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As opposed to health care and security, home improvement and hardware retailers are not part of an overhead sector. Wafer-thin margins and the ability of a few giant players to sell goods at a loss make the use of BI for defensive purposes essential.
As part of that effort, Christopher Dorsey, CIO of Chase-Pitkin, decided to tackle the rampant pilfering occurring at its Northeast chain stores. Rather than just react to the problem, he says, “We decided we’d do better getting ahead of the curve.”
Dorsey says two years ago their BI system -- built on Hyperion’s BI solution -- indicated that 16 of the stores’ 38,000 items made up half of all the pilferage. Dorsey added analytical capabilities from SPSS and altered processes to get the results Chase-Pitkin was looking for. “Instead of doing inventory on every item during the slowest time of year, we started doing a weekly one of the subset of most-pilfered items during the busy season,” Dorsey says.
The SPSS predictive analytics examined the attributes of pilfered products and then projected the next most likely theft candidates when the current top choices were secured. According to Dorsey, “We moved from reactive to being ahead of them to actually creating prevention. We can predict in real time what the next problem is likely to be" – and take steps to head it off.
Although playing defense was what pulled Chase-Pitkin into applying business analytics, Dorsey’s team -- like Rothman’s at EMA -- makes use of the capabilities elsewhere. According to Dorsey, analytics help the company with pricing experiments, allowing it to design new approaches in response to discoveries about customers’ behavior. “It makes us a heck of a lot more sophisticated,” according to Dorsey.
Pairing real-time data with targeted business analytics can have a dramatic effect. During the past 18 months, Apex Management Group, a health-care consulting and insurance services organization, has shifted away from being a producer of static, flat BI reports. The old model didn’t work for the companies’ actuaries, who try to chart a course for the future, not plumb the three- to six-month-old past, which is how long the previous system took to deliver actionable knowledge.
“In order to get to the next realm, we had to get predictive modeling, forecasting, deep kinds of cluster analyses,” says Dr. Jody Porrazzo, Apex’s director of econometric risk strategy.
Porrazzo and her group deployed a solution that includes SAS Institute's Enterprise BI Server. She chose to deliver some fast, obvious benefits -- for example, the senior manager who used to get one three-week-old report every three weeks now gets one every morning with data fresh from 3 a.m. that day.
Apex is cranking out actuarially informed applications as quickly as the environment is changing, enabling major parts of the organization to evolve in real time. As Porrazzo says, “You can’t be agile and surprised at the same time.”