The analytical sales team series: Understanding how advanced analytics can transform your business

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1 E-Book Understanding how advanced analytics can transform your business The new buzzword in business is analytics which offers the potential to significantly increase sales and customer service by using technology. This ebook focuses on how organizations should leverage the new breed of advanced analytics tools, including in-memory analytics, in-database analytics and complex event processing. Find out more about these technologies and how to determine if they might make an impact in your sales organization. Sponsored By:

2 E-Book Understanding how advanced analytics can transform your business Table of Contents Business analytics trends yield tools with potential if you re ready Creating an advanced data analytics business culture: Tips and advice About SAP Sponsored By: Page 2 of 11

3 Business analytics trends yield tools with potential if you re ready By Todd Morrison Advanced business analytics technologies such as in-memory analytics, in-database analytics and complex event processing (CEP) tools enable organizations to analyze increasingly massive amounts of data from a diverse number of sources, and to do it faster and more efficiently than ever before. But does that mean you should spend the required time and resources to implement them? The technologies are mature enough to consider for enterprise adoption, according to industry analysts. The biggest question might be whether your organization is ready for them. In fact, the first thing any business needs to consider when thinking about buying advanced analytics software is whether it s sufficiently prepared to deploy and use tools that are more complex than mainstream business intelligence (BI) products, said Forrester Research Inc. analyst Boris Evelson. The first advice is really, Are you ready? You need to learn to walk before you can learn how to fly, Evelson said. There a lot of things that have to be done and done correctly just to support basic BI and analytic technologies, he noted. Data governance policies and processes need to be put in place. Basic data management issues also have to be taken care of. For example, BI data must be cleansed and properly integrated to ensure that key corporate information is accurate and accessible. Only when those steps have been taken should an organization look at aligning itself with the latest business analytics trends, technologies and techniques, Evelson cautioned. Otherwise, he said, it s like the proverb: Garbage in, garbage out. Sponsored By: Page 3 of 11

4 But Evelson and other analysts said there s no reason to avoid emerging analytic technologies once you re in a position to succeed with them. Until recently, that might not have been the case. For example, in-memory analytics, in which queries and calculations are run against data stored in a computer s memory instead of requiring information to be pulled from disk drives, has been around for years but it was limited by 32-bit architectures and high memory costs. Now, thanks to 64-bit architectures and reductions in memory prices, the technology finally appears to be hitting its stride. As a result, all of the major BI vendors are committed to providing some kind of in-memory analytics capabilities, if they don t already, according to Rick Sherman, founder of Stow, Mass.-based consulting firm Athena IT Solutions. It s a proven technology, he said. Business analytics trends at work: friendlier tools, faster performance The increasing allure of in-memory analytics is being aided and abetted by several factors, industry watchers said. For one thing, many business users have grown frustrated with having to go to the IT department every time they need to create a report. At the same time, organizations are looking for tools that are more flexible and more intuitive to use, as part of so-called pervasive BI efforts aimed at broadening the adoption of BI and analytics software within companies. We re seeing a trend toward technologies that are easier to use for people who aren t necessarily very technical or capable of writing their own reports but still want to do their own analysis, said Rita Sallam, an analyst at Gartner Inc. The biggest reason in-memory analytics has taken off, she added, is that vendors have combined the technology with user interface tools that are highly interactive and simple to grasp. Also working to the benefit of in-memory analytics are growing demands from business users for faster data analysis performance, Sallam said. Sherman agreed, saying that the amount of time it takes to do more complex analytics is a constant source of frustration for end users. Looking at data through the lens of various metrics is where analytics gets slowed down considerably, he said, while pointing to inmemory analytics as a potential way to reduce processing times. Sponsored By: Page 4 of 11

5 However, giving business users more analytical flexibility and freedom via in-memory analytics also carries with it some risks, Evelson warned. It s a double-edged sword, he said. On one hand, it s great to empower your end users, and it frees up the IT department. On the other hand, you start losing control. So, all of a sudden, end users that maybe don t have the proper training start creating their own reports. How do you know they re creating the right calculations? End-user training programs at organizations that are deploying in-memory analytics tools should include sections designed to give workers a good understanding of corporate data and data models, so they won t go astray in using the information and produce faulty findings, Evelson said. Setting the stage for scaling up advanced business analytics In-database analytics, in which analytical processing is done directly within a data warehouse, is also being supported by more vendors and seeing broader enterprise adoption. Forrester analyst James Kobielus said in-database analytics tools have the potential to help organizations scale up their data mining activities and other advanced analytics efforts. For example, as data mining models become increasingly complex, analytic applications have to pull together more data, on a more continuous basis, and from a greater number of data sources than in the past, according to Kobielus. You need some heavy-hitting horsepower to do that in an efficient way, he said, adding that in-database analytics can help speed up the process. CEP software, which is designed to enable organizations to monitor and react to business events in near real time, is another example of how business analytics trends are evolving. While CEP technology typically is used to look for patterns and trends in large amounts of financial or supply-chain data, Kobielus said new uses are emerging for example, monitoring Twitter and other social media networks for mentions of a company or a product. Sponsored By: Page 5 of 11

6 Kobielus described CEP, in-database analytics and in-memory analytics as hot technologies that have the ability to provide significant benefits to companies ready to handle them. This is not bleeding edge, he said. This is really happening. Sponsored By: Page 6 of 11

7 Creating an advanced data analytics business culture: Tips and advice By Craig Stedman and Mark Brunelli The quickest, and potentially most successful, way to create an internal business culture that thrives on advanced data analytics technology and fact-based decision making is to start at the top of an organization, according to some IT professionals and industry analysts. Just ask Bill Robinette, manager of business intelligence (BI) systems at Advance Auto Parts, a Roanoke, Va.-based retailer with about $5 billion in annual revenue. Two years ago, Robinette bore witness to the fact that a change in senior management can clear the way for the development of a data analytics business culture and a data warehousing, BI and advanced analytics program. At a recent event held in Cambridge, Mass., by The Data Warehousing Institute (TDWI), Robinette said that when he joined Advance in 2006, business decisions were typically based on data stored in spreadsheets and Excel-generated cubes. Basically, we were running the business on gut feel, he said, adding that more sophisticated BI and analytics investments were a tough sell because company higher-ups were mainly focused on redesigning Advance s retail stores. Going from gut feel to an analytics business culture Things changed in early 2008, when a former Best Buy executive took over as Advance s CEO and put a priority on improving the mix of parts in different stores based on local demand. Instead of the previous one-size-fits-all approach to merchandise planning, the company now uses data mining and predictive analytics tools to help automatically set plans for populating individual stores with parts, Robinette said. Sponsored By: Page 7 of 11

8 In addition, an analytics business culture has been firmly established within the retailer, he said. My big cultural challenge now is that I have people who want [analytics] and I can t deliver it fast enough. Operational improvements enabled by the analytics tools have helped to solidify those tools place in the company. For example, in the past, about 20% of the parts stocked in stores didn t sell within a year. Advance has used analytics to lower that figure to 4% a reduction that is worth millions of dollars to our bottom line, Robinette said. The company also uses performance metrics generated via its analytics applications to set growth targets for store managers and foster internal competition among stores. Analysts say that Advance s experience with analytics technology is becoming more common these days. A technology-savvy CEO, often someone brought in to replace the previous top executive, pushes a company to use advanced data analytics software and methodologies to generate deep data insights that can support better business decisions. To help an analytics initiative succeed, senior executives need to drive an internal emphasis on optimizing business performance through quantitative measurements, TDWI analyst Wayne Eckerson said. They also have to put the company s money where their mouths are by funding and prioritizing analytics projects, he added. Analytics software doesn t equal an analytics business culture But new analytics software and high-level executive support while a good start aren t enough to foster and maintain an analytics business culture. Companies also need to make sure that their employees have the ability to make the right decisions based on information gleaned from analytics technology, said Dan Vesset, an analyst at Framingham, Mass.- based IDC. I think that was part of the problem, for instance, with the financial crisis, Vesset said. The systems correctly identified risks, but the humans overrode those signals because they were incented to do so. Sponsored By: Page 8 of 11

9 A recent IDC survey of 1,100 organizations found that analytics programs tend to work best when employees are truly willing to let their actions be influenced by the technology. The survey also found that companies with successful analytics programs tend to be more successful in general. The more analytically oriented a company was, the more competitive they were in their industry, Vesset said. He added that education and training are two of the keys to creating a long-lasting data analytics business culture. But that means more than simply teaching employees how to press buttons, click icons and read data on executive dashboards, he cautioned. We don t just mean training on the tools but also training on analytics techniques, Vesset said. There is a lack of people who are knowledgeable on the different ways of analyzing data. Employees should also be educated about the meaning of data as it pertains to their company s specific key performance indicators and performance metrics, he advised, while noting that such training is currently lacking at most companies. Using an analytics group to help create an analytics business culture Another potential way to help foster an analytics business culture within an organization is to set up a dedicated data analytics group, according to Eckerson, who put cultural issues at the top of a list of analytics challenges during a presentation at the TDWI event in Cambridge. While most companies haven t gone that far yet, he said, an analytics group with its own director could develop an analytics strategy and project plan, promote the use of analytics within the company, train data analysts on analytics tools and concepts, and work with the IT, BI and data warehousing teams on deployment projects. One more point to keep in mind: Don t go overboard on the use of analytics tools. For example, Advance Auto Parts tied information gleaned from analytics software into a performance dashboard application that was rolled out last year. The dashboard gives store employees a quick view of key performance metrics a capability that Robinette said Sponsored By: Page 9 of 11

10 reinforces the importance and value of analytics without requiring front-line workers to delve deeply into it themselves. We didn t want to turn our store managers and associates into data analysts, he said. We want them out front in the stores, selling products. About the Authors: Todd Morrison: Prior to joining SearchSAP.com, Todd worked as a managing editor at HCPro, a healthcare publishing firm in Marblehead, Mass. Before that, Todd worked as a daily newspaper reporter in New Hampshire, where he covered everything from business to political reporting. Todd has a bachelor's degree in advertising from the University of Oklahoma, and a master's degree in journalism from Boston University. He is currently pursuing a certificate in digital media production at Emerson College Craig Stedman: As an executive editor within the Business Applications and Architecture Media Group, Craig oversees editorial processes for the following websites: SearchBusinessAnalytics.com, SearchContentManagement.com, SearchDataManagement.com, SearchSQLServer.com and SearchDataManagement.co.UK. His responsibilities include cross-site leadership and working with site editors, writers and group leaders on editorial projects. He also is the site editor for SearchBusinessAnalytics.com and SearchDataManagement.com. Craig has more than 20 years of experience as an IT journalist. Mark Brunelli: As news editor for SearchDataManagement.com, Mark Brunelli spends his days talking to data management professionals, industry analysts and software vendors. His goal is to learn the latest news, tips, trends and tricks that can help those data management professionals do their jobs better. Some of his coverage areas include data integration, data governance, data quality, master data management, data services, database management systems and data warehousing. A former general assignment reporter with The Boston Globe, Mark has spent the last ten years writing about various issues of interest to the IT community. He is committed to the highest journalistic standards and always welcomes your data management story ideas. Sponsored By: Page 10 of 11

11 About SAP SAP's vision is for companies of all sizes to become best-run businesses. Best-run businesses transform rigid value chains into dynamic business networks of customers, partners, and suppliers. They close the loop between strategy and execution, help individuals work more productively, and leverage technology for sustainable, profitable growth. This vision is in keeping with SAP's mission to accelerate business innovation for companies and industries worldwide - contributing to economic development on a grand scale. Sponsored By: Page 11 of 11