decision making Inserting intelligence at key decision points in business processes to improve outcomes and automate decisions + -

25 Major Nordic Bank CUSTOMER & TELLER 1 PAPER based CREDIT APPLICATION GATHERING 360 DATA VIEW on customer PREPARE FOR DECISION DECISION MAKER LEVEL 1 PAPER based DECISION 3 2 Customer accepts CREDIT PROPOSAL PREPARES CONTRACT PAPER based CONTRACT DECISION MAKER LEVEL 2 PAPER based DECISION CONTRACT Signed CONTRACT Manager Releases money Archives documents CREDIT COMMITTEE PAPER based DECISION Favorable or not decision with conditions issuing 900,000 credit contracts annually Issuing cost per contract 240 EUR Loan contract issuing on average in 6 working days 3,500 people involved

26 Major Nordic Bank BRANCH EXTRNAL data providers Automated PRICING CALL CENTER Automated SCORING CUSTOMER INTERNET Real time data gethering RESULT MONITORING $ Automated SPECIAL CONDITIONS ATM INTERNAL data sources / EDW 30 sec. Data gathering and credit decision in 2 min. 5 seconds today! Contract in 15.min retail customers 30 min. for corporate customers

27 Excluded human error and waiting time in issuing credit contracts Major Nordic Bank Decreased headcount involved in Credit issuing process 9 times Improved employee productivity: 833% Cost per credit contract issued decreased from Yearly TCO below 4% of total investment

28 Which revolutions had the most profound effect on history? Spirit of 76? Liberté, Egalité et Fraternité?

29 The Agricultural Revolution from ~1700

30 The Industrial Revolution from ~1780

31 What revolutions do for the world Agricultural Revolution Industrial Revolution Scale the effects multiply the benefit by orders of magnitude.

32 What revolutions do for the world Improved Retention Increased Sales Scale the effects multiply the benefit by orders of magnitude. Reduced Fraud Credit Management Welcome to the Analytical Revolution.

33 Predictive Analytics World 19 October 2011 Thank You! The Analytical Revolution Colin Shearer Worldwide Industry Solutions Leader SPSS Business Analytics software