How does an organization become a data-driven, customer-centric utopia, and what can you realistically do to start moving in that direction today?

In a panel discussion at the SAS Financial Services Executive Summit, Susan Faulkner, Deposit and Card Products Executive, Bank of America, Eric Williams, retired CIO, Catalina Marketing, Mark Gorman, CEO and Founder of The Gorman Group Insurance Consultancy, and Lori Bieda, SAS Customer Intelligence Executive Lead, identified six steps to help your organization become more customer focused:

1. Correlate data across systems for new insights.
   If you don’t know your customers across the spectrum of their relationships with the organization, you might not know your customers at all. And what you don’t know can hurt you.“During the recession we were running things very much as silos,” Faulkner recalled. “If we had been smarter on the front end, we would have seen up front what started to happen in California, Phoenix and Florida that was leading the way for the recession.
2. Align the business around the customer.
   A major national financial institution produced and executed a successful credit card direct-mail campaign, resulting in numerous applications for new credit cards. The very next week, the company’s home equity department sent appeals to the same customers, urging them to cut up their credit cards and consolidate their debt with a home equity loan.True story, and not even uncommon. All too often, separate lines of business – mortgages, credit cards, etc. – work independently to build revenue. Each department is concerned primarily with how its own product contributes to the bottom line. Such organizational misalignments can create poor customer experiences with real financial impacts.
3. Walk the talk. Structure accountability around customer metrics, not product metrics.
   One of the common hurdles for companies when moving to a customer-centric approach is their own organizational structure – usually based on geographies and products rather than on customers or customer segments. Employees are held accountable for productivity metrics that don’t necessarily align with customer value – and can even undermine it.Bank of America recognized this disconnect and took dramatic steps to resolve it. “We had to walk the talk,” said Faulkner. “We couldn’t go out and say we were going to be customer-focused, and then show that every way we keep score, or the way we looked at our financial systems, was still in the yesterday of banking. We had to move forward.“We’re changing our entire general ledger and the way we account. We’ll always have product P&Ls, but now we also have customer segment P&Ls, which will be front and center in our reporting. We already had been doing segment-level reporting for some groups, such as mass affluents and corporate clients, but not at a consumer level. We said, ‘Top to bottom, it is about our customers.’”
4. Use segmentation for more than marketing and sales.
   How is customer segmentation being used in business? Is it still the province of marketing, or does it also shape how the organization provides customer service, develops products, manages risk and makes other business decisions?“We have grown up in the environment where customer segmentation was borne out of the marketing team,” said Bieda. “There was a group of marketers, and they were attached to a group of analysts. Those two collaborated and came up with a segment, because their intention was to push out marketing activities. Now segmentation has grown up, as it rightly should, and it is affecting all kinds of things. In retail banking and insurance, customer segmentation still affects marketing decisions, certainly, but also a lot of financial decisions, product development decisions, collections, fraud strategies and all kinds of servicing strategies. As organizations take customer segmentation out to its fullest potential, it has all sorts of possibilities.”
5. Don’t think ‘share of wallet,’ think ‘value of relationship.’
   Aggressive cross-selling may boost the number of accounts per household, but customer household profitability may still drop because the newly sold products don’t add value. For example, a customer may open a new line of credit in order to eliminate fees on other accounts. If the customer never uses the credit line, the bank loses the fees, receives no interest, and has to absorb the cost of opening and maintaining the idle line of credit.In other cases, cross-selling only entices current customers to shift their dollars from one banking product to another. There’s no net gain, only profit-killing disintermediation. For example, a customer may revolve a high balance on a credit card, and the bank may proactively promote a secured home-equity line of credit. The customer has thereby shifted the same dollars from a higher margin credit card to a lower margin home-equity line.
6. Consider customer lifetime value.
   To consider the future profit potential of customers, marketing and sales functions have begun exploring an equation called customer lifetime value (CLV) that treats each customer (or segment) as an investment instrument similar to an individual stock in a portfolio.Customer lifetime value can be defined as the net present value of the likely future profits from a customer, household or segment for a designated time period – a forward-looking view of wealth creation. CLV shows you which customers will offer the highest value in the future, which in turn identifies the core attributes you should look for in prospects.

For the other four steps and more information from this panel discussion, download the white paper: Connecting the Dots with Customer Analytics

De Medinaceli discusses new approaches in data mining, like taking into account text data – or unstructured data – to augment the accuracy of data mining models. She also highlights the importance of “hitting a single” to show the value of analytics before “going for a homerun” later when building a business case for analytics within an organization. Hear more in this video Q&A.

Avensani was speaking to an audience of businessmen and women at The Premier Business Leadership Series in Amsterdam about the expanding role of risk management at Unipol, one of the largest insurance groups in Italy. Risk management is now part of a strong, business-oriented experience at Unipol.

The risk management role is now focused on supporting business departments in strategic change, promoting a healthy exit of the economic downturn and gaining a competitive position in the “new normal.” The department is also progressively building a sound risk management practice inside the Insurance Group with a wide and diversified set of risk-taking activities.

In Avesani’s view, risk management must actively design and implement changes in business practices to mitigate risk and help gain profitable results. This must be done by creating direct links between business departments and the risk management department and getting risk management people more involved in managing risk-taking processes and their consequences.

From this perspective, risk management can be seen simply as integration between business execution and business control activities, with a clear understanding of the link between revenue (volume) growth strategies and risk taking. “The leading role in risk management is the CEO role,” says Avesani.

The specific action undertaken at Unipol by risk management, after a recent phase of volume growth that generated a subsequently high level of claims and a strong rise in combined ratio (meaning a strong unbalance between revenue achieved and cost generated by the underwriting process), was helping to design and deliver a new agent network remuneration policy, and balance underwriting and risk generation. With the help of a new and detailed information processing system, Unipol aligned agent underwriting to the company risk appetite. The new policy has already produced positive changes in combined ratio, showing a relevant progress to profitability.

The wider medium-term task that risk management is accomplishing is the setup of a Risk Management Practice based on a sound information management system. The approach that Avesani is promoting is based on a single platform for risk data management that helps feed risk measurement engines and collect their output for integration and management support.

In this way, the proper selection and development of risk management skills is crucial. Risk management people should on one side help grow the risk management capability as a specific department, while moving out of the border of the risk management department and embedding themselves in the business department network that runs the business, thus helping risk management become an integral part of the business.

“The knowledge of the world is only to be acquired in the world, and not in a closet,” says Avesani, quoting Lord Chesterfield.

Dan Ariely, Professor of Psychology and Behavioral Economics and author of Predictably Irrational.

Why do people make the choices they do? There is a science behind decision making, and if you can harness it, you can influence and predict the decisions people make. Dan Ariely, Professor of Psychology and Behavioral Economics and author of Predictably Irrational, has made a career of it and shared his expertise with attendees at The Premier Business Leadership Series in Amsterdam.

When an accident landed him in the hospital for an extended stay, Dan observed that “good, caring people can often make irrational decisions and they do so systematically – not because they don’t care, but because they are following accepted wisdom or their own belief in that they are doing the right thing,” he said. It was his time in hospital that got him interested in why people make the choices they do, which led to his specialty in behavioral economics.

After extensive research, Dan has demonstrated these five principles:

1. Humans are imperfect decision-makers, but our irrational behaviors can sometimes be predicted.
2. When forced to make a decision, we will often seek the ‘do nothing’ or ‘default’ option.
3. We don’t deal with complexity well and would much rather choose between similar options than different ones.
4. The forces of ‘default’ and of ‘complexity’ are very powerful.
5. It is often possible to predict the outcome of a decision and, with skill and insight, even influence it by framing the choice in a particular way.

To explain, Dan offered the analogy of the optical illusion:  “Not only can you ‘trick’ the brain into seeing something that isn’t there, you can predict that people will see it and, even after they know it is an illusion the brain still sees the illusion,” he said.

“We are evolved to be incredibly good at vision and we still get it wrong,” says Dan. “Imagine how hard it is to make rational decisions about things we are not so good at.”

How we decide
When we are trying to make a decision, we often make comparisons between things that are similar rather than markedly different.

“For example, if you’re going on a vacation and trying to decide between Paris or Rome, you’re facing a difficult decision,” said Dan. “Both are beautiful cities with much to offer, but  with different languages, cuisine, history and culture.”

“However, if we add a third option ‘Rome-minus’ (same Rome vacation but without free coffee), people start to compare Rome with Rome-minus, and are more likely to select Rome as a vacation destination than Paris.” Why?  Because it’s easier to compare the two Rome options, which are similar, than the Rome / Paris options which are dissimilar.

Opt in or opt out?
In another example, Dan talked about the power of opt-in, rather than opt-out, showing that the differences in organ donation rates in various countries is much more affected by whether the enrollment form is for ‘check the box to opt-in’ (typically low rates of enrollment), or ‘check the box to opt-out’ (high rates of enrolment) than the religion, culture or morality.

It is a big decision and the power of default is typically to do nothing – i.e. not check the box, regardless of the option.

As Dan says, your decision about whether to enroll in the organ donation program is much more likely to be driven by the way the form is designed, than by your own preferences.

David Chong on marketing in Asia

David Chong, SVP of Marketing at a leading Malaysian bank

David’s primary focus is:

• Defining and communicating strategy.
• Timing and triggers.

Defining and communicating strategy
David articulated 3 challenges:

• Understanding which products, offers or services will be of interest to your customers.
• Communication from executive management.
• Central capability to ensure alignment.

Timing and triggers
The fundamental challenge for all marketers is one of execution – offering the right product to the right person at the right time. This is complicated given that everyone is different.

There is a greater emphasis on understanding the context of event triggers, personalizing actions and evaluating performance in a series of experiments or test and learn loops.

The future …
David envisions a continued emphasis on developing better segmentation profiles – ultimately getting to a segment of one. Customer needs will be identified in real time, not just for your best customers, but for the masses.

Jim Foreman on doing more with less

Jim Foreman, Director of Circulation and Analytics at Staples Inc.

Jim identified three key challenges:

• Macro economic conditions.
• Understanding the customer.
• Understanding the buying process.

Macro-economic conditions
Marketing as a percent of sales is expected to stay in line. There are two basic tactics impacted – acquisition and retention. But it’s not a case of doing either or – it’s about getting the right balance.

Understanding the customer
Your strategy for engagement with a Fortune 500 company will be very different than to a smaller business and totally different for an individual consumer. The challenge centers around three questions:

• What makes a good customer?
• What are their characteristics?
• How do you appeal to them?

Jim suggests macro-economic conditions force you to look at this as an optimization challenge – how to get the biggest bang for your buck – and that requires modeling and data analysis. Access to data and the explosion of channels makes the task harder.

Understanding the buying process
It’s no longer about identifying fit then making an offer through the most appropriate channel; it’s about understanding how a person makes a decision and then providing value at each step of that process.

Jim talks about the challenges associated with attributing success, understanding influence and ensuring the best marketing actions are taken across the whole business – not just one part of it.

The future …
The mantra will be one of taking data driven decisions. The biggest challenge will be that as time goes on, there will be more and more sources of data to mine; more channels to consider and even greater complexity. It will become more challenging to uncover new and insightful findings in the data.

Warren Murray weighs in on social marketing challenges

Warren Murray, Head of Business Decision Support at eBucks

Head of Business Decision Support at eBucks, South Africa’s leading multi-partner rewards program.

Issues …

• Getting the right members active within the program
• Knowing the specifics about what members use eBucks for

Getting the right members active within the program
Interestingly, eBucks isn’t looking for acquisition targets i.e., new members. 90% of their customers enter the program by opening a bank account with First National Bank, South Africa (FNB).

The challenge for eBucks is to nurture or incentivize the right behavior of their partner’s customers so that they feel rewarded and remain or improve loyalty.

Getting permission to contact customers, knowing where someone lives or how to contact them is a real issue in South Africa. Integrating data, managing quality and tracking usage becomes the main focus to address this challenge.

Knowing the specifics about what members use eBucks for
If you are trying to drive behavior, you need to know what a customer will be interested in to be successful and efficient. eBucks analyzes both category of offer and frequency to identify patterns that will help them make the right offer at the right time. The same information has been used to optimize which products they stock and promote on their web store leading to improved customer experiences and reduced cost.

The future …
Every time a new channel or partner is added to the program , it has woken up interest in customers that appeared to be dormant in terms of earning or spending eBucks.

But this time, social has the promise of awakening far more interest. By combining existing data with interests, opinions and a person’s circle of friends – the possibilities for relevant marketing go through the roof. Not just in terms of improving relevance, but experimenting with incentives and experiences.

For more, download the white paper Driving Profitable Growth: The Practitioner Perspective, the second of our four-part Driving Profitable Growth series.

Derek Wylde, Head of Group Fraud Risk, HSBC

You take out your entire family – in-laws included – for a nice dinner to celebrate being together once a year. The bill comes, you whip out your credit card without thinking, take your last sip of wine and all of a sudden the waiter returns saying, “I’m sorry, your card has been declined.” This embarrassing scenario could turn go two ways – if actual fraud was detected as soon as the waiter swiped the card, you are grateful and your confidence in the card’s financial institution just skyrocketed. If the card was declined by mistake, your loyalty just shattered and you very well may move to another institution.

Now, let’s say you are the bank, and it is imperative that you make the right and immediate decision about potential fraud to not only avoid customer churn but also protect fees from the purchase. If you allow the fraudulent purchase to process – and it is actually fraud – your customer is now a financial crime victim and you pay for the big dinner.

“The bank must make the accurate call – in real-time, any less is unacceptable,” said Derek Wylde, Head of Group Fraud Risk, HSBC Group. His financial services colleagues at this week’s The Premier Business Leadership Series in Amsterdam understand why this is especially important in the digital world.

To get an idea of the depth and breadth of HSBC, it serves more than 89 million customers in 85 countries, “but only about 20 countries are relevant here, where we have scale and where fraud is a problem,” said Wylde. HSBC has US$2,555 billion of Total Assets (end 2011). Whether you’re a bank of this magnitude or a small community bank, it’s important to keep up with the latest fraud trends to continually come up with ways to prevent it.

Current trends show that credit card fraud in the UK has been falling over the last few years, and this is likely due to chip cards – which most countries have implemented, save for the US. Conversely card fraud is much higher anyway and will continue to rise. “The US needs to get their act together in this regard, in my humble view,” Wylde shared without hesitation.

What’s increasing dramatically is ‘Card Not Present’ (CNP) fraud which allows for easier information breaches through phishing tactics and online banking. Phishers are still very much in business. The Anti-Phishing Working Group reported that they took down close to 30,000, but others still remain and are cropping up all the time. In 2011, Semantic, an anti-virus protection system reported that there were 5.5 billion malicious attacks on systems, which is an increase of 81 percent over the previous year.

And customer demand for online will move to mobile banking. That is where the war on fraud is and will truly be fought, according to Wylde.

Ever-changing fraud

Internal fraud is now prevalent as well, and HSBC is implementing detection systems to discover this behavior. First party fraud or fraud among customers is an issue as well. “I’ll admit that historically we’ve not measured this appropriately but it is still a focus area.” Typically, fraud is very well-organized by criminal gangs that get into accounts and massage credit limits.

Recently, a more worrying trend is that crooks are able to inject malware into ATMs. For example, a Mexican bank suffered a loss a couple of years ago when criminals opened a number of remote ATMs at service stations and railway stations and incorporated malware in them via a USB port. The malware captured card details during the transaction and more alarmingly – PINs.

“ATM vendors could do more. If you buy a car with standard safety features, you should be able to buy an ATM with standard security measures,” Wylde explains. “The aforementioned Semantic research showed that there were 403 million incidents of malware out there. That’s a scary number.”

Crooks prey upon the naivety and carelessness of the customer. Fraudsters need passwords that they can discover via malware or by sending an email to customers with a link asking to update their account, thereby giving away passwords – the crown jewel of information.

Fraudsters also prey on weaknesses within an organization’s IT security to steal customer data. For example, at clothing retailer TJ Maxx, 50 million card customers were compromised. And many global payments companies have been hacked.

The future

Wylde said that banks and financial services firms are challenged with providing what customers want while still protecting them from fraud. “We need to be able to open a bank account, without paperwork and a signature. That’s a challenge for us because when one applies for a bank account online, we have traditionally sent out a letter for them to sign to confirm their information,” he explained.

“Customers don’t want to do the paperwork anymore. They want to get online and within a few minutes, have a bank account. That leaves their data – where they live, credit history in a fragile online environment.”

So, speed and convenience are driving customers to demand easier banking. As such, mobile banking will continue to rise and serve as the next biggest challenge for risk managers among financial institutions. Customers want fast decisions, accurate information and access to their account – 24/7.  

“And we have to combat whatever risks may arise from that movement.”

Another great post to read is Data breaches, cyberheists and payments fraud. Learn more about how HSBC is fighting fraud in this case study.

Saul van Beurden , ING, speaking at The Premier Business Leadership Series in Amsterdam.

How can a CIO best help his or her organization be more successful?  According to Saul van Beudern, CIO Retail Banking & International, ING, CIOs must put aside their technology-focused view, and instead look at interactions from the customers’ point of view.

“The world of banks is changing with fascinating speed,” Saul told a full house at The Premier Business Leadership Series in Amsterdam. “Customer-control and trust are reshaping the financial industry — every bank has a choice: excel or be phased out.”

“Banks should be seen as making some of life’s better moments possible: From buying your first car to paying for a much-deserved and enjoyed holiday,” said Saul, “but customers rarely learn much from their banks, other than what’s on their statement.”

Today’s customers are asking businesses to do three things:

1. Make their lives easier.
2. Remember things for them.
3. Don’t bother them with averages (or treat them like one).

If you don’t meet these three needs, your business is in danger of becoming irrelevant, said Saul.

Getting into the information business
Companies are increasingly centering their business models around data and information. Nike, Amazon, KLM are just a few of the many organizations getting into the information business. “They deliver data back to customers as a personalized service, while still getting value from the aggregate big data because they understand that information is the ‘new oil,’ “ said Saul.

As a result, many of these information businesses are encroaching on traditional banking’s territory. They are where the customer is, not where the bank is (i.e. customer-centric, not process-centric). This is in turn is driving a seismic shift from ‘transactional’ to ‘customer-facing’ relationships.

“If banks are to remain the preferred channel they have to stay relevant by focusing on being where the customer is and making the core processes invisible,” he said.

A next-generation bank
What does this mean for the future of ING? “We are on a transformational journey,” said Saul, “combining transactional parts of the business with customer-facing capabilities.” The company is focusing on three main areas:

1. Sensing the customer.
2. Selling and servicing the customer.
3. Securing the customer’s money.

This three-prong strategy requires the ability to analyze sentiment across all channels. ING must also provide next-generation apps to improve customer access to services. The bank is also exploring real-time interventions – like using advanced intelligence to protect its customers’ money from fraud, such as phishing or skimming.

The challenge, in Saul’s view, is not ‘Big Data’; it is ‘being relevant with ‘Big Data’.

“Ultimately, the result is that the Chief Information Officer transforms into a true Chief Technology Officer, or the Chief Marketing Officer,” said Saul. “The leadership role distinctions become blurred when you they all bring their disciplines to a customer-centric, not process-centric culture.”

For more from Saul van Beurden, follow him on Twitter @saulvanbeurden , and for more on ING, find out how they’re using SAS.

Terry Leahy, former CEO of Tesco

Known as one of the most remarkable business turnaround stories in British history, global retailer Tesco grew from being half the size of its two biggest competitors to six times the size of either of them. In fact after reporting £2 billion in profits in April 2005, its CEO until a year ago, Sir Terry Leahy, faced protests that the company was “too successful.”

Now Tesco is one of the largest retailers, operating in 14 countries, with more than 500,000 employees and serving millions of customers each week.

I had the pleasure of hearing Leahy talk about nine management lessons from this transformational business experience at The Premier Business Leadership Series in Amsterdam.

“These are the key lessons that came out of building this business to what it is today, and interestingly, many of these lessons are founded in the use of data. Tesco essentially is a story of using data to transform performance in an industry [retail] that has historically been slow moving and beyond the stage of lending itself to innovation,” Leahy said.

1. Find the truth – Humans are very socialable: they inherently work on subjective impressions. Until recently, that’s all we had. With the availability of hard data, those impressions turn into facts. You now have a reference point for what is actually happening to make more substantive decisions from there.Some leaders don’t acknowledge that the world is changing, and so must their decision making. Those leaders constantly look for information to confirm their beliefs, rather than seeing the truth through facts.

   Many employees see the truth in the data but don’t want to speak plain, simple truth to the CEO. The CEO is oftentimes the most isolated to what’s really going on.The most reliable voice is the customer. If you’re prepared to listen to them, they’ll tell you about their lives, what they need, what is good about your business and what’s not, how your business can be improved, the list goes on. If you bring in data that reflects those customer-centric findings into sales, marketing and upper management meetings, I guarantee they will be better received.

2. Audacious goals – You have to push people farther than they want to go or you’ll maintain the status quo. Examples of Tesco’s ambitious goals include:
• No. 1 choice in the UK.
• Grow a non-food business, which was a new strategy to be as strong in non-food as food.
• Invent Retailing Services: Research showed that people actually spent more on services (travel, insurance, banking, education) than they did on products (cars, food, clothing). So, we needed to retail service like banking in the same way we retail actual products like food.
• Become a leader in global retailing by expanding our reach and opening new locations.
3. Vision, values and culture- The soft side of management matters more than the hard side – culture determines whether or not the company will be successful.

   Tesco developed core values by using information on what drives employees in their role. This was a data-rich exercise in which we built tools within HR to track employee feelings about the organization. It’s these values that motivate people and release their core talents.

4. Follow the customer – Customer lives and preferences constantly change. Use data to know what’s happening in their lives, what’s important for them – in addition to knowing more about the community and society.For example, retailing is all about bigger stores to offer as many products to the customer as possible.

   Our research reflected that customers actually are feeling busier and busier these days. They don’t have time to plan for the big shop and big store. Young men in particular, just want to see food that’s already prepared immediately and have the tendency not to shop.We started building “Tesco Express” miniature shops in communities and universities to make it more convenient for our customers. Convenience is one of the best benefits a business can offer the customer. The Tesco Express model was most successful and came about from a single observation – customers felt busy in their everyday lives.

5. The steering wheel– A common question I receive is “How do you link the very large – purpose, goals, values, strategy – to the very small – what they do each day at work”? How can you make people feel a part of the bigger picture?

   Tesco has had a balanced scorecard for many years; we call it The Steering Wheel. It’s a terrific, data-rich, tool that connects the big business targets to the small world that employees interact with each day … to make people feel they make a direct contribution to the company.You will see The Steering Wheel in the Tesco stores and it can also be applied at different levels, regions and departments. It shows everything from grand measures to small measures like how many people were upset that day in a store. This was a great way to link strategy and goals to measurable targets. Here are the key areas we highlighted on The Steering Wheel.

• Customer
• Community
• Operations
• People
• Finance
6. People, processes and systems- How do you actually make your business different and make that come to life on the shelf edge? To make a strategy turn into a reality, you need a motivated organizational culture and thoughtful processes.Both require a huge amount of data on profitably, delivery time, etc. that comes from a well-designed system. Keep in mind that people are not robots but there is a need for both the systems and associated culture and practices to make it work.
7. Data is priceless - When I started at Tesco, we couldn’t even get hold of our data. We developed a wealth of customer information through the Tesco Clubcard loyalty program. This provided tons of data to monitor shopping habits and movements of the customer. The card could even predict insurance purchasing habits just on what items they buy.This created a club of Clubcard holders that increased customer loyalty, giving them a sense of community by shopping at Tesco.
8. Competition is good –It forces you to do a better job day in and day out. The trick is to learn from your competitors quicker than they can learn from you. Always look for your competitors’ strengths. They are the best management consultants we ever had … and they didn’t charge.
9. Leadership – It’s all about the impact you have on other people. You need to have thousands of leaders within an organization – not just a handful. These leaders will deal with the customer, project, etc. as a leader.

The bottom line is that customers want to look good and live forever. If you can latch on to their trends and interests, you will do well. Companies who can use data to gain better insights of the world around them and what sits beneath them will be successful.

Erik Brynjolfsson, Director of the MIT Center for Digital Business, speaking at The Premier Business Leadership Series in Amsterdam.

What value does your organization place on business analytics to help understand and solve problems? MIT Professor Erik Brynjolfsson has spent years researching the value of business analytics to business and has quantitative data demonstrating why businesses that use data-driven decision making perform measurably better than those that don’t.

He shared those findings in a Premier Business Leadership Series Amsterdam keynote titled: Strength in Numbers: Data-Driven Decision Making. According to Eric, most revolutions in science begin with better methods of measurement. When we can see (and measure) new things we are driven to seek answers and thus to new ways of thinking and operating.

Now we have a flood of ‘big data’ that we can capture, store and measure, all of which enables new capabilities.

For example, online retailers can measure far more about their customers than their traditional bricks-and-mortar counterparts — giving them new options to innovate and transform their relationships with their customers.

But this revolution of big data and big measurement is still in the early stages, notes Eric. Innovative organisations are not only adopting new technologies, they are creating new corporate cultures where there’s more reliance on data than experience or opinion. But it also gives organisations opportunities to predict the future with far greater accuracy than before. Citing an example of house purchases, Eric described how a model they generated to predict house purchases outperformed the experts in the field.

In Eric’s studies, organisations that relied on data-driven decision-making performed at rates 4-6% higher than their peers in a number of different categories. This was demonstrated to statistically- significant levels. But, those that are most likely to perform at the highest levels have data, expertise and leadership in abundance.

Eric thinks that ‘nano-data’ will be the successor to big data – i.e. the ability to make measurements and analysis on the basis of groups of one, but doing that within the deluge of big data.

For more, check out Erik Brynjolfsson’ blog: http://www.economicsofinformation.com/ or follow him on Twitter: @erikbryn

In the panel discussion, Tham Ming Soong, the former United Overseas Bank (UOB) Chief Risk Officer (CRO), emphasized that high-performance analytics is more than just a new solution to help financial organizations meet regulatory requirements (e.g., Basel 3 capital, liquidity, counterparty (CVA), etc.); organizatons in all industries are creating huge value from this innovation.

Here are some of the highlights from the discussion between Tham Ming Soong and SAS CEO Jim Goodnight:

Jim Goodnight, Chief Executive Officer, SAS

Outside of financial services, what industries are most impacted by big data and would benefit from high-performance analytics?

Jim Goodnight: We see telecommunications picking up on high-performance analytics, as well as publishing websites that are constantly (and immediately!) tracking visitor data to target marketing campaigns.

Retail has seen excellent results from high-performance analytics through mark-down optimization. For example, a large department store retailer has to markdown prices across 350 stores and 3 million SKUs on a nightly basis. High-performance analytics can calculate the resulting 1 billion rows of data in a matter of minutes – it used to take a week.

Tham Ming Soong, former United Overseas Bank Chief Risk Officer

Tham Ming Soong: The financial services industry is actually not too different from the retail example. Today the UOB Group has a network of more than 500 offices in 19 countries and territories in Asia-Pacific, Western Europe and North America. So the time gain from high-performance analytics proved critical to each area’s growth. It gave us the ability to know customers better and improve our financial standing and stability.

What has been the catalyst for HPA? What is enabling this to happen and why now?

Jim Goodnight: I visited Ming to talk about how his analytics is working for him and he explained his challenges to compute all the data the mega bank has to manage in a timely fashion. I took this problem back to my team and figured out that you have to split up the computing process so they can run at the same time. So you’re basically taking advantage of several processes at once.

We fine-tuned this concept and were amazed by the drastic reduction of time to compute incredibly large amounts of data. Ming had a lot to do with our high-performance analytics offering … (turns to Ming) and I thank you for that. We went from 18 hours to process your data to 15 minutes. 

Tham Ming Soong: SAS and UOB had a series of discussions on what we could do with this time savings. I had this sandbox initially, and now with high-performance analytics, I could have a nice sandbox and could build bigger sandboxes. It opened up a world of possibilities. 

What advice would you give executives and other senior business leaders, who are facing the very same challenges and strive to become a high(er)-performing organization?

Tham Ming Soong: Identify a champion within your organization who leads high-performance analytics. An innovative person. A creative person. I hesitate to use the word, but – a visionary. This person needs to produce results that senior management can see by exploring how analytics can help other parts of the risk business that have the incredible impact on business.

Question from the audience:

You didn’t cover unstructured data – social media, online nuggets of info. That’s a big challenge facing organizations as well. If I had one approach to “sell” to upper management, which would it be – high-performance analytics or social media analytics?

Jim Goodnight:The unstructured data is much simpler to do in parallel, to take the unstructured data and spread across processes. And if you want to use social media for sentiment analysis to track, measure and respond to your brand’s perception, then that’s a pretty easy sell for the CEO. Brand image is always a priority.

As for high-performance analytics, you need to examine the best way to show the cost benefit for buying the analytics.

Tham Ming Soong: Risk managers are often seen but not heard. We were forced to look at what was the payback for everything we did. Relative to the high-performance analytics project, it took about 24 months. But the challenge was not the time – it was convincing people that it’s worth doing. Many thought risk managers shouldn’t be so involved with IT (in implementing the analytics). But after the project, both the SAS team and my management team said, “You know what? We learned a lot and look at what we’ve accomplished.”

Jim Goodnight: Another “how to sell analytics” tip is to present how the analytics may start within the compliance organization and also apply to marketing. It’s easier to sell this way because if you’re using it to get results for more than one business unit, it becomes a lot cheaper.

Tham Ming Soong: A wise person once told me a quote by Goethe that is very powerful and to which I can attribute my venture into enterprise risk management, high-performance computing and analytics: “Whatever you dream you can or know you can do, start it.  Boldness has power and magic.”

You can do more with high-performance innovation, too. Get your ideas, insights and answers starting with, “What can high-performance analytics do for me?“