Saturday, July 12, 2008

Competing on Analytics: The New Science of Winning

Competing on Analytics: The New Science of Winning - Thomas Davenport and Jeanne Harris

This book originated from an excellent article that the authors wrote to the Harvard Business Review. In this book, the authors define the analytical competition, and why and how the companies are using sophisticated quantitative and statistical analysis and predictive modeling to competing in a world where the companies are offering similar products. The globalization finished with several previous bases for competition and the companies need increasingly build their competitive strategies using the concepts of analytics.

They divide the book in two parts. In the part one, called The Nature of Analytical Competition, they wrote about the fundamentals that define the analytical competition.

In the first chapter, they define analytics as: "By Analytics we mean the extensive use of data, statistical and quantitative analysis, explanatory and predictive models, and fact-based management to drive decisions and actions. The analytics may be input for human decisions or may drive fully automated decisions. Analytics are a subset of what has come to be called Business Intelligence: a set of technologies and processes that use data to understand and analyze business performance."

They explain the use of analytics to improve the business performance and the business process to gain competitive advantage, divided into two categories: internal and external. In the internal process, they explain the use in financial analytics, cost management, mergers and acquisition, manufacturing, operations, research and development, and human resources. In competing on analytics with external processes, they define how the analytical competitors are using the data from customer-based process and supplier-facing processes to improve their external processes (sales, marketing, procurement, logistics).

In the part two, called Building an analytical capability, they define a road map, through five stages to the companies develop the analytical capability, and also how the companies should managing efficiently the analytical professionals.

It is an excellent book that to point the direction that the companies need to drive to become an analytical competitor.

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