Big Data

‘Big analytics is a bigger problem than Big Data’: Mikael Hagstrom, SAS

by Jasmine Kohli, InformationWeek, May 6, 2013

In a discussion with InformationWeek, Mikael Hagstrom, Executive VP, Europe, Middle East, Africa and Asia Pacific, SAS, talks about how the role of analytics has changed over the years and shares how analytics enables organizations to make better choices ahead of competitors and create new value from Big Data

Please shed some light on how the role of analytics has changed as compared to yesteryears?

The role of analytics has definitely changed over the years — today we work on segments of data and re-structure database on those assumptions. The assumptions could be around the questions you have. We are now able to work much more in the discovery stage.

In the past, one had to ask a question and in case there were billion records, only 10 records were displayed. One was then required to arrive on a mean or average. However, today we can plot a billion records and see what they represent.

In the past to calculate market risk in a bank, one had to do a lot of iterations, with each calculation taking about 20 minutes. So, the calculations earlier could be done only on a subset of data, maybe a few 100,000 customers, who may or may not be representative. Today, one can do it on 10 million customers and in fact all the customers. This model has a much higher fit and results are much more precise, accurate. Thus, one can now train the data, use the data and do the analysis in real time within fraction of seconds.

Today, some of the online retailers have analytical servers that analyze your question from a vocabulary standpoint, from a linguistic standpoint, and you get much better of answers than a call. That has become possible because of the tectonic shift from an analytical point of view into a world where you can clock to manage very large volume. This is a major change, which was not their earlier.

Can you share some real life examples of how organizations are today using the power of analytics and making a difference? 

Analytics enable organizations to quickly and confidently seize new opportunities in order to make better choices ahead of competitors and create new value from Big Data. It enables organizations to handle their most difficult challenges, quickly generate high-impact insights and transform their operations.

For example, with analytics, retailers can predict how many red sweat¬ers they need in stock and how many small and large sizes they need based on local demographics. They can also determine optimal prices for hundreds of thousands of products at multiple locations. Pricing used to be an art earlier; now giant retailers can zero in on the optimal price for all their SKUs and stores. Likewise, banks can determine the optimal amount of cash to keep in ATMs. Automakers can predict how many spare parts they’ll need on hand, and when.

Take the case of Harrah’s, a global casino operator, which uses analytics to optimize its marketing and customer loyalty programs. Harrah’s ranks No. 1 in profit percentage of revenue and has increased its share of wallet from 36 percent in 1998 to 45 percent today, largely due to its extensive usage of analytics. To cite another example, in the Philippines, the Bureau of Internal Revenue used analytics to recoup USD 114 million in unpaid value-added taxes, a 400 percent ROI in the first year. 

In Sweden, analytics is being used to reduce the number of patients who die from clinical errors. In addition to reducing unnecessary deaths, they expect to save USD 10 billion in health care costs at the national level through their analytic efforts.

Also, using analytics 1-800-FLOWERS.COM changes prices and offerings on its website, sometimes on an hourly basis. It also uses analytics to target print and online promotions with greater accuracy and to optimize its marketing, shipping, distribution and manufacturing operations. With its usage of analytics, the company has registered a reduction of USD 50 million in costs last year. 

Can you give us an example of the usage of cutting edge analytics?

New joint venture between the telcos in the U.K to form a new mobile marketing platform, called 'weave', is an analytical cloud. It is cutting edge because it will help in fostering mobile payments. 

How according to you can organizations unlock the power of Big Data? 

Big analytics brings big opportunities — many organizations say they have the Big Data problem but I reiterate they don’t. Today, we have the problem of big analytics than Big Data. With 90 percent of the world’s data created in the last two years, most organizations are still discovering the potential within internal data, and perhaps more importantly, within big external data.

Today, our world is changing at an unprecedented pace. Just look at the accelerated level of complexity surrounding the social, political, financial and environmental issues we are all faced with. Daunting, perhaps, but with that comes the digital era that will turn these challenges into bright new opportunities.

Just as the industrial age brought us automation, or the ability to achieve greater output from fewer resources, the digital age brings us the ability to capitalize on our collective knowledge and outperform in effectiveness, efficiency and innovation.

About Author

Jasmine Kohli is a Mumbai-based Principal Correspondent at InformationWeek India. She has an experience of five years in reporting and conducting interview with industry delegates. She writes on emerging technologies.

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