Analytics Across the Enterprise: How IBM Realizes Business Value from Big Data and Analytics

by Brenda Dietrich, Emily Plachy, Maureen Norton

Overview

How to Transform Your Organization with Analytics: Insider Lessons from IBM’s Pioneering Experience

Analytics is not just a technology: It is a better way to do business. Using analytics, you can systematically inform human judgment with data-driven insight. This doesn’t just improve decision-making: It also enables greater innovation and creativity in support of strategy. Your transformation won’t happen overnight; however, it is absolutely achievable, and the rewards are immense.

This book demystifies your analytics journey by showing you how IBM has successfully leveraged analytics across the enterprise, worldwide. Three of IBM’s pioneering analytics practitioners share invaluable real-world perspectives on what does and doesn’t work and how you can start or accelerate your own transformation. This book provides an essential framework for becoming a smarter enterprise and shows through 31 case studies how IBM has derived value from analytics throughout its business.

Coverage Includes

• Creating a smarter workforce through big data and analytics
• More effectively optimizing supply chain processes
• Systematically improving financial forecasting
• Managing financial risk, increasing operational efficiency, and creating business value
• Reaching more B2B or B2C customers and deepening their engagement
• Optimizing manufacturing and product management processes
• Deploying your sales organization to increase revenue and effectiveness
• Achieving new levels of excellence in services delivery and reducing risk
• Transforming IT to enable wider use of analytics
•  “Measuring the immeasurable” and filling gaps in imperfect data

Whatever your industry or role, whether a current or future leader, analytics can make you smarter and more competitive. Analytics Across the Enterprise shows how IBM did it--and how you can, too.

 

Learn more about IBM Analytics

Product Details

ISBN-13:	9780133835885
Publisher:	Pearson Education
Publication date:	05/15/2014
Series:	IBM Press
Sold by:	Barnes & Noble
Format:	eBook
Pages:	224
File size:	4 MB
Age Range:	18 Years

About the Author

Dr. Brenda L. Dietrich is an IBM Fellow and Vice President. She joined IBM in 1984 and has worked in the area now called analytics for her entire career. Her early work involved applying mathematical models to improve the performance of IBM manufacturing lines. During her career, she has worked with almost every IBM business unit and applied analytics to numerous IBM decision processes. For more than a decade, she led the Mathematical Sciences function in the IBM Research division, where she was responsible for both basic research on computational mathematics and for the development of novel applications of mathematics for both IBM and its clients. In addition to her work within IBM, she has been the president of INFORMS, the world’s largest professional society for operations research and management sciences, she is an INFORMS Fellow, and she has received multiple service awards from INFORMS. She has served on the board of trustees of SIAM and on several university advisory boards. She is a member of the National Academy of Engineering. She holds more than a dozen patents, has co-authored numerous publications, and frequently speaks on analytics at conferences. She holds a BS in mathematics from UNC and an MS and PhD in operations research/information engineering from Cornell. Her personal research includes manufacturing scheduling, services resource management, transportation logistics, integer programming, and combinatorial duality. She currently leads the emerging technologies team in the IBM Watson group.

Dr. Emily C. Plachy is a Distinguished Engineer in Business Analytics Transformation, responsible for leading an increased use of analytics across IBM. She has integrated data analysis into her work throughout her career. Since joining IBM in 1982, she has held a number of technical leadership roles including CTO, Process, Methods, and Tools in IBM Global Business Services (GBS), providing architecture and technology leadership and driving the adoption of consistent methods and tools in GBS, and CTO, Enterprise Integration, GBS, providing architecture and technology leadership. She has also held a variety of roles in IBM, including development, ad tech, research, emerging business opportunities, technical sales, and services. Her technology skills include data integration, enterprise integration, solution architecture, software development, and asset reuse. She has experience in multiple industries, including banking, consumer products, retail, telecommunications, healthcare, and petroleum. She has a BS degree in applied mathematics from Washington University, an MSc degree in computer science from the University of Waterloo, and a DSc degree in computer science from Washington University. In 1992, Emily was elected to the IBM Academy of Technology, a body of approximately 1,000 of IBM’s top technical leaders, and she served as its President from 2009 to 2011. She has been a long-term champion of women in technology. She is a member of Women in Technology International, the Society of Women Engineers, and INFORMS. Emily lives in New York with her husband, Tony. She is on Twitter @eplachy and on LinkedIn at http://www.linkedin.com/pub/emily-plachy/3/1bb/777.

Maureen Fitzgerald Norton, MBA, JD, is a Distinguished Market Intelligence Professional and Executive Program Manager in Business Analytics Transformation, responsible for driving the widespread use of analytics across IBM. She pioneered the development of an outcome-focused communications strategy to drive the culture change needed for analytics adoption. Maureen created analytics case studies and innovative learning exercises for teaching analytics. She co-created an innovative analytics workshop and taught MBA students in Europe and the Middle East. In her previous role, Maureen led project teams applying analytics to IBM Smarter Planet initiatives in public safety, global social services, commerce, and merchandising, specializing in cost/benefit analysis and return on investment of analytic projects. Maureen became the first woman in IBM to earn the designation of Distinguished Market Intelligence Professional for developing innovative approaches to solving business issues and knowledge gaps through analysis. She has held a number of analytic and management roles in IBM. She earned BA and MBA degrees from the University of New Haven and a JD degree from the University of Connecticut School of Law. She is a licensed attorney and did her thesis on the legal implications of artificial intelligence. She lives in Connecticut with her husband, Dr. William Norton, and three children, Erin, Colleen, and William. She is a dual citizen of the United States and Ireland. In addition to Analytics Across the Enterprise, Maureen has published “The Benefits of Social Media Analytics 2013” with the IBM Academy of Technology and “Social Media Analytics: Measuring Value Across Enterprises and Industries” in the Journal of Management Systems. Maureen is on Twitter @mfnorton and on LinkedIn at http://www.linkedin.com/in/maureennorton/.

Table of Contents

Foreword    xix
Preface    xxi
Chapter 1: Why Big Data and Analytics?     1
Why IBM Started an Enterprise-Wide Journey to Use Analytics    3
Big Data and Analytics Demystified    4
  Descriptive and Predictive Analytics    5
  Prescriptive Analytics    6
  Social Media Analytics    6
  Entity Analytics    7
  Cognitive Computing    7
  Big Data    8
Why Analytics Matters    9
Governance    10
Proven Approaches    12
Gauging Progress    13
Overview of Nine Journeys    14
Emerging Themes    15
How to Use This Book    17
Endnotes    18
Chapter 2: Creating a Smarter Workforce    21
Perspective: Applying Analytics to the Workforce    21
Challenge: Retaining High-Value Resources in Growth Markets    25
  Outcome: Attrition Rate Declined; Net Benefits Exceeded Expectations    26
Challenge: Gaining an Accurate View of What Employees Are Thinking    26
  Outcome: Ability to Act on Real Insights About Employees    27
Lessons Learned    29
Endnotes    31
Chapter 3: Optimizing the Supply Chain    33
Perspective: Applying Analytics to the Supply Chain    33
Challenge: Detecting Quality Problems Early    36
  Outcome: Significant Cost Savings, Improved Productivity, Improved Brand Value, and Two Awards    38
Challenge: Providing Supply/Demand Visibility and Improved Channel Inventory Management    39
  Outcome: Reduced Price Protection Expense, Reduced Returns, and Two Industry Awards    41
Challenge: Improving the Accounts Receivable Business Process and Collector Productivity    41
  Outcome: Better Visibility to Track the Total Receivables View Across the Entire Collection Process and Reduction in Labor Cost    43
Challenge: Predicting Disruptions in the Supply Chain    43
  Outcome: Number of Listening Events Increased Tenfold and Local Language Listening Proved Valuable    44
Lessons Learned    45
Endnotes    48
Chapter 4: Anticipating the Financial Future    51
Perspective: Big Data and Analytics Increase Value of Finance Team    51
  Getting the Basics in Place    52
  Creating an Analytics Culture    53
Challenge: Attaining Operational Efficiency, Managing Risk, and Informing Decisions    55
  Tracking Spending: The Worldwide Spend Project    55
  Outcome: More Efficient and More Effective Spend Forecasting    57
  Keeping Up with Reporting Requirements: The Accelerated External Reporting (AER) System    58
  Outcome: Improved Statutory and Tax Reporting and Analytics    59
Challenge: Balancing Risk and Reward    59
  Country Financial Risk Scorecard    59
  Outcome: Country Financial Risk Scorecard Uses Big Data to Monitor Trends and Minimize Risk    61
Challenge: Validating Acquisition Strategy    62
  The Mergers and Acquisitions Analytics Project    62
  Outcome: Mergers and Acquisitions Analytics Improves Success Rate    62
  The Smarter Enterprise Enablement (SEE) Initiative    64
  Outcome: SEE Project Transforms Strategic Planning and Its Novel Approach Leads to Patent Applications    64
What’s Next for IBM Finance?     64
Lessons Learned    65
Endnotes    66
Chapter 5: Enabling Analytics Through Information Technology    67
Perspective: Applying Analytics to IT and Enabling Big Data and Analytics Across an Enterprise    67
Challenge: Deciding When to Modernize Servers    69
  Outcome: Increase in Application Availability    70
Challenge: Detecting Security Incidents    71
  Outcome: Increased Detection of Security Incidents    71
Enabling the Transformation to a Smarter Enterprise    71
  Developing Enterprise-Wide Big Data and Analytics Applications    71
  Partnering with Business Areas to Develop Social Media Analytic Solutions for Customer-Centric Outcomes    73
  Developing an Information Agenda and Processes for Governance and Security of Data    73
  Providing a Big Data and Analytics Infrastructure    76
Lessons Learned    77
Endnotes    78
Chapter 6: Reaching Your Market    81
Perspective: Using Analytics to Reach and Engage with Clients    81
  A Signature Client Experience    83
  Marketing-Related Analytics Hiring Soaring    84
  Agility Is Key    84
Challenge: Developing the Data Foundation and Analytics Capability to Enable a Signature Client Experience    85
  Outcome: Individual Data Master to Provide Client-Level Insights    87
Challenge: Providing a Real-Time View into Effectiveness of Marketing Actions: Performance Management    87
  Outcome: Marketing Efficiencies Realized and Transformation of Marketing Enabled    88
Challenge: Going Beyond Correlation to Determine Causal Effects of Marketing Actions    90
  Outcome: System Deals with Special Terms and Conditions Added Grew from 67% to 98% over Three Quarters    90
Challenge: Tapping into Analytics Passion to Provide New Insights to Inform IBM’s Digital Strategy    92
  Outcome: Insights from Diverse Teams Provided the Evidence Needed to Make Changes to the Digital Strategy    93
Lessons Learned    94
Endnotes    94
Chapter 7: Measuring the Immeasurable    97
Perspective: Software Development Organization Optimizes the Highly Skilled Workforce    97
Challenge: Creating a Common View of Development Expense to Enable Decision Making    99
  Development Expense Baseline Project    99
  Outcome: Development Expense Baseline Project Proves That the Immeasurable Can Be Measured    105
Lessons Learned    105
Endnotes    106
Chapter 8: Optimizing Manufacturing    107
Perspective: Applying Analytics to Manufacturing and Product Management    107
Challenge: Scheduling a Complex Manufacturing Process in a Semiconductor Fab    108
  Outcome: Reduced Production Times    111
Challenge: Enhancing Yield in the Manufacturing of Semiconductors    111
  Outcome: Cost Savings Due to Yield Improvement    112
Challenge: Reducing the Time to Detect Aberrant Events    113
  Outcome: Engineers Take Action    114
Challenge: Simplifying the Hardware Product Portfolio    115
  Outcome: Significant Reduction of Hardware Product Portfolio    116
Lessons Learned    117
Endnotes    117
Chapter 9: Increasing Sales Performance    121
Perspective: Using Analytics to Optimize Sales Performance--Inside and Out    121
  How IBM Approached Leveraging Analytics in Sales Organizations    122
  Using Analytics to Build a Business Case for Inside Sales    123
Challenge: Deploying Sellers for Maximum Revenue Growth by Account    124
  Outcome: Increased Sales Performance    126
Challenge: Deploying Sellers Within a Territory    126
  Outcome: Increased Territory Performance    127
Challenge: Determining the Optimal Sales Coverage Investment by Account    128
  Outcome: Increased Revenue and Increased Productivity    130
Online Commerce    130
Challenge: Creating a Smarter Commerce B2B Solution to Drive Cross-Company Efficiencies    132
  Outcome: An Analytics-Based, Client-Focused Business Case Wins Approval    133
Lessons Learned    135
Endnotes    137
Chapter 10: Delivering Services with Excellence    139
Perspective: Leveraging Analytics in a Services Business    139
Challenge: Developing New Business    141
  Outcome: Increased Signings, Revenue, and Pipeline    142
Challenge: Predicting Risk of Contracts    142
  Outcome: Deployment of Financial Risk Analytics    143
Challenge: Optimizing Workforce Performance    143
  Outcome: Large Cost Savings, Improved Productivity, and Faster Client Response Times    147
Challenge: Getting Early Warning About Problems    147
  Outcome: Timely Intelligence to Delivery Teams to Help Satisfy Clients    148
Lessons Learned    148
Endnotes    149
Chapter 11: Reflections and a Look to the Future    151
The Journey Continues    151
Reflections    153
  Transactional Data    155
  Simulation    156
  Alerts    157
  Forecasting    158
The Future    159
  Growth of Data    160
  Unstructured Data    161
  Cognitive Computing    163
Endnotes    164
Appendix A: Big Data and Analytics Use Cases    165
Glossary: Acronyms and Definitions of Key Big Data and Analytics Terms    175
Index    183

Editorial Reviews

Few major high-tech companies eat their own dog food. But give IBM credit: It practices what it preaches. This book provides an inside look at how IBM has applied analytics to nine business functions, the lessons it has learned, and the value it has derived. This book is valuable for anyone in a large company who wants to know how to apply analytics profitably.”
--Wayne Eckerson, Principal Consultant, Eckerson Group, and author, Secrets of Analytical Leaders: Insights from Information Insiders

“Analytics Across the Enterprise shows how even the most complex enterprise can transform itself with analytics. A powerful collection of real-world projects shows that using analytics to improve decisions, especially operational decisions, drives efficiency and innovation. The stories in this very readable book show the importance of actually taking action, not just developing insight; of caring about the end user context, not just the model; of gaining buy-in and managing organizational change; and much more. A great guide for anyone transforming their own organization with analytics.”
--James Taylor, author, Decision Management Systems: A Practical Guide to Using Business Rules and Predictive Analytic s (IBM Press)

“Analytics Across the Enterprise is the only book on analytics written by three world-class experts ‘standing on the shoulders of a giant’ analytics powerhouse: an impressive first-hand account of nine breakthrough analytic journeys from 70 top executives and practitioners, the largest private math department in the world, and a leading consulting think tank. This is an unprecedented tour de force showing how a best-of-breed analytics company revolutionized its own business model.”
--Goncalo Pacheco de Almeida, Associate Professor of Strategy, Head of the Business Analytics Initiative, and Academic Director of the MBA Strategy Specialization, HEC Paris Business School and the French National Scientific Research Center-HEC Lab

“A thoughtfully written collection of stories from within IBM, with proven techniques that are valuable for all current and future business leaders. IBM has been doing analytics since before it was ‘cool’ and, for the first time, shares an inside look at the very pragmatic, inspiring approach complete with lessons learned. Analytics Across the Enterprise not only changes the game, it explains how to win.”
--Lawrence G. Singleton, PhD, CPA, Dean, School of Management, Professor of Accounting and International Business, Marist College

“Organizations are awash in data. Many have transformed this data into information, yet few have identified patterns of insight from this information. A rare number of organizations can take the insight to action, but even fewer can create a pathway from data to decisions. In Analytics Across the Enterprise, Dietrich, Plachy, and Norton definitively chronicle what it takes to apply big data and analytics in the transformation of enterprises. The results: Successful leaders create competitive advantage in smarter workforces, optimized supply chains, and predictable sales performance. Organizations will learn how to move not only from gut-feel intuition but also to powerful fact-based decision making.”
--R “Ray” Wang, Principal Analyst and Founder, Constellation Research, Inc.

“The growing demand for analytics is a priority for business and IT to collaborate on the processes and technology required to gain the insights to guide organizations to be effective. This book helps organizations gain a perspective on what operating analytics across the enterprise is all about and most importantly why it is crucial across lines of business where the outcomes can be achieved from making continuous investments.”
--Mark Smith, CEO and Chief Research Officer, Ventana Research

“Glimpses of the IBM vision of the future for analytics have regularly appeared in the literature, and now for the first time we have a comprehensive inside account of how IBM uses advanced analytics to compete globally. Using examples from many functions (HR, marketing, finance, supply chain), this book provides a fascinating view of IBM as an intensively data-driven corporation. Senior executives familiar with analytics and data applications will find many ideas in this book on how they can harness analytics to improve their corporation’s performance. Executives less familiar with analytics may experience some ‘shock and awe’ in reading how far data- and analytics-driven corporations have progressed and what formidable competitors they have become.”
--Peter C. Bell, Professor, Management Science, Ivey Business School at Western University

“Analytics Across the Enterprise is a live chronicle of how the practice of analytics transcends the business functional boundaries and how it benefits all the business functions.”
--Dr. Adam Fadlalla, Associate Dean for Academic Affairs and Professor of Information Systems, College of Business and Economics, Qatar University

“The use of data and analytics to generate value is a journey for all organizations: a journey of technology, operational self-awareness, and culture. The joy and challenge of data and analytics is that it is difficult, and as such, it is a source of sustainable competitive value. This book tells the story of the journey of adoption of analytics for IBM and how we became a company driven by data and analytics. It explores the technical and mathematical complexities of the journey, the different business use cases, and the value it delivered to our clients, our employees, and our shareholders.”
--Fred Balboni, Global Managing Partner, Strategy and Analytics, Global Business Services, IBM Corporation

From the Publisher