by: Prof. Dr. Ir. Uzay Kaymak
Business Analytics is a concept that is being heard more and more in
companies and universities. But what does it exactly mean and what is
its impact on businesses and consumers? Uzay Kaymak, professor at
Eindhoven University of Technology explains.
Today’s society is digitizing and, with the rise of social media, the usage of smartphones and the coming of the Internet of Things, are generating an ever increasing amount of data. This pile of data creates a huge potential in getting useful information out of these billions of pieces of data. “A company as Netflix has a business model that relies on analysing your data. When you
watch something on Netflix they will recommend you other videos based on the ones you’ve watched. For this to be possible, the company needs to understand the preferences of customers, which is closely related
to business analytics.”
Despite the term business analytics getting more common there is no exact definition of what it is. Kaymak: “Business analytics is for me understanding
the factors that influence your business. This is done by focusing on the evidence that your data provides as opposed to generating understanding based on mere experience. What makes business analytics unique is that you analyse much more frequently and you integrate that in your processes.”
One example is a big retailer in the United States that monitors its sales numbers, how much is being sold of what product at what time etc. Within minutes after a milk spill they spotted that the milk sales went down and that there had to be a cause. This was even before the employees were aware of this.
Human and computers
Thus business analytics is an analysis at an almost real-time basis. This is mostly automated but for a final analysis humans are always needed. Kaymak: “The amount of data that is generated and the speed at which this is
done does not make it possible for humans to do an ‘old’ analysis. This is the reason tools, methods and models are generated for computers to do the analysis as well. So the human is more a supervisor that is steering the process in the right direction. For instance, getting a quote for your insurance happens mostly automated. But humans are still the ones that made up the questions, think of the products to be sold and handle the difficult cases.”
So humans are still needed to perform tasks that computers cannot do and make the final decisions in analyses. However, computers are getting more
intelligent as well. What was perhaps human five years ago was maybe already taken over by computers, but then humans will get other tasks that computers at that moment will not be able to do.
Business value
For businesses, this technology creates an opportunity for competitive advantage. Kaymak: “If you can analyse your business data in near real-time means that you understand your business environment, the market and
also your customers better. This brings the advantages that the responsiveness of your company increases, so you can react quicker to changes in your environment and the interaction with your customers also becomes
better, which will lead to a higher customer satisfaction.”
Airlines for example use analytics with algorithms that optimise the prices. These prices change usually daily, but sometimes in other time intervals. This has as consequence that no two seats in an airplane are sold for the same price. Another sector in which the analytics of big amounts of data is growing is the financial sector. The traditional image of a trader is someone in
a suit being busy with looking at screens, shouting to buy or sell stocks. But nowadays there are also people that are not in a suit, but behind a computer improving algorithms for trading. This means that an increasing amount of transactions is automated, in 2006 around 50% and nowadays around 80% of the transactions. An advantage of a computer is that it can act fast and a
millisecond gain can be worth millions of dollars.
Kaymak thinks that analytics will be everywhere and will be an integral part in operations of companies. For customers, this will mean that companies can offer better services and better products. However this also has a downside, says Kaymak: “In the future, but also nowadays, we will be more and more confronted with questions such as how much we want corporations to
interfere with our lives. For instance, in the Netherlands a card is used for the public transport that can detect at an individual level which person from which station departed at what time and where to. You can imagine that this kind of information is useful for optimizing the train schedules. But the question is if there is an added value that this is being done on an individual level or if it could be done in another way.”
Business Analytics in Healthcare
Kaymak is currently focusing on healthcare due to his natural interest and because the digitization in healthcare is coming. “Healthcare is currently going through the process that the industry went through 20 to 25 years ago. A lot more information is becoming available which on its turn can be analysed.”
An area that can create value in healthcare is the use of mobile devices. Currently, people first get ill before they go to the doctor. Then a doctor does tests to see if and how he can cure the disease. For this system, people have to get ill first, notice it in time and go to the doctor in time. In the future, this might be different:
“In the future, health services might offer constant monitoring and automatically contact of your doctor if certain values are out of range. Or, when you go to the hospital, they do not collect information only when
you arrive, but access the information you already accumulated until the moment of arrival. This might be a first step to make better decisions. With information about 100 or 1000 patients it might also be possible to analyse patterns, so that for example patterns in cardiovascular diseases might be discovered. So trough analytical solutions integrated in healthcare the doctor
will not be the one who cures you, but the one that coaches you to ream healthy.”
Credit: 47th issue of ESTIEM Magazine (2014)
