Webinar Notes: Use Predictive Analytics to Help You Capitalize on Business Moments
This week’s webinar notes are from a March 5th webinar hosted by Gartner. Douglas Laney, a Gartner Research VP, who made the presentation, was a strictly no-nonsense guy. He opened the webinar by introducing himself as not being either a tech/tools or Magic Quadrant guy.
That combination definitely benefitted the audience, as the following presentation on analytics, data, and information, was application or function agnostic and offered real insight for any team in an organization attempting to harness the power of data for competitive advantage. Not all companies display the same attitude towards information and its potential perhaps because, as Laney pointed out, information is not yet a balance sheet asset.
The business moments portion of the webinar – my reason for attending – was fascinating. The companies that have managed to prepare for and manage the opportunity presented by these moments have achieved truly amazing things. Laney provided many examples from Gartner’s ‘Art of the Possible,’ but I thought two of the best demonstrations were these:
1. Burberry wanted to take better advantage of the data they were able to collect in their retail locations, including using a customer’s past purchases to incent future purchases. Their business moment was made possible by embedding RFID tags in products so that when a customer lifted an item to look at it, dynamic displays in the area would automatically change to show that item as part of an outfit.
2. A fast food restaurant (who understandably could not be named) figured out that if they changed out the displays at the drive through when there were long lines they could emphasize items with less preparation time to keep the lines moving.
Less clear, but equally valuable, is their definition of a business moment, “A transparent opportunity in digital business that is exploited dynamically – and is dynamic and responsive to those opportunities, based on the current context.” I’m sure I’m biased, but the Burberry case example works much better as an explanation.
Once you define a business moment, you must understand it. Who owns the moment and who can get value from it? How can you make money from it? How can you improve consumer/citizen lives? That last example definitely bridged into the scary (or creepy as Laney put it). When you start thinking about who is using data and for what purpose, the specific mention of citizens raises the question of what governments and other public entities are using analytics for.
Speaking of analytics, predictive is just one of four ‘styles’ of analytics defined by Gartner:
- Descriptive: What is happening?
- Diagnostic: Why is it happening?
- Predictive: What will happen?
- Prescriptive: How can we make it happen?
As I mentioned, Laney’s discussion of analytics was function agnostic. When it came to the sources of data used in analytics, we were only overtly represented by contract management, something Laney included as part of ‘Dark Data.’ Dark Data is collected for some other operational purpose but not usually pulled into central analytical activity, although it holds value.
For procurement professionals, I believe the content of this webinar holds a few important messages. The first is that predictive analytics can not come from an extension of spend analysis and ERP data alone. External information must be pulled in, as it is the patterns in these larger trends and forces that create the opportunities we can harness. The other is that predictive analytics is only one type of approach to using data for the creation of value and competitive advantage. We must not let its trendy status deter us from the benefits of descriptive, diagnostic, and prescriptive styles.