Analytics: Governing the Data to Dollars Value Chain™
Jaime FitzgeraldPresident, Fitzgerald Analytics
Sept 13, 2012 2:40PMNew York City
Architects of Fact‐Based Decisions™
2Analytics: Governance of the Transformation of Data to Dollars © 2012 Fitzgerald Analytics, Inc. All Rights Reserved
Introduction
Jaime Fitzgerald,Founder @ Fitzgerald Analytics
Professional Mission:
To help clients find and unlock opportunitiesvia data, technology, and processes, whilealways addressing the crucial role of people.
Writing a book: “The Data to Dollars Value Chain” Collaborating re: Analytics, Info Mgt, Data Mgt via groups like TDWI, NYTC, DAMA, AIIM, and “Analytics in Fiserv NYC”
Easier Ways to Find Opportunities
Better Ways to Unlock That Potential
andTo Achieve my MissionI Focus On:
Other Projects:
3Analytics: Governance of the Transformation of Data to Dollars © 2012 Fitzgerald Analytics, Inc. All Rights Reserved
Improving Analytic Processes
Building Analytic Teams
Measuring Things Clients Did Not Previously Measure
Turning Data into Dollars™
Things my team and I work on a lot
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3
1
4
4Analytics: Governance of the Transformation of Data to Dollars © 2012 Fitzgerald Analytics, Inc. All Rights Reserved
The “importance statement”…
“Technology is to us…
….what manufacturing is to
General Motors."
‐Jamie Dimon, Chairman/President/CEO JPMorgan Chase
Source: The Economist, 2007, re: banking http://econ.st/nrMSpa
5Analytics: Governance of the Transformation of Data to Dollars © 2012 Fitzgerald Analytics, Inc. All Rights Reserved
…the problem statement
6Analytics: Governance of the Transformation of Data to Dollars © 2012 Fitzgerald Analytics, Inc. All Rights Reserved
Table of Contents
1. Data to Dollars Value Chain™
2. Governance Recommendations
3. Case Studies
7Analytics: Governance of the Transformation of Data to Dollars © 2012 Fitzgerald Analytics, Inc. All Rights Reserved
The Data to Dollars Value Chain™
4. Results
New Data Source Acquisition
Data Discovery
Data Governance
Data Quality
Analysis Insight Better Decisions
BetterProcesses
More Customers
Happier & More Loyal Customers
Opportunity Discovery
Revenue Growth
Margin Expansion
Cost Reduction
Risk Management
3. Action2. Analysis1. Data
8Analytics: Governance of the Transformation of Data to Dollars © 2012 Fitzgerald Analytics, Inc. All Rights Reserved
Analytics Value Chain as a Cycle
Data
Analysis
ActionResults
New Data Learnings
1
3
2
4
5
9Analytics: Governance of the Transformation of Data to Dollars © 2012 Fitzgerald Analytics, Inc. All Rights Reserved
Example: Customer Analytics Cycle
Customer Data
Analysis
ActionResults
New Data Learnings
1
3
2
4
5 Descriptive Predictive Test & Learn Hypotheses
Messages Offers Products Pricing & Policy Customer Service
Profitability Behaviors Demographics Psychographics Wants & Needs
Customer Response Financial Impact Predictions vs. Actuals
Surprises Input
Response to actions Delta vs. Predictions New insights New hypotheses New data sources
10Analytics: Governance of the Transformation of Data to Dollars © 2012 Fitzgerald Analytics, Inc. All Rights Reserved
So why DOES this happen?
11Analytics: Governance of the Transformation of Data to Dollars © 2012 Fitzgerald Analytics, Inc. All Rights Reserved
“Uber Cause”: Complexity + Human Limitations
1. Business Models 2. Decisions + Processes
3. Analysis Options4. Tech Tools,
Platforms, Plug‐ins, Deployment Options
Analytic Projects
Complexity = f (Bizmodels x Decisions x Processes x Analysis Options x……..)
12Analytics: Governance of the Transformation of Data to Dollars © 2012 Fitzgerald Analytics, Inc. All Rights Reserved
Other Root Causes of “Analytic Underperformance”
Cross‐Functional Collaboration
Communication Challenges
Technology and Data Management Barriers
1
2
3
The good news is…
…managing complexity makes all these other problems easier to manage also…
People: Talent, Skills, Learning, Team Effectiveness
4
13Analytics: Governance of the Transformation of Data to Dollars © 2012 Fitzgerald Analytics, Inc. All Rights Reserved
Table of Contents
1. Data to Dollars Value Chain™
2. Governance Recommendations
3. Case Studies
14Analytics: Governance of the Transformation of Data to Dollars © 2012 Fitzgerald Analytics, Inc. All Rights Reserved
Recommendation #1: Process Standards
Plan and execute with discipline ‐ “begin with the end in mind”
Insights Required
Analysis Methods Required
Data Required
Platforms, Technology, People, and Processes
Business GoalTranslates to
Which drives
Allowing definition of
And selection of the right
Plan:
Act:
15Analytics: Governance of the Transformation of Data to Dollars © 2012 Fitzgerald Analytics, Inc. All Rights Reserved
Rec #2: Core Governance Objectives
Objective Recommendations
• Business‐driven w/ technical inputs (e.g. time est.)• Standard criteria (process not personality!)• Decision‐rights clear (governance team!)
• Essential for testing, QA, audit, often compliance• Key concept: lineage / process branching
• Trust = f (trust‐worthiness + communication)• Key concept: fit with purpose• Trust drives use…Use drives value.
• Optimize globally (not locally)• Key Concept: the “Enterprise Hat”• Impossiblewithout governance
1. Prioritization
2. Repeatability / traceability
3. Trust & Use
4. Enterprise Alignment
16Analytics: Governance of the Transformation of Data to Dollars © 2012 Fitzgerald Analytics, Inc. All Rights Reserved
Rec #3: Speaking of Alignment
Analytics Governance
DataGovernance
17Analytics: Governance of the Transformation of Data to Dollars © 2012 Fitzgerald Analytics, Inc. All Rights Reserved
Rec #4: The Power of “Causal Clarity”
Revenue
Cost of Revenue
Operating Costs
Marketing
Overhead
Other
Gross Profit
Other Costs
Net Profit
less
less
Example: Drivers of Net Profit
Your Business Model
Has
18Analytics: Governance of the Transformation of Data to Dollars © 2012 Fitzgerald Analytics, Inc. All Rights Reserved
Example: creating “Causal Clarity”
ROI on Sales & Marketing:
Volume
Price per Transaction
Sales and Marketing
Transactions per Client
# of Clients
X
Opportunity: “Efficiency of New Client Acquisition”Key Driver / KPI: Acquisition Cost per New Client
Formula: [spending on new client marketing]/[# New Clients)
19Analytics: Governance of the Transformation of Data to Dollars © 2012 Fitzgerald Analytics, Inc. All Rights Reserved
Rec #5: Analytic Governance “Cheat Sheet”
Executive Establish “causal clarity” visually so that everyone understands Encourage teams to use this context to prioritize and target effort Expect recommendations to be justified by their impact on key drivers
Business Identify points of opportunity before investing time in analytic details
Technology Insist upon understanding the business context and causal logic of requests for analytic systems and effort
1. Begin Your Business Model
2. Define + Agree on the Causal Model
3. Identify Points of Opp.
4. Define the info needed to unlock the opp.
5. Keep analysis as simple as possible…
For All:
By Role:
20Analytics: Governance of the Transformation of Data to Dollars © 2012 Fitzgerald Analytics, Inc. All Rights Reserved
Table of Contents
1. Data to Dollars Value Chain™
2. Governance Recommendations
3. Case Studies
21Analytics: Governance of the Transformation of Data to Dollars © 2012 Fitzgerald Analytics, Inc. All Rights Reserved
Case Study: Missing the “Analytics Layer”
The cost of “competing without analytics”?
Key Performance Metric Performance vs. Peer Group
% of Store Customers w/ Store Card
Line of Credit per Cardholder
Utilization Rate (balance/credit limit)
“Gross Profit Yield on Balances”
Impact on Store Profits (extra boost)
Total profit per card (annual, lifetime)
Step 1: Performance Gap Analysis
Case Study:Private Label Credit
22Analytics: Governance of the Transformation of Data to Dollars © 2012 Fitzgerald Analytics, Inc. All Rights Reserved
It is hard to compete without the analytics layer
Insights Required
Missing Analytics Layer
Data
Tools, Technology, People, and Processes
Business GoalPlan:
Act:
23Analytics: Governance of the Transformation of Data to Dollars © 2012 Fitzgerald Analytics, Inc. All Rights Reserved
Step 2: Groundwork for Analytics Capability
Basic pre‐conditions to analytics excellence…
Data Quality
Data Integration
Customer Profitability
Analytics Data Mart
24Analytics: Governance of the Transformation of Data to Dollars © 2012 Fitzgerald Analytics, Inc. All Rights Reserved
Step 3: Proof of Concept (‘”It’s Valuable”)
The first 3 analytic wins proved the value….
Credit Line Decision Rules
(Profit Lift = 14 %)
Credit Approval Models
(Profit Lift = 10%)
Marketing ROI
(Efficiency Gain = 30%)
25Analytics: Governance of the Transformation of Data to Dollars © 2012 Fitzgerald Analytics, Inc. All Rights Reserved
The “Long Pass” analogy
In Analytics, what is the
“cost of an interception?”
26Analytics: Governance of the Transformation of Data to Dollars © 2012 Fitzgerald Analytics, Inc. All Rights Reserved
Step 4: Scale & Sustainability (1 FTE to 10 FTE)
Analytics Governance Board
Request Management System
Project Portfolio Management
Project 1 Project 2 Project 3 Project 4
Profits quintupled, sustainable growth trajectory
Data Gov.
IT Governance
Strategy
27Analytics: Governance of the Transformation of Data to Dollars © 2012 Fitzgerald Analytics, Inc. All Rights Reserved
Case Study: “Lean Startup” Governance
Realities Implications for Governance
Budget Constraints “Process overhead” considered untenable…
Rapid‐cycle work‐styles Adds speed and agility… …but increases risk of mistakes… …and lost knowledge…
“Rework” a big risk THIS is where the team realises how much they NEED documentation
3. In‐Code “Knowledge
Drops”
Key solutionelements:
1. Causal Clarity
2. Govern the Info‐Product Portfolio
28Analytics: Governance of the Transformation of Data to Dollars © 2012 Fitzgerald Analytics, Inc. All Rights Reserved
Context: Local Search Business Models
29Analytics: Governance of the Transformation of Data to Dollars © 2012 Fitzgerald Analytics, Inc. All Rights Reserved
Bundle’s Disruption – It is based on REAL SPEND DATA
30Analytics: Governance of the Transformation of Data to Dollars © 2012 Fitzgerald Analytics, Inc. All Rights Reserved
Key Data Source: Billions of Real Spending Records
Unlike other merchant listing sites, our content is based on real credit card spending by 20 million households
Example: Credit Card Statement Data
Key Issues with this Data:
1. Credit card data lacks merchant identifier
2. Depend on text analytics to associate transactions with merchants
31Analytics: Governance of the Transformation of Data to Dollars © 2012 Fitzgerald Analytics, Inc. All Rights Reserved
Key Steps in “Refinement” (Transformation)
Other Data: Census, Bureau of Labor Statistics, User Feedback
Card Transaction Data
Merchant Listings(e.g., Address, Phone
Number, Business Type)
Old DataTransformed in New Ways
To Create New Features Such As…
Data‐Driven Reviews From an Array of Customer
Segments
People Who Shop Here Also Like…
The Bundle Loyalty Score
Linking
Normalization
Aggregation
Clustering