Driving business intelligence to new destinations

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1 IBM SPSS Modeler and IBM Cognos Business Intelligence Driving business intelligence to new destinations Integrating IBM SPSS Modeler and IBM Cognos Business Intelligence Contents: 2 Mining for intelligence 3 Reliably predicting outcomes 4 Extending the value of enterprise data 5 Analytics for managers 6 Analytics for analysts 7 Analytics for IT staff 7 A proven, repeatable process 8 Results in perspective 9 Enhancing intelligence with predictive capabilities 10 About IBM IBM Cognos Business Intelligence is a powerful solution that enables business users to be more informed, engaged and aligned in their decision-making. Combining IBM SPSS Modeler with IBM Cognos Business Intelligence provides additional capabilities; particularly the ability to predict what is likely to happen next. In business, all decisions count. Of course, some count more than others. Famously, both Sir William Rootes, head of the British car manufacturer Rootes Group, and Henry Ford II decided to turn down opportunities to take over the Volkswagen factory after World War II decisions with far-reaching consequences for both companies! But everyday choices what incentive to offer a customer who may be about to defect, where to open a new shop, or whether to submit an insurance claim for investigation also matter. Over time, the accumulated weight of thousands of small choices can have just as much impact as, say, larger decisions about whether or not to relocate manufacturing to a different country or to outsource a business function. Not surprisingly, over the past few decades businesses have increasingly turned to BI solutions such as IBM Cognos Business Intelligence to deliver the accurate, complete, consistent and timely information they need to make smarter decisions.

2 Business intelligence software can discover a great deal of information painting a detailed picture, for example, of which customers are buying what products, and where and when they re doing so. Predictive analytics adds foresight to the insights gained through business intelligence. In this way, companies can anticipate future purchasing patterns and make attractive offers at just the right times and places. IBM Cognos Business Intelligence delivers business value by providing everyone from executives and line managers to business and financial analysts with tailored interfaces that deliver the right information to the right users at the right time. With its scorecards and dashboards, business managers and executives can keep their fingers on the pulse of the business at all times. With reporting and query, decision-makers at all levels can gain a deeper understanding of what is happening in the business, while analysis capabilities help them plan what to do next. Mining for intelligence One straightforward BI application would be to analyze sales data to discover which products are selling well (or badly) in which geographies. Armed with this intelligence, sales managers could take action to boost sales in the affected geographies for example, by conducting further research to find out why some products are not selling, or by deciding to concentrate on those that are. Other applications include: Tracking shifts in the market for a product or service Comparative analysis against a competitor s products/services Analysis of the market for a new product/service Financial analysis Profitability analysis IBM Cognos Business Intelligence is an immensely powerful solution for guiding business decisions but when combined with the advanced functionality of IBM SPSS Modeler it is even more powerful. This is because IBM SPSS Modeler adds exceptional predictive analytics capabilities, along with a range of invaluable procedures for cleansing and preparing data. 2

3 Reliably predicting outcomes While BI solutions excel at revealing how we are doing, and why, predictive analytics provides a window into the future by predicting what is likely to happen next. Predictive analytics connects data to effective action by drawing reliable conclusions about current conditions and future events. IBM SPSS Modeler offers techniques for clustering and segmentation, to reveal groups within the data; techniques for association, to reveal connections and sequences of events; and techniques for predicting outcomes. An association technique is often used to look at all supermarket purchases and identify what products are purchased together. This technique, called market basket analysis, could reveal that there are many different baskets bought by different groups of customers. IBM SPSS Modeler can go beyond this simple technique to examine the customers who buy particular baskets and identify the unique characteristics that define their preferences. Then, using these characteristics as a model, it can predict which products they are likely to buy next. For example, using IBM Cognos Business Intelligence scorecards and dashboards, a supermarket product manager might discover that sales of a certain premium brand of coffee are declining. The analysis and reporting features might show that customers seem to prefer to buy other, lower-margin coffee brands. The question, then, is what to do to increase sales of the high-margin product. The answer is to use IBM SPSS Modeler to perform a market basket analysis. This could reveal that a group of customers who frequently buy the premium coffee brand also buys, say, fresh meat, certain varieties of fruit and vegetables and artisanal bread. On the basis of this predictive intelligence, a product manager could reliably conclude that premium coffee sales would increase by making a special offer and strategically placing display units near the produce, meat and bread counters. 3

4 The predictive intelligence produced by IBM SPSS Modeler for example, information about the products people are likely to buy next, and their propensity to purchase can be integrated directly into the IBM Cognos Business Intelligence framework and made available to the reporting environment immediately. Then product managers have a significantly more comprehensive view into their business including a view into the future all from their familiar, intuitive IBM Cognos Business Intelligence dashboard. In this way, marketers can create personalized, targeted offers, and focus effort and expenditure. Extending the value of enterprise data IBM Cognos Business Intelligence delivers a complete, consistent and enterprise-wide view of information to support decision-making. IBM SPSS Modeler can read that enterprise view directly, preserving the structure and the metadata, so that users are interacting with data in the way that is already familiar to them. Once the IBM SPSS Modeler analysis is complete, the results can be written back to that same consistent view using familiar tools and technologies. Because the predictive intelligence is then a part of the underlying data, managers can combine, view and manipulate those results from within the familiar IBM Cognos Business Intelligence interface to leverage the data views that are driving the organization forward. Figure 1: IBM SPSS Modeler allows users to tap into IBM Cognos Business Intelligence framework data from the modeling interface. IBM SPSS Modeler reads enterprise views directly, preserving the structure and the metadata so that users interact with IBM Cognos Business Intelligence data in the usual, familiar ways. 4

5 Since are tightly connected, the predictive intelligence uncovered is immediately available to business user and all stakeholders who rely on IBM Cognos dashboards and reports to make informed decisions. The rich visualization and graphical options built into IBM Cognos Business Intelligence can be used to integrate predictive intelligence in imaginative ways. For example, dashboard reports could use maps or other charts to present data overlaid on cities, countries, seats in an airplane or even parts of the human body. With the ability to display predictive metrics in interactive charts and gauges, the reach of predictive analytics can be extended from analysts desks to the boardroom. Analytics for managers IBM SPSS Modeler delivers capabilities that address many of the major issues facing business managers, analysts and IT staff. Business managers make critical decisions every day but are often hampered by incomplete understanding of the data and an inability to reliably predict outcomes. Although based on in-depth business knowledge, their choices often involve a number of assumptions and a degree of guesswork. As a result, there is always some uncertainty in their analysis, accompanied by a lack of confidence in the results. IBM SPSS Modeler improves the confidence level in business decisionmaking because it provides techniques to extract patterns and relationships from datasets, and creates models of the interactions that really matter. The results that IBM SPSS Modeler produces give managers a clearer view of present conditions and deeper insights into the future. These insights can underpin rational decision-making, and managers can even ask analysts to carry out what if analyses to test the relative impact that different variables have on the outcome. Business managers can use IBM SPSS Modeler results to predict outcomes by modeling a business decision before implementing it and understand with a high degree of certainty what the outcome will be. As a result, they can switch from sense and respond mode to predict and act. With IBM Cognos Business Intelligence, stakeholders can evaluate trends, benchmark results, make plans and compare performance with plans. The addition of predictive intelligence obtained from IBM SPSS Modeler creates better informed strategies because they can also look into the future and evaluate likely outcomes, understand how various factors (and their interplay) underpin outcomes and assess the likelihood behind outcomes all within their familiar, high performance reporting environment. 5

6 Figure 2: Once an analysis is complete, users can write the predictive intelligence back to the IBM Cognos Business Intelligence view directly from IBM SPSS Modeler. Then business analysts can create interactive reports with the new data using the powerful reporting interface of IBM Cognos Business Intelligence. There is no need to define additional metadata or take extra data manipulation steps. Analytics for analysts While IBM SPSS Modeler s unique features and intuitive graphical interface make it easy for non-specialists to produce models quickly and easily, professional analysts can exploit its advanced modeling capabilities to provide still deeper insight. IBM SPSS Modeler includes powerful data manipulation features, including automatic data preparation. Not only does it read IBM Cognos Business Intelligence views, it can read and write directly to a wide variety of operational databases that the BI tool itself supports. With the power that IBM Cognos Business Intelligence has to consolidate and structure data and the sophisticated data manipulation capabilities inherent in IBM SPSS Modeler, there is no need for additional data extraction and preparation steps or tools. IBM SPSS Modeler has a number of data-cleansing options to remove or replace invalid data, automatically impute missing values and detect and mitigate outliers and extreme data values and these preparation and conditioning processes can be carried out in a single automated step. 6

7 Other data manipulation services include field filtering, renaming, derivation and binning, recategorization, value replacement and field re-ordering. Analysts can also sample, merge, concatenate, sort, aggregate, restructure and partition data to create data sources optimized for analysis. Analytics for IT staff Above all, IT specialists require a scalable and flexible solution that will deliver advanced analytical capabilities to end-users while fitting seamlessly into the existing information management infrastructure. With its open and scalable architecture, IBM SPSS Modeler easily meets these criteria. IBM SPSS Modeler supports almost any operating system or operational database, including Linux for System z and IBM s Smart Analytics System for Power (AIX). IBM SPSS Modeler frees IT staff from repetitive and ad hoc data pulls and restructuring tasks by providing secure access to both operational data and to IBM Cognos Business Intelligence views, all in a graphical user interface that eliminates the need for programming. A proven, repeatable process IBM SPSS Modeler supports the de facto industry data mining standard, the CRoss-Industry Standard Process for Data Mining (CRISP-DM), during every phase of operation. This means that business users and analysts alike can focus on solving business problems rather than on re-inventing a new method for every project. Because they can concentrate on knowledge discovery rather than on technical tasks, they can pursue train-of-thought analysis to explore the data more deeply and uncover additional hidden relationships. 7

8 Results in perspective IBM SPSS Modeler has a range of techniques for finding patterns and relationships within large datasets. Historically, this task has been carried out by expert analysts but the results are important to a variety of users who will not necessarily have the skill or experience to extract the information they need. Presentation is a crucial step to enable end users to understand the results, which must be delivered in a way they can understand and that reflects actual business processes. Integrating the predictive capabilities of IBM SPSS Modeler with the advanced reporting and presentation features of IBM Cognos Business Intelligence delivers more refined information that can be exploited in any or all parts of the business. IBM Cognos Business Intelligence is one of the leading solutions to bridge the gap between in-depth analysis and comprehensible reporting. By reading the results produced by IBM SPSS Modeler and transforming them into easily understandable reports in a variety of styles complete with graphs, charts and tables managers get information in familiar formats. The advanced query and reporting functionality in Cognos Business Intelligence can also be used to extract additional useful information from modeled datasets. For example, with the results of a cluster analysis carried out with IBM SPSS Modeler, managers could use IBM Cognos Business Intelligence to: Quickly and easily drill through to the records defined by a specific cluster Compare the statistics of a cluster to global statistics. This can reveal which factor(s) define the cluster. For example, if the average age of customers in the segment is 20 and the average age of all customers is 40, then the segment is characterized (in part) by age group. Define a specific cluster relevance measure. For example, segments that contain more than ten thousand customers, with each customer spending at least a hundred dollars a month. Visualize the distribution of data in a cluster using charts and graphs Examine a cluster in detail by introducing customized metrics that combine information about clusters into a single relevance criterion 8

9 Enhancing intelligence with predictive capabilities It is no exaggeration to say that organizations today stand or fall by the quality of their decision-making. Each correct decision no matter how insignificant it might seem to be has a positive impact on the bottom line; conversely, each bad call, each misjudgement of the facts, has a negative effect. Increasingly, then, organizations are using the data they hold about customers, competitors, their products and services and soon to drive better decision-making and improve their business processes. This capability, combined with business knowledge and professional skills, is what enables organizations to predict and act rather than sense and respond to make reliable decisions about what actions to take to increase sales, improve the quality of service, or meet any other pressing business goal. With working together, they can progress from measuring and reacting to historical events, to predicting and taking pro-active measures with a high degree of certainty that they will benefit the organization. But having the data is one thing: making sense of it is another, and IBM Cognos Business Intelligence provides a comprehensive solution including reports, dashboards, scorecards, charting, that present data in easily understood, familiar format so that managers can measure results and monitor business performance. Combining the predictive capabilities of IBM SPSS Modeler massively increases the power of IBM Cognos Business Intelligence by giving managers insight into future events. While IBM Cognos Business Intelligence can clearly and concisely show what has happened and why, IBM SPSS Modeler can indicate what is likely to happen next. 9

10 About IBM IBM software delivers complete, consistent and accurate information that decision-makers trust to improve business performance. A comprehensive portfolio of business intelligence, advanced analytics, financial performance and strategy management and analytic applications gives you clear, immediate and actionable insights into current performance and the ability to predict future outcomes. Combined with rich industry solutions, proven practices and professional services, organizations of every size can drive the highest IT productivity and deliver better results. For more information For further information or to reach a representative: Request a call To request a call or to ask a question, go to analytics/spss/contactus. An IBM representative will respond to your inquiry. 10

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12 Copyright IBM Corporation 2010 IBM Corporation Route 100 Somers, NY US Government Users Restricted Rights - Use, duplication of disclosure restricted by GSA ADP Schedule Contract with IBM Corp. Produced in the United States of America May 2010 All Rights Reserved IBM, the IBM logo, ibm.com, WebSphere, InfoSphere and Cognos are trademarks or registered trademarks of International Business Machines Corporation in the United States, other countries, or both. If these and other IBM trademarked terms are marked on their first occurrence in this information with a trademark symbol ( or TM ), these symbols indicate U.S. registered or common law trademarks owned by IBM at the time this information was published. Such trademarks may also be registered or common law trademarks in other countries. A current list of IBM trademarks is available on the Web at Copyright and trademark information at SPSS is a trademark of SPSS, Inc., an IBM Company, registered in many jurisdictions worldwide. Other company, product or service names may be trademarks or service marks of others. Please Recycle software YTW03041USEN-02