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The Eight Levels Of Analytics?

The 1 to 1 blog recently reported that SAS’ CMO “unveiled the eight levels of analytics”:

1. Standard reports — It answers the question, “What happened?”
2. Ad Hoc Reports – how many, how often?
3. Query drilldown (or OLAP) – where exactly is the problem?
4. Alerts – what actions are needed now?
5. Statistical analysis — Why is it happening? What opps am I missing
6. Forecasting – what if these trends continue
7. Predictive modeling – what will happen next?
8. Optimization – how do we do things better? What is the best decision for a complex problem?

He notes that the first four support reactive decision making, while the second four support proactive decision making. The goal is to use analytics to optimize data and actions to find the best solution for a specific business challenge.”

[Note: I cut and pasted the above from the blog. Don’t get on my case about the inconsistency in capitalization and use of the question mark.]

This model has a few flaws: 1) It isn’t labeled correctly; 2) It incorrectly characterizes the components as levels; and 3) It inappropriately assigns the elements to reactive and proactive decision making.

First off, why couldn’t a report that addresses “how many, how often” be a standard (vs. ad hoc) report? In fact, why couldn’t a “how many, how often” report be a query drilldown? And for that matter, why is a query drilldown about problems and not about successes? While we’re at it, a business that applies a trending formula to sales could easily make a forecast (“level” 6) a standard report, no?

Second of all, these aren’t levels. Levels implies an order or a hierarchy. From a capabilities perspective, there’s no reason why a firm couldn’t forecast something like sales (“level” 6) without knowing where exactly the “problem” with sales is (“level” 3). “Level” 4 is really problematic for me. How could I, as a manager, address the question of “what actions are needed now?” without some understanding of “what if these trends continue?” and “what will happen next?” (“levels” 6 and 7)?

Thirdly, I just don’t get the distinction between reactive and proactive decision making. Decisions aren’t that neatly compartmentalized. A decision I (as a manager) make is informed by, in varying degrees, data and input that cut across the eight “levels”.  How can anyone distinguish between a reactive and a proactive decision?

The questions posed in the model, however, do provide a good framework for assessing a firm’s analytics capabilities. You have to be able to answer those questions. And you should be able to determine how well your firm does in answering them.

Ron ShevlinRon Shevlin is a senior analyst at Aite Group, a Boston-based research and advisory firm serving the financial services industry. Ron is a frequent speaker at industry events and bank and credit union strategic planning sessions. His soon-to-be released book, Smarter Bank: Why Money Management is More Important than Money Movement to Banks and Credit Unions will be published in January 2015. Ron's popular blog, Snarketing 2.0, is now a permanent fixture here at The Financial Brand. You can follow Ron on Twitter.

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  1. The way these two aspects are mixed in the original article is nothing short of a mess: reporting and analytics should not be mixed… at least not like the article does.
    Reporting on analytical results is part of reporting, but some results may come about without a marketer having to apply analytical techniques.
    Ok, you got me, I now have to blog about it!

  2. Ron, I would love to comment but I am dumbfounded. This is SAS making these comments. SAS!

    From the SAS website – :

    SAS is the leader in business analytics software and services, and the largest independent vendor in the business intelligence market. Through innovative solutions, SAS helps customers improve performance and deliver value by making better decisions faster. SAS gives you THE POWER TO KNOW®.

    I have used their statistical software on and off over the years and am a big advocate for their tools. I am no advocate of the “eight levels of analytics”


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