Data is the ultimate intangible asset: worthless is raw form, yet priceless when used well. Financial services companies depend on analytics to transform troves of data into business advantage, insight, and profits. Yet the ugly secret is that most analytics project fail to achieve their full potential, leaving millions of dollars in potential profits on the table.

1. Analytics:
Governing the Data to Dollars Value Chain™
Jaime Fitzgerald
President, Fitzgerald Analytics
Sept 13, 2012 2:40PM
New York City
Architects of Fact‐Based Decisions™

2. Introduction
Jaime Fitzgerald,
Founder @ Fitzgerald Analytics
To help clients find and unlock opportunities
Professional
Mission: via data, technology, and processes, while
always addressing the crucial role of people.
To Achieve
my Mission Easier Ways to and Better Ways to
I Focus On: Find Opportunities Unlock That Potential
Other  Writing a book: “The Data to Dollars Value Chain”
Projects:  Collaborating re: Analytics, Info Mgt, Data Mgt via groups like
TDWI, NYTC, DAMA, AIIM, and “Analytics in Fiserv NYC”
Analytics: Governance of the Transformation of Data to Dollars © 2012 Fitzgerald Analytics, Inc. All Rights Reserved 2

3. Things my team and I work on a lot
1
Improving Analytic Processes
2
Building Analytic Teams
3
Measuring Things Clients
Did Not Previously Measure
4
Turning Data into Dollars™
Analytics: Governance of the Transformation of Data to Dollars © 2012 Fitzgerald Analytics, Inc. All Rights Reserved 3

4. The “importance statement”…
“Technology is to us…
….what manufacturing is to
General Motors."
‐Jamie Dimon, Chairman/President/CEO
JPMorgan Chase
Source: The Economist, 2007, re: banking http://econ.st/nrMSpa
Analytics: Governance of the Transformation of Data to Dollars © 2012 Fitzgerald Analytics, Inc. All Rights Reserved 4

5. …the problem statement
Analytics: Governance of the Transformation of Data to Dollars © 2012 Fitzgerald Analytics, Inc. All Rights Reserved 5

6. Table of Contents
1. Data to Dollars Value Chain™
2. Governance Recommendations
3. Case Studies
Analytics: Governance of the Transformation of Data to Dollars © 2012 Fitzgerald Analytics, Inc. All Rights Reserved 6

7. The Data to Dollars Value Chain™
1. Data 2. Analysis 3. Action 4. Results
 New Data  Better Decisions  Revenue
Source Analysis Insight Growth
Acquisition  Better
Processes  Margin
 Data Discovery Expansion
 More
 Data Customers  Cost Reduction
Governance
 Happier &  Risk
 Data Quality More Loyal Management
Customers
 Opportunity
Discovery
Analytics: Governance of the Transformation of Data to Dollars © 2012 Fitzgerald Analytics, Inc. All Rights Reserved 7

8. Analytics Value Chain as a Cycle
1
Data
5 2
New Data
Learnings Analysis
4 3
Results Action
Analytics: Governance of the Transformation of Data to Dollars © 2012 Fitzgerald Analytics, Inc. All Rights Reserved 8

9. Example: Customer Analytics Cycle
1  Profitability
 Behaviors
Customer  Demographics
Data  Psychographics
 Wants & Needs
 Response to actions 5 2
 Descriptive
 Delta vs. Predictions New Data
Analysis  Predictive
 New insights
 New hypotheses
Learnings  Test & Learn
 Hypotheses
 New data sources
4 3
 Customer Response  Messages
 Financial Impact  Offers
 Predictions vs. Results Action  Products
Actuals  Pricing & Policy
 Surprises  Customer Service
 Input
Analytics: Governance of the Transformation of Data to Dollars © 2012 Fitzgerald Analytics, Inc. All Rights Reserved 9

10. So why DOES this happen?
Analytics: Governance of the Transformation of Data to Dollars © 2012 Fitzgerald Analytics, Inc. All Rights Reserved 10

11. “Uber Cause”: Complexity + Human Limitations
2. Decisions
1. Business Models
+ Processes
Analytic
Projects
4. Tech Tools,
3. Analysis Options Platforms, Plug‐ins,
Deployment Options
Complexity = f (Bizmodels x Decisions x Processes x Analysis Options x……..)
Analytics: Governance of the Transformation of Data to Dollars © 2012 Fitzgerald Analytics, Inc. All Rights Reserved 11

12. Other Root Causes of “Analytic Underperformance”
1
Cross‐Functional Collaboration
2
The good news is…
Communication Challenges
…managing complexity
3 makes all these other
Technology and problems easier to manage
Data Management Barriers also…
4
People: Talent, Skills, Learning,
Team Effectiveness
Analytics: Governance of the Transformation of Data to Dollars © 2012 Fitzgerald Analytics, Inc. All Rights Reserved 12

13. Table of Contents
1. Data to Dollars Value Chain™
2. Governance Recommendations
3. Case Studies
Analytics: Governance of the Transformation of Data to Dollars © 2012 Fitzgerald Analytics, Inc. All Rights Reserved 13

14. Recommendation #1: Process Standards
Plan and execute with discipline ‐ “begin with the end in mind”
Plan: Business Goal
Translates to
Insights Required
Which drives
Analysis Methods Required
Allowing definition of
Data Required
And selection of the right
Platforms, Technology, People, and Processes Act:
Analytics: Governance of the Transformation of Data to Dollars © 2012 Fitzgerald Analytics, Inc. All Rights Reserved 14

15. Rec #2: Core Governance Objectives
Objective Recommendations
• Business‐driven w/ technical inputs (e.g. time est.)
1. Prioritization • Standard criteria (process not personality!)
• Decision‐rights clear (governance team!)
2. Repeatability / • Essential for testing, QA, audit, often compliance
traceability • Key concept: lineage / process branching
• Trust = f (trust‐worthiness + communication)
3. Trust & Use • Key concept: fit with purpose
• Trust drives use…Use drives value.
• Optimize globally (not locally)
4. Enterprise Alignment • Key Concept: the “Enterprise Hat”
• Impossible without governance
Analytics: Governance of the Transformation of Data to Dollars © 2012 Fitzgerald Analytics, Inc. All Rights Reserved 15

16. Rec #3: Speaking of Alignment
Analytics Data
Governance Governance
Analytics: Governance of the Transformation of Data to Dollars © 2012 Fitzgerald Analytics, Inc. All Rights Reserved 16

17. Rec #4: The Power of “Causal Clarity”
Example: Drivers
of Net Profit
Revenue
less
Your Has Cost of Revenue Gross Profit
Business Operating Costs
Model less Net Profit
Marketing Other Costs
Overhead
Other
Analytics: Governance of the Transformation of Data to Dollars © 2012 Fitzgerald Analytics, Inc. All Rights Reserved 17

18. Example: creating “Causal Clarity”
ROI on Sales & Marketing:
Opportunity: “Efficiency of New Client Acquisition”
Key Driver / KPI: Acquisition Cost per New Client
Formula: [spending on new client marketing]/[# New Clients)
Transactions Price per
per Client Transaction
X
# of Clients Volume
Sales and
Marketing
Analytics: Governance of the Transformation of Data to Dollars © 2012 Fitzgerald Analytics, Inc. All Rights Reserved 18

19. Rec #5: Analytic Governance “Cheat Sheet”
For All: 1. Begin Your 2. Define + 3. Identify 4. Define the 5. Keep
Business Agree on Points of info needed analysis as
Model the Causal Opp. to unlock simple as
Model the opp. possible…
By Role: Executive
 Establish “causal clarity” visually so that everyone understands
 Encourage teams to use this context to prioritize and target effort
 Expect recommendations to be justified by their impact on key drivers
Business Technology
 Identify points of opportunity  Insist upon understanding the
before investing time in analytic business context and causal logic
details of requests for analytic systems
and effort
Analytics: Governance of the Transformation of Data to Dollars © 2012 Fitzgerald Analytics, Inc. All Rights Reserved 19

20. Table of Contents
1. Data to Dollars Value Chain™
2. Governance Recommendations
3. Case Studies
Analytics: Governance of the Transformation of Data to Dollars © 2012 Fitzgerald Analytics, Inc. All Rights Reserved 20

21. Case Study: Missing the “Analytics Layer”
Case Study:
The cost of “competing without analytics”? Private Label Credit
Step 1: Performance Gap Analysis
Performance
Key Performance Metric
vs. Peer Group
% of Store Customers w/ Store Card
Line of Credit per Cardholder
Utilization Rate (balance/credit limit)
“Gross Profit Yield on Balances”
Impact on Store Profits (extra boost)
Total profit per card (annual, lifetime)
Analytics: Governance of the Transformation of Data to Dollars © 2012 Fitzgerald Analytics, Inc. All Rights Reserved 21

22. It is hard to compete without the analytics layer
Plan: Business Goal
Insights Required
Missing Analytics Layer
Data
Tools, Technology, People, and Processes Act:
Analytics: Governance of the Transformation of Data to Dollars © 2012 Fitzgerald Analytics, Inc. All Rights Reserved 22

23. Step 2: Groundwork for Analytics Capability
Basic pre‐conditions to analytics excellence…
 Data Quality
 Data Integration
 Customer Profitability
 Analytics Data Mart
Analytics: Governance of the Transformation of Data to Dollars © 2012 Fitzgerald Analytics, Inc. All Rights Reserved 23

24. Step 3: Proof of Concept (‘”It’s Valuable”)
The first 3 analytic wins proved the value….
 Credit Line Decision Rules
(Profit Lift = 14 %)
 Credit Approval Models
(Profit Lift = 10%)
 Marketing ROI
(Efficiency Gain = 30%)
Analytics: Governance of the Transformation of Data to Dollars © 2012 Fitzgerald Analytics, Inc. All Rights Reserved 24

25. The “Long Pass” analogy
In Analytics, what is the
“cost of an interception?”
Analytics: Governance of the Transformation of Data to Dollars © 2012 Fitzgerald Analytics, Inc. All Rights Reserved 25

26. Step 4: Scale & Sustainability (1 FTE to 10 FTE)
Analytics Governance Board Strategy
Request Management System Data Gov.
IT
Project Portfolio Management
Governance
Project 1 Project 2 Project 3 Project 4
Profits quintupled, sustainable growth trajectory
Analytics: Governance of the Transformation of Data to Dollars © 2012 Fitzgerald Analytics, Inc. All Rights Reserved 26

27. Case Study: “Lean Startup” Governance
Realities Implications for Governance
 “Process overhead” considered
Budget Constraints
untenable…
 Adds speed and agility…
Rapid‐cycle work‐styles  …but increases risk of mistakes…
 …and lost knowledge…
 THIS is where the team realises how
“Rework” a big risk
much they NEED documentation
Key solution 2. Govern the 3. In‐Code
1. Causal
elements: Info‐Product “Knowledge
Clarity
Portfolio Drops”
Analytics: Governance of the Transformation of Data to Dollars © 2012 Fitzgerald Analytics, Inc. All Rights Reserved 27

28. Context: Local Search Business Models
Analytics: Governance of the Transformation of Data to Dollars © 2012 Fitzgerald Analytics, Inc. All Rights Reserved 28

29. Bundle’s Disruption – It is based on REAL SPEND DATA
Analytics: Governance of the Transformation of Data to Dollars © 2012 Fitzgerald Analytics, Inc. All Rights Reserved 29

30. Key Data Source: Billions of Real Spending Records
Unlike other merchant listing sites, our content is based on real credit card
spending by 20 million households
Key Issues with this Data:
Example: Credit Card Statement Data 1. Credit card data lacks
merchant identifier
2. Depend on text analytics to
associate transactions with
merchants
Analytics: Governance of the Transformation of Data to Dollars © 2012 Fitzgerald Analytics, Inc. All Rights Reserved 30

31. Key Steps in “Refinement” (Transformation)
Transformed To Create New
Old Data in New Ways Features Such As…
Card Transaction Normalization People Who Shop
Data Here Also Like…
Clustering
Merchant Listings The Bundle Loyalty
(e.g., Address, Phone Score
Number, Business Type)
Linking
Data‐Driven
Other Data: Reviews From an
Census, Bureau of Labor
Aggregation Array of Customer
Statistics, User Feedback Segments
Analytics: Governance of the Transformation of Data to Dollars © 2012 Fitzgerald Analytics, Inc. All Rights Reserved 31