Achieve Analytics

Sophistication
THOUGHT LEADERSHIP
Become Analytics-Driven W H I T E P A P E R

APR. 2017
Data production will be
R Systems Inc.
44 times greater in 2020
than it was in 2009.
Source: IDC
Table of
Contents

1. Introduction 1

2. Analytics-Driven Organization 1

2.1. Big Data Revolution 3

2.2. Resurgence of Machine Learning and AI 3

2.3. Analytics as Competitive Advantage 4

3. Analytics Maturity 4
By 2020, data-driven
organizations are set to
4. Analytics Sophistication 6 achieve additional $65Bn.
in productivity benefits.
5. Analytics Skill Gap 8

6. References 10

7. About R Systems 11

Thought Leadership Whitepaper | analytics.rsystems.com

1. Introduction
In today’s world, a successful enterprise
has to achieve competencies in data and
analytics to remain competitive and
relevant. An organization can position
itself ahead of disruptions in its industry
by leveraging all relevant data which is
at its disposal and by applying a variety
of analytics on top of it. This is a mandate
for many classic organizations who are
under constant threat of disruptions in
their own markets by newcomers or
agile competitors. Although nothing can
save an obsolete product or business
model, analytics is fundamental for both
innovating new products and enhancing
existing products, as well as, their reach
to the right customers, in the right way.
This whitepaper explains different
progressive levels in an enterprise’s
journey to become analytics driven
2. Analytics-Driven
Organization
The use of Machine Learning (ML) and
advanced analytics to create value from
corporate or public data is nothing new
[1]. Leveraging these technologies for
commercial use started in the late ‘80s/
early ‘90s, when predictive analytics and
ML techniques had become very popular.
Today, we collectively cover both these
aspects under “data science1 .”
Nowadays, data science is an umbrella
term that spans across data mining,
advanced and predictive analytics,
statistical modeling, decision science,
knowledge discovery in databases
(KDD), ML, pattern recognition and AI
to make better decisions based on a
vast amount of data of all kinds. Data
science gained traction when there
were real business interests in specific
industries about advanced analysis of
data for business decision making.
For over two decades, Data Science
has been the cornerstone for a lot of
applications. For e.g., Real-time Fraud
Detection in the Finance vertical and
the Recommendation Systems in the
Retail vertical. However, due to the
popularity of web products since early
‘2000, data science today has become
widely acceptable across industries.
In the last three decades, the genuine
interest in treating data as an asset2 and
advanced uses of data for analytical
decision making has been the driving
force for many of the technology
innovations. Figure1 is an illustration of
the goal that has survived the test of
time which is to collect and process all
types of data in granular detail and in
conjunction with each other to gain
valuable novel insights.
1 We define data science as “the practice of extracting insights
from data using a multitude of disciplines and technologies for
the purpose of creating new data products and services or
improving the existing ones [1].” Based on this definition, data
science is nothing new but the term itself and the recent level of
interest in it.
2 As you have heard, data is the new Oil.
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As is typical, such interests started out of
specific industries that realized the need
which were then led by the innovators
(technology enthusiasts) and early
adopters (visionaries).
In Figure 1, the technologies involved
have been constantly changing at a very
fast pace. E.g., due to the exponential
growth in volume/ velocity of data and
data variety due to internet connectivity
and proliferation of web products, data
technologies have been under both
evolutionary and revolutionary changes.
Analytics tools and related technologies
have also been continuously improving
at a great pace with the most significant
change being the abundance and easy
availability of open-source analytics
tools/ software. In parallel, for classic
and new companies, the possibilities to
innovate/ improve their products and
services by leveraging analytics has
significantly increased. This has created
amazing new market opportunities. The
use of analytics for product innovation
and improvement is the norm today. In
short, the general theme of evolution
from detailed/ granular data of all kinds
to intelligent business decisions has
stayed unchanged in the past 30 years,
while the technologies, processes and
implementation details on achieving it
have been in constant change.
For many classic organizations, coping-
with constant changes in technologies
and applications has become their main
challenge towards becoming a data and
analytics-driven organization.
Thought Leadership Whitepaper | analytics.rsystems.com
At the same time, this has brought in
big opportunities for many players as
well. In early years, data warehousing
and data marts were of a significant
focus with IT-led reporting and BI. On
the advanced analytics end, the focus
was on finding rewarding use cases
and right algorithms for commercial
use. By mid ‘2000, the focus shifted to
cost-effective data infrastructure, to
cope up with the exponential growth
of data and business-led BI, with an
emphasis on visualization and self-
service. On the advanced analytics
front, with significant breakthroughs
in the processing speed, open-source
tools and easy availability of all kinds
of data, it became possible to deliver
more confidently on the promises of
Machine Learning and AI.
This whitepaper focuses on the
Two main breakthrough changes
in the recent years:
Big Data Revolution and ML/ AI
By 2018, more than half of
large organizations globally
will compete using
advanced analytics and
proprietary algorithms
Source: Gartner
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2.1 Big Data Revolution standpoint, BI had now gone ahead of
ETL which is an indication of putting
For a moment, we first consider one of data to analytics use. BI is the fastest
these significant technology changes way to show the value of data and
that are the big data revolution and its justify investments in any new data
drastic impact on organizational data technology. Focusing on BI doesn’t
infrastructure. In early to mid ‘2010, big diminish advanced analytics’ value,
data was at its hype. So many companies that typically brings higher business
were experimenting or planning to value (ROI) although it has a longer
explore Hadoop ecosystem. At the time, turnaround time and higher risks.
top technical challenges with Hadoop
were the speed of processing, ETL and
data preparation, useage of advanced 2.2 Resurgence of Machine
analytics and real-time embedding of Learning and AI
advanced analytics in operational flows[4,5]
In 2015, per Gartner, investment in big Earlier we mentioned a few successful
commercial uses of ML in early ‘90s, in
data going strong, where 75% of all com-
financial (real-time fraud detection
panies were either investing or were
using neural networks[10]) and retail
planning to invest in big data in the next (recommendation systems) verticals
two years[7]. By 2016, big data maturity that are still in use. Since then, there
survey[6] indicated that 75% of the have been many applications of ML
respondents already had at least one used everyday, but still go unnoticed.
Hadoop cluster in some shape or form, In recent years, one very interesting
whereas 73% had it in production. The development is the resurgence of AI,
survey also established that big data was which comprise of ML. We are no
still growing fast, data governance was a longer concerned whether computers
growing concern ahead of security and (or robots) can ever display intelligent
access. It also revealed big data cloud behavior, but rather how intelligent
option was a preferred choice for partial/ they may get as witnessed by recent
full data storage or development for AI successes like Watson in Jeopardy!
many organizations3 . It also indicated and Google DeepMind AlphaGo4 are
that 95% of respondents have achieved the evidence of the possibilities in AI.
positive value from their investments in
There have been different approaches
big data, or are expecting that they will.
to AI. The most successful approach,
Given that all the investments in data
that typically outperforms others,
infrastructure, were from a workload’s involves ML applied to large datasets.
3 In 2014, there was fear of Cloud among many enterprise companies.
That mindset has quickly changed. Today, every enterprise is either 4 AlphaGo uses Deep Learning via convolutional neural networks
using the cloud or in process of moving there. This trend is witnessed trained to predict moves that expert players would make, using a
across many industries like financial, retail, insurance, healthcare, dataset of 30 million different positions from real games. The real
retail, and even government. world applications are much harder than games but ML/ AI have
recently proven their success on many new real-world use cases.

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For some of these applications, the results
are so human-like that many companies
are looking to hire more data scientists,
collecting more data and applying latest
ML & AI technologies to improve their
existing decision-making processes or
innovate new data products.
New analytical tools for making decisions,
like Watson, are creating entirely new
opportunities. With the digitization of
world commerce, the emergence of big
data and the advancement of analytical
technologies, organizations now have
amazing opportunities to differentiate
themselves through analytics. Per the
study, “Analytics: The Widening Divide,” by
MIT Sloan Management, most companies
have seized these opportunities.
2.3 Analytics as Competitive
Advantage
For more than 20 years, organizations that
embraced analytics enjoyed a clear-cut
competitive advantage over their peers.
As the importance of analytics grew and
success stories publicized, analytics thus
gained more ground across industries
(typically the laggards). A 2011 MIT Sloan
Management survey[2] indicated that at
the time 58% of executives globally, across
all industries considered analytics as a
competitive advantage, which is a very
significant jump from what they perceived
a year before. However, by 2016, increased
market adoption of analytics had leveled
the playing field and made it harder for
companies to keep their competitive edge
using analytics while the optimism about
analytics’ potential had stayed strong[3].
Thought Leadership Whitepaper | analytics.rsystems.com
Many enterprises remain in the early
stages of their analytics initiatives and
strategically consider it as an engine
of innovation. Almost every classic
organization is realizing the journey
through analytics maturity requires a
lot of hard work and commitment due
to constant changes in technologies
involved and the pressures of new
competition. This commitment does
touch many aspects of organizational
behavior, from revamping the data
management and analytics skills/
tools, to changing cultural norms[3].
Decisions
Advanced
Analytics
Business Intelligence
Data Infrastructure
Data Types (Structured, Semi-structured, Unstructured)
Figure 1: From detailed granular data to
analytics-driven decisions
3. Analytics Maturity
Our five progressive levels of analytics
maturity (Figure 2) shows the final,
most sophisticated level named as
“Transformed”. Such companies are
data native hence regard analytics an
integral part of everything, thus use
analytics strategically daily and at all
levels. Reference[9] below, elaborates
each of these levels further.
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Figure 1 illustrates the succession of Transformed
steps to go, from Raw Data (variety of
detailed operational data, third party
data, etc.) to Intelligent Decisions, for
Advanced
achieving analytics maturity. Companies
can optimize their decisions based on
specific analysis performed on the data
and dependent on the specific business Experienced

use cases. In classic organizations, these

competencies will take time to evolve
and mature. An organization should first
commit to the importance of decisions
that are analytics-driven. This requires
gradual alignment in culture, along with
a clear technical roadmap.
For a classic organization, achieving
analytics maturity is a journey across
multiple dimensions. Organizations will
not progress through analytics maturity
levels solely based on “data readiness/
infrastructure” and employing “analytics
tools/ techniques”. Other dimensions
like “culture”, “top leadership”, “people/
skillsets”, “business processes”, “nature of
industry/ market”, competitive map, etc.
need to be taken into consideration to
make this journey successful.
For brevity, in this paper we have
merged some of these dimensions and
laid emphasis on three dimensions:
Analytics Sophistication (skill level,
expertise, techniques and tools)
Data Management Sophistication
(data readiness, infrastructure, skills,
experience and tools)
Culture (competitive landscape,
leadership, processes and industry)
Motivated
Beginner
Figure 2: Five progressive levels of
analytics maturity
Culture plays a very crucial role as it
influences leadership, processes and
people across the organization and at
all levels. Irrelevant of a company’s
sophistication across the data and
analytics dimensions, if the culture
does not promote and reward the
analytics-driven decisions, higher
levels of analytics maturity may not be
achieved. Leadership in a company can
initiate an analytics-driven culture and
thinking down the ranks. Changing
established processes, mindset and
thought process in an organization
takes time but it is instrumental to get
everybody on board on analytics and
data initiatives. However, mostly, this
change may be initiated even from the
mid-level of an organization and then
cascade up to the top and the rest of
the organization. In either scenario, an
analytics-driven thinking and culture is
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essential for a successful implementation
of data and analytics competencies
which help companies to move towards
an analytics-driven decisions whether
tactical or strategical. Many times the
culture change is forced upon a company
by market dynamics and competitive
landscape in the industry which they
operates in. In such situation, companies
look up to the leaders and innovators in
their industry or similar industries.
Analytics can only perform well if an
organization stands over a solid data
foundation and infrastructure, which is
designed and built for various analysis.
Highlighting the importance of data
management, infrastructure and its
readiness here is not needed but it is
sufficient enough to say that the most
matured organizations are continuously
making it easier for all types of users
(data scientists and analysts) to access
relevant quality data they need. In an
analytically matured company, data
scientists and analysts should never be
concerned with core data management
tasks such as data collection, ingestion,
storage, access, documentation quality,
governance and integration (raw data
quality). Data engineering/ architecture
teams provide these services across the
company and work with other data
scientists to collect and transform new
sources of data for the use of analytics.
Thought Leadership Whitepaper | analytics.rsystems.com
4. Analytics Sophistication
Analytics sophistication is one of the
dimension which is considered for the
assessment of analytics maturity. One
key issue that always comes up in data
science5, BI, or other data processing
tasks is the precise definition of the
term “analytics,” and what does it really
mean. Analytics covers a vast spectrum
and is often found to be a source of
confusion for clients evaluating various
vendors’ capabilities. Figure 3 is an
illustration of an enterprise evolution
in analytics[1]. It plots the analytics
sophistication in terms of simple and
familiar analytics practices and its
direct correlation with competitive
advantage. The analytics spectrum is
basically divided into Two - Basic and
Advanced. The divisions are based on
at least two vital differentiating factors.
Firstly, advanced analytics needs more
sophisticated algorithms, tools and
skillsets to achieve its goals. Secondly,
the business value/ insights obtained
from Advanced analytics is also higher,
since it has a predictive, proactive and
prescriptive (3Ps) nature. This means
the capabilities it provides can impact
future outcomes in a smart manner[1].
Basic analytics looks at the past data
and requires simpler processing. It is
both reactive and descriptive in nature.
In the business world, both these terms
(Analytics and Data Science) are often
5 In this document, we may use the term “Data Science” and “Data
Mining” interchangeably with data science obviously preferred.
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 used interchangeably and covers the full
spectrum. The term Analytics is often
considered ‘business-friendly’, whereas,
Data Science is still viewed like a technical
term. However, both these terms achieve
the same objective of extracting value
from data via analysis. From a technical
standpoint, the term “Data Science” is
regarded to be more focused on covering
the high-end of the analytics spectrum.
To be successful at any level of analytics
sophistication, a company must have an
outstanding level of expertise in data
management. Only then an enterprise
can start its evolution from a low-end
analytics like standard reports towards
adhoc reporting, simple alerts, OLAP,
real-time dashboards (monitoring KPIs)
and interactive visualization. Business
and data analysts usually operate in
this range. A data analyst must have a
sufficient business domain knowledge
and a good understanding of relevant
data along with common analytical
skills. To perform data analysis tasks,
business/ data analysts often deal with
an aggregated data, mostly from a
single data source and a handful of
variables at anytime.

Prescriptive
ANALYTICS SOPHISTICATION = COMPETITIVE ADVANTAGE

Advanced Analytics:
Predictive & Proactive
OPTIMIZATION

What is the best that can

happen given constraints?

PA, ML, AI What will happen?

FORECASTING What is the trend?

STATISTICAL
ANALYSIS What is happening?

Basic Analytics: ALERTS

Descriptive & Reactive What actions are needed?
DASHBOARD
What is happening overall? &
VISUALIZE

What exactly is the problem? STD. REPORTS

AD-HOC
What happened specifically? REPORTS
What exactly is the problem?

OLAP
What happened? DRILL DOWN

Figure 3: Competitive advantage has direct correlation with analytics sophistication. Here we
measure sophistication only by examples of analytics deployed from less complex
basic analytics to more sophisticatedalgorithmic techniques (advanced analytics) 7 of 11
As an enterprise recognizes the value of
its data through the analytics processes,
it will continue to improve upon them to
maximize their business value. However,
there is a saturation point beyond which,
the marginal contribution achieved from
the basic analytics practices quickly
diminishes[1]. Precisely at this point, a
disruptive change has to take place in an
organization’s vision and culture in order
for it to transition into a higher form of
analytics. In Figure 3, this transition point
is illustrated using a yellow lightning bolt
while Figure 4, outlines some key factors
required for this disruptive transition. At
this side of the spectrum, a company
becomes more proactive in employing a
data-driven predictive and prescriptive
processes. Statistical Analysis, Machine
Learning (ML), Predictive Analytics (PL),
Forecasting, Artificial Intelligence (AI)
and mathematical optimization (under
real-world constraints) are examples of
Advanced Analytics techniques. Data
scientists typically operate in this range.
It is worthy to mention that when an
organization transitions from large data
to big data, there would be disruptive
changes required as well. The enterprise
will clearly need different mindset and
thought process in its approach along
with various tools and techniques to
cope up with big data. The traditional BI
and advanced analytics skillset also
needs to improve and evolve to address
the challenges of the big data. [Figure 5]
Thought Leadership Whitepaper | analytics.rsystems.com
5. Analytics Skill Gap
Data Science is a multi-disciplinary
field that ideally requires a strong
technical knowledge of ML, pattern
recognition, programming, statistics,
mathematics, probability, modeling,
databases, and computing. Given the
existing silos in our higher education
system, companies had to hire and
train data scientists. In recent years,
there have been many data science
programs (degreed or non-degreed)
which are introduced in different
settings (academic/ non-academic),
but still data science can be best
learned on the job, assuming that the
companies have experienced data
scientists onboard who can mentor
the new hires. However, due to lack of
data science talent, high emphasis has
been put on the some of the data
science techniques and other stand-
alone/ cloud-based tools like Python
(Pandas, Scikit-learn, etc.), R, SAS,
SPSS, SQL, Azure ML, H2O, Hadoop
ecosystem (Hive, Spark, HBase, etc.).
Data scientists always deal with large
granular data, in all shapes and forms
and from a variety of sources. They
have to deal with a huge number of
variables and employ advanced sets
of algorithms. A data scientist always
demands more data. “All data in raw
form” is always preferred, but it may
not always be practical to store and
analyze all that data[1].
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Aside from deep knowledge of the data
science “black arts” and above mentioned 01 Different training
skill set (both in terms of
and experience)
techniques, data scientists should possess
many non-technical skills, which are often Scientific Mindset 02
over-looked. The ten non-technical skills
outlined `below are important (the first 03 Different Analysis Toolset
seven are the Key ones) to be successful in
data science tasks in the real world: Different Data Infrastructure
(only sometimes) 04
01. Problem solving ability
02. Ability to question the work of self and
05 Longer Project Cycles
others as well
Different Data Transformations 06
03. Passion for data (the more, the better)
04. Attention to detail and an ability to
validate own work in multiple ways 07 Most Granular/ Detailed Use of Data
05. Statistical thinking (one who knows
when to reason deterministically and Figure 4: Transition to advanced analytics
when probabilistically) always requires changes to the
06. Passion for exploration and discovery skillsets and tools.
(quick learner from failures)
07. Ability to devise optimal and creative High Performance Data Mining
ways to experiment new (finding novel (HPDM)
insights is cumbersome. One can never
Sophistication Advanced

find a sure way to find it)

08. Presentation ability (written and oral)

Big Data Analytics

Traditional Data Mining |
“Big Data”
09. Business acumen Predictive Analytics
Mining
10. Ability to simplify complex concepts
Analytics

(BDA)
to be able to easily explain it to others

While one interested in data science can Traditional BI

Basic

often learn the technical skills and evolve,

the non-technical skills however, may not
necessarily be as straightforward to grasp.
Organizations often face these challenges
as they attempt to create, build and evolve
a data science team.
Large Data Volume Big Data
Figure 5: Analytics sophistication and big data.
Transition from large to big data for
both traditional BI and Predictive
Analytics/ Data Mining requires new
skills development and tools.

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REFERENCES:
FFC483

[1] Hassibi Khosrow - 2014 High Performance Data Mining and Big Data
Analytics: The Story of Insight from Big Data (Available on Amazon)
[2] MIT Sloan Management Review Research Report: 2011 Analytics The
Widening Divide
[3] MIT Sloan Management Review Research Report: 2016 Beyond The
Hype: The Hard Work Behind Analytics Success
[4] Rogers Shawn John Myers and Barry Devlin: 2013 Operationalizing the
Buzz: Big Data 2013 Research Enterprise Management Research (EMA)
[5] Graham Bradley and M R Rangaswami 2013 "Do you Hadoop? A
Survey of Big Data Practitioners" Sand Hill Group - October 29 (Accessed
March 31, 2017) sandhill.com
[6] Hortonworks & AtScale 2016: 2016 Big Data Maturity Survey
[7]Gartner.com 2015 "Survey Analysis: Practical Challenges Mount as Big
Data Moves to Mainstream
[8] Ernst & Young (EY) 2015: Becoming an Analytics Driven Organization
to Create Value
[9] Analytics Maturity Assessment 2017 (Accessed April 30, 2017)
http:⁄⁄analytics.rsystems.com⁄data-analytics-consulting⁄analytics-maturity-assessment⁄

[10] Hassibi Khosrow 2001 "Detecting Payment Card Fraud with Neural
Networks" In Business Applications of Neural Networks: The
State-of-the-Art of Real-World Applications by Paulo J G Lisboa Alfredo
Vellido and Bill Edisbury, 141-158. World Scientific
Insights-driven businesses
http:⁄⁄bit.ly⁄IDC-estimates-big-data
will earn over $1.2 Trillion
http:⁄⁄bit.ly⁄IDC-press-release annually, by 2020
http:⁄⁄bit.ly⁄Gartner-press-release Source: Forrester
http:⁄⁄bit.ly⁄Forrester-predictions

Thought Leadership Whitepaper | analytics.rsystems.com 10 of 11

 ABOUT R SYSTEMS
R Systems Analytics helps clients
uncover actionable insights to drive
ANALYTICS SOPHISTICATION competitive advantage and capture
business value. We help organizations
W H I T E P A P E R integrate and operationalize data
analytics solutions, enabling them to
gain visibility into previously opaque
or hard to measure processes. This
empowers our clients to make
smarter business decisions.

Our team of data experts, consultants

and data scientists leverage proven
analytics methodologies, tools and
best practices to define the right
analytics solutions for you, that solve
complex business challenges/ specific
use cases and drive future growth.

Khosrow Hassibi, PHD Jeff Johnstone

Chief Data Scientist Director – Client Services, Analytics
Khosrow.Hassibi@rsystems.com Jeff.Johnstone@rsystems.com
Executive Contacts:
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