How companies are achieving competitive advantage through analytics

How companies are achieving competitive
advantage through analytics
Tony Boobier
Insurance Leader EMEA
IBM Business Analytics

1 © 2011 IBM Corporation

Dramatic changes across industries require new
approaches…
Channel management
Need to simplify back-office processes so
that distribution channels can be more
efficient and profitable

Economy Customers
Investment income is no Customers are more price
longer a dependable conscious and less loyal
source of profit and demand personalized,
high service levels

Competition Regulation
Competition is intensifying Regulatory reporting
with increased mergers and requirements and a demand
acquisitions, divestitures, for transparency are
and new entrants increasing

Growth Risk
Growth market segments have Technology investments driven
become the focus of expansion by regulatory requirements need
with a need to grow the current to be leveraged in other business
customer base areas

A need for change is a need for smarter planet.

‘We have entered the decade of Smart’
Sam Palmisano, CEO IBM 2010


Our world is becoming

INSTRUMENTED
Our world is becoming

INTERCONNECTED
Virtually all things, processes and ways
of working are becoming

INTELLIGENT


INSTRUMENTED
We now have the ability to measure,
sense and see the exact condition of
everything.
•Today, there are 1 billion transistors for each
person on the planet. 1
•By 2010, 30 billion RFID tags will be
embedded into our world and across entire
ecosystems.1

Everything will become instrumented:
supply chains, healthcare networks,
cities and even natural systems like
rivers.

5 1 Sam Palmisano speech, November 12, 2008 © 2011 IBM Corporation

INTERCONNECTED
People, systems and objects can
communicate and interact with each other in
entirely new ways.

• The internet of people is 1 billion strong. Almost one
third of the world’s population will be on the web by
2011.1
• There were nearly 4 billion mobile phone subscribers
worldwide by the end of 2008. 1

The Internet of things—cars, appliances,
cameras, roadways, pipeline,
pharmaceuticals and even livestock—is
headed to 1 trillion.


INTELLIGENT
We can respond to changes quickly and
accurately,and get better results by
predicting and optimizing for future
events.

• Every day, 15 petabytes of new information are
beinggenerated. This is 8x more than the
information in all U.S. libraries.1
• An average company with 1,000 employees spends
$5.3 million a year to find information stored on its
servers. 1

New computing models manage the
massive amounts of data generated by the
proliferation of end-user devices, sensors,
and actuators. Combined with advanced
analytics, these technologies are making
us smarter.

7 1 New Intelligence White Paper from ThinkForward website © 2011 IBM Corporation

+ + =
An opportunity to think and act in new ways—
economically, socially and technically.

‘Location’ is a key component
of thinking in different ways


We are Already Integrating Location with Analytics

• Postal delivery optimisation
• Movement analytics for tourists
• Minority integration support
• Law enforcement
• Railroad track analysis
• Cancer research
• Insurance fraud analytics
• Flood prediction

Welcome to the world of ‘Geo Analytics’

Examples of Spatial Analytics in Use

Using IBM DB2 database with Spatial Extender:

BNSF - incredibly complex spatial queries for railroad analytics
Emory University - Dr. Fusheng Wang - cancer research
Irish insurance company - analysis of insurance flood risk
Medicare Australia – analysis of healthcare fraud analysis


IBM and ESRI

2011 ESRI wins Global Technology Alliance
Award : IBM partner conference Las Vegas

2011 SpotOn Systems Inc (acquired by ESRI last
week) wins ISV Achievement Award Las Vegas


What smart things are happening
in your industry today?

Where are the greatest
opportunities for progress?


Where does the location element of a ‘Smart Planet’ fit in….?

New Intelligence:
A smarter planet gives organizations the vision to see without
being there.

Matiq: Employs RFID tags to trace meat and poultry from German supermarket: Uses smart RFID labels to
the farm to store shelves to ensure safety and freshness manage inventory with real-time sales data, improving
and provide more transparency to consumers.1 product availability and enhancing the consumer
experience.2

U.S. power company: Saves $1.2 million annually IBM Deep Thunder: Leverages computing power,
by using an RFID-based fleet optimization system to visualization and data analytics to generate high-
reduce the amount of repair work on their vehicles.2 resolution weather forecasts for areas as fine as 1 to 2
square kilometers.3

1 Approved Smart Planet Client References
2 Smarter planet sales deck


Green and Beyond:
A smarter planet empowers organizations to do more,
using less.

Landmark: Revolutionizes petroleum frontier StatoilHydro: Links advanced real-time sensing
exploration in Texas by integrating data sources to capabilities in the field to collaborate and analyze
increase the likelihood of finding profitable sources resources across the enterprise for an expected 5%
of oil.1 boost in oil and gas production and 30% cost reduction.1

Stockholm, Sweden: An intelligent toll system in the IBM’s Carbon Tradeoff Modeler: Manages and
city center resulted in 20% less traffic, 40% lower performs analytics to help companies reduce
emissions and 40,000 additional users of the public emissions and make smarter, more cost-effective
transportation system.1 energy choices.2

1 Approved Smart Planet Client References


Smart Work:
A smarter planet puts organizations in position to be first
and be right.

Canadian airlines: Use passenger information to British Airways: Uses mobile device check-in and
predict the number of no-shows for each flight, so they other self-service technologies to help facilitate a
can strategically overbook while minimizing the risk of trouble-free travel experience and save the airline
bumping passengers.1 $3.50 per passenger.2

Max Bahr: A Dynamic Inventory Optimization Solution IBM Research Zurich Lab: Uses visualization software
enables the retailer to meet demand for any of 40,000 to render a 3D model of each patient, allowing doctors
products in more than 80 outlets with low replenishment to interact with data that improves patient care.2
and storage costs—boosting customer service ratings
to 99%. 2

17 2 Approved Smarter Planet Client References © 2011 IBM Corporation


Dynamic Infrastructure:
A smarter planet enables organizations to solve the problem
before the problem occurs.

British banks: Utilize real-time data analytics of Bank of Montreal: Created a synchronized secondary
complex financial models to help understand and data center 100 kilometers from its primary facility to
manage their exposure to risk.1 meet government regulations and ensure the safety
and availability of data in the event of a disaster.2

River and Estuary Observatory Network: Will create IBM Fire Program Analysis: Uses unique mathematical
the first technology-based real-time environmental algorithms to determine where wildfires will likely occur,
monitoring and forecasting network to guide better and helps optimize government funds and resources for
policy, management and education for the Hudson battling those fires.1
River and estuaries worldwide.2

1 Original deck
18 2 Approved Smart Planet Client References © 2011 IBM Corporation

The Roadmap to Success

IBM Research with MIT Management Research shows the
urgency to act on analytics and tells about the paths
organizations are taking to transformation

Research findings

Competitive Competitive
There are two
advantage being analytics requires
paths to analytic
created by analytics mastery of three
sophistication
is widening key competencies

19 19
Page 11/29/2011 Source: The New Intelligent Enterprise a joint MIT Sloan Management Review and IBM Institute of Business Value analytics research partnership. © 2011 IBM Corporation
Copyright © Massachusetts Institute of Technology 2011.

The Journey from Aspirational to Transformed

3 Key Analytic Segments of Ability
Transformed
(Leading)

Experienced
(Learning)

Aspirational
(Growing)

20 20

Finding competitive advantage using analytics has
increased in 12 months

Respondents who say
analytics creates a Organizations achieving
competitive advantage a competitive advantage
with analytics are

2011 58%
2.2x
more likely to
substantially outperform
2010 37% 57% their industry peers

increase
Ratio of respondents who indicated analytics creates a
competitive advantage to those who indicated it did not and the
likelihood they also indicated their organizations was
“substantially outperforming their competitive peers”. The ratio
was 2.0 to1 in 2010.

22 22

Transformed or ‘Leading’ companies are getting greater
competitive advantage by expanding the use of analytics

Respondents who cited a competitive advantage using
analytics year-over-year

2011 80%
Transformed / Leading 23%
2010 65% increase

2011 63%
Experienced / learning 66%
2010 38% increase

2011
Aspirational / Learning 5%
2010 39% decrease

23 23

Transformed (‘leading’) organizations are creating
advantage by intensely focusing on applying
analytics in three key areas of business

Speed of decisions Enterprise risk Customers

Transformed Transformed Transformed

72% 86% 62%

Experienced Experienced Experienced

49% 6% 49%

Aspirational Aspirational Aspirational
22% 0% 34%

Percentage indicates those who exhibited an intense level of focus on a particular subject area.

25 Page 25 11/29/2011 Source: The New Intelligent Enterprise a joint MIT Sloan Management Review and IBM Institute of Business Value analytics research partnership. © 2011 IBM Corporation

Where can Analytics help
– and where best is the location component? Majority of
respondents
10% 20% 30% 40% 50% 60% 70%

Enhancing customers’ overall experience
Customer Optimizing the match of sales reps to customers
Defining marketing campaigns
Identify target customers
Allocating employees’ time and efforts
HR
Evaluating employee performance
Establishing organizational strategic objectives
Strategic Developing / refining new products or services
Streamlining operational processes
Operational
Managing supply chain or logistics
Allocating annual budget
Financial
Establish financial forecasts
Aspirational Experienced Transformed

Percentage of respondents who indicated their organization relies on data and analytics to execute these activities. The question
choices ranged from 1= Intuition /Experience, 3= Equal parts experience / data to 5= Data / Analytics. Respondents above
selected 4 or 5.


How to Implement Analytics : 3 areas of competence

Manage, Understand, Act on the data
Analytic Competencies
1.Manage the data 2.Understand the data 3.Act on the data

Information management Analytic skills and tools Data-oriented culture

Solid information Skills developed as a Fact-driven
foundation core discipline leadership

Enabled by a Analytics used as a
Standardized data robust set of tools
management practices strategic asset
and solutions
Delivers actionable Strategy and
Insights accessible and
insights embedded operations guided by
available
in processes insights


Implementation

Transformed ‘leading’ organizations take either an enterprise or specialist path

Paths to transformation

High Enterprise
driven
Transformed
Collaborative
path
Information Governance
management approach
proficiency

Specialized
path
Aspirational Line-of-business
Low
driven

Low High
Analytic skills and tools
proficiency

Collaborative organizations have to resist the urge
to perfect the data

Key characteristics respondents said would increase confidence in data
used for decisions

More timely data 31%

More relevant data 31%

Better data collection 24%

Better traceability of data 22%

More precise data 21%

Respondents were able to select up to three choices from a
longer list of options. These are the top five answers.


Specialized organizations face problems ahead

Most view organizational challenges as more difficult to resolve
than technology

Respondents who rate these challenges as
extremely difficult to resolve

Organizational
challenges 44%

Technology
challenges 24% 1.8x
more difficult


Three Steps to Transformation

1
Assess your analytic sophistication

2 Focus on improving your analytic competencies

Establish a strong Develop a robust Create a culture
information set of analysis that takes action
foundation skills and tools on analytics

3
Tie approach together with an information agenda
which includes a location component


Summary

• Welcome to the decade of ‘Smart’
• Analytics provide measureable differentiation
• Location analytics can be a critical component


How companies are achieving competitive advantage through analytics

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