SAS White Paper

Successfully Automating Decisions with Business Analytics:
How to identify high-value opportunities for embedding analytics into your business processes
provided by
Successfully Automating Decisions with Business Analytics
Table of Contents
Introduction.................................................................................................................................... 1
The goal: evolve from “craft” to “industrial” analytics.......................... 2
Where to start: identify the opportunities......................................................3
Taking a Process View........................................................................................................... 5
“Big Picture” Frameworks................................................................................................. 6
Systematic Inventory............................................................................................................. 9
Setting Ambition....................................................................................................................11
Qualify the opportunities.................................................................................................13
DELTA-Readiness..................................................................................................................14
Motivation and Momentum............................................................................................14
Experimentation....................................................................................................................16
Summary........................................................................................................................................ 17
About nGenera......................................................................................................................... 18
About Intel.................................................................................................................................... 18
About SAS..................................................................................................................................... 18
i
This white paper is excerpted from “Managing Business Processes Analytically,”

a research study conducted by nGenera Corporation in partnership with
Dr.Thomas Davenport of Babson College.
ii
Introduction
Business analytics has been a rather ad hoc activity in most corporations, requiring
an interested decision-maker, a skilled analyst, and typically some unstructured activities
for pulling together the right data and constructing the right analytical model. There
is normally a high degree of interaction and iteration between analyst and decision-
maker as the model is refined and the results are understood. This approach can
serve individual decisions and initiatives (e.g., marketing campaigns) well, but it has
several shortcomings:
• It is time-consuming and labor-intensive, making it infeasible for decisions that
must be made often and quickly.
• It requires a positive interpersonal relationship between the decision-maker

and the analyst, which may well affect the decision outcome.
• The process steps and cycle time for ad hoc analytical decisions are
unpredictable, making it difficult to respond quickly to business change and
customer demand.
• Because the means of making the decision are typically not saved or embedded in
an ongoing business process, execution of the decision may be inconsistent, and the
next similar decision requires that the entire cycle be repeated.
As a result of these shortcomings, corporations are getting much more interested in

how analytical decisions can be embedded into business processes on an ongoing,
repeatable basis. Such analytical decisions will either be automated or clearly specified
as to when human intervention is appropriate. Analytics may be used in the execution
of the process, or as a means to measure and monitor process performance and
process improvement. The goal of such efforts is to make analytical decision-making
faster, more reliable, more consistent, and more aligned to the operational activities of
the enterprise.
The problem is that a process orientation is still not well established in many
corporations. They don’t have agreed-upon maps of major processes or owners
responsible for those processes. Even those that have mapped the activity and
information flows of their processes have yet to inventory the major decision points
and the potential for more analytical decision making.
So how do you determine which of your business processes would benefit the most
from efforts to embed analytics into them? Where would you likely get the biggest
return on your investment of time and money? The purpose of this paper is to
provide practical advice on how to identify the best opportunities for making your
processes more analytical.
1
The goal: evolve from “craft” to “industrial” analytics
Business decision-making has been predominantly a “craft.” Each decision is its own
ad hoc effort, including decisions supported by extensive data and analysis. The
contemporary sequence runs like this: The company stores data from transaction
systems in data warehouses. A decision-maker defines the decision to be made and
communicates this to an analyst. The analyst reviews the data available, selects the data
wanted, extracts the data (sometimes with the help of IT), analyzes it with the help of
statistical software, and communicates the results to the decision-maker. The decision-
maker then cogitates, and the definition-extraction-analysis sequence may iterate, until
the decision-maker makes the decision. The approach is highly customized and often
skilled labor-intensive and time-consuming.
As businesses learn to marry the disciplines of analytics and process management,

however, many decisions can become more automated, embedded in the process
flow, or, as we call it, “industrialized.” Here the decision-maker decides to automate a
decision with the right attributes (e.g., it is structured and repetitive) and works with
the analyst to define parameters, information needs, and decision rules. The analyst
works with IT to build an automated decision system, often incorporating a statistical
model, and tests and refines the system until it works well. Once implemented, the
decision system receives data from transaction systems in real or near-real time,
makes decisions automatically and instantaneously, and thus determines subsequent
process flow and triggers new transactions. Often the system is designed to “kick
out” the exceptional cases for the decision-maker to handle. Over time, the decision-
maker and analyst work to refine and optimize the decision system. The approach
requires lots of skilled effort up front, but thereafter the decisions are automated with
the flexibility to tune the system and adapt to changes as needed.
Figure 1 contrasts the “craft” and “industrial” approaches to employing business

analytics. Craft is a one-time effort, inherently slow. Industrial takes more time and
effort up front, but then the decisions can be instantaneous. With craft, the analysis is
often discarded or forgotten after use. With industrial, it is maintained, improved, and
available for reuse – thanks to investment in ongoing model management.
Why automate decisions in this way? Corporations have begun to “industrialize”

knowledge-intensive processes in response to:
• Customer expectations – for real-time response and consistent decisions
and actions.
• Competitive pressures – for increased agility and a faster “insight to action” loop.
• Talent shortages – the need to reduce dependence on costly, aging, or scarce

human resources.
2
Craft Industrial
Pattern Ad hoc, project-oriented Embedded in an ongoing process
Purpose One-time decision or event support Ongoing process performance
Benefit One-time Recurring
Higher up front, recurring to maintain
Investment Lower, one-time
the model
Time to
Brief Longer
Implement
Speed of Once implemented, fast or
Same as time to implement
Analysis instantaneous
Labor-intensive up front, analysis
Staff Labor-intensive
automated thereafter
Memory of
Can be saved for reuse, but often lost Maintained and improved upon
Analysis
Figure 1: From “Craft” to “Industrial” Analytics
Meanwhile, technology improvements make the industrial approach to business

analytics more and more feasible and cost-effective. These include tools for making
high-quality, integrated data available; for creating robust models and simulations; and
for making, managing, and learning from decisions.
Where to start: identify the opportunities
There are two fundamental approaches to finding business opportunities for applying
analytics, and you should exercise both regularly:
• “Big picture” thinking – keeping tabs on what others in your industry are
doing, using business decomposition and analysis frameworks to assess where
performance can or must improve, and exploring your hunches about the
business, what makes it tick, and where the next breakthrough may await.
• Systematic inventory – of your key business processes and how decisions

are made within them, and of your key business decisions (e.g., to make an
acquisition) and how they can be made more process oriented and benefit
from more and better analytics.
Most businesses start the opportunity finding process by surveying what’s happening
elsewhere in their industry. Figure 2 lists some of the most common applications of
analytics that you’re likely to find. Looking across your industry – and scrutinizing the
activities of your competitors – on a regular basis is essential. At a minimum, it keeps
you alert and informed about what you must do to keep pace not only with the
competition, but also with changing and rising customer expectations.
3
Industry Analytical Applications Business Analytics in Action

Credit scoring, fraud detection, pricing, program trading, claims analysis,
Financial services Banking:
underwriting, customer profitability
Promotions, replenishment, shelf management, demand forecasting, US Bank
Retail
inventory replenishment, price and merchandizing optimization Challenge
Supply chain optimization, demand forecasting, inventory replenishment, Enhance competitive advantage through
Manufacturing
warranty analysis, product customization, new product development
more insightful customer relationships.
Transportation Scheduling, routing, yield management
Healthcare Drug interaction, preliminary diagnosis, disease management Solution
Hospitality Pricing, customer loyalty, yield management Apply predictive analytics and interaction
Energy Trading, supply, demand forecasting, compliance management software to track and
Price plan optimization, customer retention, demand forecasting, capacity analyze customer behavior and trigger
Communications
planning, network optimization, customer profitability timely customer contacts.
Services Call center staffing, service/profit chain
Fraud detection, case management, crime prevention, revenue Results
Government
optimization US Bank now defines contact strategies
Online Web metrics, site design, recommendations to customers for customers with a consistent,
Every business Performance management personalized message across all touch
points, including call centers, branch sales
Figure 2: Where in Your Industry?
staff, service personnel and direct mail.
Analytics allow US Bank to understand
Ironically, choosing your target process for analytics may be based on an intuitive
customer behavior over time so that its
hunch, for example:
bankers can act on significant changes
• Something you’ve always suspected about your industry but have been unable immediately – when intervention is
to explore or verify. What are the implicit assumptions behind how industry likely to have the most impact – thus
players operate, and which of these may be obsolete or reversible? accelerating sales opportunities and
salvaging at-risk relationships.
• Something innovative that seems logical and doable, but for which you have
no evidence to prove so. What business problems or challenges have proven
resistant to solution by other means?
• Something that you (or someone influential in the business) passionately believes
is important to customers. What needs or forms of value have customers
themselves not yet discovered or articulated?
There’s nothing wrong with the informed hunch or educated guess at the start of
opportunity finding, but you must verify your intuition by doing a small-scale test of
the idea and expanding if it seems to be working and making a difference.
4
Taking a Process View
In thinking about how analytics might support your business processes, it’s important
first to ensure that you are thinking about your business activities from a process
standpoint. This means looking at the activities from an end-to-end perspective, with
the primary customer of the activities as the recipient of the process outputs. Taking
a process perspective allows organizations to identify all the possible ways in which
analytics might be used to create a better outcome for a process customer.
For example, Chad Jones, a telecom industry executive (Nextel, Sprint, and Grande
Telecommunications) has applied a process perspective to both customer and
employee relationships. At Nextel (which was acquired by Sprint), and later at the
mid-sized firm Grande, he created a “customer experience lifecycle” consisting of six
lifecycle stages (aware/learn, need/buy, install/use, pay bill, seek help, renew/upgrade).
For each stage, Jones and his colleagues identified a series of attributes and metrics.
They viewed each stage and attribute in the entire customer experience as being
potentially influential in determining customer loyalty. At Nextel between 2001 and
2005, this process-based approach led to a 40% reduction in customer turnover or
“churn,” while the subscriber base grew at over 100%. The focus on upsell and cross-
sell also substantially increased lifetime customer value.
When Nextel executives saw this integrated, process-based approach to customer

relationships, they also speculated about whether it could be applied to employee
relationships. Jones and his colleagues believed that it could, and began to work with
the Human Resources organization on a lifecycle approach to employees. Just as
they investigated how customers learn about the company’s offerings, they explored
how potential employees learn about the company. Just as they attempted to reduce
customer churn, they addressed the reasons for employee departures.
Jones and his colleagues began to analyze employee attrition in 2003, and quickly
discovered that Nextel employees were most vulnerable to leaving within 45 days
of being hired. Nextel learned that new employees during this period often felt
ineffective because their computers weren’t installed and configured quickly, and
because supervisors didn’t provide enough attention and direction. When they
addressed some of the onboarding issues, turnover rapidly fell. Analysis also suggested
that signing up for the company’s 401K plan was critical to new employees staying for
more than a year. Managers intervened with employees slow to sign up, explaining
details such as the company contribution match, and turnover fell again. Just as with
customers, a process perspective was the key to better serving employees.
Most organizations already have some process orientation, be it Six Sigma, Lean, or
reengineering. The key is to identify which attributes in the process are associated
with satisfaction and value from the standpoint of the end customer. The analytical
work necessary to pinpoint the key attributes is not likely to be difficult once the
process perspective has been adopted.
5
“Big Picture” Frameworks
We recommend three tools for thinking broadly about your business, its performance
drivers, and its opportunities for differentiation.
The first is the Value Tree, a formal decomposition of business or shareholder value
most often used in decision alternative action analysis. The basic form of the tree goes
value-goals-objectives-criteria-attributes and then how specific decisions or scenarios
influence the attributes. Figure 3 has a simple example adjusted to depict major
business drivers and the processes whose performance most influences them. If you
have a comprehensive measurement system, you can perform statistical analysis on
your value tree and determine the correlations among business drivers.
New Markets
(e.g., geographic, vertical, segments)
New Products, Services, Solutions
Revenue
(Growth) New Adjacent Businesses
Share of Account/Wallet
Pricing/Margins
Shareholder New Channels

Value
Ease of Doing Business
Procurement
Cost of Goods Sold
Supply Chain
Costs
(Productivity) Selling and Marketing
Cost of Capital SG&A Finance and Accounting

(Leverage and
Risk) Human Resources
Assets Working Capital
Information Technology
Fixed Assets
Figure 3: Value Tree
The second tool is the Service/Profit Chain, a well-known business analysis

framework that tries to document and quantify specific linkages from what employees
do, through customer satisfaction and value, to financial performance and share price.
It is especially useful for exploring opportunities at the interface with the customer
and related to the customer’s experience. Figure 4 depicts the basic steps in the chain.
In a service-oriented business, employee behavior can drive customer response, in

turn driving increased loyalty and retention and business volume. Again, companies
use analytics to understand the relationships among links in the chain, though a
complete and quantitative set of relationships – all the way from employee satisfaction
and engagement to share price – is difficult to pin down. Some skip the first two
steps (at least initially) and start their investigation with customer loyalty. The original
Harvard Business Review article introducing the framework, “Putting the Service-
Profit Chain to Work” (March 1994) has spawned a variety of books and articles
exploring and extending the method, and some firms have made substantial progress
at understanding relationships along the chain.
6
Employee Business Analytics in Action

Customer Customer
Satisfaction/
Service/Value Loyalty
Productivity Manufacturing:
Sub-Zero Freezer Company
Challenge
Share Price Financial Customer Improve product quality and customer
Performance Purchase
satisfaction.
Figure 4: Service-Profit Chain

Solution
The third tool explores the questions: “What kind of business are we really in?” and Gather and analyze warranty claims
“How do we really create value?” Figure 5 contrasts three basic business types: data to detect the causes of potential
• Value Chain businesses create value by producing physical products. Their product problems faster.
external focus is on brand, their internal focus on efficient utilization of
resources. Manufacturers are the classic examples. Chain businesses have been Results
the traditional and dominant focus of most management theory, even though Predictive analytics can now detect
they are in the minority among corporations today. emerging product issues and pinpoint
where they occur three months sooner
• Value Shop businesses create value by solving problems (note that “shop” is than Sub-Zero’s previous system.
in the sense of a “job shop” producing custom products, not a retail “shop”). Potential issues are assigned to product
Examples include hospitals, construction companies, and consulting firms. engineers for immediate investigation. As
Externally, success depends on reputation, internally on the leverage of skilled a result, the company expects to save
people and their knowledge. valuable time in the problem resolution
cycle and boost the company’s already
• Value Network businesses create value by bringing customers together
high customer satisfaction rates.
to exchange or transport goods, capital, or information. Examples include
financial institutions, telecommunications companies, transportation companies
including airlines, and online exchanges like Amazon and eBay. These businesses
leverage the “network effect” – the fact that the value of a network to each
of its members (or “nodes”) increases with the number and quality of other
members. So these businesses focus externally on the size and composition of
their networks and internally on efficient routing and optimal pricing.
Value Chain Value Shop Value Network

Consulting, exploration, Banks, insurance,
Examples Manufacturing
construction, hospitals telecom, airlines
Managing
Product profitability People profitability Network profitability
Profits
Manage network
Manage brand: Manage reputation:
Managing expectations:
Expectations of product Trust in non-observable
Markets Expectations of network
properties competencies
size and composition
Capacity utilization: Knowledge leverage: Network yield:
Managing
Manage flow and Manage senior-junior Manage prices and
Efficiency variation ratios, knowledge routing dynamically
Source: Fjeldstad, Ø. and E. Andersen, “Casting off the chains: Value shops and value networks,” European
Business Forum, Summer 2003, 47-53.
Figure 5: Three Types of Value Creation
7
The potential and therefore emphasis of business analytics varies by business type,
as outlined in Figure 6. In a value chain business, analytics may focus on problems of
supply/demand fluctuations, cost of assets, flexibility of operations, and interfaces with
others in the chain. In a value shop business, which incorporates new information to
solve new versions of problems, the most valuable analytics may be in support of
exploration and solution and decision design. In a value network business, analytics
may focus on understanding the network and its transaction patterns, the better to
attract quality customers and minimize cost. For a complete description of these
three business types, see “Casting off the chains: Value shops and value networks”
by Fjeldstad and Andersen (European Business Forum, summer 2003).
Note that a business of one type may have major processes more akin to a different
type. For example, a bank’s back-office operations may have a lot in common with
a value chain business, and its commercial loan department may function much like
a value shop, while the bank as a whole is a value network, enabling the exchange
of money. It’s useful to apply this business type analysis to major processes within a
corporation; however, you must keep in mind (and not work in opposition to) the
overall purpose of the business. For example, telecommunications companies that
run their customer service call centers too much like value chain businesses (pursuing
efficient utilization over customer service) do the overall business the disservice of
driving customers out of the value network.
Value type analysis can serve two important purposes in finding opportunities to
leverage business analytics. First, it can help you focus on the fundamental objectives of
the business and how analytics can serve them. Second, it can suggest where to look
outside your industry for fresh examples of analytical applications. When looking across
industries for inspiration, your best hunting grounds are likely to be other industries
within your value type (e.g., telecom companies learning from financial institutions).
These are companies that face analogous business problems but in different contexts,
and their analytical applications may be recognizable, relevant, and transferable.
Value Chain Value Shop Value Network

Data (part number, Data is often Underlying transaction
time, place, price, order) voluminous, uncertain, (call, payment, shipment)
Data and data flow are fairly and context-dependent is simple, but a high
precise volume of transactions
can happen anywhere
Running at capacity, Assess problems and Minimize cost to
minimizing investment, find resources to solve select and serve
Objectives forecasting demand, them the best customers,
minimizing fluctuations both individually and
collectively
Anticipating demand Creating frameworks Finding alternative views
Analytical and supply, dealing with and tests, enabling of transaction patterns,
Emphasis fluctuations earlier and more finding new customers
efficient decisions outside the network
Figure 6: Three Analytical Patterns
8
Systematic Inventory
Another way to find specific opportunities for applying analytics is by looking in detail at
your processes and how decisions are made within them. What kinds of processes lend
themselves to – or call for – business analytics? They tend to be processes that are:
• Information-intensive – analytics reveal the meaning of information.
• Asset-intensive – analytics enable effective utilization and sharing of scarce

or expensive resources.
• Labor-intensive – analytics enable decision-making and the leverage of

expertise, especially where talent supply is short, talent demand is cyclical, and
training times are lengthy.
• Dependent on speed and timing – analytics enable process acceleration

and real-time decisions, especially where customer satisfaction or process
competitiveness demand superhuman response times.
• Dependent on consistency and control – analytics enable consistent decisions

even in unpredictable cases.
• Dependent on distributed decision-making – analytics enable decision makers

to look upstream and downstream and anticipate the effects of their actions.
• Cross-functional or cross-business in scope – analytics reveal

interdependencies and enable the parts to work together.
You can also find specific opportunities for applying analytics by inventorying your key
business decisions (whether or not they are associated with well-defined business
processes) and asking how better information and analysis would make for faster and
better results. In general, look for:
• Complex decisions with lots of variables and steps within the decision process.
• Simple decisions where consistency is key (or required by law).
• Places where you want to optimize the whole process or activity (i.e., if
you simply decompose and optimize locally, you sub-optimize the whole).
• Decisions where you need to understand connections, correlations, and

their significance.
• Places where you need better forecasts, anticipation, prediction, or

downstream visibility.
Ask, for example: Where are all the places we do forecasts – and are they of high and
trustworthy statistical quality? Where do we need to optimize something? Where else
would forecasts or optimization make a difference? Be sure to cover different types of
decisions and useful anticipations, for example:
9
• Strategic decisions – Should we acquire another company?

Business Analytics in Action
• Operational decisions – What are the likely sales for this quarter? Healthcare:
Healthways
• Tactical decisions – Is this customer likely to buy this particular product?
Challenge
Although few firms have as yet created an inventory of decisions, we believe that this Identify high-risk patients and
activity is more likely to take place in the future as tools like analytics begin to reshape implement preventative actions to
how decisions can potentially be made. As you inventory and assess your important improve member health outcomes
business processes and decisions, it may be useful to start with a realistic sense of and reduce costs.
their likely potential for embedded analytics.
Solution
Among the core operational processes, the potential of analytics is best established Apply predictive analytics to
in supply chain and marketing. Sales and service lag but may be areas of great determine patient risk levels, and
opportunity. There may be lower analytical potential in the innovation process, given develop more targeted intervention
its unstructured and creative nature, except, of course, where analytical applications and prevention plans.
directly support simulation and/or engineering-type work. Note, however, that
companies like Capital One apply experimental design to traditionally “creative” Results
decisions – what color is the direct-mail envelope, where is the call-out box, is there a Using predictive modeling, Healthways
picture of someone in the mailing? Attributes like these – and their interactions – can can better assess patient risk for
be tested to understand their potential contribution to the outcome of interest. certain outcomes and predict the
level of patient compliance with
Among the support activities, analytical potential is probably highest (though current recommended standards of care.
applications may be few) in performance management, where companies can Advanced analytics helps Healthways
make their scorecards more quantitative and analytical. The situation is similar in identify the right members for the
HR management, which is typically underserved by analytics but can accomplish a best care intervention at the right
great deal by understanding and raising employee engagement. In IT management, time, resulting in healthier members
operational activities may be highly automated and analytically measured, but the with reduced total medical costs.
more creative work of finding new business uses of technology lends itself less to
embedded analytics. In corporate development, key decisions (e.g., regarding M&A)
may benefit greatly from analytics, but few companies take a process approach to
such activities.
You will, of course, want to make your own assessment of the analytical potential of
your business processes.You might also gauge the difference between the current
level of analytical support and the analytical potential of each process.You’ll likely
find opportunities everywhere – the challenge is ensuring that the opportunities, if
exploited, will truly drive business performance and competitive advantage. And keep in
mind that there will still be important roles for ad hoc or “craft” analytics in conjunction
with processes that may not be ready for embedded or “industrial” analytics.
10
Setting Ambition
It’s useful to categorize your current analytical applications and potential analytical
opportunities – to understand your emphasis and “mix,” to identify gaps and adjacent
opportunities, and to set a realistic level of ambition. Figures 7 and 8 are frameworks
for doing so.
Content Type
Information Insight
What’s the Best

Future What Will Happen? that Can Happen?
(Prediction/Simulation) (Optimization)
Timeframe
How and Why

Past What Happened? Did It Happen?
(Reporting) (Modeling)
Figure 7: Analytics Alternatives
The “Analytics Alternatives” matrix categorizes applications according to timeframe –

past or future – and content type – basic information versus new insight. The past-
information quadrant is the realm of traditional business reporting, not really analytics.
By applying statistical methods and modeling that information, however, you get
insight into how and why things happened. Incorporating predictive analytics and
simulations creates future information such as forecasts. And optimization models
create future insight by addressing the question of what’s the best that can happen.
This two-by-two matrix is a convenience. Any given analytical application may have
elements of more than one category. However, you can learn a lot about what you
are – and aren’t – doing analytically by using this matrix. And you can explore your
options for turning past information into future insight. The “Ladder of Analytical
Applications,” Figure 8, depicts how analytical capabilities and applications tend to
build upon one another. Going up the ladder entails more sophisticated analytics.
The foundation is good data – is it accurate, consistent, integrated, accessible,
and relevant? Statistical analysis of that data yields useful segmentation (e.g., of
customers, products, and transactions or other business events), which in turn enables
differentiated action (e.g., treating customers differently, or calling upon the right “lane”
in a flexible business process). Incorporating predictive analytics enables a business
to marshal its resources where opportunity is greatest. At the institutional action
rung, differentiation and prediction are embedded in ongoing business processes and
accomplished automatically. The top rung is the domain of real-time optimization,
where the process adjusts on the fly to maintain optimal business yield. As with any
such classification, the higher rungs tend to be less populated.
11
Real-Time Optimization
Optimal
response
embedded in
real-time Institutional Action
process
Prediction and
differentiated
action embedded
Predictive Action in process
Predictions of
response by
target/segment Differentiated Action
Different
approaches
for different
Key Targets/Segments targets/segment
Key targets and
segments defined
Data in Order
Well-defined
common, clean, and
integrated data
Figure 8: Ladder of Analytical Applications
The Ladder is a general pattern, not a set sequence. But within any major process
area, it’s enlightening to ask: How high have we climbed? How high can we
climb? How high does the market want us to climb? Have we compromised our
performance by skipping or only partially covering a rung? Can we gain competitive
advantage by moving up a rung?
12
Qualify the opportunities
For any analytical opportunity, the qualification step involves:

• Anticipating whether the application will make a significant difference in business
performance.
• Anticipating whether the business will be able to implement the application and
realize the opportunity.
We’ve discussed in general what attributes of processes lend themselves to business

analytics. Formal qualification for embedded analytics requires examining the target
process in greater depth, including:
• Does the process incorporate rational decision methods with well-defined
parameters and well-understood business implications of decisions?
• Does the process call for or benefit from consistent decisions, including the
need for exacting policy compliance or significant liability from inconsistently
applied policies?
• Is the process high-volume and performed often, and are there significant cost
savings from speeding decisions, eliminating steps, or selecting the best process
variation?
• Will excelling at the process yield competitive advantage, or build a

differentiated capability within the industry?
In the rest of this section, we discuss three ways in which the qualification of a
business analytics application differs from that of more conventional and predictable
projects or initiatives.
13
DELTA-Readiness Business Analytics in Action

The DELTA framework captures five conditions that must be in place for an analytical Retail:
initiative to succeed. Applied to process analytics, these are: Hallmark Cards, Inc.
• Data. Do we have access to the necessary data of sufficient quality to embed Challenge
analytics in the process? Do we have a rich data set for exploring, designing, and Cost-effectively build more
testing the embedded analytics? Do we have the technology to manage this personalized relationships with high-
data? value customers.
• Enterprise. Does the process have the cross-functional or cross-boundary scope Solution
to make a difference in overall business performance, including financially?
Predictive modeling and data mining
techniques to better understand each
• Leadership. Does the process have a capable owner who can work across the
customer’s buying profile and identify
affected functions and who has the backing of top management?
the right offer at the right time for each
customer.
• Targets. Will embedded analytics drive the performance of this process to
a level that makes a difference in overall business performance, including
Results
financially? Do we have the metrics to track these results?
Hallmark now uses insights from their
• Analysts. Do the analysts have sufficient analytical ability as well as process or analytics initiatives — such as what
domain knowledge? Who can bridge any gaps? Will process performers be each customer likes to buy and how
prepared to work in an analytics-assisted manner? they prefer to be communicated with
and rewarded — to customize the
Assess the readiness of the process and the organization in all five of these areas. content and timing of direct marketing
You may need to fill gaps in order to have the foundation for succeeding with vehicles. Hallmark marketers have
process analytics. also learned things like the best time
to advertise and for what holidays,
and which factors influence whether
a customer will visit a Hallmark store.
Motivation and Momentum The bottom line for Hallmark is more
value from customer data leading to
Organizations face a variety of challenges in generating management motivation and better decisions and, ultimately, better
organizational momentum for business analytics initiatives. Figure 9 summarizes three ROI on marketing spend.
common scenarios:
• Sometimes there’s a well-defined business problem or improvement
opportunity in a process that lends itself to analytics. Examples include logistics
at Wal-Mart and revenue management at Marriott. Here the target may be clear,
but management motivation may not be high enough if the problem is owned
by functional managers. You may need to elevate sponsorship, especially if the
analytical solution will be cross-functional.
14
• Sometimes a key executive or management team senses or recognizes that

the business is sitting on a hoard of potentially valuable data associated with a
business process (e.g., point-of-sale data, claims history, employee experience)
that is not being put to good use, either operationally or predictively. This is
often the case in financial institutions, and it was a big part of the momentum
behind analytics at Harrah’s. In this scenario, you need to do some exploration
to uncover the specific potential of the data for process improvement, and you
need to get someone in top management to recognize the business value of
exploiting it.
• Sometimes (often as the result of “big picture” thinking) top management senses
or recognizes a strategic business opportunity that depends on analytics. As we
mentioned earlier, this analytical opportunity may be sensed in only an intuitive
way. This may seem the ideal scenario for generating momentum; however, any
delay may frustrate management’s expectations and drain momentum. And
delay is common, especially when the opportunity needs further definition and
qualification, the structure and management of the process are weak, or key
assets (especially data) are not ready.
Scenario Situation Who Cares?

We have a • Need to raise performance, Mid-to-upper functional
problem or perhaps in response to a management, making targeting
improvement competitor. easier than investing.
opportunity • Need to lower cost, improve asset
utilization, or change cost structure.
• Need to increase innovation or
accelerate time to market.
We have a • Sitting on an accumulation of Who recognizes the potential?
data hoard potentially useful data that has yet Helps if top management includes
to be explored and exploited. some “data dogs.”
• Ideally in combination with other
assets – analysts and technology.
We have • Determined to compete on a Top management, which puts the
a strategic different basis, to solve a problem pressure on, especially if the assets
opportunity nobody else has mastered, to be aren’t ready.
the best at something important.
• Determined to invest to seize the
opportunity.
Figure 9: Motivation and Momentum
15
Experimentation
One of the most challenging differences between a conventional information systems

project or business change initiative and an analytics implementation is the inherently
experimental nature of the latter.You can (and should) estimate the business value of
any anticipated improvement in process performance. But if the analysis, decision point,
or process step is new, you don’t know the degree and value of success until you’ve
given it a try.You don’t know how a new mathematical model, the users of the model,
and the established business process will work together until they start to do so.
You may, for example, be confident that better decisions on the timing and priority
of order fulfillment will lower inventory and logistics costs and raise customer
satisfaction. But you don’t know how much effect a better decision system will have
on each of those business goals. The first implementation of the decision system may
just give a foretaste of the business value generated as the model is refined over time.
And you may well discover new goals and new value over time.
An analytics initiative should not be managed as you would a more predictable

systems project, with tight specifications and very specific business improvement or
cost reduction targets.You should manage it as a business experiment: a structured,
controlled, cost-effective, iterative approach to learning about the potential success or
failure of a new product, service or process. A business experimentation initiative
typically incorporates techniques such as iterative design, experimental design,
rival designs, early pilots, stage-gate review, and periodic refunding. With a business
experiment, sponsoring management must pay close attention, support adjustments
on the fly, and be willing to pull the plug if the initiative stalls.
Thus, the final major question in qualifying a process analytics opportunity is “Can we
handle a business experiment?” Do we have the right mindset and expectations, both
among senior management and across the organizations affected by the analytical
application? Are our project approval and management methods flexible enough
to guide a business experiment through to conclusion, one way or the other? Are
sponsors afraid to change course or pull the plug because they fear losing face?
If the company’s project approval process (e.g., with strict financial hurdle rates),
project management process (e.g., based on sequential milestones), and management
mindset assume lockstep predictability in business projects, then an analytical initiative
of any scope or scale is destined to run afoul of “the system” and fail – no matter
how good the concept, analysts, and technology behind it. In a situation like this, you
may be able to engage top management to break through the project approval and
management obstacles, and then “cover your flank” as “the system” inevitably tries to
reassert itself and undermine your efforts. Otherwise, you have to start small with
process analytics – a local application entirely within the domain of an enthusiastic
management sponsor.
16
Summary
A systematic approach to identifying and qualifying opportunities for embedding
analytics into business processes will result in more focused efforts, fewer false starts
and much greater chances of successful implementations. That approach should
encompass the following steps:
• Find analytical opportunity through “big picture” thinking – keeping tabs on what
others in your industry are doing, using business decomposition and analysis
frameworks to assess where performance can or must improve, and exploring
your hunches about the business, what makes it tick, and where the next
breakthrough may await.
• Also find analytical opportunity through systematic inventory of your key

business processes and how decisions are made within them, and of your key
business decisions (e.g., to make an acquisition) and how they can be made
more process oriented and benefit from more and better analytics.
• Qualify your analytical opportunities both by anticipating whether the

application will make a significant difference in business performance, and by
anticipating whether the business will be able to implement the application and
realize the opportunity. Especially when the analytical application is new, you
must have all the elements in place, including data, skilled analysts, leadership,
stakeholder motivation, and organizational momentum.
17
About nGenera
nGenera Corporation is an on-demand platform for business innovation that

provides a suite of subscription-based offerings to enable the Next Generation
Enterprise. Powered by software and people, nGenera’s on-demand offerings give
organizations sustainable, breakthrough capabilities in leadership performance, talent
management, and customer experience. Customers that subscribe to nGenera’s
on-demand solutions include a marquee list of Global 2000 companies in a range
of industries.
About Intel
Intel (NASDAQ: INTC), the world leader in silicon innovation, develops technologies,
products and initiatives to continually advance how people work and live. For almost
15 years Intel and SAS have collaborated to solve real business problems in the most
cost-effective manner. Working together, SAS and Intel have optimized SAS Business
Intelligence and analytics applications to take full advantage of the performance,
scalability and reliability of the latest Intel® processors.
About SAS
SAS is the leader in business analytics software and services, and the largest
independent vendor in the business intelligence market. With innovative business
applications supported by an enterprise intelligence platform, SAS helps customers at
45,000 sites improve performance and deliver value by making better decisions faster.
Since 1976 SAS has been giving customers around the world THE POWER TO KNOW.®
18
www.sas.com www.intel.com www.ngenera.com
SAS and all other SAS Institute Inc. product or service names are registered trademarks or trademarks of SAS Institute Inc. in the USA and other countries. ® indicates USA registration. Other brand and product names are
trademarks of their respective companies. Copyright © 2008, SAS Institute Inc. All rights reserved. 103717_516697.1108

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Successfully Automating Decisions with Business Analytics:

This white paper is excerpted from “Managing Business Processes Analytically,”

• It requires a positive interpersonal relationship between the decision-maker

As a result of these shortcomings, corporations are getting much more interested in

The goal: evolve from “craft” to “industrial” analytics

As businesses learn to marry the disciplines of analytics and process management,

Figure 1 contrasts the “craft” and “industrial” approaches to employing business

Why automate decisions in this way? Corporations have begun to “industrialize”

• Talent shortages – the need to reduce dependence on costly, aging, or scarce

Meanwhile, technology improvements make the industrial approach to business

Where to start: identify the opportunities

• Systematic inventory – of your key business processes and how decisions

Industry Analytical Applications Business Analytics in Action

Taking a Process View

When Nextel executives saw this integrated, process-based approach to customer

“Big Picture” Frameworks

New Products, Services, Solutions

Shareholder New Channels

Cost of Capital SG&A Finance and Accounting

Figure 3: Value Tree

The second tool is the Service/Profit Chain, a well-known business analysis

In a service-oriented business, employee behavior can drive customer response, in

Employee Business Analytics in Action

Figure 4: Service-Profit Chain

Value Chain Value Shop Value Network

Figure 5: Three Types of Value Creation

Value Chain Value Shop Value Network

Figure 6: Three Analytical Patterns

• Asset-intensive – analytics enable effective utilization and sharing of scarce

• Labor-intensive – analytics enable decision-making and the leverage of

• Dependent on speed and timing – analytics enable process acceleration

• Dependent on consistency and control – analytics enable consistent decisions

• Dependent on distributed decision-making – analytics enable decision makers

• Cross-functional or cross-business in scope – analytics reveal

• Simple decisions where consistency is key (or required by law).

• Decisions where you need to understand connections, correlations, and

• Places where you need better forecasts, anticipation, prediction, or

• Strategic decisions – Should we acquire another company?

What’s the Best

How and Why

Figure 7: Analytics Alternatives

The “Analytics Alternatives” matrix categorizes applications according to timeframe –

Figure 8: Ladder of Analytical Applications

Qualify the opportunities

For any analytical opportunity, the qualification step involves:

We’ve discussed in general what attributes of processes lend themselves to business

• Will excelling at the process yield competitive advantage, or build a

DELTA-Readiness Business Analytics in Action

• Sometimes a key executive or management team senses or recognizes that

Scenario Situation Who Cares?

One of the most challenging differences between a conventional information systems

An analytics initiative should not be managed as you would a more predictable

• Also find analytical opportunity through systematic inventory of your key

• Qualify your analytical opportunities both by anticipating whether the

nGenera Corporation is an on-demand platform for business innovation that

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