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Adding Value to Information via Analytics.

Perspective from BA&MS Research and Projects

May 2008 © Copyright IBM Corporation 2008

2 IBM Business Analytics and Mathematical Sciences

Outline

  Historical perspective. When can analytics enhance value of information?

Using analytics to utilize information.

Supply chain Workforce management Carbon management  Using analytics to extract information.

Collaborative filtering, Netflix challenge ASCOT BANTER  Using analytics to collect information.

Prediction markets Peer-to-peer services Personal benchmarking © Copyright IBM Corporation 2008 Document Title | Date

3 IBM Business Analytics and Mathematical Sciences

Information / Analytic services start up when a new sector of economic activity begins to take-off

1900 1920 1930

Information / Analytic Service Starting Points

1940 1950 1960 1970 1980 1990 2000 Stock market crash of 1907 R.L. Polk meets with Alfred Sloan to discuss information needs in growing auto market Moody’s Polk Auto Registry Database Network TV advertising opens up Brand Pharmaceuti cal market begins to take off A.C. Nielsen IMS Health Consumer credit goes mass market Take-off in individual mutual fund investing Fair Isaac Digital Photography takes over Getty Images Morningstar Internet advertising begins to grow aQuantive GPS becomes commercially usable Navteq

Early Mover position in an emerging market is critical

Document Title | Date © Copyright IBM Corporation 2008

4 IBM Business Analytics and Mathematical Sciences

Outline

  Historical perspective. When can analytics enhance value of information?

Using analytics to utilize information.

Supply chain Workforce management Carbon management  Using analytics to extract information.

Collaborative filtering, Netflix challenge ASCOT BANTER  Using analytics to collect information.

Prediction markets Peer-to-peer services Personal benchmarking © Copyright IBM Corporation 2008 Document Title | Date

5 IBM Business Analytics and Mathematical Sciences

Utilizing Information

We consider situations where information is already available

From ERP or other business process automation tools Historical data Some enterprise generated view of the future May be combined with purchased data from information services Most examples now are within an enterprise or an enterprise driven value net We focus on the case where analytics are applied to the information with the goal of optimizing the use of resources

Examples:

Supply Chain Workforce management Carbon management © Copyright IBM Corporation 2008 Document Title | Date

IBM Business Analytics and Mathematical Sciences 6

Supply Chain Collaboration: IBM Buy Analysis Tool (

BAT)

Improve Inventory Cost in IBM's Extended Supply Chain Business Problem   A significant percentage of IBM’s hardware sales in high-velocity servers are sold through major channel partners such as Arrow, Ingram, and Tech Data. Lack of alignment between procurement, manufacturing, and channel sales resulted in significant price protection and sales incentive costs for IBM and high inventory-related costs for our channel partners Solution      Web-based collaboration platform for IBM’s channel replenishment planning that combines innovative forecasting and inventory analytics with up-to-date visibility of channel sales and inventory data Optimized buy recommendations for channel partners based on statistical forecasting techniques and risk optimized inventory replenishment models Proactive review system that initiates demand shaping based on supply and demand imbalances Standard SOA-based solution design which can easily be adapted to specific ERP environments Patent-pending methodology Business Value     Cornerstone of IBM Server Group’s Business Partner Transformation Initiative Fully deployed with IBM’s largest channel partners across the United States, Canada and Europe Solution enables business partners to carry 15-25% less inventory without negatively impacting their delivery performance Lower channel inventory resulted in lower price protection expenses for IBM, improved cash flow, and higher operating margins © Copyright IBM Corporation 2008 Document Title | Date

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Available to Sell (ATS)

Find saleable product recommendations to consume excess inventory

Business Problem   With shrinking product lifecycles, component supply overages can quickly lead to obsolescence requiring costly inventory writeoffs. One way to avoid this costs is to find products to build and sell that would consume the excess supply.

In a complex product environment such as IBM Servers, product build-out typically requires additional procurement of non-excess parts to “square” with the excess supplies. With part commonality across many possible product configurations, this leads to an enormous number of potential build-out strategies to choose from. Additional factors such as part substitution, re-work costs, and marketing constraints make this a difficult optimization problem.

   Solution ATS Engine uses IBM’s Watson Implosion Technology to find optimal sales recommendation portfolio given: excess part supplies, bill of material, procurement and value-add costs, product demand upper bounds, and product pricing.

Pegging module assigns excess consumption additional costs to each product in the sales recommendation allowing users to pick which build outs to execute and promote in market.

What-if capability enables users to cost a targeted build-out plan, supporting end-of-life processes.

Business Value     ATS Engine and Process fully deployed in IBM’s Systems Technology Group since 2002.

Solution drove build-outs and sales recommendations which consumed $200 million worth of excess inventory in 2002. Ongoing usage of the tool keeps excess supply from becoming obsolete. System is integrated with IBM’s Central Planning Engine with Web-based, on-demand availability within IBM STG.

IBM Business Analytics and Mathematical Sciences

Application Areas in Workforce Management

Many opportunities to improve workforce management through utilization of information

SKILL&ENGAGEMENT ANALYTICS JAN APR JUL DEC DEMAND FORECASTING

CAPACITY PLANNING Now x Target STRATEGIC PLANNING

MATCHING & SCHEDULING

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TRAINING AND LEARNING

9 IBM Business Analytics and Mathematical Sciences

Workforce challenges - The DATA is distributed in many enterprise applications

  There is no single “Enterprise Resource Planning” tool for labor management Supply (given in terms of roles or skills) Traditional HR systems contain information about the current job   Structured: Position code, salary, location, shift, etc Unstructured: Education, IBM courses, dept history, awards New Job Role/Skill Set with job taxonomy and skill list  Full Text Resumes  Demand (given in terms of engagements or contracts) Past and Current Contracts (and history of deal closure) New opportunities: Sales Opportunity Database  Missing link Bill of resources = set of skills required to deliver an engagement But billing database includes detail (by individual) on employees participation in engagements And additional sources include contractor/engagement data © Copyright IBM Corporation 2008 Document Title | Date

IBM Business Analytics and Mathematical Sciences

Business Consulting Examples

Supply Chain-PLM Engagements

Can range from one month, one skill set…..

MOT LIBERTYVLLE

60.00

40.00

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10/15/2004 10/29/2004 11/12/2004 PLM.Engineering & Design Business Transformation Consultant 9 10

Weekly variations appear to be driven by calendar effects, vacation schedules, and resource availability ….to more than 10 months, 16K hours, and wide range of job roles/skill sets

600.00

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CAT MOSSV AC

W ebSphere Application Server Application Architect 7 Procurement Proj ect Manager 9 Procurement Proj ect Manager 10 Procurement Business Transformation Consultant 8 Procurement Business Transformation Consultant 7 Procurement Business Transformation Consultant 6 Partner Business Development Executive Operations Strategy Engagement Manager Matrix One Packaged Solution Integration Consultant Client Facing Proj ect Administrator Ariba Packaged Solution Integration Consultant © Copyright IBM Corporation 2008

IBM Business Analytics and Mathematical Sciences  

Analysis of Data to estimate Bill Of Resources

Several different sources of data High level account information, such as     Client name Account description Offering information Billing (Fixed price, best estimate) Ledger information  Project cost, revenue Labor claiming information  Hours claimed per week by each employee on a project Employee information  Line of Business, Job Role, Skill Set, global resource, etc. For US contracts over past 18 months Approximately 10K accounts More than 2M labor claim records    Data Issues Can’t tell if individual is deployed in primary Job Role/Skill Set JR/SS table has current state only  Beginning to collect longitudinal data High % of missing JR/SS information  JR/SS not tracked consistently at subcontractor or global resource level  No information for consultants no longer with IBM Over 400 valid JR/SS combinations Account descriptions give little to no indication of scope of work

History reflects what actually happened, not necessarily “best practice”

IBM Business Analytics and Mathematical Sciences

Engagement Profiling

 Service offerings/opportunities are typically specified in terms of revenue and solution Using statistical analysis and clustering, develop template staffing structure for offerings, which can be used to translate offering revenue forecasts and opportunity revenue into staffing resource requirements Semi-automated and parameterized process for generating staffing templates and supporting software  Value Standardized project templates allow for planning of staffing decisions at earlier stages of the engagement process, more reliable forecasting of resource needs and better workforce planning Enables partners/project managers to quickly develop staffing plans early in the opportunity cycle Predictive accuracy of 70-80% at engagement level and 90-95% at aggregate level for

major

job roles Deployed by GBS in the Demand Capture Tool 2.1 released in December 2006 12 Client Name Sector Service ISV Project Type Start Date End Date Estimated Revenue Linked to other projects? Document Title | Date

ABC Industrial Supply Chain Management SAP

Modules

Package Configuration and Implementation 1/2/2004 12/31/2004 4700000 No

Plan Names

SAP.SCM

IBM Business Analytics and Mathematical Sciences

Risk Based Capacity Planning

Allows development of capacity plans according to business strategy. The best solution will be based on a combination of expected revenues/costs/profits, allowed risk tolerances with respect to revenue loss, and other business concerns, such as market-share and growth

Revenue at Risk ($M) Capacity $15 $10 $5 $ $45 $40 $35 $30 $25 $20 $35.4

Expected Profit $26.0

$35.8

Expected Revenue $26.5

$37.1

$28.0

Expected Labor Cost $39.0

$30.7

$40.8

$36.4

$9.4

$9.1

$8.3

$4.4

$5.56M (optimal profit) 247 $5.2M (all risks < 20%) 251 $3.9M (all risks < 10%) 266 $2.0M (all risks < 5%) 292 $0.2M (all risks < 0.5%) 346

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Workforce Does Not Happen Overnight

The use of analytics and optimization in workforce management applications requires significant maturity levels in terms of data, process and business understanding

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Analytics & Optimization

View of demand “Infrastructure, process and analytics to forecast demand” Bills of materials “Templates to describe projects/tasks to be performed” View of supply “Infrastructure and process to capture available resources” Job taxonomies “How to describe skills and activities”

IBM Business Analytics and Mathematical Sciences

Carbon as a New Variable in Supply Chain Decisions

15  Typical supply chain optimization only considers the direct monetary costs  Inventory and supply policies can be significantly different with the inclusion of broader environmental costs, and constraints  A good model can quantify both the cost and the carbon impact of various supply chain policies.

 A comprehensive model can identify areas where carbon and cost reduction can be achieved simultaneously (e.g. minimization of wastage, rework etc) Document Title | Date

Service CO 2

Supply Chain Trade-offs

Quality Cost Inventory Policy Options

IBM Business Analytics and Mathematical Sciences

Any Supply Chain Carbon View must be Multi-Dimensional

Shrinkage ($, CO 2 cost) Packaging Options ♦ Transportation Options ♦ Energy Options Inventory Policy Options ♦ Process Options Breakage ($, CO 2 cost) Real Estate ($ cost) ♦ ♦ ♦ ♦ ♦ ♦ Handling ($, CO 2 cost) Transportation ($, CO 2 cost) Utilities ($, CO 2 cost) ♦ ♦ ♦ ♦ ♦ ♦ ♦ ♦ ♦ ♦ Manufacturing ($, CO 2 cost) Component Supply ($, CO 2 cost) ♦ ♦ ♦ ♦

Supply Options ♦

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Green Sigma

– Carbon Management Dashboard

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Outline

  Historical perspective. When can analytics enhance value of information?

Using analytics to utilize information.

Supply chain Workforce management Carbon management  Using analytics to extract information.

Collaborative filtering, Netflix challenge ASCOT BANTER  Using analytics to collect information.

Prediction markets Peer-to-peer services Personal benchmarking © Copyright IBM Corporation 2008 Document Title | Date

19 IBM Business Analytics and Mathematical Sciences

Extracting Information

We consider situations when vast amount of data is available. Typically a mix of structured and unstructured data Often incomplete and/or noisy data Data may come from multiple sources, but typically includes at least some “private” data.

The data owner wants to use the data to improve some aspect of the business operations, but a specific business objective is typically not fully articulated.

Analysis (and pre-analysis data preparation) need to be automated.

 

Examples:

 KDD cup and Netflix Challenge ASCOT BANTER © Copyright IBM Corporation 2008 Document Title | Date

IBM Business Analytics and Mathematical Sciences 20 Document Title | Date © Copyright IBM Corporation 2008

IBM Business Analytics and Mathematical Sciences

October 2006 Announcement of the NETFLIX Competition

USAToday headline: “Netflix offers $1 million prize for better movie recommendations”

Details:

 Beat NETFLIX current recommender model ‘Cinematch’ by 10% based on absolute rating error prior to 2011  $50.000 for the annual progress price (relative to baseline)  Data contains a subset of 100 million movie ratings from NETFLIX including 480,189 users and 17,770 movies     Performance is evaluated on holdout movies-users pairs NETFLIX competition has attracted 24,396 contestants on 19,799 teams from 155 different countries 25115 valid submissions from 3335 different teams current best result is 9.08% better than baseline (from 6.7% as of March 2007) © Copyright IBM Corporation 2008 Document Title | Date

IBM Business Analytics and Mathematical Sciences

KDD-Cup 2007

 The 2007 KDD-Cup was based on a subset of the Netflix prize data The Netflix grand prize competition (a different task on the same data) attracts 24396 contestants on 19799 teams from 155 different countries (no IBM participants due to IP issues) The data contains a subset of 100 million movie ratings from Netflix.com including 480,189 users and 17,770 movies Ratings of users and movies were collected from Nov-1999 until Dec-2005  Task 1: Who Rated what in 2006 Given a list of 100,000 pairs of users and movies, predict for each pair the probability that the user rated the movie in 2006  Task 2: Number of ratings per movie in 2006 Given a list of 8863 movie, predict the number of additional reviews that all existing users will give in 2006 © Copyright IBM Corporation 2008 22 Document Title | Date

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Task 1: Probability of a member rating a movie

 Extracted features: Movie-based features  Graph topology: # of ratings per movie (across different years), adjacent scores between movies calculated using SVD on the graph matrix 

Movie content: similarity of two movies calculated using Latent Semantic Indexing based on bag of words from (1) plots of the movie and (2) other information, such as directory, actors

User profile  Graph topology: #rating per user (across different years), adjacent scores between users in the graph calculated using SVD  User content: user preference based on the movies being rated: key word match count  Learning Algorithm: Single classifiers: logistic regression, Ridge regression, decision tree, support vector machines (best run: RMSE = 0.2647) Naïve Ensemble: combining sub-classifiers built on different types of features with pre-set weights (best run: RMSE = 0.2642) Ensemble classifiers: combining sub-classifiers with weight learnt from the development set (best run: RMSE = 0.2629) © Copyright IBM Corporation 2008 23 Document Title | Date

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Task 2: Number of additional ratings per movie

Perform in depth analysis of the domain All movies and users were in the NETFLIX database already in Dec 2005  Model the “aging” process of movies Understand the way the specific data for the competition was created The new ratings in 2006 were split into two sets by random sampling of movies The ratings for Task 1 were sampled according to the MARGINAL distribution of ratings in 2006 We can use the “test” set for Task 1 as a surrogate training set for Task 2 short of a scaling factor that is unknown, and modeled separately Estimate Poisson regression on the marginal as found in test set for task 1 Variables: Lagged reviews, genre, age, director, actor, … Correct for missing duplicates based on the estimated rating marginal of the users Estimate the Scalar to rescale from marginal to total 4 Poisson regression models: 1, 2, 3 and 4 quarter ahead prediction of the number of ratings for all movies Correct for decreasing user base by creating lagged datasets with removed users after deadline Key point: Understanding the data domain and how the sampling was done was critical factor in accuracy of prediction © Copyright IBM Corporation 2008 24 Document Title | Date

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ASCOT

(

utomated

earch for

ollaboration

pportunities by

ext-mining)

 We currently build OnTARGET models to predict purchase probability for existing IBM clients as well as “Whitespace” -- e.g. will they purchase an IBM Rational software product?

These models use historical IBM transactional data joined with D&B data What if we added indexed content crawled from each company’s website?

 We apply Active Feature Acquisition to minimize number of web sites we need to crawl

We find interesting terms on a company website that increases likelihood of a Rational SW purchase Chi-squared score

100.4

89.4

89.1

79.5

78.7

76.9

74.5

70.1

68.8

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65.9

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Stemmed word

interfac enabl deploi scalabl integr deploy simplifi autom multipl platform configur sophist workflow leverag interoper enterpris proposit softwar Document Title | Date

With Web Content Improvement due to web content And the resulting model is more accurate than our existing OnTARGET model … Active Feature Acquisition Random Acquisition Existing OnTARGET model (Without Web Content) 0 5 10 15 20 Percent of Websites Processed

IBM Business Analytics and Mathematical Sciences

BANTER

(

log

nalysis of

etwork

opology and

volving

esponses)

Technology Blogs Enterprise Software Blogs OBJECTIVE: Apply machine-learning to extract business insight from technology-based blogs 77M Blogs 1. How do we identify the relevant sub-universe of blogs?



We submit set of relevant keywords to Technorati, include out linked blogs, and then refine this sub-universe via active learning 2. How do we determine “authorities” in this sub-universe?



We use page-rank-like algorithms against cross-reference structure, combined with SNA concepts (e.g. Information Flow)

OpenID Buzz in January OpenID Buzz in January 3. How do we detect emerging topics and themes in this sub universe?



One approach is to predict link (cross-reference) formation using network evolution and content (keywords) at the nodes (blogs)

5 10 days 15 20

4. How do we detect sentiment associated with specific posts?



One approach is to learn a model using text features against labeled product ratings (1-5 stars) scraped from Amazon

Document Title | Date © Copyright IBM Corporation 2008

27 IBM Business Analytics and Mathematical Sciences

Outline

  Historical perspective. When can analytics enhance value of information?

Using analytics to utilize information.

Supply chain Workforce management Carbon management  Using analytics to extract information.

Collaborative filtering, Netflix challenge ASCOT BANTER  Using analytics to collect information.

Prediction markets Peer-to-peer services Personal benchmarking © Copyright IBM Corporation 2008 Document Title | Date

28 IBM Business Analytics and Mathematical Sciences

Outline

  Historical perspective. When can analytics enhance value of information?

Using analytics to utilize information.

Supply chain Workforce management Carbon management  Using analytics to extract information.

Collaborative filtering, Netflix challenge ASCOT BANTER  Using

information and

analytics to collect

more

information.

Prediction markets Peer-to-peer services Personal benchmarking © Copyright IBM Corporation 2008 Document Title | Date

29 IBM Business Analytics and Mathematical Sciences

Collecting (more) Information

Can available data be made more useful through the addition of a small amount of additional data?

What to collect?

How to collect? Where (from whom) to collect? Given what you have, how do you determine what else do you need?

What additional data is becoming available?

How can it be effectively utilized?

Examples:

 Prediction markets: collective prediction of event probabilities, ranking bets in prediction markets to figure out “experts”.

 Peer-to peer services: information exchange to establish “reputation”, common interests, groups of similar peers.

 Personal benchmarking © Copyright IBM Corporation 2008 Document Title | Date

IBM Business Analytics and Mathematical Sciences 30

What is a Prediction Market?

 An online forum, usually in a stock market format, that

gathers collective wisdom

for decision-making and forecasting  One method of ‘Crowdsourcing’ or using the ‘wisdom of crowds’  Considered an emerging ‘Enterprise 2.0’ technology  Concept is decades old, but until recently was not used within enterprises  Questions are posed regarding future events, and

participants vote by ‘investing’ in their forecast

using virtual currency  i.e., “IBM stock price will hit $120 by January 1st”, or “Proposition 123 will pass into law before YE 2008”  Different markets for different topics, events or decisions 

No specific knowledge or expertise is required

, regardless of the topic 

Stock Prices

are interpreted as

event probability

, while analysis of

trading behavior

provides valuable data on how 

Participants are recognized information flows

for their prediction accuracy, providing

motivation to share valuable knowledge

- truthfully  Contains algorithms for

aggregating diverse opinions

 Often used as sole prediction method, but also used to complement other forecasting mechanisms 

Synonyms include:

Predictive markets, information markets, decision markets, idea futures, event derivatives, virtual markets © Copyright IBM Corporation 2008 Document Title | Date

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Political Examples…

31 Document Title | Date © Copyright IBM Corporation 2008

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Public prediction markets?

32 Document Title | Date © Copyright IBM Corporation 2008

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Collective intelligence harnessed from prediction markets yields myriad benefits for enterprises and employees



Strategic foresight

into emerging issues from large, diverse and global population



Quick,

efficient aggregation

of employee

knowledge



Insight which even the best Business Intelligence solution could not provide



Real-time analytics

on social networking, social capital



More effective

and

more accurate

than polls, surveys, ratings



Circumvention of bureaucracy

impeding flow of information



Elimination of personal biases

in decision-making



Improved

innovation

culture

and employee

morale

  

Participants given a voice

in decision-making and/or forecasting Sponsors provide non-monetary disclose

incentives

for employees to

valuable information

and often

untapped knowledge

Increase in building a

visibility and opportunities for participants

reputation

for good

decision-making

and

foresight

IBM Business Analytics and Mathematical Sciences

Do they work? Properly executed prediction markets are more accurate than teams of experts, or any other traditional forecasting method

Examples of Market Accuracy 

The Iowa Electronic Markets (IEM) predictions for the presidential elections between 1988 and 2000 were off by an average of 1.37%; more accurate than any exit polls



InTrade Markets correctly forecast the 2004 presidential race in all 50 states and 49:50 State Senate races



HP’s internal prediction market, over a three year period, outperformed HP’s official printer sales forecasts 75% of the time

   

Intel established a prediction market to allocate manufacturing capacity, which yielded a 100% efficiency improvement Siemens’ prediction market, to assess their ability to meet a project deadline, correctly forecast the missed deadline; management had predicted success Hollywood Stock Exchange (HSX) correctly predicted 32:39 Oscar nominees and 7:8 Oscar winners in 2006 Farmer’s Almanac has long been a trusted source for weather predictions because of its surprising accuracy

IBM Business Analytics and Mathematical Sciences

Peer-to-peer services

 Governments and large institutions are becoming less effective and efficient at providing affordable and reliable basic services (retirement benefits, health care, insurance, education) for individuals.

 Individuals need to become increasingly self-sufficient in these regards Individuals are turning to other individuals in a peer-to-peer fashion, to tap into the collective knowledge and financial pockets of communities (both virtual and physical).

 In developing countries self-sufficiency may be only practical solution.

 As peer-to peer networks progress from serving ‘lighter’ (e.g., entertainment) needs to serving these long-term, basic needs, a more robust set of IT, communications and business services is required manage new peer-to-peer applications provide high-quality information and analytics services to individuals.

IBM Business Analytics and Mathematical Sciences

Needs and Opportunities



Peer-to peer ‘services’ (e.g., social/micro lending, peer-to-peer insurance, homeschooling) are growing



There are risks and sources of uncertainty associated with peer-to-peer service: - Reliability and accuracy of web-based data - Fraud & Reputation (how do you know who you are really dealing with?) - Security of personal information - Reliability of web-based IT infrastructure



These risk factors are not new. However, the models required to adequately capture the

characteristics of uncertainty in a peer-to-peer services environment may be different

from traditional models used in more centralized business environments.



Additionally,

the types of services that participants in the P2P environment require may also be different

(e.g., more personalized uncertainty analytics services, mobile web).



Core technologies are available and gaining adopters (P2P, electronic health records, social networking sites, business integrity, business intelligence)



Will we see an emergence of companies whose business is to support P2P services networks?

IBM Business Analytics and Mathematical Sciences

Example: Peer-to-Peer Lending

Potentially transformative financial business Prosper , a peer-to-peer borrowing and lending system. The system lets anybody make a case for why they need to borrow money.

Lenders can select which cases they want to take on and easily put a little money to work in dozens

or even hundreds of them, diversifying their risk.



Since launch, over 200,000 consumers around the world have become Zopa members, as they seek the innovative loans and returns on investments that Zopa offers.

More recently growth has been boosted by the global credit crunch which is driving unprecedented demand for P2P loans as banks become less competitive and tighten their lending criteria. 

Online peer-to-peer lending services, Prosper , Zopa significant lead time and lots of venture backing; and CircleLending all have

Zopa, for example, has raised around $34 million.



Lending Club

is the first of its kind to integrate its services into a social network. 

These services are generating a huge number of lending transactions

How can this transaction data be utilized to provide new information to government and/or industry?

IBM Business Analytics and Mathematical Sciences

Peer-to-Peer Insurance

 Peer-to-Peer Insurance is

preparing to launch a new type of insurance product, is based on pooling people together to insure each other at rates cheaper than they currently pay, without automatically losing the money they pay as premium.

The Peer-to-Peer Insurance Project: Peer-to-Peer Auto Insurance

(safe drivers pooled together to insure each other)

Peer-to-Peer Home Insurance

(categories of homeowners pooled together to insure each other)

 Value Proposition: -

Participants will not automatically, and permanently, lose all the money paid for coverage.

Incentive for safe driving (personal, and social good) Credit score will not be used to set premium. No age discrimination

No fine print. None of that sleek legal lingo buried in the middle of a thousand pages of policy.

What information is used to create pools? What information about pool is provided to participants? New methods for calculating risk may be required. © Copyright IBM Corporation 2008 39 Document Title | Date

IBM Business Analytics and Mathematical Sciences

Personal benchmarking



Log onto your favorite web browser and you'll likely be offered a chance to do some personal benchmarking.

 There are opportunities to compare everything from body mass index to the trade-in value of your car or how your local school district ranks.  Beyond a chance to feed any competitive streak, benchmarking can motivate change and help monitor progress.

41 IBM Business Analytics and Mathematical Sciences

Examples

 Carbon Footprint - Calculate, Reduce and Offset.

www.carbonfootprint.com

calculates, compares to national average and proposes products to reduce or offset the footprint (like donating money for reforestation) -

Enter information about your car make and model and miles you travel. Energy bills, flights you take, number of people in household, state of residence.

Can use for targeted marketing of alternative energy sources, hybrid cars, even travel packages.

 Health and Fitness www.revolutionhealth.com

builds your profile, enables members to create webpages on topics interesting to them, supports blogs and communities, helps people find communities with similar health related interests.

Enter information such as age, interests, health history, fitness routine, etc.

Can use for health insurance marketing, drug marketing, weight loss programs, etc.

IBM Business Analytics and Mathematical Sciences

Examples

 Diving community www.padi.com

allows members to create a profile and log diving information.

Enter information about where and when you dive, how long, how deep, with whom, what equipment you bought for how much and when.

Can use for profiling travel preferences, frequency, destinations. Independent travel vs. large resorts, consumer profile, level of risk averseness.  Knitting community http://www.ravelry.com

, a members only knitting community, launched in May 2007   By February 2008 had over 80,000 members.

Adds 800+ per day, but waiting list is consistently over 5000 Includes “stash” and project management tools, connections to flickr for images of finished items, pattern repository, forum, groups (2 IBM groups, 4 math groups) Enter information about what you own, finished and current projects, etc Used for event and product promotions, pattern and material sales, social networking and assorted competitive events © Copyright IBM Corporation 2008 42 Document Title | Date

IBM Business Analytics and Mathematical Sciences

Conclusions



Amount of information is growing

IT automation Instrumentation End users



There are established analytics methods for extracting addition value from data

For standard automated business processes



There are new analytic methods being developed

To support new business processes and business models To leverage combinations of public and private data

  

Scalability will continue to be an issue Personalization of analytics is an opportunity Early Mover position in an emerging market is critical