Current outlook: We’re looking into the past
In accordance with market evolution and in the face of heavy global competition, the rivalry between companies is becoming intense. The ease of access to technology that allows consumers to be better informed and therefore more selective makes running a really successful business increasingly difficult.
Complicated operations, the ease of using the new technology and the vast amount of information available bring about the need for innovative techniques that allow companies to have more specific information.
Historically, the information required for decision-making can be found in reports and systems of indicators; but this information is old and focused on the past (the data explains what happened) and so firms that use this information have to base their decisions on “feeling” and not on an analysis focused on the prediction of what could happen and how to react to this in the best possible way.
This new trend in the study and analysis of information is called “Analytics”. Let us have a look at this new direction in information analysis and some of its benefits
Evolution in order to bring about growth.
In order for a business to be successful, it is essential to come up with strategies that provide a competitive advantage that places the firm one step ahead of the competition.
In terms of the available information, we can count on not only all the information that comes from the organization’s daily transactions (structured information), but also on the large amounts of information obtained from secondary sources, such as: television, radio, internet search engines and social networks (non-structured information). This data could be an invaluable source of big opportunities and company differentiators.
In order to better understand the term analytics, let’s start by defining it and mentioning its objectives.
What is Analytics?
It is a set of tools and processes used to carry out in-depth analysis of information, in order to efficiently determine future behaviors based on historical information
In order for our clients to have the most relevant and useful information so that their decision-making processes are successful, at SINTEC we work with the concept of Business Analytics and Optimization. (BAO) .
BAO – Prepared for anything
BAO specializes in forecasting different possible business scenarios and suggests courses of action for them. This is a Sintec consulting practice based on processes and tools such as predictive and prescriptive analytics.
Descriptive Analysis is a technique in which large volumes of information and data mining describe behaviors.
For example:
A company that sells the streaming of entertainment by internet to millions of online clients on a daily basis could analyze the purchases of all its clients in order to profile each one of them, so that when the users log on to the internet they access a page personalized according to their interests, which were chosen based on an analysis of their historical purchasing behavior. In this example, marketing efforts could then be better targeted based on segmentation and the transaction improved based on improved customer service. How would BAO be used in your company?
Predictive Analysis carries out forecasts and predicts future behavior based on historical information.
Example:
In the retail industry it is possible to analyze a customer’s purchasing history with a loyalty card and to know the frequency with which he buys certain products, in order to forecast the required restocking needs of a particular product and thus proactively look for customers in order to inform them of specific promotions. This could create greater loyalty as well as possibly increase the value of the average ticket; it would also allow for cross-selling, among other benefits.
This example also applies to the aeronautical industry as, based on frequent flyer information, airlines would be able to obtain projections on their customers’ possible future trips and thus be able to proactively offer routes with a discount or provide focused promotions.
These patterns are adaptable to practically all industries. The point is to focus them and to make the best use of them, thus creating a competitive advantage.
Just like descriptive analysis, Prescriptive Analysis manages a lot of information; this is Analytics’ most advanced option. Its objective is to optimize a result as a function of related variables, and based on the information generated, it can also decide which is the best option in accordance with an expected result and it carries out simulations that allow one to identify the alternative that maximizes this option.
Example:
Based on customers’ purchasing behavior forecasts, we could determine how much raw materials are needed to produce finished articles that satisfy demand with a minimum inventory level and that would allow us to fulfill our customers’ needs, at the lowest cost. At the end of the equation what is being sought is profitability maximization of the model, optimizing all the links under the same profitability objective.
In terms of maturity and complexity in the use of Analytics, we find:
Examples of some uses of BAO by sector:
Conclusions
Companies that know how to analyze, forecast , simulate and optimize these databases will achieve a competitive advantage obtained from information generated by their transactions, and from other channels such as social networks. They will be able to offer products and services with specific value characteristics in the manner and at the time the customers want them.
There exists a true challenge in organizations derived from the constant competition and from better informed customers. It is therefore essential that we find competitive advantages that differentiate us in order to achieve sustainability and long-term growth.
Trends in information analysis show a clear move towards predictive and optimization analyses, based on historical information, thus leaving traditional reports and systems of indicators in the past. While these traditional methods are undoubtedly the basis of any information system, they are not able to provide the full panorama and do not facilitate making the decision that most benefits the company. Companies that adopt and dominate these types of initiatives will find they have advantages that will differentiate them considerably from their competitors.
Update (August 23, 2013): The graphic regarding Levels of Maturity with BAO was removed because it is SAS News Magazine’s intellectual property
About Sintec
Sintec is the leading consulting firm focused on generating profitable growth and developing competitive advantages through the design and execution of holistic and innovative Customer and Operations Strategies. Sintec provides a thorough and unique methodology for the development of organizational competencies, based on three key elements: Organization, Processes and IT. Furthermore, Sintec has successfully carried out more than 300 projects on Commercial Strategies, Operations and IT issues with more than 100 companies in 14 countries throughout Latin America. Our track record of more than 25 years makes Sintec the most experienced consulting firm in this area of expertise in the region.
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