History of Analytics

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The article talks all about history of analytics and the usage of analytics in the business. The article contains the definition of analytics, what exactly analytics means and how it can be defined. We will also explain here how data analytics can be leveraged for driving the entire organizational strategy.

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History of Analytics

  1. 1. By Rahul Nawab Academy for Decision Science & Analytics www.adsa.inAcademy for Decision Science & Analytics http://www.adsa.in
  2. 2. Educating savvy and business-minded Indians on the importance of numbers andanalytics in your business is like teaching the properties of sand to someone inthe desert, but here is my effort anyway.The simplest definition of analytics is "the science of analysis." However, apractical definition would be how an entity, e.g., a business, arrives at an optimalor realistic decision based on existing data. Business managers may choose tomake decisions based on past experiences or rules of thumb, or there might beother qualitative aspects to decision making, but unless data is considered, itwould not be an analytical decision-making process.Analytics have been used in business since the time management exercises thatwere initiated by Frederick Winslow Taylor in the late 19th century. Henry Fordmeasured pacing of the assembly line, thus revolutionizing manufacturing. Butanalytics began to command more attention in the late 1960s when computerswere used in decision support systems. Since then, analytics have evolved withthe development of enterprise resource planning (ERP) systems, datawarehouses, and a wide variety of other hardware and software tools andapplicationsToday, businesses of all sizes use analytics. For example, if you ask my fruitvendor why he stopped servicing our road he will tell you that we try to bargaina lot and hence he loses money, but on the street next to mine he has some greatcustomers for whom he provides excellent service. This is the heart of analytics.Our fruit vendor TESTED servicing my street and realized that he is losing money– within one month he stopped servicing us, and even if we ask him, he will notshow up. How many businesses today know who their MOST PROFITABLECUSTOMERS are? Do they know who their MOST COST GENERATING customersAcademy for Decision Science & Analytics http://www.adsa.in
  3. 3. are? And given the knowledge of most profitable customers, how should youtarget your efforts to ACQUIRE the MOST PROFITABLE customers?Large business uses analytics to drive the entire organizational strategy. Someexamples include:  Capital One, a credit card company in the U.S., uses analytics to differentiate customers based on credit risk and they match customer characteristics with appropriate product offerings.  Harrah’s Casino, another U.S. company, identified that against popular belief, their most profitable customers are the ones playing slots. To leverage this insight, they have created marketing programs to attract and retain their MOST PROFITABLE CUSTOMERS.  NETFLICKS, an online movie service, identifies the most logical movies to recommend based on past behaviour. This model has increased their sales because the movie choices are based on customers’ preferences and therefore the experience is customized to each individual.Common applications of analytics include the study of business data usingstatistical analysis to discover and understand historical patterns with an eye topredicting and improving future business performance. Also, some people usethe term to denote the use of mathematics in business. Others hold that the fieldof analytics includes the use of operations research, statistics and probability;however it would be erroneous to limit the field of analytics to only statistics andmathematics.While the concept is simple and the notion is intuitive, the common leverage ofanalytics to drive business is just in its infancy.Academy for Decision Science & Analytics http://www.adsa.in

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