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BI outsourcing and emerging trends 2012

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BI continues to grow in demand in 2012 and the foreseeable future. The demand for BI/Analytics has driven the need for company investment in "Big Data" and trying to outdue competitors by exploiting advantages through the use of data patterns.
  • 1. Business Intelligence OutsourcingEmerging Trend Report Simplesoft Solutions, Inc. By Paul Hansford, MS 10/2012

2. OVERVIEWAnalytics has been defined as the extensive use of data, statisticaland quantitative analysis, explanatory and predictive models, andfact-based management to drive decisions and actions (Davenportand Harris, Competing on Analytics, 2007)Volume of Digital DataEvery day, 15 petabytes of new information arebeing generated. This is 8x more than theinformation in all U.S. libraries. Velocity of Decision MakingBy 2010, the codified information base of the70% of executives believe that poor decisionworld is expected to double every 11 hours.making has had a degrading impact on their companies performance Only 9% of CFOs believe they excel at interpreting data for senior management 3. WHERE DID BI COME FROM? The industry that has claimed responsibility for helping organizations get real value from information goes by the name business intelligence. This term was originally coined by Hans Peter Luhn, an IBM researcher, way back in 1958. Luhn defined business intelligence as the ability to apprehend the interrelationships of presented facts in such a way as to guide action towards a desired goal. The term didnt catch on, however, until sometime after Howard Dresner, best known for his work at Gartner, used it again to breathe new life into to the data warehousing industry. Dresner defined the term as concepts and methods to improve business decision making using fact-based support systems.Source: 4. Drive the business Analytics Hive/PigBig Data Improve the business Text analyticsPerformanceCloud BIManagement Predictive analytics Mobile BIUse the dataVisual discoveryBusiness Operational BIIntelligence Data integration suitesGet the data Packaged analytic applicationsData Data virtualizationWarehousing Dashboards and scorecards Business intelligence suites Web query/reportingOn-line analytical processing (OLAP) Desktop query/reportingExtract, transform, loadtools1990swarehousesData2000s2010 2015Source: BI Leadership Forum (www.bileadership.com). 5. WAVES OF BIStatisticians = Reporting High= AnalyticsExecs, Mgrs,Workers Business ValueWhat willhappen?UsersBusinessanalysts Whats Prediction happening?Monitoring Why did itAll usershappen? AnalysisWhathappened?ReportingStatic & Interactive Query, Excel,Dashboards, Statistics, dataLow ReportsOLAP, Viz analysis Scorecardsmining, optimizationTools 1980s1990s 2000s2010sSource: BI Leadership Forum (www.bileadership.com). 6. OVERVIEW OF THE DATAPROBLEM Estimated Global Data Volume: 2011: 1.8 ZB 2015: 7.9 ZB The worlds information doubles every two years Over the next 10 years: The number of servers worldwide will grow by 10x Amount of information managed by enterprise datacenters will grow by 50x Number of files enterprise data center handle willgrow by 75x Source: http://www.emc.com/leadership/programs/digital-universe.htm, which was based on the 2011 IDC Digital Universe Study 7. OVERVIEW OF THE BUSINESS PROBLEMAnalytics has evolved from business initiative to business imperative Analytically sophisticated companies outperform their competition Respondents who say analytics Organizations achieving creates a competitive advantage a competitive advantage with analytics are2010 37% 57% increase2.2x more likely to substantially outperform201158%their industry peers Ratio of respondents who indicated analytics creates a competitive advantage to those who indicated it did not and the likelihood they also indicated their organizations was substantially outperforming their competitive peers. The ratio was 2.0 to 1 in 2010.Source: The New Intelligent Enterprise, a joint MIT Sloan Management Review and IBM Institute of Business Value analytics researchpartnership. Copyright Massachusetts Institute of Technology 2011 8. OVERVIEW OF THE PEOPLEPROBLEMData volume is growing exponentially without a doubtIn the past, the most difficult problem for businesses was how tostore all the data.The challenge now is no longer to store large amounts ofinformation, but to understand and analyze this data, make adecision, and take action.This leads to the people problem, who can analyze the data andcrunch the numbers and make sense of it? 9. PEOPLE SKILL SHORTAGEThere is going to be significant shortage of analytical talent. Indeed,thesituation might get worse before it improves, due partly to theemergence of big data. For example, a report released last May bythe McKinsey Global Institute estimated that by 2018 in the U.S.alone, there could be an unmet need for 140,000 to 190,000workers with deep analytical capabilities for analyzing bigdata.To boot, the creation of business analytics tools takes more than justtraditional software development skills, it also calls for high-endmath capabilities given the emphasis on data mining, statisticalsampling and forecasting. India produces about 690,000 math andsciences graduates each year, according to a study released Friday.The comparable number for the U.S. is 420,000.Source: http://www.informationweek.com/news/global-cio/outsourcing/229204206http://www.mckinsey.com/Insights/MGI/Research/Technology_and_Innovation/Big 10. TYPES OF ANALTICS OUTSOURCINGKnowledge Process Outsourcing (KPO) is the outsourcing of high-endbusiness functions in an organization. These functions include both coreand non-core activities. Analytics Outsourcing (AO) is a type of KPO.1Analytics outsourcing, which deals with the application of computingresources, statistics and operational research to solve business andindustry problems, is fast becoming the most sought after outsourcingvertical.2 Customer and Marketing Analytics Risk Management Analytics Operations and Data Analytics Finance and Investment Analytics Supply Chain Analysis3 Pharmaceutical analysisSource: 1. http://www.bpowatchindia.com/KPODemystified.html2. http://www.flatworldsolutions.com/articles/growth-of-analytics-outsourcing.php3. http://outsourceportfolio.com/outsourcing-data-analytics/ 11. WHY BUSINESS ANALYTICS MATTERTHE NEED FOR ANALYTICS IS PERVASIVE ACROSS BUSINESS ANDINDUSTRYThe healthcare industry spends $250 - $300 billion on healthcarefraud, per year. In the US alone this is a $650 million per dayproblem.1One rogue trader at a leading global financial services firm created$2 billion worth of losses, almost bankrupting the company. $93 billion in total sales is missed each year because retailers dont have the right products in stock to meet customer demand.5 billion global subscribers in the telco industry are demandingunique and personalized offerings that match their individuallifestyles.2 Source: 1.Harvard, Harvard Business Review, April 2010. 2,IBM Institute for Business Value, The Global CFO Study, 2010. 12. EXAMPLE OF OUTSOURCINGSource: http://www.sganalytics.com/SG-Analytics/data-processing-and-analytics-research-is-divided-into-two-main-areas-new.html 13. ANALYTICS OUTSOURCINGTRENDS Viral Thakker, executive director, performance and technology services KPMG pointed out some of the emerging/growth areas in analytics: Customer analytics for the energy and utilities sector Fraud analytics in retail banking Cyber-analytics to detect cyber crime and terrorism Learning analytics to assess academic performance Other trends that could emerge are: Cloud-based BI tools could see proliferation Social network data mining for customer analytics Big data analytics Big data refers to the tools, processes and proceduresallowing an organization to create, manipulate, and manage very large datasets and storage facilities.Source: http://www.globalservicesmedia.com/BPO/Knowledge-process-Outsourcing/Outlook-2012-What-do-the-Cards-Say-About-Analytics-Outsourcing/23/12/11734/GS1201033610362_4 14. MAJOR OUTSOURCEPROVIDERSThere are several players in the AO marketplace, but there fewanalysts that are ranking them or are premium priced reports. Thismay be because the AO trend is early in adoption and global 1000companies are the main clients.The Top Analytics suppliers are: Top Providers GenPact* Fractal Analytics WNSAccenture* Capgemini* Cognizant EXL Services HP IBMInfosys TATA Consultancy Services (TCS)* Market LeadersThe details can be bought for $15,000.00Source: IDC MarketScape: Worldwide Business Analytics BPO Services 2012 Vendor 15. RISKS & KEY ISSUES IN THE KPOSECTOR Skills Acquisition and Retention For India, it will be a major challenge with high annual churn rates and wageinflation playing dampener. IP Management & Data Security Outsourcing high-end functions to an offshore location involves the exchangeof confidential information, especially in segments such as financial servicesand biotech. Training and Development Be it legal processes, pharma outsourcing or financial services outsourcing,any knowledge process requires familiarity with the concerned domain as itexists in the client country.Source: http://www.bpowatchindia.com/KPODemystified.html 16. RISKS & RECOMMENDATIONS FOCUS ON: 1 Reduction in costs Ability to scale-up and scale down resource Making IT provision a contractual relationship Access to skills, ally with them and bring them in-house2 Focus on core competencies BE AWARE OF: Privacy risks are a concern Intellectual Property rights are a concern Increasing costs are a concern Domain specific knowledge Confidentiality This is a trend that is not going away but will continue to grow.Source: http://peterjamesthomas.com/2009/03/14/is-outsourcing-business-intelligence-a-good-idea/ 17. ASSESSMENT Niche analysts project that Big Data/ business analytics will be a 50 billion dollar market in the next 5 years, therefore outsourcing will increase because of skill shortages.Source: Wikibon 2012 Big Data Market Size and Vendor Revenues report 18. LESSONS LEARNED Analytics outsourcing is a niche market of the KPO/BPO category It is a source of competitive advantage Combining bu

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