UNIT II MANAGING RESOURCES FOR BUSINESS ANALYTICS

Managing BA Personnel, Data and Technology. Organizational Structures

aligning BA. Managing Information policy, data quality and change in BA.

Managing BA Personnel- Introduction

To fully understand why business analytics (BA) is necessary, one must understand the
nature of the roles BA personnel perform. In addition, it is necessary to understand resource
needs of a BA program to better comprehend the value of the information that BA provides.
The need for BA resources varies by firm to meet particular decision support requirements.
Some firms may choose to have a modest investment, whereas other firms may have BA
teams or a department of BA specialists. Regardless of the level of resource investment, at
minimum, a BA program requires resource investments in BA personnel, data, and
technology.

Business Analytics Personnel

One way to identify personnel needed for BA staff is to examine what is required for
certification in BA by organizations that provide BA services. INFORMS
(www.informs.org/Certification-Continuing-Ed/Analytics- Certification), a major academic
and professional organization, announced the startup of a Certified Analytic Professional
(CAP) program in 2013. Another more established organization, Cognizure
(www.cognizure.com/index.aspx), offers a variety of service products, including business
analytic services. It offers a general certification Business Analytics Professional (BAP) exam
that measures existing skill sets in BA staff and identifies areas needing improvement
(www.cognizure.com/cert/bap.aspx). This is a tool to validate technical proficiency,
expertise, and professional standards in BA.

In a general sense, BA positions require competencies in business, analytic, and information

systems skills. As listed in Table 3.3, business skills involve basic management of people
and processes. BA personnel must communicate with BA staffers within the organization (the
BA team members) and the other functional areas within a firm (BA customers and users) to
be useful. Because they serve a variety of functional areas within a firm, BA personnel need
to possess customer service skills so they can interact with the firm’s personnel and
understand the nature of the problems they seek to solve. BA personnel also need to sell their
services to users inside the firm. In addition, some must lead a BA team or department, which
requires considerable interpersonal management leadership skills and abilities.

In summary, people who undertake a career in BA are expected to know how to interact with
people and utilize the necessary analytic tools to leverage data into useful information that
can be processed, stored, and shared in information systems in a way that guides a firm to
higher levels of business performance.

Business Analytics Data

Structured and Unstructured data is needed to generate analytics. As a beginning for
organizing data into an understandable framework, statisticians usually categorize data into
meaning groups.

Categorizing Data

There are many ways to categorize business analytics data. Data is commonly categorized by
either internal or external sources. Typical examples of internal data sources include those
presented in Table 3.4. When firms try to solve internal production or service operations
problems, internally sourced data may be all that is needed. Typical external sources of data
Table 3.5 are numerous and provide great diversity and unique challenges for BA to process.
Data can be measured quantitatively (for example, sales dollars) or qualitatively by
preference surveys (for example, products compared based on consumers preferring one
product over another) or by the amount of consumer discussion (chatter) on the Web
regarding the pluses and minuses of competing products.
A major portion of the external data sources are found in the literature. For example, the US
Census and the International Monetary Fund (IMF) are useful data sources at the
macroeconomic level for model building. Likewise, audience and survey data sources might
include Nielsen (www.nielsen.com/us/en.html), psychographic or demographic data sourced
from Claritas (www.claritas.com), financial data from Equifax (www.equifax.com), Dun &
Bradstreet (www.dnb.com), and so forth.

Data Issues

Data quality can be defined as data that serves the purpose for which it is collected. It means
different things for different applications, but there are some commonalities of high-quality
data. These qualities usually include accurately representing reality, measuring what it is
supposed to measure, being timeless, and having completeness. When data is of high quality,
it helps ensure competitiveness, aids customer service, and improves profitability. When data
is of poor quality, it can provide information that is contradictory, leading to misguided
decision-making. For example, having missing data in files can prohibit some forms’
statistical modeling, and incorrect coding of information can completely render databases
useless. Data quality requires effort on the part of data managers to cleanse data of erroneous
information and repair or replace missing data.

Data privacy refers to the protection of shared data such that access is permitted only to those
users for whom it is intended. It is a security issue that requires balancing the need to know
with the risks of sharing too much. There are many risks in leaving unrestricted access to a
company’s database. For example, competitors can steal a firm’s customers by accessing
addresses. Data leaks on product quality failures can damage brand image, and customers can
become distrustful of a firm that shares information given in confidence. To avoid these
issues, a firm needs to abide by the current legislation regarding customer privacy and
develop a program devoted to data privacy.

Business Analytics Technology

Firms need an information technology (IT) infrastructure that supports personnel in the
conduct of their daily business operations. The general requirements for such a system are
stated in Table 3.6.

These types of technology are elemental needs for business analytics operations. Particular
importance for BA is the data management technologies. Database management systems
(DBMS) is data management technology software that permits firms to centralize data,
manage it efficiently, and provide access to stored data by application programs. DBMS
usually serves as an interface between application programs and the physical data files of
structured data. DBMS makes the task of understanding where and how the data is actually
stored more efficient. In addition, other DBMS systems can handle unstructured data. For
example, object-oriented DBMS systems are able to store and retrieve unstructured data, like
drawings, images, photographs, and voice data. These types of technology are necessary to
handle the load of big data that most firms currently collect.

DBMS has a data definition capability to specify the structure of content in a database. This
is used to create database tables and characteristics used in fields to identify content. These
tables and characteristics are critical success factors for search efforts as the database grows
in size. These characteristics are documented in the data dictionary (an automated or manual
file that stores the size, descriptions, format, and other properties needed to characterize
data). The database encyclopedia is a table of contents listing a firm’s current data inventory
and what data files can be built or purchased. The typical content of the database
encyclopedia is presented in Table 3.7.

Of particular importance for BA is the data manipulation language tools included in DMBS.
These tools are used to search databases for specific information. An example is structure
query language (SQL), which allows users to find specific data through a session of queries
and responses in a database.

Data warehouses are databases that store current and historical data of potential interest to
decision makers. What a data warehouse does is make data available to anyone who needs
access to it. In a data warehouse, the data is prohibited from being altered. Data warehouses
also provide a set of query tools, analytical tools, and graphical reporting facilities. Some
firms use intranet portals to make data warehouse information widely available throughout a
firm.

Data marts are focused subsets or smaller groupings within a data warehouse. Firms often
build enterprise-wide data warehouses where a central data warehouse serves the entire
organization and smaller, decentralized data warehouses (called data marts) are focused on a
limited portion of the organization’s data that is placed in a separate database for a specific
population of users. For example, a firm might develop a smaller database on just product
quality to focus efforts on quality customer and product issues. A data mart can be
constructed more quickly and at lower cost than enterprise-wide data warehouses to
concentrate effort in areas of greatest concern.

Once data has been captured and placed into database management systems, it is available for
analysis with BA tools, including online analytical processing, as well as data, text, and
Web mining technologies.

Online analytical processing (OLAP) is software that allows users to view data in multiple
dimensions. For example, employees can be viewed in terms of their age, sex, geographic
location, and so on. OLAP would allow identification of the number of employees who are
age 35, male, and in the western region of a country. OLAP allows users to obtain online
answers to ad hoc questions quickly, even when the data is stored in very large databases.

Data mining is the application of a software, discovery-driven process that provides insights
into business data by finding hidden patterns and relationships in big data or large databases
and inferring rules from them to predict future behavior. The observed patterns and rules are
used to guide decision-making. They can also act to forecast the impact of those decisions. It
is an ideal predictive analytics tool used in the BA process. The kinds of information obtained
by data mining include those in Table 3.8.

Text mining is a software application used to extract key elements from unstructured data
sets, discover patterns and relationships in the text materials, and summarize the information.
Given that the majority of the information stored in businesses is in the form of unstructured
data (emails, pictures, memos, transcripts, survey responses, business receipts, and so on), the
need to explore and find useful information will require increased use of text mining tools in
the future.

Web mining seeks to find patterns, trends, and insights into customer behavior from users of
the Web. Marketers, for example, use BA services like Google Trends
(www.google.com/trends/) and Google Insights for Search
(http://google.about.com/od/i/g/google-insights-for-search.htm) to track the popularity of
various words and phrases to learn what consumers are interested in and what they are
buying.

In addition to the general software applications discussed earlier, there are focused software
applications used every day by BA analysts in conducting the three steps of the BA process.
These include Microsoft Excel® spreadsheet applications, SAS applications, and SPSS
applications.

Microsoft Excel spreadsheet systems have add-in applications specifically used for BA
analysis. These add-in applications broaden the use of Excel into areas of BA. Analysis
ToolPak is an Excel add-in that contains a variety of statistical tools (for example, graphics
and multiple regressions) for the descriptive and predictive BA process steps. Another Excel
add-in, Solver, contains operations research optimization tools (for example, linear
programming) used in the prescriptive step of the BA process.

SAS® Analytics Pro (www.sas.com/) software provides a desktop statistical toolset allowing
users to access, manipulate, analyze, and present information in visual formats. It permits
users to access data from nearly any source and transform it into meaningful, usable
information presented in visuals that allow decision makers to gain quick understanding of
critical issues within the data. It is designed for use by analysts, researchers, statisticians,
engineers, and scientists who need to explore, examine, and present data in an easily
understandable way and distribute findings in a variety of formats. It is a statistical package
chiefly useful in the descriptive and predictive steps of the BA process.

IBM’s SPSS software offers users a wide range of statistical and decision-making tools.
These tools include methodologies for data collection, statistical manipulation, modelling
trends in structured and unstructured data, and optimizing analytics. Depending on the
statistical packages acquired, the software can cover all three steps in the BA process.

Other software applications exist to cover the prescriptive step of the BA process.

LINGO is a comprehensive tool designed to make building and solving optimization models
faster, easier, and more efficient. LINGO provides a completely integrated package that
includes an understandable language for expressing optimization models, a full-featured
environment for building and editing problems, and a set of built-in solvers to handle
optimization modeling in linear, nonlinear, quadratic, stochastic, and integer programming
models.

In summary, the technology needed to support a BA program in any organization will entail
general information system architecture, including database management systems and
progress in greater specificity down to the software that BA analysts need to compute their
unique contributions to the organization. Organizations with greater BA requirements will
have substantially more technology to support BA efforts, but all firms that seek to use BA as
a strategy for competitive advantage will need a substantial investment in technology,
because BA is a technology-dependent undertaking.

Organization Structures Aligning Business Analytics

To successfully implement business analytics (BA) within organizations, the BA in whatever
organizational form it takes must be fully integrated throughout a firm. This requires BA
resources to be aligned in a way that permits a view of customer information within and
across all departments, access to customer information from multiple sources (internal and
external to the organization), access to historical analytics from a central repository, and
making technology resources align to be accountable for analytic success. The commonality
of these requirements is the desire for an alignment that maximizes the flow of information
into and through the BA operation, which in turn processes and shares information to desired
users throughout the organization. Accomplishing this information flow objective requires
consideration of differing organizational structures and managerial issues that help align BA
resources to best serve an organization.

Organization Structures

Most organizations are hierarchical, with senior managers making the strategic planning
decisions, middle-level managers making tactical planning decisions, and lower-level
managers making operational planning decisions. Within the hierarchy, other organizational
structures exist to support the development and existence of groupings of resources like those
needed for BA. These additional structures include programs, projects, and teams. A program
in this context is the process that seeks to create an outcome and usually involves managing
several related projects with the intention of improving organizational performance. A
program can also be a large project. A project tends to deliver outcomes and can be defined
as having temporary rather than permanent social systems within or across organizations to
accomplish particular and clearly defined tasks, usually under time constraints. Projects are
often composed of teams. A team consists of a group of people with skills to achieve a
common purpose. Teams are especially appropriate for conducting complex tasks that have
many interdependent subtasks.

The relationship of programs, projects, and teams with a business hierarchy is presented in
Figure 4.1.

Within this hierarchy, the organization’s senior managers establish a BA program initiative to
mandate the creation of a BA grouping within the firm as a strategic goal. A BA program
does not always have an end-time limit. Middle-level managers reorganize or break down the
strategic BA program goals into doable BA project initiatives to be undertaken in a fixed
period of time. Some firms have only one project (establish a BA grouping) and others,
depending on the organization structure, have multiple BA projects requiring the creation of
multiple BA groupings. Projects usually have an end-time date in which to judge the
successfulness of the project. The projects in some cases are further reorganized into smaller
assignments, called BA team initiatives, to operationalize the broader strategy of the BA
program. BA teams may have a long-standing time limit (for example, to exist as the main
source of analytics for an entire organization) or have a fixed period (for example, to work on
a specific product quality problem and then end).

In summary, one way to look at the alignment of BA resources is to view it as a progression

of assigned planning tasks from a BA program, to BA projects, and eventually to BA teams
for implementation. As shown in Figure 4.1, this hierarchical relationship is a way to
examine how firms align planning and decision-making workload to fit strategic needs and
requirements. A more common beginning for a BA initiative is the creation of a BA team
organization structure possessing a variety of analytical and management skills. Another way
of aligning BA resources within an organization is to use a project structure. Most firms
undertake projects, and some firms actually use a project structure for their entire
organization. For example, consulting firms might view each client as a project (or product)
and align their resources around the particular needs of that client. A project structure often
necessitates multiple BA teams to deal with a wider variety of analytic needs.

In general, there are different ways to structure an organization to align its BA resources to
serve strategic plans. In organizations where functional departments are structured on a strict
hierarchy, separate BA departments or teams have to be allocated to each functional area, as
presented in Figure 4.2.

This functional organization structure may have the benefit of stricter functional control by
the VPs of an organization and greater efficiency in focusing on just the analytics within each
specialized area. On the other hand, this structure does not promote the cross-department
access that is suggested as a critical success factor for the implementation of a BA program.

Organizational structure commonly found in large organizations aligns resources by project

or product and is called a matrix organization. As illustrated in Figure 4.3, this structure
allows the VPs some indirect control over their related specialists, which would include the
BA specialists but also allows direct control by the project or product manager.
This, similar to the functional organizational structure, does not promote the cross-
department access suggested for a successful implementation of a BA program.

The literature suggests that the organizational structure that best aligns BA resources is one in
which a department, project, or team is formed in a staff structure where access to and from
the BA grouping of resources permits access to all areas within a firm, as illustrated in Figure
4.4.

The dashed line indicates a staff (not line management) relationship. This centralized BA
organization structure minimizes investment costs by avoiding duplications found in both the
functional and the matrix styles of organization structures. At the same time, it maximizes
information flow between and across functional areas in the organization. This is a logical
structure for a BA group in its advisory role to the organization.

Other advantages of a centralized structure like the one in Figure 4.4. These include a
reduction in the filtering of information traveling upward through the organization, insulation
from political interests, breakdown of the siloed functional area communication barriers, a
more central platform for reviewing important analyses that require a broader field of
specialists, analytic-based group decision-making efforts, separation of the line management
leadership from potential clients (for example, the VP of marketing would not necessarily
come between the BA group working on customer service issues for a department within
marketing), and better connectivity between BA and all personnel within the area of problem
solving.

In summary, the organizational structure that a firm may select for the positioning of their BA
grouping can either be aligned within an existing organizational structure, or the BA grouping
can be separate, requiring full integration within all areas of an organization. While some
firms may start with a number of small teams to begin their BA program, other firms may
choose to start with a full-sized BA department. Regardless of the size of the investment in
BA resources, it must be aligned to allow maximum information flow between and across
functional areas to achieve the most benefits BA can deliver.

Establishing an Information Policy

The information policy specifies organizational rules for sharing, disseminating, acquiring,
standardizing, classifying, and inventorying all types of information and data. It defines the
specific procedures and accountabilities that identify which users and organizational units can
share information, where the information can be distributed, and who is responsible for
updating and maintaining the information. In small firms, business owners might establish the
information policy. For larger firms, data administration may be responsible for the specific
policies and procedures for data management. Responsibilities could include developing the
information policy, planning data collection and storage, overseeing database design,
developing the data dictionary, as well as monitoring how information systems specialists
and end user groups use data.

A more popular term for many of the activities of data administration is data governance,
which includes establishing policies and processes for managing the availability, usability,
integrity, and security of the data employed in businesses. It is specifically focused on
promoting data privacy, data security, data quality, and compliance with government
regulations. Such information policy, data administration, and data governance must be in
place to guard and ensure data is managed for the betterment of the entire organization. These
steps are also important in the creation of database management systems and their support of
BA tasks.
Outsourcing Business Analytics
Outsourcing can be defined as a strategy by which an organization chooses to allocate some
business activities and responsibilities from an internal source to an external source.
Outsourcing business operations is a strategy that an organization can use to implement a BA
program, run BA projects, and operate BA teams. Any business activity can be outsourced,
including BA. Outsourcing is an important BA management activity that should be
considered as a viable alternative in planning an investment in any BA program. BA is a staff
function that is easier to outsource than other line management tasks, such as running a
warehouse. To determine if outsourcing is a useful option in BA programs, management
needs to balance the advantages of outsourcing with its disadvantages.
Managing outsourcing of BA does not have to involve the entire department. Most firms
outsource projects or tasks found to be too costly to assign internally. For example, firms
outsource cloud computing services to outside vendors and other firms outsource software
development or maintenance of legacy programs to offshore firms in low-wage areas of the
world to cut costs. Outsourcing BA can also be used as a strategy to bring BA into an
organization. Initially, to learn how to operate a BA program, project, or team, an outsource
firm can be hired for a limited, contracted time period. The client firm can then learn from the
outsourcing firm’s experience and instruction. Once the outsourcing contract is over, the
client firm can form its own BA department, project, or team.

Ensuring Data Quality

Data quality refers to accuracy, precision, and completeness of data. High-quality data is
considered to correctly reflect the real world in which it is extracted. Poor quality data caused
by data entry errors, poorly maintained databases, out-of-date data, and incomplete data
usually leads to bad decisions and undermines BA within a firm. Organizationally, the
database management systems personnel are managerially responsible for ensuring data
quality.

An organization needs to identify and correct faulty data and establish routines and
procedures for editing data in the database. The analysis of data quality can begin with a data
quality audit, where a structured survey or inspection of accuracy and level of completeness
of data is undertaken. This audit may be of the entire database, just a sample of files, or a
survey of end users for perceptions of the data quality. If during the data quality audit files
are found that have errors, a process called data cleansing or data scrubbing is undertaken to
eliminate or repair data. Some of the areas in a data file that should be inspected in the audit
and suggestions on how to correct them are presented in the table,
Managing Change
It is found that what is critical in changing organizations is organizational culture and the use
of change management. Organizational culture is how an organization supports cooperation,
coordination, and empowerment of employees. Change management is defined as an
approach for transitioning the organization (individuals, teams, projects, departments) to a
changed and desired future state. Change management is a means of implementing change in
an organization, such as adding a BA department. Changes in an organization can be either
planned (a result of specific and planned efforts at change with direction by a change leader)
or unplanned (spontaneous changes without direction of a change leader).

The application of BA invariably will result in both types of changes because of BA’s
specific problem-solving role (a desired, planned change to solve a problem) and opportunity
finding exploratory nature (i.e., unplanned new knowledge opportunity changes) of BA.
Change management can also target almost everything that makes up an organization.

It is not possible to gain the benefits of BA without change. The intent is change that involves
finding new and unique information on which change should take place in people, technology
systems, or business conduct. By instituting the concept of change management within an
organization, a firm can align resources and processes to more readily accept changes that
BA may suggest. Instituting the concept of change management in any firm depends on the
unique characteristics of that firm. There are, though, a number of activities in common with
successful change management programs, and they apply equally to changes in BA
departments, projects, or teams. Some of these activities that lead to change management
success are presented as best practices are presented in table,