Data Mining&Business Planning of Engineering/Research Projects

Presentation 0Dr. Gábor Pauler,

Associate ProfessorFaculty of Sciences, University of Pécs

Tel:30/9015-488 E-mail: pauler@t-online.hu

Content of the PresentationPurpose of the course

What is Business Planning? Scientific DefinitionWho the hell needs Business Planning?Why You should do your Business Planning?Why to do our Data Mining-Based Business Planning?

Course agendaAccessibility of course materialsRequirements and ConsultationBusiness Plan ContestGrading and Rewards

Purpose of this courseWe, Hungarians can be proud of how many inventors and Nobel-prize winning scientists we gave to the world:Can we really be proud of it? Why the hell we „gave them to the world” instead of creating competitive new products at home – and lot of profit?There are range of objective reasons we can cry about helplessly as usual for us:

In times of nazi/communist totalitarian reigns most scientist remaining home were threatened with death because of their views or religionIn times of „soft dictatorships”, inventors were stuck in the mud of short-sighted political elite and conservative society or lack of investable capitalIn short periods of democracy, inventors were stuck in the mud of corruption

However, it is also true that Hungarian scientists’, professionals’ attitude is often still very far from modern business thinking preventing them being really successfulWe try to help students – who can be inventors and scientists of tomorrow - with this course to be more successful using Data Mining-Based Business Planning

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What is Business Planning? Scientific DefinitionBusiness Planning (Üzleti tervezés) is a complex process involving multiple disciplines to set up profitable, self-sustaining enterprises:Marketing (Marketing):

Generate and define Product/Service (Termék/Szlogáltatás) ideasIdentify profitable target market segment with reasonable demand and reach it with Promotion (Promóció) through selected Channels (Csatorna)Set up optimal Pricing (Árazás) in product/service Lifecycle (Életciklus)

Operations management (Termelés menedzsment):Estimate investment in production capacities (Kapacitás beruházás)Estimate fixed costs (Fix költség) of production/serviceEstimate variable/unit costs (Változó/egység költség) of product/service

Financing (Pénzügy):Estimate Cash Flow (Szabad pénzáram) the enterprise generates in timeResolve financing until Cash Flow turns to positive with Own capital (Saját erő), Bank- and non-bank financing (Banki/Nem-banki finanszírozás)Estimate Financial returns (Pénzügyi megtérülések):is it worth to do at all?

Management (Menedzsment):Set up Organizational structure (Szervezeti struktúra) + Process Flow (Folyamatsruktúra) of enterprise balancing Authorities (Hatáskör), Responsibilities (Felelősség), Information (Információk) among positions

Now, one can say: „Hey, man, this is frightening un-understandable economist blah-blah. Are you sure that all those stone-rich used car dealers did all this?!”

All you needa’ brotha’ is f…ing big 8mm Walther PPK

Who the hell needs Business Planning?Of course, not. You can be successful businessman without any planning, IF:

There is no free market and competition at all, and money can be harvested solely by feudalistic privileges and corruptionIf you are willing to take very high risks: 10%:you will be stone rich, 90%:the bank will take your house and car, and the maffia will sell your family as sex-slaves and beat you up dead (average 9 from 10 small enterprises do not survive 1 year, sometimes entrepeneurs also…)You want to harvest the money in 3 days in all possible illegal ways, then run away. Then run away again, then run away again…

Non-scientific definition: Business Planning is pain-in-the-ass process to: 1. Reduce risk of failure:90%20-25%2. Enable you resist competition3. Make you stay alive long term

involving frightening amount of com-putations (and re-computing again and again in many alternatives) can-not be done on a piece of paper.Now, one can say: „Hey, man, I do not care about dirty business. I am a sea biologist wanting to fight with that nasty Japanese whaler ships to save whales from extinction. So I am not interested in business planning” Really? From where do you get the boat, equipment, food, fuel, insurance, permits and crew? How to collect money to pay this? How do you get there? What message will you tell for the media? Who will command crew?So you can see that business planning is not just for entrepeneurs. Even if you wanna be Mother Theresa of Calcutta 2nd, as long as you want to do something meaningful, you need business planning to reach your goals.

Why You should do your Business Planning?Now, one can say: „Look, I see that business planning is important, but I get dizzy if I see too many numbers. Why it cannot be done by Economist guys?!”Be surprised: those Economist guys learn quite amount of Marketing, Operations Management, Finance and Management in theory. But business planning requires integrating all of these in one computing process.And exactly that’s the weak point of most Economics trainings in Europe. Eg.:

In Marketing, you can learn how to define a market segment, differenciate your product from competitors, and all the „fancy-soft-verbal” stuff. But it rarely gives „if my price will be X then my sales will be Y dollars”-type numeric results, be-cause „numeric methods are so unreliable”, „this belongs to Statistics”, etc.In Finance, „we assume that company A has annual sales of $120M”, then we can compute all fancy-named financial me-asures by 7th decimal exactness. But, in the reality, from where we can assume it? From our marketing studies, certainly not, the bridge is missing.

In USA, business training is much more application-orientated in general,how-ever the whole system is flawed by very, very weak basic math background of Americans. For example, the market leading business planning software (http://www.paloalto.com/ps/bp/ Business Plan Pro) is extremely well worked out in terms of „soft” planning elements, but in terms of computations, it is rather simple, otherwise the market would totally reject that.

Am I looking a calculator or something?!

Why to do our Data Mining-Based Business Planning?Therefore, we put together best of our experiences in old- and new worlds to create BusinessPlanner 2.0 software and IQlub Business Planning Course: You can develope your own product/service idea working with a team into a stage required at applying for bank loan or grants The software drives you through the whole integrated numeric planning process: From organizing a market research survey and estimate demand/ optimal pricing Until financial measures required by credit/grant jury It is heavily based on range of nasty quantitative Data Mining (Adatbányá-szati) methods (eg. „nonlinear curve fitting and extrapolation”) and other horror stories. But, you cannot see them: the software will do the math, and user interface does not go beyond secondary school level. It will help you to process product/service lifecycle data in planning process, while most other soft-ware cannot do it It is written in MS Excel environment familiar to you Any partial results can be easily expor-ted to other systems The price you have to pay for this is: you have to collect more data and you have to use more complicated user interface than in other business plan-ning sofware

2007.10.26 PaulerSoft™ Business Planner|Üzleti Tervező 2.0 Product1|Termék1 Dr. Gabor Pauler

Legenda|Jelmagy.: Input data|Inputok Parameter|Paraméter Part.results|Részeredm.Outputs|Outputok VariableID|VáltozóID-k Constants|Konstansok Estimation|BecslésSummary of demand and its extrapolation in product/service lifecycle|Kereslet összegzése és előrevetítése a termék/szolgáltatás életciklusban:Lifecycle extrapolation parameters: Segment 1 Aggregated sample demand|Aggregált kereslet a mintábanEstimation fit diagrams|Becslés illeszkedési diagrammokÉletciklus extrapolác. paraméterek: StartDate|KezdőDátum:2005.01.01 2006.01.01 2007.01.01 2008.01.01 2009.01.01 2005.01.01 2006.01.01 2007.01.01 2008.01.01 2009.01.01

Slope Intercept Reliability Adatok 1 2 3 4 5Meredeks. Konstans Megbízhat. LifeCode UnitPricCod Period1 Period2 Period3 Period4 Period5 Period1 Period2 Period3 Period4 Period5

0.75 0 2 1 2.0 4.5 4.5 5.0 5.0 1.10 1.18 0.77 0.22 0.0020000 One-time 2 0.0 0.0 0.0 0.5 0.5 0.00 -0.29 -0.69 -2.08 -2.3050000 Egyszeri 3 0.0 0.0 0.0 0.0 0.0 0.00 -0.69 -1.10 -2.08 -2.3065000 4 0.0 0.0 0.0 0.0 0.0 -6.91 -7.60 -8.01 -8.29 -8.52

3.17 5.8 90.3% 0 3 1 3.0 6.5 6.5 5.0 5.0 3.0 6.5 6.5 5.0 5.01.56 1.3 92.2% 20000 Impulse 2 1.0 1.5 1.5 0.5 0.5 1.0 1.5 1.5 0.5 0.51.67 1.1 97.3% 50000 Impulzus 3 1.0 1.0 1.0 0.5 0.5 1.0 1.0 1.0 0.5 0.52.56 0.0 0.0% 65000 4 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

2.0 0 4 1 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 2.00.6 20000 Regular 2 1.0 0.5 0.5 0.5 0.5 1.0 0.5 0.5 0.5 0.50.0 50000 Rendszeres 3 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.00.4 65000 4 0.0 0.5 0.5 0.5 0.5 0.0 0.5 0.5 0.5 0.5

-0.300 3.7 50.0% 0 5 1 4.0 2.5 2.5 2.5 2.5 4.0 2.5 2.5 2.5 2.5-0.250 1.2 89.3% 20000 Increasing 2 1.0 0.5 0.5 0.0 0.0 1.0 0.5 0.5 0.0 0.00.150 -0.3 75.0% 50000 Növekvő 3 0.0 0.0 0.0 0.5 0.5 0.0 0.0 0.0 0.5 0.5

-0.300 1.5 75.0% 65000 4 1.0 1.0 1.0 0.0 0.0 1.0 1.0 1.0 0.0 0.0

0 1 Összeg 11.0 15.5 15.5 14.5 14.5 11.0 15.5 15.5 14.5 14.520000 Total 2 Összeg 3.0 2.5 2.5 1.5 1.5 3.0 2.5 2.5 1.5 1.550000 Összes 3 Összeg 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.065000 4 Összeg 1.0 1.5 1.5 0.5 0.5 1.0 1.5 1.5 0.5 0.5

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Content of the PresentationPurpose of the course

What is Business Planning? Scientific DefinitionWho the hell needs Business Planning?Why You should do your Business Planning?Why to do our Data Mining-Based Business Planning?

Course agendaAccessibility of course materialsRequirements and ConsultationBusiness Plan ContestGrading and Rewards

Course AgendaWeek Presentation Quiz

Grade %

Practice Home assignmentGrade

%

0Purpose, Agenda, Grading -   - -  -

1Case study 1: Miracle roof -  Brainstorming, STEP,

SWOT

Form teams, new product/service idea, STEP, SWOT

3%

2Basic termsBrainstorming,

STEP, SWOT

3%Focus group Focus group 3%

3Questionnaire design,

Case study 2: CarSculpturers

Focus group 3%Paper based questionnaire Questionnaire 6%

4Web-surveysQuestionnaire

design3%SurveyMonkey Test survey 3%

5Business Planner Web-surveys 3%Demand estimation Survey 3%

6Assessing unit costsDemand

estimation3%BusinessObjects Unit costs 3%

7Assessing fixed costsBusiness

Objects3%

Breakeven, multi-product analysis

Fixed costs 3%

8Cash-flow analysis Fixed costs 3%Non-bank financing Cash-flow 3%

9Analysis of returnsNon-bank

financing3%Bank financing

Returns analysis & distrubute reports

3%

10Presentation planning Bank financing 6%Presentation editing Prepare presentation - 

11Project Presentation

Contest- 40%  Evaluation - - 

Accessibility of course materialsAll course materials are available at PTE-TTK Szentágothai Szakkollégium website: http://szentagothai.ttk.pte.hu/ in form of PowerPoint presentations and practicesThese are NOT conventional „three sentences/slide” projectable presenta-tions, but almost full-text materials with:

Linked-in case study materialsStep-by step animated software usage

usable at computer labHowever it is highly recommended for stu-dents to print them out in handout format and taking notes to slides, as questions in quiz may be represented from oral comments of tutor also

All course materialsare in English to cap-ture Business EnglishBut their Hungariantranslation availableSoftware has English/Hungarian GUI

We can’t use TAB here!

Requirements and ConsultationMid-semester requirements:

Max. 10 × 3points = 30 points from simple 5-question quizes written at the beginning of presentations where students are evaluated individuallyQuizes are from the last presentation and practiceMissed quizes can be substituted by one extra 6 point quiz ad the end of semesterMax. 10 × 3points = 30 points from home assignments evaluated at project team-level. Teams are free to reallocate their home assignment points internally to proportionate it to contribution of their members!Home assignments are due to the beginning of next practiceMissed home assignments cannot be replaced after deadline as they are group assignments

Consultations:Tutors will provide consultation at Department of Informatics, PTE-TTK, at times prearranged at pauler@t-online.hu or +36/30-901-5488

Results:Students can track their mid-semester results at http://szentagothai.ttk.pte.hu/

Business Plan ContestFor the beginning 10th week practice, project teams have to submit their completed business plan in *.pdf and *.xls format. After the deadline, teams cannot change anything on business plan: any further corrections are ignored!Business plans will be circulated among among all participating teams for reviewing errors and deficiencies. It is highly recommended for team leaders to assign each member of the team to review business plan of one specific competitor. Alternatively, they can allocate review by area (marketing, finance, statistics, etc.). Teams can ask for consultation from tutor to help criticizing concurrent business plans.At 11th week presentation we organize Business Plan Contest:

All teams present their busines plan to other teams in a 20 minute presentation. Order of teams will be randomly selected and time limit will be extremly strictly held by tutor. Journalists of university- or local media may be present at contest.Concurrent teams have 10-15 minutes to criticize the current business plan after presentations, followed by a 5-10 minutes coffe breaksAt conclusion of contest, teams cross-evaluate each other: each team allocates n×20points in total among n other concurrent teams proportional to the quality of their business plan (eg. in case of 5 teams, one team will allocate (5-1)×20=80points among four other teams, eg.: 35, 25, 15, 15)Average of points given by other teams is added to current team members mid-semester points, forming 40% of their evaluation in grading.

Grading and RewardsGrading of individual students:

0-29points:Reject signing course(0), 30-49points: Fail(1), 50-69points: Sufficit(2), 70-79points: Medium(3), 80-89points: Good(4), 90-points: Excellent(5)In case of Fail(1), there are 2 possibilities for correction at oral exam from course material of presentations to get creditIllegal „pooling” of points evenly among teams regardless their performance is not enogh to guarantee Sufficit(2) for everyone, not worth to do it.Members of team totally beaten, or failing to present their work in contest - therefore receiving 0 points there - can still pass the exam with Sufficit(2), if they did all quizes and home assigments properly. So. don’t be shy criticizing other teams, because of:

Rewards of PTE-TTK Szentágothai Szakkollégium for winner teams: (At least one participant of the team shoud be a registered member there to apply for rewards)1st prize: 200,000.-HUF + Extra prize joining them to ERASMUS Inventor Scholarship Program2nd prize: 100,000.-HUF3rd prize: 50,000.-HUF

Whoever is not interested getting credit for the course, can partici-pate only in the competition and will be excluded from grading tests and home assignments!

But, as preparing business plan is not „happy play & fairly tale” – requiring lot of commitment mid-semester – we do not recommend it.