Home > Articles > Business & Management

Principles of Modern Analytics

The authors of Modern Analytics Methodologies: Driving Business Value with Analytics discuss the nine core principles of their book.
This chapter is from the book

There was a time, not long ago, when enterprise analytics was simple: You bought software from the leading vendor and installed it on a box. If your needs changed, you bought more software from the same vendor, and installed it on a bigger box. Analytics was a niche field populated by specialists, all of whom used the same software they learned in graduate school. People still believed that a single data warehouse could hold everything worth knowing.

The business cadence was, in retrospect, leisurely: If it took two years to implement a predictive model, well, that was just how things worked. Not that long ago, a big bank ran four campaigns per year to promote its credit card; at the time, executives thought that was an accomplishment.

Well, good-bye to all of that. Digital media is here; so are Web 2.0, mobile, cloud, and Big Data. The volume, velocity, and variety of data are exploding; enterprises are abandoning the ideal of the single data warehouse because it is impossible to stay on top of the tsunami. Diversity rules—we have a plethora of sources, an alphabet soup of platforms, and data everywhere: on premises, hosted by third parties, and in the cloud.

The changing landscape of data brings with it sweeping changes to the field of analytics: new business questions, applications, use cases, techniques, tools, and platforms. Techniques now considered mainstream were exotic five years ago. A single vendor once dominated analytic software; today, there are 851 analytic startups listed in Crunchbase, the leading source of information about startups. Open source software continues to eat the software world: two of the four Leaders in The Gartner Group’s most recent Advanced Analytics Magic Quadrant are open source projects, and surveyed analysts prefer open source analytics to the most popular commercial software by more than two to one.

Above all, the cadence of business accelerates exponentially. Yesterday, we ran four campaigns a year; now we can run four campaigns an hour. Nobody can afford to take two years to implement a predictive model; we will be out of business by then.

We can no longer afford the luxury of the blue chip, single-vendor proprietary analytics architecture. In its place, we see enterprises building an open analytics platform based on diverse commercial and open source tools, tied together through open standards. In this new world, each organization must define a unique analytics architecture and roadmap, one that recognizes the complexity of the modern organization and business strategy. This architecture will include many vendors and open source projects because no single vendor can meet all needs.

In this book, we propose an approach based on nine core principles:

  • Deliver Business Value and Impact—Building and continuously evolving analytics for high-value business impact
  • Focus on the Last Mile—Deploying analytics into production to attain repeatable, ongoing business value
  • Leverage Kaizen—Starting small and building on success
  • Accelerate Learning and Execution—Doing, learning, adapting, and repeating
  • Differentiate Your Analytics—Exploiting analytics to produce new results
  • Embed Analytics—Building analytics into business processes
  • Establish Modern Analytics Architecture—Leveraging commodity hardware and next generation technology to drive out costs
  • Build on Human Factors—Maximizing and grooming talent
  • Capitalize on Consumerization—Leveraging choices to innovate

Next, we fully explore each of these principles because they are the foundation upon which Modern Analytics are built.

Deliver Business Value and Impact

Later in the book, we describe how to go about creating a unique analytics roadmap and how to prioritize projects. For now, suffice it to say that one of the principles of Modern Analytics is a focus on analytic projects with potential for game-changing value to your organization. To hold the organization accountable for delivering value, measure your current state to establish a baseline and set initial quantifiable target business objectives and ongoing business objectives. For example, current revenue is $100 million with CAGR 4%. The initial target is to identify 15% net new revenue with an ongoing net new revenue contribution of 10% annually.

Although such a metric can be easy to identify and measure, other metrics can be harder to identify and measure. To discover these potential metrics, identify points where business decisions are typically made. Start by measuring impact at these points. Then work toward establishing metrics that have a direct impact on the business. Whereas in the past, companies typically aspired for either a revenue metric or an operational cost metric but not both, today mature analytic organizations often establish metrics on both sides of the balance sheet. This sends a clear signal to the team that revenue growth has to be accomplished cost efficiently.

Savvy organizations identify potential analytic opportunities by thinking outside the box. Typically, the hardest, most entrenched problems in an industry or company have been around so long that people start to think about them as hard-and-fast constraints for their business. However, often, the barriers that existed in the past that made them impossible to solve no longer exist. Unleashing the bottleneck typically results in massive business value creation. Analytic-driven organizations dare to think outside the box and identify some of the most challenging problems facing their industry or business. When that is done, they work toward identifying how they solve or reduce the problem through innovative data- and technology-driven approaches. This is usually accomplished with a clean sheet brainstorming approach and imagining that all the resources needed to solve the problem exist. After ideas are vetted, the team typically has another brainstorming round to determine how to get everything they need to solve the problem without settling. Instead of using samples or backward validation1 to estimate a solution, the team will identify potential new resources—data, symbiotic partnerships, or technology—that will help them achieve their business objectives.

To realize the business value both initially and over an extended period of time, you need to deploy the analytics into production. Before any analytics can be deployed, the results of the analytic model need to be validated for accuracy. Today, that typically occurs in a “sandbox” with a limited subset of the data and in an artificial, nonproduction environment. It is all too common for an analytic model to meet or exceed business criteria in a sandbox but significantly underperform in a production environment. Be sure to evaluate your analytic models based on the environment that they will be deployed into, not any idealistic environment. Deploy the analytic models into a replicated production environment to fully test the model prior to going live to get a realistic assessment against the target business objectives. Where deploying used to be a “post” process after the model was built, deployment is now part of the full life-cycle analytic process. Once all potential technical deployment barriers are identified, obtain legal and/or procedural process validation before the “go-live” launch into production. After an analytic model is deployed, measure the initial business impact and identify quick ways to continuously improve on the results.

InformIT Promotional Mailings & Special Offers

I would like to receive exclusive offers and hear about products from InformIT and its family of brands. I can unsubscribe at any time.

Overview


Pearson Education, Inc., 221 River Street, Hoboken, New Jersey 07030, (Pearson) presents this site to provide information about products and services that can be purchased through this site.

This privacy notice provides an overview of our commitment to privacy and describes how we collect, protect, use and share personal information collected through this site. Please note that other Pearson websites and online products and services have their own separate privacy policies.

Collection and Use of Information


To conduct business and deliver products and services, Pearson collects and uses personal information in several ways in connection with this site, including:

Questions and Inquiries

For inquiries and questions, we collect the inquiry or question, together with name, contact details (email address, phone number and mailing address) and any other additional information voluntarily submitted to us through a Contact Us form or an email. We use this information to address the inquiry and respond to the question.

Online Store

For orders and purchases placed through our online store on this site, we collect order details, name, institution name and address (if applicable), email address, phone number, shipping and billing addresses, credit/debit card information, shipping options and any instructions. We use this information to complete transactions, fulfill orders, communicate with individuals placing orders or visiting the online store, and for related purposes.

Surveys

Pearson may offer opportunities to provide feedback or participate in surveys, including surveys evaluating Pearson products, services or sites. Participation is voluntary. Pearson collects information requested in the survey questions and uses the information to evaluate, support, maintain and improve products, services or sites, develop new products and services, conduct educational research and for other purposes specified in the survey.

Contests and Drawings

Occasionally, we may sponsor a contest or drawing. Participation is optional. Pearson collects name, contact information and other information specified on the entry form for the contest or drawing to conduct the contest or drawing. Pearson may collect additional personal information from the winners of a contest or drawing in order to award the prize and for tax reporting purposes, as required by law.

Newsletters

If you have elected to receive email newsletters or promotional mailings and special offers but want to unsubscribe, simply email information@informit.com.

Service Announcements

On rare occasions it is necessary to send out a strictly service related announcement. For instance, if our service is temporarily suspended for maintenance we might send users an email. Generally, users may not opt-out of these communications, though they can deactivate their account information. However, these communications are not promotional in nature.

Customer Service

We communicate with users on a regular basis to provide requested services and in regard to issues relating to their account we reply via email or phone in accordance with the users' wishes when a user submits their information through our Contact Us form.

Other Collection and Use of Information


Application and System Logs

Pearson automatically collects log data to help ensure the delivery, availability and security of this site. Log data may include technical information about how a user or visitor connected to this site, such as browser type, type of computer/device, operating system, internet service provider and IP address. We use this information for support purposes and to monitor the health of the site, identify problems, improve service, detect unauthorized access and fraudulent activity, prevent and respond to security incidents and appropriately scale computing resources.

Web Analytics

Pearson may use third party web trend analytical services, including Google Analytics, to collect visitor information, such as IP addresses, browser types, referring pages, pages visited and time spent on a particular site. While these analytical services collect and report information on an anonymous basis, they may use cookies to gather web trend information. The information gathered may enable Pearson (but not the third party web trend services) to link information with application and system log data. Pearson uses this information for system administration and to identify problems, improve service, detect unauthorized access and fraudulent activity, prevent and respond to security incidents, appropriately scale computing resources and otherwise support and deliver this site and its services.

Cookies and Related Technologies

This site uses cookies and similar technologies to personalize content, measure traffic patterns, control security, track use and access of information on this site, and provide interest-based messages and advertising. Users can manage and block the use of cookies through their browser. Disabling or blocking certain cookies may limit the functionality of this site.

Do Not Track

This site currently does not respond to Do Not Track signals.

Security


Pearson uses appropriate physical, administrative and technical security measures to protect personal information from unauthorized access, use and disclosure.

Children


This site is not directed to children under the age of 13.

Marketing


Pearson may send or direct marketing communications to users, provided that

  • Pearson will not use personal information collected or processed as a K-12 school service provider for the purpose of directed or targeted advertising.
  • Such marketing is consistent with applicable law and Pearson's legal obligations.
  • Pearson will not knowingly direct or send marketing communications to an individual who has expressed a preference not to receive marketing.
  • Where required by applicable law, express or implied consent to marketing exists and has not been withdrawn.

Pearson may provide personal information to a third party service provider on a restricted basis to provide marketing solely on behalf of Pearson or an affiliate or customer for whom Pearson is a service provider. Marketing preferences may be changed at any time.

Correcting/Updating Personal Information


If a user's personally identifiable information changes (such as your postal address or email address), we provide a way to correct or update that user's personal data provided to us. This can be done on the Account page. If a user no longer desires our service and desires to delete his or her account, please contact us at customer-service@informit.com and we will process the deletion of a user's account.

Choice/Opt-out


Users can always make an informed choice as to whether they should proceed with certain services offered by InformIT. If you choose to remove yourself from our mailing list(s) simply visit the following page and uncheck any communication you no longer want to receive: www.informit.com/u.aspx.

Sale of Personal Information


Pearson does not rent or sell personal information in exchange for any payment of money.

While Pearson does not sell personal information, as defined in Nevada law, Nevada residents may email a request for no sale of their personal information to NevadaDesignatedRequest@pearson.com.

Supplemental Privacy Statement for California Residents


California residents should read our Supplemental privacy statement for California residents in conjunction with this Privacy Notice. The Supplemental privacy statement for California residents explains Pearson's commitment to comply with California law and applies to personal information of California residents collected in connection with this site and the Services.

Sharing and Disclosure


Pearson may disclose personal information, as follows:

  • As required by law.
  • With the consent of the individual (or their parent, if the individual is a minor)
  • In response to a subpoena, court order or legal process, to the extent permitted or required by law
  • To protect the security and safety of individuals, data, assets and systems, consistent with applicable law
  • In connection the sale, joint venture or other transfer of some or all of its company or assets, subject to the provisions of this Privacy Notice
  • To investigate or address actual or suspected fraud or other illegal activities
  • To exercise its legal rights, including enforcement of the Terms of Use for this site or another contract
  • To affiliated Pearson companies and other companies and organizations who perform work for Pearson and are obligated to protect the privacy of personal information consistent with this Privacy Notice
  • To a school, organization, company or government agency, where Pearson collects or processes the personal information in a school setting or on behalf of such organization, company or government agency.

Links


This web site contains links to other sites. Please be aware that we are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of each and every web site that collects Personal Information. This privacy statement applies solely to information collected by this web site.

Requests and Contact


Please contact us about this Privacy Notice or if you have any requests or questions relating to the privacy of your personal information.

Changes to this Privacy Notice


We may revise this Privacy Notice through an updated posting. We will identify the effective date of the revision in the posting. Often, updates are made to provide greater clarity or to comply with changes in regulatory requirements. If the updates involve material changes to the collection, protection, use or disclosure of Personal Information, Pearson will provide notice of the change through a conspicuous notice on this site or other appropriate way. Continued use of the site after the effective date of a posted revision evidences acceptance. Please contact us if you have questions or concerns about the Privacy Notice or any objection to any revisions.

Last Update: November 17, 2020