PREDICTIVE ANALYTICS AND DATA MINING

INTRODUCTION AND OVERVIEW

 Customer Analytics

Popularized in Competing on Analytics (2007) A

Harvard book by Davenport and Harris

a new breed of company is upping the stakes. Organizations such

as Amazon, Harrah's, Capital One, and the Boston Red Sox have
dominated their fields by deploying industrial-strength analytics across
a wide variety of activities

they know what products their customers want, but they also know
what prices those customers will pay, how many items each will buy in
a lifetime, and what triggers will make people buy more.
 Evolution Of The Analytic Process

Business Intelligence versus Data Science (Advanced

Analytics) Data Science (Advanced Analytics)
Typical Optimization, Predictive modeling, forecasting
Techniques statistical analysis
and Data Structured/unstructured data, any types of sources,
High Types very large data sets
What if?
Common Whats the optimal scenario for our business?
Questions What will happen next? What if these trends
Data continue? Why is this happening?
BUSINESS
VALUE

Science
Business Intelligence
Typical Standard and ad hoc reporting, dashboards, alerts,
Techniques queries, details on demand
and Data Structured data, traditional sources, manageable data
Business Types sets
Intelligence What happened last quarter?
Common How many did we sell?
Low Questions
Where is the problem? In which situations?
Past Future
TIME

Big Data: How Data Powers Big Business, Bill Schmarzo, Wiley
Youtube Videos
1. The Three ves of Business Analytics
2. Dawn of the Data Scientist
3. Davenport on Big Data and Analytics
4. SAS and IIML
 Data Sources ETL Software Data Stores Data Analysis Users
Tools and
Applications
Transaction Data S
T
IBM A
Prod G
I
N SQL
G ANALYSTS
Mkt IMS
A
R Cognos
Ascential E
HR VSAM Data Marts
A Teradata SAS
IBM MANAGERS
O Finance
Oracle P
Fin E Load
R Data Essbase Queries,Reporting,
Extract A Warehouse DSS/EIS,
T Informatica
Acctg Syba se Data Mining
I Marketing
O EXECUTIVES
Other Internal Data N Micro Strategy
A Meta
L Data Sales
ERP SAP Sagent
D
A Microsoft Siebel
Web Data T
A Business OPERATIONAL
Infor mix Objects PERSONNEL
Clickstream S
T
SAS O
External Data R Web
E Browser
Demographic Harte-
Hanks Clean/Scrub CUSTOMERS/
Trans form SUPPLIERS
Firstlogic
Process For Analytics
OLAP
 Multiple views
What is OLAP ??
Drill-Down

Set of Slice-n-Dice
Natural to users
functionalities
that facilitate
Cubes of data
multi-dimensional
data analysis
On-Line Analytical for faster,
more informed
Processing decision making
Data Mining versus OLAP

OLAP provides you with a very

good view of what is
happening, but can not predict
what will happen in the future or
why it is happening

Verification Driven (OLAP) vs

Discovery Driven (Data Mining)
What is Not Data Mining
What is Data Mining ?

Data mining (knowledge discovery in databases):

Extraction of interesting (non-trivial, implicit, previously unknown and
potentially useful) information or patterns from data in large
databases
Data Mining vs Statistics
Data Mining Techniques

Regression and Logistic Regression

Decision Trees

Neural Networks

Clustering

Association Rules

Fuzzy Inference Systems, Genetic Algorithms, Sequence Analysis etc

Major Application Areas for Data Mining Solutions
Advertising

Bioinformatics

Customer Relationship Management (CRM)

Database Marketing

Fraud Detection

eCommerce

Health Care

Banking/ Financial Services/ Insurance

Investment/Securities

Manufacturing, Process Control

Sports and Entertainment

Telecommunications

Web
 Data Mining Applications in CRM

Typical Applications
Customer Segmentation What
Which
WhatHow
Which
are
isofcan Imost
customers
my
the tellchannel
mymarket
best which
are
valuable
segments
goodto
What is the life time
transactions
reach
candidates
and
customers
who
my customers
are
for
are
myare
our
at likely
customers
new
risk to
in each
of
long
Propensity to Buy profitability of my customers ?
be
distance
marketfraudulent
byleaving
segment
calling
segment? ??
? plans ?
Profitability Modeling & Profiling
Customer Attrition
Channel Optimization
Fraud Detection

Targeting
Prevent
Increase
Interact customers
Personalize
loss
w/customers
highof based
customer
value
high on
customers
value
based their needs.
relationships.
customers
onbased
Detect and prevent fraud to minimize loss.
More
Higher
and product
onlet
current &sales
satisfaction
go
their =Higher
Greater
of preference.
lower
future
=
value loyalty
profitability.
customers.
retention
Source: Teradata, 2001
 The use of digital technology to
Digital radically improve the
Transformation performance and/or reach of a
company
Youtube Videos
What is the SMAC Stack?
SMAC Social, Mobile, Analytics and Cloud
The SMAC Stack The Fabric of Code Halos
BIG DATA MBA
Big Data MBA

Big Data Strategy vs Business Strategy that Incorporates Big

Data

Responsibility of Analytics : IT Team OR Business Leaders

Creative Thinking : The key to data monetization and business

transformation : Think Like a Data Scientist
Finally, the business potential of big data is only limited by the
creative thinking of the business users

FOLLOW THESE RULES AND GAIN COMPETITIVE

ADVANTAGE; OTHERWISE BE READY TO FALL BY THE
WAYSIDE**

**SPECIALLY WHEN YOU ARE COMPETING WITH COMPANIES

THAT ARE BORN DIGITAL
Big Data Business Model Maturity Index

Measures the degree to which the organization has

integrated data and analytics into their business models
Business Metamorphosis

Data
Monetization

Business
Optimization

Business
Insights
Business
Monitoring

BIG DATA MBA , Bill Schmarzo, Wiley

 FIRST QUESTION THAT NEEDS TO BE ASKED BY EVERY ORGANIZATION
(BUSINESS, GOVERNMENT and SOCIETY, EVEN UNIVERSITIES and B-
SCHOOLS (incl. IIMs)

How effective is my organisation at leveraging new sources of data

and advanced analytics to uncover new customer, product and
operational insight that can be used to differentiate our customer
engagement

BIG DATA MBA , Bill Schmarzo, Wiley

Lets Go Back into History :
Exploiting Technology Innovation to Create Economic Driven
Business Opportunities (Not an exhaustive list)

Printing Press..Expanded Literacy

Steam Engine,,,,,Sparked Urbanization

Interstate Highway..Foundation for interstate commerce

Telephone..Democratized communication

Computers..Automated common processes and freeing humans

for more creative activities

Internet..Gutted cost of commerce and Knowledge sharing

Big Data, Predictive Analytics, Data Science; SMAC/ AMPS..?

Critical Importance of Thinking Differently
Critical Importance of Thinking Differently

Dont think Big Data Technology, Think Business

Transformation : Focus on 4 Ms and not 3 Vs

Dont Think Business Intelligence, Think Data Science

Dont Think Data Warehouse , Think Data Lake

Dont Think What Happened, Think What Willl

Happen

Dont Think HIPPO, Think Collaborations

BIG DATA MBA , Bill Schmarzo, Wiley

Youtube Video : Big Data Story Map

Source BOOK: BIG DATA MBA, Bill Schmarzo

THINK BUSINESS TRANSFORMATION , THINK
DIGITAL TRANSFORMATION
YOUTUBE VIDEO

Digital Transformation : Are you Ready for the

exponential Change, Futurist Gerd Leonhard, TFA
Studios
Data Scientist Skills
Data Scientist Skills
Data MiningEasy?

Marketing literature makes it look easy!!!

Just apply automated algorithms created by great minds, such
as:
Neural networks
Decision trees
Genetic algorithms
Poofmagic happens!!!

Not SoData Mining is an iterative, learning process

DM takes conscientious, long-term hard work and

commitment

DMs Reward: Success transforms a company from

being reactive to being proactive