Analytics not only proves or disproves hypothesis, but its truth-seeking tests can also reveal cause and effect relationships. Understanding causality serves for making better decisions. Ambiguity and uncertainty? The greater they exist, then the more challenging the problem for an analyst and researcher to undertake. They can be an analyst’s best friend.
Read moreTried and Died? One and Done? Don’t let this be your EPM epitaph
One of the frustrations I experience is when managers or analysts share with me that their organizations tried to implement progressive management methods, and they either failed or abandoned them. A prominent example is an unsuccessful attempt to implement activity-based costing to measure and manage costs and profit levels of products, services, channels and customers. Other examples include risk management, customer analytics, enterprise resource planning (ERP) systems, and the balanced scorecard.
Read moreDemystifying Business Intelligence, Business Analytics and Predictive Analytics
Organizations often complain that they are drowning in data but starving for information. What they are seeking is insight and foresight from the treasure chest of raw and transactional data they already have combined with other information widely available. Business intelligence (BI) software tools have been presumed as the solution; however there is confusion because there is an emerging term, business analytics (BA), that is also heralded as the solution. What is the difference? And where does predictive analytics fit in?
Read morePredictive Business Analytics, a Book Preview
Analytics is becoming a competitive edge for organizations. Once a “nice-to-have,” applying analytics–and especially predictive business analytics–is becoming mission-critical.
Business analytics is a skill that is gaining mainstream value due to the increasingly thinner margin for decision error. There is a requirement to gain insights, foresight, and inferences from the treasure chest of raw transactional data (both internal and external) that many organizations now store (and will continue to store) in a digital format. Without interpretation, numerical data is simply just numbers.
Read moreTIME-DRIVEN OR DRIVER RATE-BASED ABC?
A debate has been going on for years about which method of activity-based costing (ABC) is better to use for assigning costs: Time-Driven or Driver Rate-Based. The answer: It depends on the circumstances. There’s a great deal of confusion regarding which one to use and around terms such as “push” vs. “pull” and “top-down” vs. “bottom-up” in which the latter perspective of both terms is one where a product isn’t consuming all of the supplied capacity expenses, and the former perspective is one where the capacity expense, including unused or idle capacity, is being fully traced into the product, thus overcosting products. This raises several questions: How are the approaches similar? How are they different? Is one method superior to the other? Can a company start with the former method and transition to the latter method as informational needs increase? What are the conditions when one or the other method might suffice?
To discuss the merits, we need a starting point to establish clarification. It’s an incorrect simplification to refer to Time-Driven ABC (TDABC) as the “pull” basis and its predecessor, the conventional Driver Rate-Based ABC (DRBABC), as
Read moreThe Time to Create a Culture for Analytics Is Now
The old organizational model for decision making is broken. The jig is up. Making decisions relying on gut feeling, intuition, office politics, past experience and bias is giving way to using fact-based information and analytics. These allow for investigation, insights, foresight, and improvements.
Predictable skepticism of business analytics
Some readers may already be reacting to my observations and saying to themself, “I’ve heard this exaggerated story before.” Skepticism is a healthy virtue. Skepticism involves waiting for enough evidence before accepting or believing.
Read moreA Television Game Show for IT and Analysts
Television game and quiz shows, like Jeopardy, are now in abundance. I have an idea for a game show that probably would not achieve high viewer ratings, but it might be appealing to those interested in how truth is proven with analytics, research and fact-based data.
True or false? Good or bad?
My idea is for a game show where three competing teams of contestants are given a business problem involving choices. They are given one week to design and test their hypotheses through experiments and return to the show with their answers. A panel of CEOs would judge the winning team.
Read moreThe Soft Stuff is the Hard Stuff
Most of us are technical. We like to be fact-driven. We embrace technologies of all flavors including computer hardware, software, mobile devices, the Internet, and social media. We tolerate opinions of others different from ours, but we prefer tangible and hard evidence that supports any one’s position or argument. The problem is organizations are comprised of people and not just computers and equipment.
We like research studies and the use of analytics to gain insights and foresights as well as to solve problems and pursue opportunities. But darn it. People get in the way.
Read moreIs Analytics Shifting Power from Executives to Employees?
Why do executives sometimes fail to act on proposed ideas that could save a company substantial amounts of money? Is it due to their complacency or incompetence? I am unsure of the correct answer. I prefer to give executives the benefit of the doubt. Most of them were promoted to executive positions because they are smart as well as effective leaders. They have made good decisions in the past.
But is there a change in the wind? I sense that an explanation for less risk-taking by executives, such as they’re not acting on a good proposed idea, involves the emergence of business analytics and Big Data. It can be explained with a pyramid depicting how a shift in power and influence to employees is increasingly affecting various types of decisions.
Read morePAF for North Pole Operations
Perhaps you thought that Santa, Mrs. Claus, and all the Elves at North Pole Operations just magically get all the toys made and delivered on Christmas eve each year? Nothing could be further from the truth. North Pole Operations uses our framework – the Profitability Analytics Framework (PAF) by the Profitability Analytics Center of Excellence (PACE) - to plan and execute the big Christmas eve delivery every year.
No organization can escape the global pressures to better execute their executive team’s strategy and improve productivity - not even Santa Claus and his team. Here is how they do it.
Read moreWhy We Like to Play with Shiny Toys
I was recently a presenter in the financial planning and analysis (FP&A) track at an analytics conference where a speaker in one of the customer marketing tracks said something that stimulated my thinking. He said, “Just because something is shiny and new or is now the ‘in’ thing, it doesn’t mean it works for everyone.”
That got me to thinking about some of the new ideas and innovations that organizations are being exposed to and experimenting with. Are they fads and new fashions or something that will more permanently stick? Let’s discuss a few of them:
Dashboards– Visualization software is a new rage. Your mother said to you when you were a child, “Looks are not everything.” Well, she was wrong. Viewing table data visually, like in a bar histogram, enables people to quickly grasp information with perspective. But be cautious. Yes, it might be nice to import your table data from your spreadsheets and display them in a dashboard! Won’t that be fun? Well it may be fun, but what are the unintended consequences of reporting performance measures as a dial or barometer?
Read moreData Scientist Geeks are Chic
A managerial movement is now in motion and picking up steam. It is the application of business analytics for organizations to gain insights to determine good decisions and the best actions to take. This topic was once the domain of “quants” and statistical geeks developing models in their cubicles. Today applying analytical methods is on the verge of becoming mainstream.
One way to draw my conclusion about this emerging movement is that there is much chatter and debate about the topic. Articles in IT magazines and websites about analytics of all flavors, such as correlation and segmentation analysis, are increasingly prominent. Debate is always healthy. Some IT analysts view applying analytics as a fad or fashion or way overvalued. Others claim that an organization’s achievement of competencies with analytics will provide a competitive edge.
Predictive analytics is one type of analytical method that is getting much attention. This is because senior executives appear to be shifting away from a command-and-control style of management – reacting after the fact to results – to a much more anticipatory style of managing. With predictive analytics executives, managers and employee teams can see the future coming at them, such as the volume and mix of demands to be placed on them. As a result, they can adjust their resource capacity levels and types, such as number of employees needed or spending amounts.
Read moreCFO Leadership with Business Analytics – Nature or Nurture?
What distinguishes strong from weak leaders? This raises the question if leaders are born or can be grown. It is the classic “nature versus nurture” debate. What matters more? Genes or your environment? This question got me to thinking about whether business analysts within an organization can be more than a support to others. Can they be leaders similar to C-level executives? Some answers for me came from a provocative talk by Alan G. Dunn, President and founder of GDI Consulting and Training Company. I share some of Alan’s thoughts in this article.
Three primary success factors for effective leaders
Having knowledge means nothing without having the right types of people. One person can make a big difference. They can be someone who somehow gets it altogether and changes the fabric of an organization’s culture not through mandating change but by engaging and motivating others.
Read moreWhy Will Analytics Be the Next Competitive Edge?
Analytics is becoming a competitive edge for organizations. Once being a “nice-to-have,” applying analytics is now becoming mission-critical. The use of analytics that include statistics is a skill that is gaining mainstream value due to the increasingly thinner margin for decision error.
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