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For the second year in a row SAP has received the number one ranking in the Wisdom of Crowds 2016 Advanced and Predictive Analytics Market Study by Dresner Advisory Services. The Dresner study reached over 3000 organizations and vendors’ customer communities and 20+ industry verticals with an organization size ranging from 100 to 10,000+.

Study findings include:

• Organizations view advanced/predictive analytics as building on existing business intelligence efforts.
• Over 90% agree about the importance and value of advanced and predictive analytics.
• Statisticians/data scientists, business intelligence experts, and business analysts are the greatest adopters of advanced and predictive analytics.
• Regression models, clustering, textbook statistical functions, and geospatial analysis are the most important analytic user features/functions.
• Usability features addressing sophisticated advanced/predictive analytic users are almost uniformly important today and over time, led by easy iteration, advanced analytic support, and model iteration.
• In-memory analytics and in-database analytics are the most important scalability requirements to respondents, followed distantly by Hadoop and MPP architecture.

I find it interesting that the Dresner study finds “Hybrid roles are also evident” and confirms SAP’s customer organization usage of predictive analytics. The research study looked at core advanced and predictive features, data preparation, usability, scalability, and integration as key criteria to rank the vendors.  Though usability criteria looked at many things, I would like to highlight one key one—“Support for easy iteration”—that ranked as most important.

In the scalability criteria, “In-memory analytics” ranked as most important one followed by “In-database analytics” and “In-Hadoop analytics (on file system).”

Read the Complete Dresner Report

You can find lots more in the 92-page Dresner Wisdom of the Crowds report. I invite you to take a look.

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by Iver van de Zand, Business Analytics Lead BeLux

In a recent thread on social media, there was an interesting discussion about just “how self-service-like” today’s self-service analytics components really are. Some of the thread contributors doubted whether self-service BI was really something one could hand over to a business end-user. They are concerned whether self-service really can exist in the day-to-day life of an end user. “Isn’t there always some ICT intervention needed?”someone asked. It’s an interesting discussion that hasn’t a black and white answer. So let’s take a closer look with the help of a restaurant analogy.

The doubters in the social media thread were talking about self-service for data analysts. But there is a small, but strict, difference between self-service for the end user or consumers, and self-service for data analysts. To explain this, I’ll need to use the analogy of an analytics dinner, and consider the differences between the home cook and the restaurant guest.

The BI Restaurant Guest

Our guests “equal” the business end users of analytics. A dinner can be seen as a collection of analytical insights. The insights are thoroughly selected as our guests pick either from a menu—and ordering à la carte—or they go to the buffet and pick the things presented to them already ready for consumption. Ordering à la carte refers to end users opening specific dashboards, reports, or storyboards from the business analytics portal.

The BI restaurant guest’s workflow is:

• Screen the menu and roughly select the type and amount of items they want. Our analytics end user chooses whether he/she needs financial info or logistic info, and what kind of detail-level is needed.

• Next our guest chooses a specific item from the menu. In analytics terms, the user decides which reports, dashboard and/or storyboards he/she needs to get the insights required. Our user also decides on prompts or variables needed to get the specific scope of the insights.
• When dinner is served our guest just enjoys what he/she asked for, leaving leftovers if feeling like it.

The BI restaurant buffet guest’s workflow is similar, with the difference being that adding special requests (like steak well done) is not possible. However, the buffet allows the guest to digest multiple small plates according to their individual needs, just like an analytical end user could consume reports and dashboards in random order.

Our guest will typically be a user of existing SAP BusinessObjects Design Studio applications or SAP BusinessObjects Cloud storyboards.

The BI Analytics Home Cook

Our next ‘flavor’ of a self-service user is the home cook that has to cook for him/herself. This user is more like a data analyst. Somebody who may not have a clear view on what kind of insight is needed, or requires insight on non-corporate data that is not explored on a regularly basis.

Here the workflow differs. Imagine the workflow of the TV cooks we all see on tele every single day; it is the exact same workflow as our self-service end user.

1. Our home cook opens up the fridge and explores the ingredients needed; think of the data analysts that accesses the data sources he/she requires to start exploring data.

2. Next our home cook starts cleaning, cutting, seasoning, mixing and combining his/her ingredients. Only those pieces of the ingredients that are needed for the meal are used. This is where our data analyst starts filtering, enriching (hierarchies, formulas), blending (combining data sources) and cleaning his data.

3. When this is all done, we typically see the home cook putting his selected ingredient-mix in the pot on the stove. This is where the data analysts starts creating the visualizations, graphs, and maps and combines them to a final storyboard which might be shared with others later on.

4. Our home cook makes quite an important decision in the last step; either they serve the plate to their guests (his colleagues or management), or the final meal is just put on a buffet for guests/users to consume.

The Final Analysis

So in the end I believe self-service always needs to be seen in the context of the type of end user. Do we talk about a guest in our restaurant who wants to digest analytics, play with the data to any extent and conclude on the fly, or do we talk about a home cook who needs to create the insights from scratch?

In terms of the guest, self-service BI 100% exists today in the sense that they can use applications and reports and do anything (!) with the data as longs as this data is part of the menu. For home cooks, there is a bit more work to be done—they need to open the fridge and make choices. Maybe some of the ingredients are not in, and our cook needs to go to the shop to buy them. Also, the personal touch given to the meal is fully on the creativity and capability of our cook.

Oh, and You Mr. Restaurant-Owner, What Do You Think?

If you happen to be the restaurant owner—BICC or ICT manager—of course you decide on the quality of the overall meals presented by managing ingredients and menus, but you also monitor the experience your guests go through. We might call this governance and organization. Even in self-service environments, the restaurant owner is key to the success of the restaurant. If you fail, your guests will go somewhere else.

This blog is excerpted from Iver van de Zand’s article, “How ‘Self-Service Like’ Are BI Applications Really? Buffet or a la Carte.” Read the complete article at the Iver van de Zand blog.

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In our previous articles, we discussed how disruptions to a supply chain can originate from a multitude of sources. According to some current trends, it is apparent that there is continued rise in measured losses from disruptions such as natural events and business volatility. Traditionally, supply chains are designed for lean operational efficiency wherever possible, yet such efficiency requires the minimization of excess capacity, inventory and redundancy – the very things that are needed to create resiliency against disruptive risks. Risk assessment tools and methodologies help decision-makers to identify the most cost effective controls that can strike the right balance between cost and risk reduction to protect against disruption. Typically, the most cost effective controls are those that can minimize the common effects arising from multiple disruptive threats. In order to understand the kind of controls that could be effective, one must recognize the risk outcomes from common supply chain vulnerabilities, which is the focus of this article.

What is Risk?

Before continuing, it would be worthwhile to revisit some of the terminology that we have been using in previous discussion, in order to understand how risk is derived. Fundamentally, risk is the chance (or the probability) of a loss or unwanted negative consequence. For decision purposes, it is often calculated numerically as a function of probability and impact (sometimes called single loss expectancy), and quantitatively expressed as an “expected” loss in monetary value or some other units. A common flaw with using risk values is that they mask the effects of impact versus probability. For example, an expected loss of $100 does not reflect whether high impact is overwhelming low probability, or high probability is overwhelming low impact. Thus, it is not clear whether this value is the expected loss due to an event that occurs 10% of the time and causes $1000 in damages when it occurs, or due to an event that occurs 20% of the time and causes $500 in damages when it occurs. For this very reason, risk values must be used in conjunction with probability and damage values, along with many other metrics, in order for the decision maker to compare the one risk against another. Risk values are not precise and are usually not to be used as standardized values for business management. Nevertheless, risk values can be used to provide decision makers with a means to distinguish risks and control options on a relative basis. Figure 1 illustrates the fundamental parameters that are used to construct risk values, and how they relate to each other.

Figure 1 – Fundamental Components of Risk

Hazards, conditions and triggers are situations that increase or cause the likelihood of an adverse event (sometimes referred to as a peril). In our last article, we examined numerous sources of hazards that can threaten a supply chain. Vulnerabilities are factors that can make a system, in our case a supply chain, susceptible to hazards.  They are usually weaknesses that can be compromised by a hazardous condition, resulting in a threat. The likelihood, or probability, of a threat circumstance occurring must be considered, for reasons discussed above. If it occurs, failures can take place, whose effects are quantified as impacts. When impacts are weighed against the likelihood of the threat, the result is a risk that poses an expected loss. Controls are countermeasures that a firm can use to offset expected losses.

With respect to a supply chain, there are many ways to classify risk. Academics have made many attempts to try to classify risks according to some kind of ontology or framework (Harland, Brenchley and Walker 2003) (Gupta, Kumar Sahu and Khandelwal 2014) (Tummala and Schoenherr 2011) (Peck 2005) (Monroe, Teets and Martin 2012) (Chopra and Sodhi 2004). Some of the more common supply chain risk classifications include:

Recurring risks – These risks arise within the operational environment due to the inability to match supply and demand on a routine basis. The ensuing effects are lower service levels and fill rates.

Disruptive risk – These risks result from loss of supply or supplier capacity, typically driven by some disruptive event.

Exogenous risk – These risks arise within the operational environment and are process driven (e.g. poor quality control, design flaws, etc.), usually within the direct influence of the firm. They typically require the use of preventive mechanisms for control.

Endogenous risk – These risks originate externally, either from the supply side or demand side, which may not necessarily be under a firm’s direct influence. They typically involve the use of responsive mechanisms for control.

While many classification attempts have been noble in nature, in the end it is difficult to classify risks according to a single scheme, for a variety of reasons. First, the lines of demarcation between risk categories can be blurred and there could be overlap between them. For example, from the above categories, one can easily argue about the differences between exogenous and recurring risks. Second, every firm is different, and thus one framework may not fit all. Finally, risk methodology approaches may differ somewhat across various industries, as evidenced by different industry best practices and standards for risk analysis.

Supply chains can exhibit many kinds of vulnerabilities, but quite often these can be viewed as either structural or procedural in nature. Structural vulnerabilities stem from deficiencies in how the supply chain is organized, provisioned and engineered. Single points of failure can arise when there is insufficient diversity across suppliers, product sources or the geographical locations of sources. Inadequate provisioning can create shortages in inventory or capacity to meet customer demands. Procedural vulnerabilities stem from deficiencies in business or operational processes. Gaps and oversights in planning, production or transport processes could adversely affect a firm’s ability to respond to customer needs. Insufficient supply chain visibility could render a firm blind to oversights in supplier vetting and management practices, quality assurance and control, or demand planning.

Such kinds of vulnerabilities, combined with an aforementioned hazardous condition, results in the supply chain failing in some fashion. Table 1 illustrates some of the more common modes of supply chain failure.

Table 1 – Common Supply Chain Failure Modes

Ultimately, such supply chain failures result in increased costs, loss of revenue, loss of assets, or combination thereof. Common risks are typically assessed as increases in ordering costs, product costs, or safety stock costs. Product stock out losses can be assessed as backorder costs or loss of sales and business revenue. Different kinds of firms will be prone to different types of risks. For example, a manufacturing firm with long supply chains will be more susceptible to ordering variability (or bullwhip) types of effects versus a shorter retail supply chain which would be more sensitive to fill rate and service level variability. Understanding and characterizing these risks is necessary in order to develop strategies to control or manage them. Quantifying risks provides the decision maker with a gauge to assess risk before and after a control is applied, thereby assessing the prospective benefit of a potential control. Using quantified risk values, in combination with other parameters, enables a decision maker to prioritize potential control strategies according to their cost-effectiveness.

Conclusions

Risk is the chance or the probability of a loss or unwanted negative consequence. Inherent supply chain weaknesses such as sole sourcing, process gaps or lack of geographical sourcing diversity can render a supply chain more vulnerable to some hazardous, unforeseen condition or trigger event, such as a strike or major storm, resulting in undesirable increases in costs, asset loss or revenue loss. Such risks can be quantified to some extent, quite often in monetary units, and can be used to facilitate cost-benefit analysis of potential control strategies. In our next article, we will take a look some of the most favored strategies to control supply chain risk.

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Bibliography

Chopra, S., and M. Sodhi. “Managing Risk to Avoid Supply-Chain Breakdown.” MIT Sloan Management Review, 2004: 53-61.

Gupta, G., V. Kumar Sahu, and A. K. Khandelwal. “Risks in Supply Chain Management and its Mitigation.” IOSR Journal of Engineering, 2014: 42-50.

Harland, C., R. Brenchley, and H. Walker. “Risk in Supply Networks.” Journal of Purchasing & Supply Management, 2003: 51-62.

Monroe, R. W., J. M. Teets, and P. R. Martin. “A Taxonomy for Categorizing Supply Chain Events: Strategies for Addressing Supply Chain Disruptions.” SEDSI 2012 Annual Meeting Conference Proceedings. Southeast Decision Sciences Institute, 2012.

Peck, H. “Drivers of Supply Chain Vulnerability.” International Journal of Physical Distribution & Logistics Management, 2005: 210-232.

Tummala, R., and T. Schoenherr. “Assessing and Managing Risks Using the Supply Chain Risk Management Process (SCRMP).” Supply Chain Management: An International Journal, 2011: 474-483.

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We are often asked why companies would hire outside consultants, when they could likely solve their business requirements on their own. After all, they have employees in house, which is more convenient for the company to get things going on solving their problem or starting on their new project. Not only that, these employees already know the company inside and out. Why would they waste their time bringing in an outsider and have them go through onboarding, training, and acclimating them to the culture of the company. Yes, at first look these may all seem like valid points to not hire consultants. However, there are many great reasons why companies hire consultants rather than employees.

Here are some of the reason why companies hire consultants instead of employees:

1. They want someone with a broader perspective

Often times, companies or clients already have an idea on how to solve the problem they are facing, but they want to make sure that the solution they have in mind is legitimate. Sometimes, they may be close to the answer, but may be missing out due to being too close to the problem. So, they turn to consultants for their expertise because they may have already worked through a similar problem in the past with someone else. The consultant can also give insight on what they have seen work (and not work)  with prior clients. With this experience, they can bring new and innovative ideas, or possible challenges to the table. Consultants bring in a new frame of reference for the company, and helps get rid of the mentality of “things are always done this way” attitude in organizations. In doing so, solving problems or getting projects done on time become more effective.

2. They need more manpower temporarily

Companies have important problems that need solving, but they don’t necessarily have the employee breadth to focus on them. It makes it difficult, since the companies still have to focus on their everyday operations and new projects usually require reprioritizing employees’ core job responsibilities. However, hiring new employees to fill in these gaps may not always work out considering most of these projects do not last very long or may not happen at all. Despite, having employees in house, companies might have difficulties getting the teams organized to do this critical work.

In these situations, consultants come in to serve as temporary, highly skilled employees. Since, they are not full-time employees of the company, it is often cheaper to use consultants than to hire new employees. Consultants are used to switching around companies, creating a very fast learning curve. Also, companies do not have to take their own employees away from their actual day-to-day jobs. It’s a win-win situation all around!

3. They need specific skills that they do not currently have

Another reason why companies hire consultants is to acquire specific skill set that might not be easily available in house. Working with firms who have access to these highly skilled professionals may be more efficient for your company.  With constant innovation in the tech world, keeping your staff 100% state-of-the-art is nearly impossible. Luckily, consultants make it possible for companies to bring in the skill set they demand whenever they need it, since staffing firms make it their business to keep consultants trained and ready for every situation.

4. Sometimes, it is better to have a mediator/ nonpartisan influence

When companies run into a challenging problem, it can be troublesome for them to make decisions or take the necessary actions without getting caught up in emotions or politics. In order to alleviate the situation, companies bring in consultants to provide unbiased solutions to the problem. Consultants are then able to come in and ensure that the problem is being handled by an external party that is both experienced and removed from any controversies. Moreover, consultants can also serve as back-up or affirmation for a client who is attempting to carry out a new idea that might not be well-received within an organization, without any risk to their career.

There are many, many more reasons why companies hire consultants/contractors. I have only touched on a few and would love to hear your must unique reason for hiring a contractor!

With the advent of culture matching and executive oversight for every project, the reward will outweigh the risk.  Save the high dollar value of advertising, screening, interviewing, and hiring an employee by meeting requirements with consultants.

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