OR/MS TODAY20 February 2010

The title of this article asks a provocativequestion. There is an increasing amount ofcoverage of the term “analytics”in the media,and there are some significant developments:• On April 28, 2009, the news broke

that “IBM today announced asignificant expansion of itscapabilities around businessanalytics with plans to open anetwork of Analytics SolutionCenters around the world,beginning with five in the secondquarter of 2009. These initial centerswill be located in Tokyo, London,New York City, Beijing andWashington, D.C. As part of thisinitiative, IBM will retrain or hire asmany as 4,000 new analyticsconsultants and professionals” [1].

• Tom Davenport’s article onanalytics is listed as one of the 10must-read articles in the HarvardBusiness Review [2].

• INFORMS has started publishing anew digital magazine Analytics. AGoogle search for “analytics” picksup the link to it (http://analyticsmagazine.com) on the first page ofresults.

• Analytics is being covered in themainstream press, such as Forbesmagazine [3].

The coverage and scope of analytics iswidespread, with interest from business,defense, government, education and thegeneral public reflected in the coverage ofthe subject in the press. Students havedeveloped a keen interest to learn aboutanalytics and venture capital firms are keento fund analytics startups.

Analytics Delivers Value Beyond OR/MS

So what constitutes analytics? Here arethree definitions:

• “By analytics we mean the extensiveuse of data, statistical andquantitative analysis, explanatoryand predictive models, and fact-based management to drivedecisions and actions” [4] – TomDavenport, co-author of“Competing in Analytics”

• “How an entity (i.e., business)arrives at an optimal or realisticdecision based on existing data …unless there are data involved in theprocess, it would not be consideredanalytics” [5] – Wikipedia

• “Recurring points in thesedefinitions appear to segmentanalytics into three skill sets. One isthe grunt work that O.R. peoplehave to do before they can applyO.R. methods and models. Thisincludes data gathering, datacleaning and organizing,distribution fitting, descriptivestatistics, ‘trend spotting’ anddeveloping performance metrics. Iwill call this body of knowledge andskills ‘pre-O.R.’ The second piece ofanalytics is the O.R. skill-set itself,which would include building someform of mathematical orspreadsheet model to add value tothe data in helping understand andresolve a decision. The thirdsegment of analytics consists of a setof more advanced analytical skillsand methodologies that would notnormally be taught in an O.R.course. These include data mining,predictive modeling and advancedstatistical techniques such as logit,cluster analysis and some tools fromartificial intelligence, as well asmethodologies such as Six Sigmaand lean manufacturing. I will callthis set of skills non-O.R. analytics”[6]. – Peter Bell

When we assess the organizationsinvolved in analytics as featured in Analyt-ics Magazine, we find that these organiza-tions define analytics functions that extendbeyond the use of core OR/MS techniquesand practitioners. They build analyticsteams with people from the fields of statis-tics, industrial engineering, computer sci-ence, data analysis, finance and OR/MS andleverage generalists with industry knowl-edge. For example:• At Schneider Logistics’ Engineering

and Research Department, “Thegroup’s academic backgroundsrange across not only operationsresearch, but also industrialengineering, mathematics,computer science, finance andbusiness administration, with acombination of bachelor’s master’sand Ph.D. degrees. A number ofteam members bring significantprior transportation operationsexperience” [7].

• In the Strategic Planning andModeling team at Hewlett Packard,“While there will always be nicheroles for technical specialists withdeep expertise in a particularmethodology like optimization ordata-mining, there is a growing needfor generalist problem solvers tosupport managers who want to drivebetter, data-driven business decisions… Their bread-and-butter analyticstools are spreadsheet modeling anddata analysis skills” [8].

As Analytics SubsumesO.R., will INFORMSSubsume Analytics?

B Y R A H U L S A X E N A

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• At McDonalds RestaurantInnovation organization, “Over thepast few years we have built a teamwith talents in the area of videoanalytics, data mining/predictiveanalytics, predictive modeling andexperimental design. These are thecore competencies needed for ourbusiness right now” [9].

So if you are an INFORMS member andpractitioner, you are probably either in ananalytics team or complement the analyticsteam. The world of analytics, therefore, hasalready enveloped many OR/MS practi-tioners; in general, we rely on the analyticsorganizations to get the data needed to doour work and then we use the operationsreporting and control mechanisms provid-ed by the analytics team to get results fromOR/MS recommendations.

This close affiliation to analytics isreflected in the skills needed for in OR/MSjobs. ManMohan S. Sodhi and Byung-GakSon analyzed O.R. job postings and foundthat “employers of O.R. graduates consis-tently require modeling, statistics, pro-gramming and general analytical skills inan operations management context” [10].This listing, however, places O.R. graduatesin just a part of the overall analytics land-scape.

To delineate the landscape for analytics,here is a proposed list of skills:

1. Framing the problem and getting tothe solutiona. Understanding the business issues

and business/organizationalconcerns using formal modelingprocesses that address purpose andenvironment and end-to-endcapabilities and processes. Thisallows the analyst to understand thedomain to frame problems andidentify solutions.

b. Frame and structure problems interms of objectives, constraints, risksand courses of action to set the stagefor meaningful results. Effectiveselection of a problem statement setsup the solution to align with theorganizational structure, systems andculture; poor problem structuresoften lead to blind alleys duringanalysis or execution.

c. Project management and exposureto the foundational principles of

managing people, politics, productsand processes.

d. Communication skills, methods andtechnologies that enable effectivecollaboration throughout the projectcycle, from effective information-gathering to collaborative decisionsupport and change management

2. Data preparation. We need to teachpeople how to assess data quality, improveits fitness for use in decision-making, andenable effective sharing of data without get-ting entangled in its semantic richness.

3. Data presentation in dashboards andreports, to communicate the situation andprompt decision-making and action by thetarget audiences.

4. Control of operations using planning,scheduling, dispatching, managing excep-tions and disruptions; project and programplanning and execution.

5. Statistics, probability, forecasting,etc. that are now being termed “predictiveanalytics” in the industry.

6. Optimization, simulation, queuingmodels, decision analysis, etc.

7. Enabling organizations to actintelligently.a. Design and governance of metrics

portfolios to drive system-wideperformance improvements; thisaddresses the problem of figuringout which metrics are importantand how to set targets andthresholds that address businessneeds.

b. Driving decisions from analysis:helping decision-makers to usedata-driven analyses effectively,often in conjunction with gut-feelor anecdotal methods.

c. Design and operation of analyticsteams and organizations in thecontext of business and ITfunctions.

This list is not intended to fully defineeither OR/MS or analytics – I do not intendto bind and carve up these sprawling andevolving bodies of knowledge. This listingmethod, instead, is intended to spark dis-cussion and understanding.We can use thislist, for instance, to map the practice of ana-lytics today versus where practitioners mayplace the OR/MS domain:

Based on the Figure 1 diagram, we canproject the trajectory of analytics from itscurrent footprint to more mature stages. Atpresent, analytics already leverages manypractitioners for their OR/MS talents andcombines this with a bunch of dashboardand report-making techniques to delivervalue beyond core OR/MS.

What Analytics Can do for INFORMS

INFORMS declares that “when you seeterms like ‘operations research’ (O.R.), thinkanalytics” [11], so INFORMS has staked aclaim to become the core institution foranalytics and intends to benefit from thetrend … or fade into irrelevance as analyt-ics practitioners subsume the domain.

INFORMS, therefore, has a uniqueopportunity to use the analytics trend togain size, scope and relevance as a profes-sional society. INFORMS members arealready engaged in high-impact work toimprove the performance of diverse health-care, financial, industrial, military and gov-ernment operations. Tom Davenport saysthat if INFORMS reorients itself, it can ridethe analytics trend: “Organizations likeINFORMS can be very helpful in facilitat-ing this rise. But rather than the old narrowfocus on operations research, the currentanalytics environment requires combiningmultiple analytical tools and perspectives,effective framing of decisions, a strongfocus on telling compelling stories withdata and analysis, and extensive familiaritywith current IT architectures” [12].

Figure 1: Analytics already leverages many practitioners for their OR/MS talents.

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A C K N O W L E D G M E N T

The author thanks the following people who provided

feedback and input to this article: John Milne, Rene

Seguin, Randall Robinson, Jennifer Leong, Irv Lustig

and Michael S. McCoy.

R E F E R E N C E S

1. www-03.ibm.com/press/us/en/pressrelease/27357.wss2. http://harvardbusiness.org/product/10-must-read-articles-from-hbr/an/13292-PDF-ENG3. www.forbes.com/2009/11/12/ibm-analytics-optimization-technology-cio-network-klaber.html4. Davenport, Thomas H., and Harris Jeanne, 2007,“Competing on Analytics: The New Science ofWinning,” Harvard Business School Press.5. http://en.wikipedia.org/wiki/Analytics6. Bell, Peter C., 2008, “Riding the Analytics Wave,”OR/MS Today, Vol. 35, No. 4, pp. 28-32.7. Gifford, Ted, 2008, “The Schneider Enterprise,”Analytics, Spring 2008, p. 46.8. Olavson, Thomas, and Cargille, Brian, 2008, “InsideHP,” Analytics, Winter 2008, pp. 21-22.9. Cramer, Mike, “McDonald’s Corp.,” Analytics, Fall2009, p. 40.10. Sodhi, Mohan, and Son, B.- G., 2008, “ASP, The Artand Science of Practice: Skills Employers Want fromOperations Research Graduates,” Interfaces, Vol. 38,No. 2, pp.140-146.11. Horner, Peter, 2008, “Data-Driven Decision-Making,” Analytics, Spring 2008, p 1.12. Davenport, Thomas H., 2009, “The Rise ofStrategic Analytics,” Analytics, Fall 2009, p. 4.13. www.iapa.org.au/14. www.businessweek.com/technology/content/apr2009/tc20090414_322525.htm15. Bennett, Gary 2008, “Welcome to Analytics,”Analytics, Spring 2008, p. 1,

OR/MS TODAY24 February 2010

Analytics has the characteristics of aprofession because it:• Requires knowledge of a specialized

and high-impact domain that takesyears to learn and is not commonlyunderstood;

• Includes classroom learning as wellas on-the-job learning and socialskills that make the analyticsprovider increasingly effective (thisdistinguishes analytics from beingmerely an artisan skill that can betaught in a contained process withno value from additional experienceor talent);

• The field is evolving and growing indepth and scope, so analyticsproviders need to keep up withdevelopments in this domain byreading, attending seminars andconferences, and studying; and

• People who use the services ofanalytics providers often do not fullyunderstand the underlying conceptsand so have to trust in the skill,talent, judgment and ethics of theproviders.

Yet, for most analytics practitioners,there is no dominant professional institu-tion for analytics at present as evidenced by:• Google searches for “professional

institution for analytics” or “analyticsprofession” both point to theInstitute of Analytics Professionals ofAustralia [13] as the top result.

• SAS is a leading analytics softwareand services company, with morethan 45,000 customer sites. Its onlinecommunity (sascommunity.org) hasmore than 5,400 user IDs, and theSAS Global Forum conference getsmore than 3,000 attendees.

• People in the IT side of analytics lookto the TDWI (The DataWarehousing Institute) for its IT-centric training on analytics, dataanalysis and design, data integration,etc. or to the PMI (ProjectManagement Institute) to earnproject management certifications.Most business practitioners ofanalytics do not realize they are in anascent profession, are not membersof INFORMS and do not see therelevance of INFORMS to their

work, although the Analyticsmagazine is chipping away at thisdemographic.

The analytics consulting business isworth $45 billion annually [14], so analyt-ics provides fertile ground for being orga-nized by a professional body. INFORMShas a natural advantage for leading theeffort to define this profession, because itembodies some of the most complex andeffective parts of the analytics domain. IfINFORMS does not lead this effort, it islikely that another society will.

What INFORMS Needs to do forAnalytics

INFORMS can use its size and scope tomake analytics work better. By doing so, itwill leverage its existing strength as “thelargest membership society in the worlddedicated to the analytics profession” [15]to become the institution that people con-sult when they need analytics services.

To establish its value for analytics,INFORMS will need to define and defendits value proposition, such as:• create and publicize a clear

definition of analytics;• establish INFORMS as the highest

quality provider of the methods,tools and techniques, as well as theinstitutional support needed fororganizations to use analyticssuccessfully;

• promote academic research andteaching, along with continuingeducation, and establishcredentialing to provide a service fororganizations to find and nurturethe analytics talent;

• create the best forum for analyticsacademics and practitioners tolearn, grow and evolve the analyticsprofession; and

• align its communications andchannels to support the analyticsstrategy.

The opportunity is clear as is the poten-tial downside. Analytics will subsumeOR/MS and many of our practitioners willwork in analytics teams. We do not need tochange our name or redefine our profes-sion, but we do have to make an effort toreach out more broadly to the analytics

community and address their professionalneeds. Will INFORMS reorient and scale tomeet this challenge and subsume analytics,or will we be subsumed and rendered irrel-evant by it? ❙ORMS

Rahul Saxena (rahsaxen@cisco.com) is adirector at Cisco Systems in Bangalore anda member of the INFORMS CredentialingCommittee that initiated this article. Othermembers of the committee include: HossamZaki (Zilliant Inc.), Irv Lustig (IBM), JenniferLeong (Booz Allen Hamilton), Michael S.McCoy (Boeing Company), René Séguin(Defence Research and DevelopmentCanada), Robert L. Simons (Boeing),Roberto F Lu (Boeing), Col. (Ret.) Rocky Gay(Decision Strategies Inc.), Lt. Col. ScottNestler (U.S. Army, West Point), Cmdr. WaltDeGrange (U.S. Navy), Col. (Ret.) William K.Klimack (Decision Strategies Inc.) and YupoChan (University of Arkansas at Little Rock).

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