As Analytics Subsumes O.R., will INFORMS Subsume Analytics?
FORUM As Analytics Subsumes O.R., will INFORMS Subsume Analytics? BY RAHUL SAXENA The title of this article asks a provocative • “By analytics we mean the extensivequestion. There is an increasing amount of use of data, statistical andcoverage of the term “analytics”in the media, quantitative analysis, explanatoryand there are some significant developments: and predictive models, and fact-• On April 28, 2009, the news broke based management to drive that “IBM today announced a decisions and actions”  – Tom significant expansion of its Davenport, co-author of capabilities around business “Competing in Analytics” analytics with plans to open a • “How an entity (i.e., business) network of Analytics Solution arrives at an optimal or realistic When we assess the organizations Centers around the world, decision based on existing data … involved in analytics as featured in Analyt- beginning with five in the second unless there are data involved in the ics Magazine, we find that these organiza- quarter of 2009. These initial centers process, it would not be considered tions define analytics functions that extend will be located in Tokyo, London, analytics”  – Wikipedia beyond the use of core OR/MS techniques New York City, Beijing and • “Recurring points in these and practitioners. They build analytics Washington, D.C. As part of this definitions appear to segment teams with people from the fields of statis- initiative, IBM will retrain or hire as analytics into three skill sets. One is tics, industrial engineering, computer sci- many as 4,000 new analytics the grunt work that O.R. people ence, data analysis, finance and OR/MS and consultants and professionals” . have to do before they can apply leverage generalists with industry knowl-• Tom Davenport’s article on O.R. methods and models. This edge. For example: analytics is listed as one of the 10 includes data gathering, data • At Schneider Logistics’ Engineering must-read articles in the Harvard cleaning and organizing, and Research Department, “The Business Review . distribution fitting, descriptive group’s academic backgrounds• INFORMS has started publishing a statistics, ‘trend spotting’ and range across not only operations new digital magazine Analytics. A developing performance metrics. I research, but also industrial Google search for “analytics” picks will call this body of knowledge and engineering, mathematics, up the link to it (http://analytics skills ‘pre-O.R.’ The second piece of computer science, finance and magazine.com) on the first page of analytics is the O.R. skill-set itself, business administration, with a results. which would include building some combination of bachelor’s master’s• Analytics is being covered in the form of mathematical or and Ph.D. degrees. A number of mainstream press, such as Forbes spreadsheet model to add value to team members bring significant magazine . the data in helping understand and prior transportation operations resolve a decision. The third experience” . The coverage and scope of analytics is segment of analytics consists of a set • In the Strategic Planning andwidespread, with interest from business, of more advanced analytical skills Modeling team at Hewlett Packard,defense, government, education and the and methodologies that would not “While there will always be nichegeneral public reflected in the coverage of normally be taught in an O.R. roles for technical specialists withthe subject in the press. Students have course. These include data mining, deep expertise in a particulardeveloped a keen interest to learn about predictive modeling and advanced methodology like optimization oranalytics and venture capital firms are keen statistical techniques such as logit, data-mining, there is a growing needto fund analytics startups. cluster analysis and some tools from for generalist problem solvers to artificial intelligence, as well as support managers who want to driveAnalytics Delivers Value methodologies such as Six Sigma better, data-driven business decisionsBeyond OR/MS and lean manufacturing. I will call … Their bread-and-butter analytics So what constitutes analytics? Here are this set of skills non-O.R. analytics” tools are spreadsheet modeling andthree definitions: . – Peter Bell data analysis skills” . 20 OR/MS TODAY Februar y 2010
• At McDonalds Restaurant Innovation organization, “Over the past few years we have built a team with talents in the area of video analytics, data mining/predictive analytics, predictive modeling and experimental design. These are the core competencies needed for our business right now” . Figure 1: Analytics already leverages many practitioners for their OR/MS talents. So if you are an INFORMS member andpractitioner, you are probably either in an managing people, politics, products This list is not intended to fully defineanalytics team or complement the analytics and processes. either OR/MS or analytics – I do not intendteam. The world of analytics, therefore, has d. Communication skills, methods and to bind and carve up these sprawling andalready enveloped many OR/MS practi- technologies that enable effective evolving bodies of knowledge. This listingtioners; in general, we rely on the analytics collaboration throughout the project method, instead, is intended to spark dis-organizations to get the data needed to do cycle, from effective information- cussion and understanding. We can use thisour work and then we use the operations gathering to collaborative decision list, for instance, to map the practice of ana-reporting and control mechanisms provid- support and change management lytics today versus where practitioners mayed by the analytics team to get results from place the OR/MS domain:OR/MS recommendations. 2. Data preparation. We need to teach Based on the Figure 1 diagram, we can This close affiliation to analytics is people how to assess data quality, improve project the trajectory of analytics from itsreflected in the skills needed for in OR/MS its fitness for use in decision-making, and current footprint to more mature stages. Atjobs. ManMohan S. Sodhi and Byung-Gak enable effective sharing of data without get- present, analytics already leverages manySon analyzed O.R. job postings and found ting entangled in its semantic richness. practitioners for their OR/MS talents andthat “employers of O.R. graduates consis- 3. Data presentation in dashboards and combines this with a bunch of dashboardtently require modeling, statistics, pro- reports, to communicate the situation and and report-making techniques to delivergramming and general analytical skills in prompt decision-making and action by the value beyond core OR/MS.an operations management context” . target audiences.This listing, however, places O.R. graduates 4. Control of operations using planning, What Analytics Can doin just a part of the overall analytics land- scheduling, dispatching, managing excep- for INFORMSscape. tions and disruptions; project and program INFORMS declares that “when you see To delineate the landscape for analytics, planning and execution. terms like ‘operations research’ (O.R.), thinkhere is a proposed list of skills: 5. Statistics, probability, forecasting, analytics” , so INFORMS has staked a 1. Framing the problem and getting to etc. that are now being termed “predictive claim to become the core institution forthe solution analytics” in the industry. analytics and intends to benefit from thea. Understanding the business issues 6. Optimization, simulation, queuing trend … or fade into irrelevance as analyt- and business/organizational models, decision analysis, etc. ics practitioners subsume the domain. concerns using formal modeling 7. Enabling organizations to act INFORMS, therefore, has a unique processes that address purpose and intelligently. opportunity to use the analytics trend to environment and end-to-end a. Design and governance of metrics gain size, scope and relevance as a profes- capabilities and processes. This portfolios to drive system-wide sional society. INFORMS members are allows the analyst to understand the performance improvements; this already engaged in high-impact work to domain to frame problems and addresses the problem of figuring improve the performance of diverse health- identify solutions. out which metrics are important care, financial, industrial, military and gov-b. Frame and structure problems in and how to set targets and ernment operations. Tom Davenport says terms of objectives, constraints, risks thresholds that address business that if INFORMS reorients itself, it can ride and courses of action to set the stage needs. the analytics trend: “Organizations like for meaningful results. Effective b. Driving decisions from analysis: INFORMS can be very helpful in facilitat- selection of a problem statement sets helping decision-makers to use ing this rise. But rather than the old narrow up the solution to align with the data-driven analyses effectively, focus on operations research, the current organizational structure, systems and often in conjunction with gut-feel analytics environment requires combining culture; poor problem structures or anecdotal methods. multiple analytical tools and perspectives, often lead to blind alleys during c. Design and operation of analytics effective framing of decisions, a strong analysis or execution. teams and organizations in the focus on telling compelling stories withc. Project management and exposure context of business and IT data and analysis, and extensive familiarity to the foundational principles of functions. with current IT architectures” . Forum, continued on p.24 www.orms-today.com 21
FORUMForum, continued from p.21 Analytics has the characteristics of a work, although the Analytics ACKNOWLEDGMENTprofession because it: magazine is chipping away at this The author thanks the following people who provided• Requires knowledge of a specialized demographic. feedback and input to this article: John Milne, Rene and high-impact domain that takes Seguin, Randall Robinson, Jennifer Leong, Irv Lustig years to learn and is not commonly The analytics consulting business is and Michael S. McCoy. understood; worth $45 billion annually , so analyt-• Includes classroom learning as well ics provides fertile ground for being orga- as on-the-job learning and social nized by a professional body. INFORMS R E F E R E N C E S skills that make the analytics has a natural advantage for leading the 1. www-03.ibm.com/press/us/en/pressrelease/ provider increasingly effective (this effort to define this profession, because it 27357.wss distinguishes analytics from being embodies some of the most complex and 2. http://harvardbusiness.org/product/10-must-read- merely an artisan skill that can be effective parts of the analytics domain. If articles-from-hbr/an/13292-PDF-ENG 3. www.forbes.com/2009/11/12/ibm-analytics- taught in a contained process with INFORMS does not lead this effort, it is optimization-technology-cio-network-klaber.html no value from additional experience likely that another society will. 4. Davenport, Thomas H., and Harris Jeanne, 2007, or talent); “Competing on Analytics: The New Science of• The field is evolving and growing in What INFORMS Needs to do for Winning,” Harvard Business School Press. depth and scope, so analytics Analytics 5. http://en.wikipedia.org/wiki/Analytics 6. Bell, Peter C., 2008, “Riding the Analytics Wave,” providers need to keep up with INFORMS can use its size and scope to OR/MS Today, Vol. 35, No. 4, pp. 28-32. developments in this domain by make analytics work better. By doing so, it 7. Gifford, Ted, 2008, “The Schneider Enterprise,” reading, attending seminars and will leverage its existing strength as “the Analytics, Spring 2008, p. 46. conferences, and studying; and largest membership society in the world 8. Olavson, Thomas, and Cargille, Brian, 2008, “Inside• People who use the services of dedicated to the analytics profession”  HP,” Analytics, Winter 2008, pp. 21-22. analytics providers often do not fully to become the institution that people con- 9. Cramer, Mike, “McDonald’s Corp.,” Analytics, Fall 2009, p. 40. understand the underlying concepts sult when they need analytics services. 10. Sodhi, Mohan, and Son, B.- G., 2008, “ASP, The Art and so have to trust in the skill, To establish its value for analytics, and Science of Practice: Skills Employers Want from talent, judgment and ethics of the INFORMS will need to define and defend Operations Research Graduates,” Interfaces, Vol. 38, providers. its value proposition, such as: No. 2, pp.140-146. • create and publicize a clear 11. Horner, Peter, 2008, “Data-Driven Decision- Making,” Analytics, Spring 2008, p 1. Yet, for most analytics practitioners, definition of analytics; 12. Davenport, Thomas H., 2009, “The Rise ofthere is no dominant professional institu- • establish INFORMS as the highest Strategic Analytics,” Analytics, Fall 2009, p. 4.tion for analytics at present as evidenced by: quality provider of the methods, 13. www.iapa.org.au/• Google searches for “professional tools and techniques, as well as the 14. www.businessweek.com/technology/content/ institution for analytics” or “analytics institutional support needed for apr2009/tc20090414_322525.htm profession” both point to the organizations to use analytics 15. Bennett, Gary 2008, “Welcome to Analytics,” Analytics, Spring 2008, p. 1, Institute of Analytics Professionals of successfully; Australia  as the top result. • promote academic research and• SAS is a leading analytics software teaching, along with continuing community and address their professional and services company, with more education, and establish needs. Will INFORMS reorient and scale to than 45,000 customer sites. Its online credentialing to provide a service for meet this challenge and subsume analytics, community (sascommunity.org) has organizations to find and nurture or will we be subsumed and rendered irrel- more than 5,400 user IDs, and the the analytics talent; evant by it? ❙ORMS SAS Global Forum conference gets • create the best forum for analytics Rahul Saxena (firstname.lastname@example.org) is a more than 3,000 attendees. academics and practitioners to director at Cisco Systems in Bangalore and• People in the IT side of analytics look learn, grow and evolve the analytics a member of the INFORMS Credentialing to the TDWI (The Data profession; and Committee that initiated this article. Other Warehousing Institute) for its IT- • align its communications and members of the committee include: Hossam centric training on analytics, data channels to support the analytics Zaki (Zilliant Inc.), Irv Lustig (IBM), Jennifer analysis and design, data integration, Leong (Booz Allen Hamilton), Michael S. strategy. McCoy (Boeing Company), René Séguin etc. or to the PMI (Project (Defence Research and Development Management Institute) to earn The opportunity is clear as is the poten- Canada), Robert L. Simons (Boeing), project management certifications. tial downside. Analytics will subsume Roberto F Lu (Boeing), Col. (Ret.) Rocky Gay Most business practitioners of OR/MS and many of our practitioners will (Decision Strategies Inc.), Lt. Col. Scott analytics do not realize they are in a work in analytics teams. We do not need to Nestler (U.S. Army, West Point), Cmdr. Walt nascent profession, are not members change our name or redefine our profes- DeGrange (U.S. Navy), Col. (Ret.) William K. of INFORMS and do not see the sion, but we do have to make an effort to Klimack (Decision Strategies Inc.) and Yupo relevance of INFORMS to their reach out more broadly to the analytics Chan (University of Arkansas at Little Rock). 24 OR/MS TODAY Februar y 2010