Going Beyond DataBy Samuel Greengard | Posted 2010-02-04 Email Print
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Business Intelligence and business analytics have become core tools to guide business decisions, develop strategies and create new opportunities.
Going Beyond Data
As more organizations attempt to sift through petabytes of data, it’s increasingly clear that BI and BA are as much about missed opportunities as about the ones companies tap into. Sifting and culling through data requires a robust infrastructure, effective data collection tools, and well-designed software for mining and analytics. Only then is it possible to identify hidden trends, customer relationships, buying behavior, operational and financial patterns, business opportunities and other vital information.
BI and BA are separate but connected tools. While BI provides a way to cull through data to find information—usually through querying, reporting, online analytical processing (OLAP) or other straightforward analysis tools—BA taps into statistical and quantitative data for explanatory and predictive modeling. For example, BA can predict which customers are likely to close accounts and can determine the optimal time to repair or replace a piece of equipment.
However, navigating BI and BA isn’t easy. That’s because numerous definitions exist, and the terms are loosely applied to a variety of tools and situations. Many companies continue to rely on spreadsheets as their primary BI tool, while others rely on dedicated and specialized applications from the likes of IBM, Oracle, PivotLink, SAS and Unica. (See “A View From the Top” on page 22.)
Steve Cranford, a managing director and practice leader at consulting firm PricewaterhouseCoopers (PwC), says BI typically involves the mechanics of turning data into information and then using dashboards and scorecards to disseminate it. Analytics, in contrast, centers on “solutions-oriented capabilities” that create value and transform information into knowledge.
Peering deep into data is certainly the goal at Independent Health, a Buffalo, N.Y., health maintenance organization with more than 300,000 members in eight counties in western New York. With health care reform looming and cost controls essential, Independent is continually searching for ways to become more efficient. “We look at health care as the business of information management,” says Joe Somma, director of market intelligence. “The better we perform, the better we’re able to deliver services and control costs.”
It’s no small task. At Independent, getting to results meant reshaping and rethinking things. “Putting the right data to use is essential,” Somma explains. Ultimately, the organization focused on three key initiatives: using predictive analytics to rate the probability of members’ contracting certain diseases, such as diabetes; using an application in-house to reduce costs; and adapting marketing campaigns to the preferences and demographics of different customer segments.
Independent Health turned to SPSS Predictive Analytics (recently acquired by IBM) to take its BA initiative to a higher level. Among other things, it developed a series of models that help customize communication with members, such as deciding the preferred method of contact, the scripts representatives should use and the services to suggest.
In fact, by overlaying demographic data from Nielsen Claritas, a market-ing and media communications company, with its internal customer data, Independent built a targeted marketing strategy that allows it to connect with members through a preferred channel—including telephone, conventional mail and e-mail (with Facebook and Twitter likely in the future).
The results have been impressive. Already, Independent has improved the efficiency and cost of campaigns by 27 percent, while achieving a 35 percent reduction in the use of outside vendors (saving approximately $350,000 a year). Moreover, the organization realizes as much as a 10 percent savings in direct costs by getting its members treatment earlier and on a preventive basis—particularly for conditions such as diabetes and heart disease.
In the future, Independent may also use BI and BA to identify fraud. “The technology is making it possible to become a far more efficient organization,” Somma adds.
One thing that makes newer BI and BA applications so powerful, says Boris Evelson, principal analyst for business intelligence at Forrester Research, is the ability of managers and others on the front lines of business to use these solutions to extract meaningful results. “They are no longer an exclusive tool for executives and power analysts,” he says. “They are enabling knowledge workers throughout organizations.”