Analysing all the ingredients

Fleur Doidge investigates where resellers should be looking for sales around business analytics

Once upon a time, business analytics (BI) apps were known as "decision support systems", according to a blog by SAP's globetrotting tech evangelist Timo Elliott. In some ways that is a better term - it is certainly a more explicit description. Business analytics is simply about helping customers make better decisions.

According to the company J Lyons, which invented perhaps the first BI computer system, LEO, in 1951: "The upward trend in office costs following the end of World War II made Lyons realise that some form of automation was essential if these costs were to be brought under control." To do that, LEO collected and analysed data across a range of product lines, to better predict product needs and demand.

Not so different from today, then - although the scale of the problem has expanded enormously. Research published in March from US consultancy Protiviti confirms that businesses are struggling when it comes to managing and getting value from large volumes of data. According to Jonathan Wyatt, managing director and UK head of IT consulting at Protiviti, one problem is that companies often remain unable to differentiate the "sensitive" information they have collected from the data that can be shared more openly.

"Data explosion is becoming an increasingly big issue for many UK businesses. Many are struggling, and lack the tools required to analyse it in a reasonable time frame, using conventional techniques," Wyatt wrote in an announcement. "Our survey shows that [as a result] many firms are holding on to more data than is practical and for longer than necessary, which poses data security and privacy risks."

Organisations need to decide which data to lock up, which should be stored but remain easily accessible, and which can and should be discarded. Meanwhile, applications go on collecting terabytes of customer, supplier, and employee data that could be used to improve data management and business processes, boost productivity and save costs, said Wyatt.

Protiviti's poll was of 100 C-level executives from Q4 2011 to Q1 2012 from a range of public and private sector organisations. It asked how they categorised data, how they acted upon that categorisation, and about other data management policies and practices.

"There are many tools for executives to significantly reduce legal exposures while driving sensitive data management improvements and cost savings," noted Wyatt.

IBM believes analytics is one of the highest priorities for the C-suite in 2012. Companies can use smarter analytics to manage their finances better, cut down on fraud, and sow the seeds for growing customer relationships.

Fraud-fighting functionality

Bridget van Kralingen, senior vice president at IBM Global Business Services, said big data can be transformed from a threat into an opportunity for businesses of all sizes and types. "One that will be their most valuable natural resource," she claimed.

Big Blue puts forward the example of healthcare fraud. The FBI believes such fraud in the US costs about $250bn (£158.1bn) a year. The vendor's Smarter Analytics Signature Solutions offering can embed algorithms into the data trail from business processes, with a view to helping organisations detect fraud more quickly, heading off losses at the pass.

"For example, the system might recommend that a simple letter requesting payment be sent to resolve one case, while recommending that a full investigation be opened in another case," according to IBM.

The vendor cites the case of US-based Infinity Insurance, a high-risk motoring insurance provider. In the first three months, Infinity found it was able to isolate fraudulent claims among the 25,000 claims it processes each month in 24 hours, where it had previously taken 14 days.

IBM's offering can also profitably combine traditional enterprise data, customer activity on social networks, logged customer service interactions and web-click stream data. "Then, real-time analytics predict customer behaviour and preferences to inform decisions on the next best action on behalf of that customer," claims IBM, citing customer Sprint, which uses it to decide how to market to specific customers.

Von McConnell, executive director of innovation labs at Sprint, says the carrier can now manage and analyse network data 90 per cent faster than before. "We can now customise new products and services in real time and respond instantly to changing market dynamics," McConnell said in a press statement.

IBM says it can also help the likes of chief financial officers obtain better insight into their company's performance. Much useful information can be gleaned by cross-referencing companies' financial data sets against market data, a range of reports, balance sheets, analyst predictions, and even news stories and notes from board meetings.

"Financial information is growing at an astounding rate of 70 per cent each year, according to our research," wrote IBM in an announcement. "Predictive analytics, combined with what-if analysis and traditional BI in an executive-style dashboard guides users with root-cause analyses. Organisations can uncover relationships among performance metrics, anticipate performance gaps and assess alternatives with scenario planning."

Marriage of convenience

US wedding dress maker Alfred Angelo uses business analytics from IBM to go beyond Excel to get better visibility across different product lines. It analyses which dress styles and accessories offer the best RoI, down to specific colours, designs and sizings. Ultimately, this can help optimise inventory to better meet demand.

Big Blue expects to earn $16bn from business analytics software, services and research by 2015, via 9,000 consultants, 400 researchers and eight global analytics solution centres - including one in London.

According to market analyst IDC, healthcare is one example of an area in EMEA where analytics will be key through 2012.

Sylvia Piai, EMEA research manager at IDC Health Insights, says fragmentation of the healthcare sector means organisations want to integrate a range of technologies - including cloud and virtualisation, in shared-services models - to improve decision making. What is needed, she suggests, is a "smarter delivery model".

"It is never easy to get a general picture. We are talking about 100 different countries, with their specific healthcare organisations and settings and peculiar issues. Nevertheless, across the region there are common threats of cost pressures, human resources and skills constraints, and the changing demand for healthcare services driven by chronic patients' needs and the increasing expectation of quality," Piai says.

J Lyons' LEO machine back in 1951 was a decision support system whose purpose was to analyse all the sales of a company's cakes, bread and so on to facilitate profit expansion. So if VARs can offer something similar to their customers today, paying attention to their customers' specific needs, it seems they too can boost margins- for both parties.