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Prescriptive Analytics for Business Leaders PRESCRIPTIVE ANALYTICS FOR BUSINESS LEADERS PETER BULL CARLOS CENTURION SHANNON KEARNS ERIC KELSO NARI VISWANATHAN PRESCRIPTIVE ANALYTICS: FOR BUSINESS LEADERS 1 PRESCRIPTIVE ANALYTICS FOR BUSINESS LEADERS BY PETER BULL, CARLOS CENTURION, SHANNON KEARNS, ERIC KELSO AND NARI VISWANATHAN EXPLORE: • THE DIFFERENT APPROACHES TO PRESCRIPTIVE ANALYTICS • THE TRANSFORMATIONAL VALUE IT BRINGS TO BUSINESS LEADERS • HOW TO DETERMINE IF YOUR COMPANY IS READY FOR PRESCRIPTIVE • A STEP-WISE APPROACH TO FINDING YOUR FIRST USE CASE AND GETTING STARTED • SOME REAL-WORLD, CROSS-INDUSTRY APPLICATIONS 2 FOREWORD FOREWORD BY ANDRE BOISVERT With over 35 years in the technology industry, leadership roles at IBM, Oracle and SAS Institute, Inc., and a co-founder of the world’s most popular commercial open source business intelligence platforms (Pentaho Corporation), Andre Boisvert is a thought-leader in the business analytics space. He serves on multiple boards, including servings as River Logic’s Board Vice Chairman and Senior Advisor. More and more, business leaders are becoming responsible for understanding how to appropriately leverage business analytics to drive value, both within their business unit as well as companywide. Simply being familiar with the types of business analytics is no longer enough, however; leaders must familiarize themselves with the kinds of problems for which each type of analytics is best suited. Prescriptive analytics is no exception to this. A recent report by Gartner stated the following: “Prescriptive analytics is moving beyond its core community of operations research and management science professionals and becoming increasingly embedded in business applications.” (Hare, J., Swinehart, H., Woodward, A., Forecast Snapshot: Prescriptive Analytics, Worldwide, 2017, Gartner Inc., May 3 2017.) Deemed the most transformational form of advanced analytics, it’s crucial that business leaders understand the value that can be drawn from prescriptive analytics and take responsibility for driving initiatives. Many might steer clear of prescriptive initiatives, believing it’s the responsibility of the Information Technology Department, too complex of an endeavor to prove reasonable Return on Investment (ROI) or deciding that other advanced analytics initiatives should take priority. However, those that rise to the top will be those who take an initiative to appropriately inform themselves about the category. PRESCRIPTIVE ANALYTICS: FOR BUSINESS LEADERS 3 The ROIs we see from prescriptive analytics alone are enough to peek anyone’s interest, with many organizations seeing numbers ranging from 10- 15%. Then, when we consider the projected market growth of the category (adoption is expected to more than double over the next four years), it’s easy to understand why prescriptive analytics is quickly becoming necessary to achieve a competitive advantage. Many of the most successful companies in the world are already leveraging prescriptive analytics — companies that span all sizes and industries. Though this might not be the right time for every organization, now is the time to get informed and understand where prescriptive will fit in your advanced analytics roadmap. TABLE OF CONTENTS ABOUT THE AUTHORS ............................... 1 INTRODUCTION .......................................4 About this Book ............................................................... 5 Beyond this Book ............................................................ 6 AN INTRODUCTION TO BUSINESS ANALYTICS ...............................8 The Business Analytics Market ...................................... 9 Business Analytics Through the Eyes of a Business Leader ............................................................. 10 Defining Prescriptive Analytics ................................... 18 The Transformational Value of Prescriptive & Why Business Leaders Should Care ........................ 21 4 PRESCRIPTIVE ANALYTICS: FOR BUSINESS LEADERS HOW DOES PRESCRIPTIVE ANALYTICS WORK? ................28 A Deeper Look into Prescriptive Analytics ................ 29 Heuristics (Rules) ........................................................... 30 Optimization .................................................................. 33 Selecting the Right Approach ...................................... 36 DETERMINING IF YOU’RE READY FOR PRESCRIPTIVE ANALYTICS ...................... 38 Finding Your First Use Case ......................................... 39 Applicability of Optimization to the Business Problem(s) ...................................................... 39 Where to Look First....................................................... 42 Requirements for Successful Adoption ...................... 44 GETTING STARTED WITH PRESCRIPTIVE ANALYTICS ...................... 48 Establishing a Vision ..................................................... 49 Outlining Key Process Steps from Evaluation Through Adoption ........................................................ 50 UNDERSTANDING THE AVAILABLE TECHNOLOGY ....................... 56 Overview ......................................................................... 57 Packaged Applications .................................................. 59 Optimization Platforms ................................................ 62 Things to Consider ........................................................ 67 Questions to Consider .................................................. 68 User Interface (UI) ......................................................... 69 Configure or Outsource? .............................................. 71 PRESCRIPTIVE ANALYTICS: FOR BUSINESS LEADERS 5 APPLICATIONS OF PRESCRIPTIVE ANALYTICS ...................... 74 Mining and Resources Blending Case Study .............. 75 Consumer Packaged Goods ......................................... 77 Public Sector Use Case ................................................. 79 Utilities ........................................................................... 81 WHAT LIES AHEAD FOR PRESCRIPTIVE ANALYTICS? ..................... 84 Overview ......................................................................... 85 Machine Learning and Artificial Intelligence ............ 86 How Prescriptive Fits in with Emerging Trends ......... 87 The Limitation of Handcrafting (Programming) ........ 89 Developing a UX that Encourages Widespread Adoption ................................................... 89 The Future is Powered by Prescriptive ...................... 90 6 PRESCRIPTIVE ANALYTICS: FOR BUSINESS LEADERS ABOUT THE AUTHORS PETER BULL Peter is Chief Technology Officer of River Logic and is responsible for the technology leadership, strategy, development and delivery of River Logic products. Prior to joining River Logic, Peter held a number of wide- ranging roles in the software and technology industry, including work with Tibco, in which he led the mobile analytics product team, and Extended Results (which was acquired by Tibco), in which he pioneered a leading mobile business intelligence product. CARLOS CENTURION Carlos Centurion is President of River Logic and is responsible for overseeing design, development, marketing and delivery of all River Logic solutions. He works closely with prospects, customers, partners and industry thought-leaders to continually improve value delivered to global organizations. Earlier in his tenure at River Logic, his thought leadership drove solution development, integrated financials into company planning and decision support processes. SHANNON KEARNS Shannon Kearns is Director of Marketing for River Logic and is responsible for overseeing River Logic’s marketing initiatives. She works closely with Product, Sales and Partner Development to ensure consistent branding and messaging, support the sales process, generate awareness through digital channels and engage partners and customers. She also works closely with influencers and analysts to drive brand awareness of both River Logic and the category of prescriptive analytics. PRESCRIPTIVE ANALYTICS: FOR BUSINESS LEADERS 1 ERIC KELSO Eric Kelso, Vice President of Product Management for River Logic, and his team are responsible for the design, development and support of the Enterprise Optimizer and EO Server platform products. Since joining River Logic in 2000, Eric has worked closely with direct customers, partners and company consultants, including work as primary EO modeler for River Logic’s Pulp and Paper Industry and Trade Promotion Optimization solutions. NARI VISWANATHAN Nari Viswanathan is Vice President of Product Management at River Logic. He is a Senior Industry Expert with extensive experience across consulting, product management/marketing, industry analysis, market research, solution design/development and pre-sales. He has a proven track record of designing, developing and launching innovative Integrated Business Planning products. He brings deep end-to- end supply chain knowledge and expertise along with finance, operations and sales process integration. He is a three-time Pro to Know Award Winner (given by the Supply Demand Chain Executive magazine). 2 PRESCRIPTIVE ANALYTICS: FOR BUSINESS LEADERS PRESCRIPTIVE ANALYTICS: FOR BUSINESS LEADERS 3 INTRODUCTION 4 ABOUT THIS BOOK At only 6% market penetration as of this year (2017), it’s no surprise that many business leaders have never heard of prescriptive analytics or, if they have, are still hesitant to define what it means for their role and their business. Even those who are familiar with prescriptive struggle
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