Business Computing for Term 1 PGP 18

Mohammed Shahid Abdulla

IT and Systems Area, IIMK
Room 2/16, Ext 254, shahid@iimk.ac.in
Office Hours: 2-3.30PM Mon-Fri

 Whats this course made up of ?

We will cover the notion of IT as a support function:
Therefore, well cover
Data Analysis (Part A, pre-midterm)
Infrastructure of IT (Part B, post midterm)

Important points to remember:

Class participation (20 points: 1 point for each session)
- Pay attention, speak up during cases/examples
- Dont be late. How do I define late ? after I start
Quizzes/Assignments (20 points)
Apply your mind and MS-Excel
-- Do not Copy, Do not Plagiarise

Getting started with Data Analysis

Overview
Data Deluge and the Opportunity
An easy case study
Key Considerations in Data Analysis
Components of a Data Analysis Plan
Technology supported Decision Making

Whodunit ? : Connect these 3 facts

1. Value at Risk (VaR) of JP Morgan Chases $6
Billion credit derivatives position in 2012 was ..
$3 Trillion
2. Countries with gross national debt greater than
90% of GDP .
will see negative growth (2010)
3. When Barclays applied to a US bankruptcy court
to buy the failed Lehman Brothers bank (2008):
1. Barclays forced to buy both good parts and
bad parts 179 toxic assets -- of Lehman.

Data Deluge
We are now flooded with data !
Product Related Data:
Categories, Features, Usages
Production Related Data:
Product Mix, Fault Rate
Customer Related Data:
What does each customer require: Quantity, Features,
Quality Requirements
Employee Related Data:
Skill sets, Experience Levels, Role, Performance
Statutory Regulations
Intellectual Property related data
.......an exhaustive list is plain difficult

Whither Noahs Ark in this

deluge
?data to actionable knowledge, we
By converting
can

Better plan for the product mix

Have better Customer Relationship Management Systems
Plan for improved ROI on our investments
reallocate budget, change responsibilities,

Identify elements of success and plan for better workforce

management
identify the qualities of successful employees, better reward potential best
performers, ...

Predict buying trends/correlations of/among products, plan

accordingly,
Design Fraud detection mechanisms:
identify traits/ characteristics of a potential fraud, ...

Build Trust, Conflict Resolution, ...

...lots more

Why is this such a big deal

for
us
?
If you possess a toolbox of data analysis skills you
will have an edge over others:
Especially true if you want to be an
entrepreneur
You would know what to do with all that data
You would know how to breakdown and structure
complex scenarios and data to get right to the
heart of the problem
So just what is this skill set ?
Computer Skills,
Basic Statistics,
Exploratory Data Analysis techniques
And, Umm.., maybe, Data Mining

What Is Data Analysis?

Data analysis provides a body of methods that
help to describe facts (Descriptive Analytics),
detect patterns (Predictive Analytics), develop
explanations and test hypotheses (Prescriptive
Analytics).
It is used in all of the sciences, businesses and in
administration.

Natura pharma
needs your help

First day of your job as an assistant

manager in Natura pharma
CEO has just sent you some sales
data for their flagship product
MoisturePlus
He wants you to work on increasing
sales
a rather vague request

MoisturePlus sales

Sep

Oct

Nov

Dec

Jan

Feb

Gross
Sales

5280000

5501000

5469000

5480000

5533000

5545000

Target
Sales

5280000

5500000

5729000

5968000

6217000

6476000

Ad costs

1056000

950400

739200

528000

316800

316800

Web
Costs

105600

316800

528000

739200

739200

Unit
Price

1.9

1.9

1.9

Data Analysis is careful when thinking about empirical

evidence

Define your problem

Define
Break down problems
and data into smaller
pieces

Disassemble
Draw conclusions

Evaluate
Put everything back
and make
recommendations

Decide

Define the problem

Your client can help you to do this in this case
the CEO
He already gave you a very vague definition I
want more sales for MoisturePlus
You need more details try emailing him?

CEOs reply
How much do you want to increase the sales?
Get back inline with target, we cant afford to miss.
How do we do it?
Well, thats your job ! .
The strategy is get people (mainly tween girls, age 11-15)
buy more
How much sales you think are feasible ? Are target figures
reasonable?
Most of customers have deep pockets, so theres no
practical limit
How are our competitors doing ?
No clear numbers, but I know they are 50-100% ahead in
moisturising product revenue
What is the deal with ads and web ads ?
We are shifting more ad budget towards Web

Disassemble
Break problem into manageable smaller problems
How do we increase sales?

What our best customers want from us ?

Which promotions are most likely to work ?
How is our advertising faring bang-for-buck ?

Divide the data into smaller chunks

Sometimes you may need to summarize data

Breakdown your data by searching for interesting comparisons

Some Examples:

How do Ad and Web costs change relative to each other ?

Does a decrease in unit price have an influence on gross sales ?
How do gross sales compare in adjacent months ?
How do gross and target sale figures compare ?

Decipher the Pieces

Comparison is key
Observations about the problem (stuff not there in the data)

Moistureplus customers are mainly tween girls

Natura pharma is reallocating more ad expenses to web
No potential limit on sales growth among tweens
Competitors are dangerous, and are way ahead of us

Observations about the Data:

Sales are wide off the mark, especially recently

Gross sales figures are more or less flat
Cutting prices does not seem to have helped
Success of more expenditure in web advertisements is unknown
Sep

Oct

Nov

Dec

Jan

Feb

Gross
Sales

5280000

5501000

5469000

5480000

5533000

5545000

Target

5280000

5500000

5729000

5968000

6217000

6476000

Ad costs

1056000

950400

739200

528000

316800

316800

Web Costs 0

105600

316800

528000

739200

739200

Unit Price

1.9

1.9

1.9

Managers must learn Data Analysis

because
You can make your assumptions explicit
You can make your conclusions credible
If you are involved yourself in the work,
you will know
o
o
o
o

What to look for in the data

You will not try to overstate your conclusions
Your will be responsible for the success of your work
Your client will understand and respect your conclusions more

Make a recommendation: Analytics

Report
Context
Moistureplus customers are mainly tween girls
Natura pharma is reallocating more ad expenses to web
No potential limit on sales growth among tweens
Competitors are dangerous, way ahead of us
Interpretation of Data
Sales are way off their targets
Gross sales figures are more or less flat
Cutting prices does not seems to have helped
Success of more expenditure web advertisements is unknown
Recommendation
Decline in sales may be due to decline in advertisement expenditure
There is no evidence that web advertising is useful
Advertising targeted at tween girls maybe the way to increase gross
sales
Bottomline ? CEO is satisfied. Report is concise, professional,
direct. Technique used is novel.

Next comes the News

Moistureplus achieves complete market saturation
among tween girls
According to DBD survey Moistureplus has 97% market share in
tween girl moisture product market

Your recommendation falls flat:

- there is no scope for growth in that market
segment
The CEOs beliefs that well target tweens have taken you
down the wrong path
The data itself doesn't say *anything* about tween girls

out of the box: problems with a

mental model

If the report is right, the CEOs belief about tween girls must be
wrong
CEOs belief was the mental model you were using
Your mental model determines what you see from the world
Your statistical model depends on your mental model
Mental models should always account for what you dont know
(uncertainty)
If uncertainty is included in the model:
you will be in the lookout for ways to use data to fill gaps in
your knowledge and thus make better recommendations
What is to be done ?
mail CEO again to query about what s/he doesnt know on
MoisturePlus ?

CEO is kind enough to respond

What are the biggest gaps in your knowledge about MoisturePlus
sales?
Interesting ! Actually we dont know much once it leaves the
warehouse to
reach the resellers.
How confident are you that advertisements have increased sales
in past.
Well !! As in any case-half is wasted, half works and we dont
know which half. Since Moistureplus is not terribly different from
other products, the brand may be the reason why people buy it.
Who else might buy it besides tween girls ?
No idea! Product is brand driven and we think only about tween
girls, we never tried to reach other groups.
Any other lingering uncertainties that I should know about ?
Sure lots. Youve scared me. Your data analysis makes me think I
know less.

CEO sends more data !

Date

Vendor

Lot
Size(units)

12/4/2012

Happy girl cosmetics

20000

13/4/2012

PP General Wholesalers

21000

13/4/2012

Lovely Princess

17000

20/4/2012

RV Girl cosmetics

19500

27/4/2012

Pretty Me

14500

2/5/2012

Happy Girl Cosmetics

21000

6/5/2012

Lovely Princess

19000

17/5/2012

PP General Wholesalers

20500

23/5/2012

RV Girl cosmetics

18300

What does CEOs mail and the data say?

From The E-Mail:

Natura Pharma is clueless on what happens beyond resellers

Effectiveness of advertising not well known, but product is
branded for tween girls.
Natura Pharma is clueless on any market segment other than
tween girl segment which possibly uses Moistureplus
CEO accepts lack of complete information

From Data:

Most of the reseller names look like they sell products for girls
But, who are PP General Wholesalers ? Whom do they cater to ?

Let us get more details on PP General Wholesalers

They shared data on their customers for the month of April 2012

Vendor

Percentage

ST Shaving supply

31

Cosmetics for men

39

buyfrom.in

12

Manly Beard Maintenance

18

It maybe that Men are buying MoisturePlus !

Email them to confirm and ask why do men buy it ?

PP General Wholesalers confirm your impression

They say men use it for post-shave skin
conditioning
It looks like you have identified a new potential
market segment. This could be big for Natura
Its also time for the new report

Modified Analytics Report

Context
Natura Pharma is clueless on what happens beyond resellers.
Effectiveness of advertising also not well known, but product is branded for
tween girls.
Natura Pharma is completely clueless on any market segment other than
tween girls
Interpretation of Data
There are resellers who sell the product to Men
Men use it for post-shave skin conditioning
Recommendation
Brand it also as a Post Shave-Skin conditioner targeting men
CEO quickly mobilizes his market team to introduce the new brand
SmoothLeather targeting men.
Sales take off !!

Technology Supported Decision

Making

Decision Support Systems

Help to collect data

Develop knowledge about various business

operations

Suggest changes to achieve profitability and other

business goals

Apart from bloomers, what is the problem with

Analytics that use a spreadsheet (read MS-Excel) ?

As managers, the problem is fundamentally that

of Scale

Types of Decision Support Systems

Data Analytics
Primarily stand-alone systems
Use a strong theory or model to perform analysis : statistical models, Optimization
models, Forecasting models, Sensitivity analysis (what-if models)

Business Intelligence

Integrate large pools of data from major enterprise data systems to data warehouses
Support decision making by enabling user to mine and extract useful information
Data mining: Can obtain types of information such as associations, sequences,
classifications, clusters, and forecast
The goal of business intelligence is: to provide individuals within the organization with
the right information, in the right format at the right time to facilitate faster, better
decisions.

BI : Multidimensionality
Measure

Pr
od
uc
t

Time

Revenue:
2,000,000.

Customer
Dimension

BI applications provide
Multi-dimensional
analysis - Means you
can analyze facts at
the intersection of any
combination of
dimensions:
Show me the Revenue
we made from
Customer A for Product
1 in January 2012?

Overview of a Decision Support System

Software for Data Analysis

KDD

Oracle Mining, Cognos, Weka

Programming Language Support

SciPy, Jlab

Statistics/Scientific Computing

SAS, SPSS, R, Matlab

Spread Sheets

Excel, Lotus 123

Where do they get used?

KDD tools are used for exploratory data analysis/data
mining on very large data sets stored in data ware
houses
SAS and SPSS are generally used for statistical data
analysis
Matlab is generally used for scientific data analysis
Programming language support is used when data
analyzer is part of a larger system (or is analyzing
large data)
Spreadsheets are the most widely used tools for day
to day data analysis

Summary
Be very clear about the analysis objectives : the
problem
Be very familiar with all aspects of what defines
your data
Develop and stay true to your data analysis plan
Be cognizant of which mathematical and software
tools can best solve your problem
Be thorough in your analyses, express openness to
additional investigations, yet be mindful of
limitations given the data and the tools you are
using

Thank You