3-Step Analytics Success with Parsimonious Models

3-Step Analytics Success with Parsimonious Models

Chris Schlueter Langdon (Peter Drucker School of Management, Claremont Graduate University, California, USA)
Copyright: © 2014 |Pages: 13
DOI: 10.4018/978-1-4666-5202-6.ch001
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Background

Big Data and Business Analytics Framework

Miriam-Webster defines ‘analytics’ as “the method of logical analysis” (http://www.gartner.com/it-glossary/business-analytics/, 2013). In short, BA is seen as an assemblage of tools used to aid business decision-making. What are the most important decisions in business? According to Peter Drucker, “there is only one valid definition of business purpose: to create a customer” (1993, p. 37). Therefore, BA is framed here in terms of how it affects customers and the creation process.

Figure 1 presents a framework or ‘map’ that firstly ties ‘analytics’ with ‘customers’ and their product experience, as well as ‘processes’. Secondly, it suggests that success with analytics requires a broader perspective, in which analytics is only one gear or element in a more complicated clockwork. Thirdly, the framework more specifically introduces analytics as one link in a 3-link chain of sensors-analytics-dashboards and how this chain can affect business in three ways: Better product, better process and transformation of an entire industry (as, for example, witnessed by Google’s pay-per-click product in advertising). Fourthly, the ‘map’ recognizes that any business impact from BA will be moderated by environmental factors, such as privacy regulation, etc.

Figure 1.

Big Data and Business Analytics Framework (Schlueter Langdon, 2013)

Key Terms in this Chapter

Cross-Selling: Describes the process of selling new products to current customers. It can save customer acquisition cost for the new product and reduce the likelihood of customers switching to competitors.

Vehicle Relationship Management (VRM): Encompasses telematics and refers to the IT-enabled automation of the interaction between a vehicle’s black box or event data recorder (EDR) and its environment for customer and business advantage.

Economies of Scope (EoS): Describe advantages in which the joint cost of two products is less than the sum of the individual costs of each of the products.

Channel System: A set of intermediaries and their infrastructure linking sellers with buyers; few producers sell their goods directly to end users, but rely on intermediaries to perform a variety of activities, including marketing, distribution, and sales. The Internet has enabled digital interactive services and a digital interactive channel system.

Customer Relationship Management (CRM): Is a broad term to cover concepts, methods, procedures and enabling information technology infrastructure that support an enterprise in managing customer relationships.

Customer and User Involvement (CUI): Describes the extent to which a customer is engaged as a participant in business operations, specifically in service production and delivery, including, for example, order processing and account management.

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