IBM today announced the newest version of IBM SPSS Statistics software,its integrated family of products that addresses the entire analytical process, from planning to data collection to analysis, reporting and deployment.
The new enhancements in IBM SPSS Statistics v21ensure that the most advanced analytics techniques are available to a broader group of business users, statisticians, analysts and researchers.Making it easier to access and manage big data, set up and perform analyses, and share results across the organization, IBM SPSS Statistics now includes:
�Simulation Modeling� Using Monte Carlo simulation techniques, users can now build better models and assess risk when inputs are uncertain.
�Advanced Techniques for Big Data�Quickly understand large and complex datasets using advanced statistical procedures to provide high accuracy and drive quality decision making.
�Improved Integration�Deploy analytics faster with seamlessaccess to common data types and external programming languages, including Java and IBM Cognos business intelligence.
Monte Carlo Simulation
The new simulation modeling feature is designed to account for uncertainty in data inputs, such as determining how weather conditions affect energy consumption, how costs of materials (e.g., steel prices) affect profitability of a construction project, or to better understand risks around investment planning.
By using Monte Carlo simulation, theunknown inputs and historical distributions are used to create confidence intervalsand visualizations(see graphic) to help make the best decision.
For example, energy and utilities organizations run simulations on potential weather temperatures, compared against historical weather temperatures, to then determine how much energy it would likely need to generate for an 85 degree day on August 31. This process can be repeated many times (typically thousands or tens of thousands of times), resulting in a distribution of outcomes so users can make the best decision.
Unlike other software packages, IBM SPSS Statistics doesn�tforce users to start from scratch, but allows them to leverage existing predictive models and existing data as the starting points for simulation.
IBM SPSS Statistics now makes working with big data easier, more scalable and ensures optimal performance when working with multiple predictors. By introducing a data file comparison tool, users now have the ability to compare datasets or data files to identify any discrepancies and ensure that the data values and records are compatible.
Users can now compare files for better quality control. For example, users can now find discrepancies between data sets that contain responses by the same respondents to a survey, but entered by two different people.
Also, IBM SPSS Statistics now allows operations like sorts and aggregations to be pushed back to the database, where they can be performed faster. Temporary files created by analytical procedures can be distributed across multiple disks, and large files can be compressed to save disk space when sorting, improving performance and speeding up analysis.
For example, users can run multiple analytical jobs at the same time while continuing to work on their desktops at other tasks. Users can also continue to run server jobs while disconnected from the server without sacrificing the quality of their analysis or output, then reconnect to access their completed jobs.
With IBM SPSS Statistics, users can now use a Java� plug-in to call IBM SPSS Statistics functionality from a Java application and have IBM SPSS Statistics output appear in the Java application.
Finally, IBM SPSS Statistics now provides the ability to easily import IBM Cognos business intelligence data for analysis. Users can now read custom data with or without filters, and import predefined reports from IBM Cognos directly into IBM SPSS Statistics.
Guest post from Jing Shyr, Chief Statistician & Distinguished Engineer, IBM Business Analytics
It's the age-old question: why did the chicken cross the road?
With one chicken, the answer is easy to compute.
But, what if there were millions of chickens crossing the road? And each chicken had a mobile device and was tweeting out its opinions, desires, likes/dislikes, photos, and detailed descriptions of what it had for breakfast that morning. Oh, and what if that road was being monitored by millions of sensors?
With current statistical techniques, it's no longer easy to quickly understand why each chicken decided to cross that road and, more importantly, predict when they might cross again.
The business analytics and statistics industry faces tough data analysis challenges in the coming years, including lack of skills, easily consuming analytics, mobility and big data.
Having been around the analytics industry for many years, it is refreshing to see that businesses are taking statistics and data mining results and injecting them directly into the business (and directly into the business process itself). The Catch-22 is that while more and more organizations are realizing the benefits of analytics, finding those professionals with an understanding of how to not only capture and analyze the tsunami of data created daily still requires training and a unique skill set.
A recent McKinsey Global Institute report indicates that over the next seven years the need for highly skilled business intelligence workers in the U.S. alone will dramatically exceed the available workforce � by as much as 60 percent.
I often imagine a business analyst presenting results to an executive the same way I present to my students. When teaching a lesson on modeling, I often ask, "Do you see what I see?" Everyone stares with blank looks on their faces and says, "No! What do you see?"
Herein lies part of the problem. To help counteract the skills shortage, we have to make the software easier to use and force the software to be consumable versus strictly scientific. Communicating results is just as important as the results themselves. I strongly believe that statistical software needs to go through a revolution of its own and become as intuitive as a smartphone.
And speaking of smartphones...
Most statistical software produces an incredible amount of very large tables and charts, making it extremely difficult to comprehend in a mobile environment. I torture my eyes every time I try to read a report on my Blackberry.
Consumability means anywhere, anytime and through any device. It's time we hold statistical s
oftware to a higher standard.
Let me get back to the chickens for a moment.
The volume, velocity and variety of data today is seemingly overwhelming traditional statistical software. Not to be clich�, but Big Data is giving the statistics industry big problems.
Previously, if we wanted to analyze any data, we would follow the same logical flow: decide what we want to predict or classify and build a model by bringing in all the predictors (independent variables). The size of predictors are often well below 100.
Today, however, we are dealing with thousands of different variables making traditional statistical analysis a serious hurdle. The machine capacity is no longer capable and many algorithms have been outpaced by data capacity.
The challenge calls for a new process of data reduction before modeling and new computation algorithms are required to handle millions of records and fields quickly in a distributed environment without passing the data back and forth multiple times.
Most importantly, we don't need to be chicken when it comes to Big Data.
Creating new statistical techniques for Big Data will get us all to the other side of the road, and you'll never have to ask why.
Have you ever had that awkward conversation with a significant other where they tell you they just want to be friends?
Sometimes the news is hard to swallow. It forces you to ask yourself, �What could I have done better?�
This same tough conversation needs to happen with certain software applications too. People just stay in relationships with software for too long. That said, it�s time to have the �friend talk� and break up with spreadsheets.
You�ve never really loved them. It�s been a relationship of convenience � they just showed up one day on your laptop and the rest was history. Yes, they�re nice and have a good personality (as much as software can), but it�s time to cut the cord and just be friends.
Disclaimer:I am not attempting to disparage or declare war on spreadsheets. They serve a useful purpose and will always be a staple inside organizations, but they are not the analytic application you want to bring home and introduce to your parents.
Spreadsheets have been widely used for financial and cost accounting, data collection and analysis, and mathematics. But, when they are called upon to perform a task for which they are not designed or beyond the limit of their capabilities, spreadsheets can actually be a fatal attraction.
Mark Smith, CEO and Chief Research Officer at Ventana Research says that spreadsheets �can be one of the most expensive pieces of technology because of the risk and wrong decisions that are made due to their numerous errors.�
In fact, a number of studies have indicated that 90 percent or more of spreadsheets contained errors.
And Bruce McCullough, the software editor for the International Journal of Forecastingwrote that �Professional statisticians continue to write books with titles like �Statistics with Excel,� but they now warn students not to bet their jobs on Excel�s accuracy. They advise students to use a real statistical package when they need to do statistics.�
So, I guess you have to ask yourself, do you want a meaningful relationship with your data, such as being able to perform detailed analysis, find hidden patterns or make reliable forecasts, instead of a dangerous liaison that gives you little in return, besides frustration?
Speaking of meaningful relationships:
�Elie Tahari, a global fashion brand, found that its retail controllers were struggling with monthly budget reports because its 22 locations submitted spreadsheets separately. By turning this task over to a more robust business analytics solution, they were able to create a seamless reporting framework that provides granular, real-time information from the sales floor to its suppliers� inventory and production schedules. They reduced their reporting cycle from as many as two days to a few minutes, and saw a 30 percent reduction in supply chain and logistics costs. (Read the case study.)
�Checkers Drive-In Restaurants Inc., the largest chain of double drive-thru restaurants in the United States, relied on spreadsheets for financial planning processes that were taking up to three months each year. By breaking away from this burden, they are now able to get the same jobs completed in three weeks, do better forecasting and more quickly respond to changing economic conditions. (Read the case study.)
It�s been said that once you break up with someone, remaining friends is almost impossible. Things just get weird.
Not true with spreadsheets. They�ll still be hanging out on the laptop, going to the same meetings and most importantly, will play a prominent role in sharing the results of the analysis across the organization (if you so choose).
But they will be frustrated by their shortcomings and say, �I wish I could�ve done better.�
For more information:
� Registerfor the upcoming webinar: �The Risks of Using Spreadsheets for Statistical Analysis.� (February 15 at 12:00 pm ET)
� Readthe whitepaper: �The Risks of Using Spreadsheets�
� Attendour upcoming IBM Innovations in Business Analytics Virtual Launch (March 7, 2012) to see new solutions that will give you a more personal relationship with your data.
It has almost become a daily occurrence when I arrive home from work and go through the mail to find yet another credit card offer from my bank, even though I already have a credit card with that very same bank.
Shouldn't they already know I have one of their credit cards? Do they even know me? Or, care to?
That�s the problem.
And according to Mark Smith, CEO and Chief Research Officer, atVentana Research, it�s imperative that banks and insurance providers anticipate and align their business around the customer.
�This is whybusiness analyticshas become a required must-have,� said Smith. �Business analytics is a significant set of technologies that is going through a huge transformation. It now plays a key role in everyday business processes, drives improvement and helps meet customer expectations and satisfaction.�
This is especially true for today�s customers who are savvier and price sensitive, and far less loyal. Customer experience now goes a long way.
Whether its banks or insurance providers (or any industry), business analytics is forcing disparate parts of those businesses to speak to each other, share data and create a personal experience for the customer.
However, according to research from Ventana, the problem is that only 1 in 5 banks and insurance companies are using business analytics at an innovative level of performance.
Smith said that these firms either have great people with skills, but struggle with technology, or have the technology but aren�t using it to drive improvements.
�Firms need a balanced approached across these elements in order to improve their analytics maturity,� said Smith.
What is holding these organizations back from taking the next step?
According to Ventana�s banking and insurance benchmarks, only 42 percent of banks and 37 percent of insurance providers are satisfied with their current analytic process.
Smith points to three main barriers that halt analytic success:
� Wasted time due to data related activities (preparation, fixing errors)
� Lack of intersection between the business and IT (read a recent blog post on this rivalry)
� Continued use of spreadsheets that increase risk factors and contribute to poor decisions
What can banks and insurance providers do to generate better value from their analytics?
According to Smith, 68 percent of companies surveyed said the most popular use of business analytics today is in customer service. What is most interesting, however, are the least popular uses which include customer profitability, voice of the customer, marketing campaigns, communications channel usage and social media (at a lowly 4 percent).
These are the areas where the use of customer analytics can have exponential effects, and according to Smith, become a true measure of innovative maturity.
This is when the analytic process gets deeply integrated into every business process and customer touch point to make every interaction personalized.
� "My business is changing on a weekly and sometimes daily basis, and in order to stay competitive I need quick access to the data without IT getting in my way."
Are these comments common inside of your organization?
It�s an interesting battle of wits: Business users needing that fast agility to get at information, and IT needing to ensure governance and control.
IT is often painted as the bad guys because they create roadblocks and are unable to deliver what the business wants � quickly and consistently.
Business is viewed like spoiled brats who have no patience or vision and ultimately rebel.
It�s a dysfunctional relationship that thrives only because these �factions� are more similar than they realize. And, they need each other. It should be very symbiotic�if only they realized.
They are both working towards the same goal: driving the business forward.
But, in order to feel like they are accomplishing their goals, they need freedom from each other. Some might say they need an �open relationship.�
IT doesn�t want to be strapped to a barrage of mundane requests. Business doesn�t want to be constrained to the complicated systems and processes IT has set up for them.
Ultimately, business wants to live in a world where they can easily access the information they need (from any source), manipulate the data without having to be a spreadsheet programmer, and share it with others.
IT wants to be able to leverage the analysis the business user has been working on and still maintain the governance and control to ensure consistent information and use of that information across the organization.
Depending on which side of the aisle you sit, there is an answer and an easy way both can be successful. In fact, both sides can have their cake and eat it too.
We invite you to view the first chapter of our Business vs. IT story in the video below.
In the simplest of definitions, analytics is all about maximizing probability.
In other words, how do you use the information around you to gain a better advantage?
For marketers, business analytics has become an easy way to measure and prove success, but also to support the decisions that drive campaigns, help anticipate customer actions and even guide the selection of messaging and content.
Yes, a scientific approach has become an absolute necessity for modern marketing.
Lest not scoff at the idea of cold, clinical data driving marketing decisions. Heck, it�s been proven that spending $1 on business analytics technology will yield almost $11 in return.
Using analytics to drive better customer experience unshackles the organization from ignorance and maximizes the probabilities for increased customer loyalty, better up/cross-sell and sales conversion.
These organizations focus their analytics capability to gain insight on cost reduction and not at consumer personalization.
Most marketing efforts focus on segmentation efficiency, such as increasing the conversion of a selected group of customers by reduction and removal of messages (for instance, avoiding delivery of identical catalogs to multiple household members), thus lowering the cost of communication.
These firms can increase customer retention by up to 9 percent, capture 2 percent more wallet share and convert an extra 3 percent of inbound contacts into a cross-sell event.
Stage Two � Sharing the Goods
To keep pace with the mobile generation, organizations within this second stage must have a clear customer analytics strategy that enables information sharing across any digital device and channel.
In fact, research shows that tri-channel buyers spent an average of two and a half times more than single-channel buyers.
The most sophisticated marketing organizations in this stage apply analytics for marketing event optimization, an approach that leverages analytics as a �horizontal control tower� to optimize the organization�s various direct marketing events over a given time period over multiple channels.
This better aligns marketing with customers� needs � and varying personas � related to those devices/channels.
Stage Three � From Reaction to Action
This stage focused on information responsiveness.
These organizations are leveraging �raw� data as it streams customers� social commentary and changing moods.
To avoid a veritable data deluge, these organizations focus on identifying the questions that � if answered � will impact their business the most.
This acts as a filter on data collection and helps an organization avoid the task of collecting all available information and then deciding what to do with it after the interminable wait to standardize and analyze it.
Companies able to perform real-time external data analysis combined with rules-based actions have experienced average conversion rates of 16.9 to 38.2 percent.
Stage Four � Next Best Action
This stage focuses on executing a strategy that enables information on demand.
This approach combines all the skills developed in earlier stages with in-depth segmentation approaches and leading-edge work in multichannel customer monitoring and real-time action recommendation (read: Decision Management).
Using predictive analytics (combined with business rules), organizations are able to engage with the customer throughout the buying cycle � from the point of needs identification through the exploration and discovery phase to the purchasing cycle.
Those companies able to apply real-time predictive analytics while executing a multichannel next-best action strategy had an average converted response rate of 24.1 to 64.3 percent.
� Understand the different stages and get a better handle of your organization�s analytics maturity by downloading the full "Customer Analytics Pays Off" white paper.
� Also, read the "Five Steps to Improving Business Performance through Customer Intimacy� white paper.
�Registerfor the �Customer Analytics Pays Off� webcast (Feb. 15 at 1:00 pm ET).
Twas the night ofbusiness analytics, when all through the org
No one in IT was stirring, the business felt like a morgue. Cognos Mobiledashboards were delivered to the iPad with care,
In hopes that the CEO would soon review them there.
The business line managers were nestled all snug in their beds,
While visions ofDecision Managementdanced in their heads.
With business rules and predictive models working in sync,
Automated, optimized decisions happen in a blink.
While over in finance there wasn�t any stress,
WithFinancial Performance Managementit�s no longer a guess.
Away to the budgets everyone flies like a flash,
To create flexible, rolling forecasts to always know how much cash.
And as the year ends, it�s time to look back
To close, consolidate and report to keep everyone on track.
When, what to the CFO�s wondering eyes should appear,
But an easy way to complete thelast mile of regulatory reportingto stay in the clear.
To anticipate customer behaviors, it�s hotter than a flame,
The industry is shouting, and calling for business analytics by name!
"NowCognos! Now,SPSS! Now,AlgorithmicsandOpenPages! IBM is taking business analytics out of the Dark Ages!
Lose the excel spreadsheets and head to the top of the charts
Measure yourAQ, that�s where the journey starts!"
With all these pieces any organization should be so proud,
Confronting the obstacle of big data? Let�s take it to the cloud.
And to not forget about all the social media noise
Taking things a step further, and to make all business users merry
2012 is when analytics gets personal, like a sundae topped with a cherry.
Interact and explore, build models and share insight
All without the help of IT, oh yeah, that�s right!
So spring to the laptop or any mobile device,
Away the business will fly, decisions no longer made by a throw of the dice.
And hear all employees exclaim, analyzing with all their might,
"Business Analyticsto all, and to all a good-night!"
There's a series of AT&Ttelevision commercialsrunning in the U.S. that portray how quickly things move in today's digital age.
Twitter, Facebook and YouTube (among others) make it easy � and difficult � to keep up with the latest news, trends and funny baby or animal videos.
By the time you see these items on your desktop or mobile device you quickly realize you are behind the times. That was so :27 seconds ago. Or worse.
In the world of analytics this has never been more true.
27 seconds (or less) is all a retailer, telecommunications provider or insurance company has today to effectively interact with a customer and take the appropriate action � making an offer, fixing a problem, or identifying possible fraudulent activity.
Time is the essence�especially in the world of social media.
Reigning in social media chatter has become a necessity. It�s not just listening to what people are saying, but understanding what they are doing, what they�re thinking and how to better engage with them.
Henkel, a leading producer of laundry and home care, cosmetics and toiletries and adhesive technologies based in Germany, recently deployedIBM social analyticsto better understand what its customers were saying about its brands in the social sphere, and more importantly where, so it could refine its message and take better action.
One of the interesting discoveries for its cosmetics business was that customers that were talking about hair were doing it on a cooking social network. They figured that once at a site, people were likely to remain on that site and continue talking about various topics. Knowing this, Henkel was able to better optimize keywords and better market appropriately on this same site.
While Henkel is finding success, many organizations are still unable to tap this precious resource due to lack of understanding of analytics or lack of in-house analytics skills.
This is why more and more universities are creating programs specifically focused on analytics, includingNorthwestern University, who recently announced two new programs, a full-time Masters of Science in Analytics in the McCormick School of Engineering and Applied Science and a part-time Masters of Science in Predictive Analytics program in the School of Continuing Studies.
Students coming out of college today are byproducts of the digital age and intuitively understand social platforms. They are not only the largest consumers of digital information, but also the purveyors of the content, and are the ones that will parlay their social media prowess into a lucrative career that will turn this social data into business value.
Scott Kellert, a student at the McCormick School of Engineering at Northwestern, commented that organizations will soon realize they need his skills to turn vast quantities of data, especially social media data, into something meaningful that can be quickly applied to improve the business.
�What I love is that analytics can be applied to everything � from insurance fraud to marketing to student retention,� said Kellert. �The new program at Northwestern will take my skills to the next level. Future employers will have confidence that I will know exactly what to do when I encounter large data sets and how to get value from them.�
Value is the operative word�and quickly.
If 27 seconds is all organizations have, they better be precise � and be adaptive to data that changes every minute to catch trends as they are happening, such as in the entertainment (X Factor) or fashion (high-heeled shoes) industries.
Think about if organizations are actually still using a spreadsheet to analyze their data, let alone social media data.
You know that feeling you get when you surprisingly find money in a pocket of your clothes?
There�s nothing better. It's free money.
And according to Nucleus Research, a provider of investigative IT research and advisory services, that's exactly what business analytics is for organizations.
In a new report from Nucleus, they found that "Analytics pays back $10.66 for every dollar spent."
Let's put that another way. Let's say you spent $1,000; the return is $10,000. Spending $10,000? That's $100,000 in extra revenue. And so on... (I rounded down for easier math.)
This number was calculated from reviewing all of the Nucleus Research case studies that have been produced and examining the implementations of analytics applications, such as business intelligence (BI), performance management, and predictive analytics.
In fact, the report states that "with such high returns to be earned on the deployment of analytics, management teams should consider these technologies to be one of the most attractive investment opportunities available to the CFO."
In fact, it would bring a smile to any C-suite executive.
In speaking to David O�Connell, the author of the report, he says that it's a matter of black and white when it comes to those who have incorporated analytics into their business.
"We have found that if we lined up 3-4 firms in the same industry and vertical side by side, those using analytics to guide their decisions would win. Analytics provides such a competitive edge and improvement to the bottom line that we could almost start handing out pink slips to those firms not adopting."
The Cincinnati Zoo, an IBM business analytics customer that participated in a ROI case study (download here), was facing tough operating factors with admissions and donations going down.
"They needed to find ways in which they could change their business model that could make them more efficient and profitable," said O'Connell.
For example, the zoo used analytics to learn moreabout when visitors were most likely to buy ice cream and made smallchanges to the operating hours of the ice cream kiosks, leading to anincrease in food revenues by 20 percent.
For organizations in any industry, O'Connell believes that it only takes a few insights into data with lots of leverage that turns into serious ROI.
That's the power analytics bring to organizations � whether it's better understanding the cost for a customer segment, realizing if a product has high or low margin or determining thatphases of the moon were a big indicator when crime would occur.
It's very much like the butterfly effect where small, unrelated happenings can have major effects on results in another area.
As Nucleus proves, deploying analytics creates those few shifts that produce revenues or lower costs.
So why aren't more organizations taking advantage of this technology?
The report talks about skepticism to technologies like analytics, but O'Connell takes it further.
"There is a complete lack of understanding about how much can be learned from analytics,� said O�Connell. �Senior managers � the CXOs � don't realize how blind their decision makers are flying right now. Organizations are relying on faulty reporting, organizational folklore and gut feel."
To be successful, organizations need to communicate and understand where visibility pain points exist.
O�Connell believes that building a business case on cost reductions and revenue increases is the way to go.
�When you use analytics, you become aware of so much granular information. Organizations suddenly realize how much they didn�t know.�
Just like that $10.66 hidden inside your jeans pocket.
For more information:
� Watcha video of Cincinnati Zoo discussing how it increased revenues by half a million dollars in less than one year.