Advanced analytics software provides insights to business intelligence, the “Wow, I did not see that before” factor. It identifies that “something more” and shows you how to capitalize on it. But what is advanced analytics?
Advanced analytics includes data mining and statistical software. It uses technologies such as neural networks, rule induction and clustering, among others, to discover relationships in data and to make predictions that are hidden, not apparent or too complex to be extracted using query, reporting and multidimensional analysis software.
In other words, advanced analytics is about applying techniques for analyzing data to identify an opportunity, solve a problem or “predict” a future outcome. These high-end analytical techniques let you tap into rich data sources to spot trends about customers, products, markets or suppliers, and to manage risk or formulate strategic initiatives in order to forecast and model outcomes. These predictive insights can, in turn, mean tangible profit-maximizing and cost-saving decisions.
Identify strategies for profitability
What this means for businesses is that advanced analytics lets you leverage your investment in people, contracts, equipment and facilities, and identify strategies that ensure profitability by looking for intelligence, not just knowledge. It means exploring the how, why and when, not just the what of collected data. It means committing to intelligent modeling that generates new insights rather than using data to justify an existing assumption.
Advanced analytics can be used to address complex planning problems and solve difficult business challenges-many of which would otherwise be considered impossible using spreadsheets and similar solutions. Advanced analytics does this thanks to linear programming and other sophisticated heuristics, which bring true intelligence into the equation.
Advanced Analytics Operates in What Could Be
Advanced analytics operate in what could be
You have spent thousands, even millions, on IT: data warehousing, data collection and BI software, including graphs, reports and charts. But what are you getting for it and how much more could you be getting if you added advanced analytics to your tool kit? The opportunities to maximize profitability and improve efficiencies through the use of advanced analytics are virtually limitless, and are applied to any industry or resource-from tracts of land, roads and bridges, to carbon emissions credits and manufactured items.
A good example comes from the province of New Brunswick and the recent overhaul of its entire asset management program for civil infrastructure. Through advanced analytics, the New Brunswick Department of Transportation (NBDoT) found that the most cost-effective way to manage its assets was to use a “least life cycle” cost approach where, previously, the accepted way to manage its 18,000 kilometers of roads, 2,900 bridges and various ferry crossings was to fix the worst first. The result had been a slowly deteriorating infrastructure and steadily increasing maintenance costs.
The NBDoT applied advanced analytics software, including linear programming, to spot efficiency trends. It showed the most profitable alternative through its trade-off analyses and scenario-modeling capabilities. In the end, the system offered an objective and strategic approach to long-term investment planning and program development. It identified the right time and the right way to make improvements to the province’s highway infrastructure at the lowest cost to taxpayers.
The more information you can include in your analysis, the more you can mitigate risk and ensure a defendable result. This is perhaps best illustrated in a recent land valuation case in which the battle to decide the final outcome of Pacific Lumber Company‘s bankruptcy confirmation proceedings was determined by Judge Richard Schmidt. Schmidt confirmed the reorganization plan for PALCO by Mendocino Redwood and PALCO creditor Marathon Structured Finance Fund. The opinion that won Schmidt’s approval was an advanced analytics approach that applied linear programming techniques to consider a wider range of alternatives for a more defendable result.
How to Ensure Profitability: 6 Tips
How to ensure profitability: 6 tips
Once you have invested in the best people and tools to accomplish your goals, identify the strategies or best practices to ensure profitability. But keep in mind that your relative success in using advanced analytics is determined by your ability to act on the recommendations provided. Keep the following six tips in mind:
Tip No. 1: Start with the endgame
“Here’s what I want. How do I accomplish it?” Rather than identifying what you do currently and then playing with known strategies until you reach an acceptable outcome, turn the problem around. Define the outcome you are looking for, and ask the advanced analytics software to give you the best strategy to accomplish it. For example, use advanced analytics to explore, “What is the best strategy to maximize the net present value of my asset?” It may give you a different answer than you expected, but you will get the best answer.
Tip No. 2: Incorporate BI data
Make the most of your IT investment by gathering and leveraging all the data and technology in which you already have invested. It can be on a variety of platforms and from multiple sources, including Teradata, Oracle, DB2 and SQL Server-based data warehousing environments.
Tip No. 3: Open your mind to the possible
It’s limiting to identify only strategies that you already have in mind based on your BI and personal experience. Instead, use advanced analytics technology to explore completely off-the-chart “what-if” scenarios. Examples of these might be: “What if I didn’t repair equipment in the worst condition first? How can we ensure that the total value of our civil infrastructure is not decreasing over time? How do compliance requirements impact our planning?”
Tip No. 4: Put it all in the mix and break some barriers
Consider all options and explore multiple “what-if” scenarios. Expand the scope of your analysis to include all data and related factors that may be of relevance. It takes sophisticated tools, algorithms and complex modeling capabilities that are not found in less-advanced BI software to accomplish this. But you’ll get a deeper, more insightful analysis.
Tip No. 5: Consider constraints
Take steps to understand and identify all the constraints (such as budget, timing, regulations and so on) under which you are operating. Constraints may eliminate some options and reduce your overall results, but including them will ensure you get the most realistic results. And a proper analysis can help you see how each of the constraints affects the bottom line, allowing you to relax or tighten them if appropriate.
Tip No. 6: Collaborate
Use collaborative technology to ensure that key people, even those without analytical expertise, have opportunities to offer their expertise and feedback.
Advanced Analytics Take Users to Higher Levels Than BI
Advanced analytics take users to higher levels than BI alone
Whether aimed at strategic or operational issues, advanced analytic software can dramatically improve the consistency and quality of decision making throughout an organization. This is because it enables decisions that are based on quantified costs, benefits and risks, rather than on pure instinct.
At the same time, it weighs the opinions of experts against established priorities to allow for the genius of experience, and it accelerates the decision-making process, allowing managers to focus their time and attention on more pressing issues.
Depending on the actions taken, organizations either save money or make more money. Advanced analytics builds on BI, causing some users to say, “Wow, I did not see that before.” It helps them take actions they might never have considered-and for the highest possible profitability.
Steve Palmer is co-CEOof Remsoft Inc. Steve’s primary focus is on corporate strategy, finance and on expanding the company’s growth in the areas of business intelligence and predictive analytics. Prior to joining Remsoft, Steve had an impressive career in the technology sector in New Brunswick. Most notable was his position as chief operating officer for Whitehill Technologies, where he played a key role in growing the company to the fifth-largest private software company in Canada.
Steve holds a bachelor of science degree in biology and an MBA from Dalhousie University. He also holds the FCMA designation. Giving back to his community is a priority for Steve. He commits time and energy to mentoring others in the tech sector and spearheads the Rising Stars Program of the New Brunswick Knowledge Industry. Steve is also chair of the Greater Moncton Knowledge Industry Network and is a member of the Moncton Technology Planning Group. He can be reached at [email protected].