“Everything is connected to everything else — if only indirectly — and this is reflected in data.” – Eric Siegel, Writer
Have you wondered how the super cyclone that wrought havoc in Orissa in 1999 was different from HudHud, which recently hit coastal Andhra Pradesh? Officially recorded casualties caused by HudHud were 100, compared to 10,000 in areas devastated by the super cyclone. Total destruction was averted due to the timely and accurate predictions of the Weather Department, based on the analysis of past data.
We use analytics in different spheres — from predicting weather patterns, understanding consumer behavior and selecting the date of release of a movie to taking decisions on the designs and number of vehicles to be manufactured. Consciously or unconsciously, analytics forms the basis of business decisions. The question is, how aware and confident are we of effectively leveraging this wealth of data?
The concept of analytics is not new. Operation research techniques used by the British during World War II to successfully defend Britain against the Germans is a classic example of its successful implementation. Though, technologies that help organizations understand their data have only become available and affordable recently. The key question is — are the organizations able to justify the return on their investment on data management and analytics strategies? How effective are their analytics solutions in solving their business problems?
Across industries, an abundance of data is generated every day. This is used to generate reports, visualize patterns, and develop an understanding of historical events. Predictive analytics is moving a step ahead to provide pro-active solutions – rather than advocating specific responses to situations – and is ensuring business continuity and profitability.
Research released by MIT Sloan Management Review reports that 67 percent of companies surveyed are gaining a competitive advantage by using analytics. There are many examples of how analytics can solve business-related problems across industries.
- One of the challenges faced by technology companies is to control their transportation costs by optimally utilizing vehicles and avoiding fraud-related risks (e.g., fake trips recorded by transport vendors). Analytics can help them optimize their operations by aligning transport routes with the timetables of employees, leading to a reduction in the collective overall distance travelled by them as well as in the wait and travel time for employees.
- Forward-looking analytics supports retailers in product assortment, product positioning, store designing, and dynamic pricing — long before a customer actually sets foot in the store.
- Inventory management could lock up 20%–40% of invested capital in manufacturing industries. Traditional supply chain management relied on historical data in planning inventory. Although, this is helpful in the case of planned cycles and peak requirements, yet, it is not really useful during unexpected events or contingencies that immediately affect the need for inventory. Inventory forecasting using data analytics can help organizations better integrate their sourcing, procurement and production operations.
Similar uses of analytics can be seen across the various industries ranging from scheduling planes and crews, pricing tickets, making reservations, planning the size of an airline’s fleet in the aerospace sector to local governments deploying emergency services, regulate environmental pollution, control air traffic and devise criminal justice-related policies.
Leading organizations of today use data as a fourth factor in production, along with capital, people and materials. If used appropriately, analytics can be a significant differentiator that gives enterprises a clear edge over their competitors. Compliance, security, fraud detection and risk management are among several other areas that can effectively leverage analytics. Has your organization got it right yet?
“Data is a precious thing and will last longer than the systems themselves.” – Tim Berners-Lee, inventor of the World Wide Web.