Beyond analytics: Prescriptive analytics for the future of your business by Álvaro Barbero at Big Data Spain 2015

Analytics has undoubtedly changed the way businesses are operated. It has made clearer than ever that what cannot be measured cannot be managed. However, about 80% of Big Data projects still merely rely on descriptive analytics. While clever visualizations of the business data can be of great aid in the decision making process, there is much more value to be explored through deeper analytical processes. Whenever information about business rules and costs is available, prescriptive analytics can recommend efficient courses of action to optimize costs or revenues.

Session presented at Big Data Spain 2015 Conference
16th Oct 2015
Kinépolis Madrid
http://www.bigdataspain.org
Event promoted by: http://www.paradigmatecnologico.com
Abstract: http://www.bigdataspain.org/program/fri/slot-29.html#spch29.2

Transcript

2. Beyond analytics Prescriptive analytics for the future of your business Álvaro Barbero www.iic.uam.es
3. Beyond analytics | Prescriptive analytics for the future of your business www.iic.uam.es Beyond analytics A note on Big Data Hype
4. Beyond analytics | Prescriptive analytics for the future of your business www.iic.uam.es Gartner’s Hype Cycle of emerging technologies 2 0 1 2
5. Beyond analytics | Prescriptive analytics for the future of your business www.iic.uam.es Gartner’s Hype Cycle of emerging technologies 2 0 1 3
6. Beyond analytics | Prescriptive analytics for the future of your business www.iic.uam.es Gartner’s Hype Cycle of emerging technologies 2 0 1 4
7. Beyond analytics | Prescriptive analytics for the future of your business www.iic.uam.es Gartner’s Hype Cycle of emerging technologies 2 0 1 5
8. Beyond analytics | Prescriptive analytics for the future of your business www.iic.uam.es Big data Hypes leves Big data Hypes leves 2012 2013 2014 2015
9. Beyond analytics | Prescriptive analytics for the future of your business www.iic.uam.es Big data Hypes leves Big data Hypes leves 2012 2013 2014 2015 2016 2017
10. Beyond analytics | Prescriptive analytics for the future of your business www.iic.uam.es Big data Hypes leves Big data Hypes leves 2012 2013 2014 2015 2016 2017
11. Beyond analytics | Prescriptive analytics for the future of your business www.iic.uam.es Big data Hypes leves Big data Hypes leves 2012 2013 2014 2015 2016 2017 GO SELL BIG DATA PROJECTS NOW
12. Beyond analytics | Prescriptive analytics for the future of your business www.iic.uam.es What´s better to know? What’s better to know?
13. What is happening Beyond analytics | Prescriptive analytics for the future of your business www.iic.uam.es What´s better to know?
14. What will happen Beyond analytics | Prescriptive analytics for the future of your business www.iic.uam.es What´s better to know?
15. How do I take advantage Beyond analytics | Prescriptive analytics for the future of your business www.iic.uam.es What´s better to know?
16. Beyond analytics | Prescriptive analytics for the future of your business www.iic.uam.es Levels of analytics Levels of analytics Descriptive analytics What is happening Predictive analytics What will happen Prescriptive analytics What is the best strategy
17. Beyond analytics | Prescriptive analytics for the future of your business www.iic.uam.es Descriptive analytics Descriptive analytics What is happening - KPIs - Dashboards - Visualizations Describe the data to get useful info
18. Beyond analytics | Prescriptive analytics for the future of your business www.iic.uam.es Descriptive analytics Descriptive analytics What is happening
19. Beyond analytics | Prescriptive analytics for the future of your business www.iic.uam.es Descriptive analytics Descriptive analytics What is happening
20. Estimate data we don’t have Beyond analytics | Prescriptive analytics for the future of your business www.iic.uam.es Predictive analytics Predictive analytics What will happen Clustering Regression Anomaly detection Classification
21. Beyond analytics | Prescriptive analytics for the future of your business www.iic.uam.es Predictive analytics Predictive analytics What will happen Real Predicción
22. Beyond analytics | Prescriptive analytics for the future of your business www.iic.uam.es Predictive analytics Predictive analytics What will happen
23. Beyond analytics | Prescriptive analytics for the future of your business www.iic.uam.es Levels of analytics 84% 13% 3% Descriptive Predictive Prescriptive Levels of analytics
24. Beyond analytics | Prescriptive analytics for the future of your business www.iic.uam.es Prescriptive analytics Prescriptive analytics What is the best strategy
25. Beyond analytics | Prescriptive analytics for the future of your business www.iic.uam.es Prescriptive analytics Prescriptive analytics What is the best strategy START
26. Beyond analytics | Prescriptive analytics for the future of your business www.iic.uam.es Prescriptive analytics Prescriptive analytics What is the best strategy START ? ? ? ? ? ? ? ? ? ? ? ?
27. Beyond analytics | Prescriptive analytics for the future of your business www.iic.uam.es Prescriptive analytics Prescriptive analytics What is the best strategy START ? ? ? ? ? ? ? ? ? ? ? ? Descriptive Analytics
28. Beyond analytics | Prescriptive analytics for the future of your business www.iic.uam.es Prescriptive analytics Prescriptive analytics What is the best strategy START ? ? ? ? ? ? ? ? ? ? ? ? Predictive Analytics
29. Beyond analytics | Prescriptive analytics for the future of your business www.iic.uam.es Prescriptive analytics Prescriptive analytics What is the best strategy START
30. Beyond analytics | Prescriptive analytics for the future of your business www.iic.uam.es How it works How it works
31. Beyond analytics | Prescriptive analytics for the future of your business www.iic.uam.es How it works How it works Numerical optimization Predictive analytics Prescriptive analytics Descriptive analytics = +
32. Beyond analytics | Prescriptive analytics for the future of your business www.iic.uam.es Numerical optimization Numerical optimization Simple approach - Predict expected benefit of each business action, independently of other actions - Choose the action or actions that maximize benefit, within a budget or other constraints - Easy to apply on top of standard analytic pipelines A B C B C A B C 22 93 78
33. Beyond analytics | Prescriptive analytics for the future of your business www.iic.uam.es Numerical optimization Numerical optimization Advanced approach - Iteratively predict and simulate different future scenarios, considering all possible business actions and parameters, to obtain the different expected outcomes - Use outcomes of previous simulations to drive the search toward better solutions - Expert knowledge in optimization is required Operations research Genetic algorithms Ant colony optimization
34. Application examples Beyond analytics | Prescriptive analytics for the future of your business www.iic.uam.es Application examples
35. Customer service automation Beyond analytics | Prescriptive analytics for the future of your business www.iic.uam.es Customer service automation
36. Beyond analytics | Prescriptive analytics for the future of your business www.iic.uam.es Customer service automation Level 1 General support Level 2 Specialized Support
37. Beyond analytics | Prescriptive analytics for the future of your business www.iic.uam.es Customer service automation Level 1 General support Active Learning Level 2 Specialized Support
38. Beyond analytics | Prescriptive analytics for the future of your business www.iic.uam.es Customer service automation Experience with a national bank Over 300 issue classes % accuracy % machine classified Automated Manual
39. Smart pricing Beyond analytics | Prescriptive analytics for the future of your business www.iic.uam.es
40. Beyond analytics | Prescriptive analytics for the future of your business www.iic.uam.es Smart pricing Prediction of future room demands. Simulation of expected sales given a pricing strategy. Optimization of the pricing strategy to maximize revenue.
41. Beyond analytics | Prescriptive analytics for the future of your business www.iic.uam.es Smart pricing Predictions must be accurate and consider all possible factors … and if they are not, we need to know confidence bounds or some way to assess risk Risk
42. Beyond analytics | Prescriptive analytics for the future of your business www.iic.uam.es Smart pricing Client traits Marketing actions Hotel features Environmental conditions - Demography - City of origin - Family, business, … - Stays at other hotels - Special offers - Promotions - Client interactions - Hotel placement - Kind of location - Competition - Weather - Services - Rooms - Room rates % Dto.
43. Beyond analytics | Prescriptive analytics for the future of your business www.iic.uam.es Smart pricing When smart pricing goes wild
44. Beyond analytics | Prescriptive analytics for the future of your business www.iic.uam.es Smart pricing Bussiness rules and constraints must be coded into the model Prevents wild decisions
45. Retail logistics optimization Beyond analytics | Prescriptive analytics for the future of your business www.iic.uam.es Retail logistics optimization
46. Beyond analytics | Prescriptive analytics for the future of your business www.iic.uam.es Retail logistics optimization Cash demands forecasting ? ? Transportation schedule optimization ? ? ?
47. Beyond analytics | Prescriptive analytics for the future of your business www.iic.uam.es Retail logistics optimization Predicted ATM and branch withdrawals Predicted deposits Acceptable stock-out risk Transportation rates Euribor rates Transportation and regulation constraints
48. Beyond analytics | Prescriptive analytics for the future of your business www.iic.uam.es Retail logistics optimization Expected gains reduction in costs 14%
49. Beyond analytics | Prescriptive analytics for the future of your business www.iic.uam.es Take-home message Take-home message
50. Beyond analytics | Prescriptive analytics for the future of your business www.iic.uam.es Don´t ask Don’t ask what you can do for your data Sculpture by Alicia Martín
51. Beyond analytics | Prescriptive analytics for the future of your business www.iic.uam.es Ask Ask what your data are going to do for you (with prescriptive analytics)
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