Students

New master's degree: Delving deep into data

Business analytics has come a long way in a short time, evolving into a vital part of company strategy. The demand is only going to grow for job candidates who can effectively collect and manage mountains of data, analyze it for insights into customers and trends and develop strategies that give their employers quick and deep advantages over the competition. Training graduate students in this hot field is the goal of the W. P. Carey School’s new Master of Science Business Analytics.

2014-02-28

Credit card issuers know their customers so well that they can spot in split-second time whether a user’s transaction in Paris is likely legit or a fraud. The American Red Cross uses computer models to decide where they should locate warehouses, and most airlines use computer models to help maximize revenues.

Harrah’s has turned casino patrons into loyal, long-term customers by figuring out just how much they’ll gamble before they feel like folding their cards. How do companies do that? By hiring people who know business analytics, of course. The demand is only going to grow for job candidates who can effectively collect and manage mountains of data, analyze it for insights into customers and trends and develop strategies that give their employers quick and deep advantages over the competition.

Training graduate students in this hot field is the goal of the new Master of Science degree in business analytics. The W. P. Carey School of Business began offering the degree in fall 2013, starting with a 10 month, full-time program taught on Arizona State University’s Tempe campus. A 16-month, online program begins in fall 2014.

Backroom operation moves up

Business analytics has come a long way in a short time, evolving into a vital part of company strategy from what was little more than statistics-oriented backroom operations focused on making sure companies complied with rules and regulations. “People that were good on the analytical side typically didn’t have very much knowledge about the capabilities of information management, and so there’s this limited capability to do the analytics if the information is dispersed, if it’s not very well organized or the sources are varied,” said Daniel Brooks, the faculty co-director who also teaches in the master’s program.

“It was a very specialized set of skills. It was used on a small portion of the issues that arose in a company, and so it was quite specific in its application and limited in its influence.” Uday Kulkarni, the other faculty co-director and who also teaches in the program, said business analytics has grown out of decision support systems, a type of information systems designed to aid managers in decision-making. But as the availability of low-cost data storage and computing power has boomed, so have the changes in business.

As companies began to collect and manage huge amounts of data, they had a vague sense that there were diamonds in the rough, or as some say, a pony in the pile of manure. This meant expanding the role of people looking into the data, and using the data to make strategic decisions. “That has raised different challenges, both on the analytics side and on the management of this data,” Kulkarni said. “We’ve got data coming in from multiple sources of different types. How do we manage this data, at first in terms of organizing and storing it, and then connecting it together and then … what type of analysis can we do on it and what type of insights can we build from that. That is the potential. That is what we’re trying to teach in these programs.”

Leading companies like Netflix and Google have shown there is competitive advantage in extracting from today’s data insights into what will happen tomorrow, Brooks and Kulkarni said. The more organizations tap the power of business analytics, the more they increase the speed and accuracy of the feedback they acquire from their data. Companies then can experiment with pricing, offers and different markets, seeing customer responses quickly and adjusting their strategies accordingly.

New combination of skills

Employees capable of managing and analyzing such data have become more valuable and more visible, reporting to managers and executives who influence strategy. The master’s in business analytics offers the necessary hybrid set of skills, combining knowledge of information systems with knowledge of analytics. The program draws its faculty from both the Department of Supply Chain Management and the Department of Information Systems, integrating skills from both fields.

The supply chain faculty includes many analysts trained in modeling, or identifying patterns in large data sets from all aspects of an organization, from customer profiles to procurement, manufacturing, costs and pricing. The information systems faculty teaches how to collect, organize and integrate data from multiple sources in order to analyze it, Kulkarni said. And to manage the development and deployment of analytics into business processes to, for example, run marketing campaigns, prevent fraudulent transactions, anticipate machine malfunctions and bottlenecks in shipments, customize experience based on who and where the customer is … in other words, make things happen.

Just as a sports team must learn offense, defense and how to apply those skills, business-analytics students will learn skills from both information systems and analytics, apply them to their particular industry or domain and build from there, Kulkarni and Brooks said. The new degree has attracted students with a wide range of backgrounds, from technology and business to even psychology. Work experience ranges from one year to 20 years, with the average number of years between four and five years.

Students need some quantitative or analytical background, and many come from engineering, business or finance, as well as information systems and supply chain management. “Most importantly, the people who are interested in quantitative analysis going forward, who are good with numbers and who want to use those skills” are the best fit for the program, Kulkarni said. And they can apply their new skills in a wide range of domains within organizations in both the public and private sectors, from human resources and supplier/customer management to marketing, economics and finance.

The program

Courses in the master’s program introduce students to analytics, teach them data mining and add in analytical decision-making tools. The course ties it all together with an applied project that organizes data, extracts insights from it and applies it to real-world strategy. Teams of four to five students are already working on applied projects for organizations ranging from global corporations to small non-profits.

For example, one team is helping the American Red Cross decide where to locate its warehouses for increased effectiveness. Already, the team has discovered ways in which more precise data can aid the organization in a more insightful evaluation of warehouse locations. That’s an important lesson, Kulkarni says, because companies should realize that although it is inexpensive to collect mountains of data, it is expensive to organize and analyze it. That is where MS-BA graduates will add value to companies, influencing the amount of time, the number of employees and the level of resolution of data needed to make strategic decisions. Notably, coursework starts with studying the strategy of an organization, exposing students to critical, high-level thinking, Kulkarni said.

In the big picture, students should see that business analytics starts with asking what decisions an organization needs to make to be competitive. The decisions to be made influence the data that will be collected and the insights analysts hope to gain from the data. Another important component woven throughout the courses is ethics — the good character required to collect and manage data properly and to apply the analytics appropriately. As analytics are becoming more visible and important in predicting the future, some companies do them extremely well and others feel they are going to lose if they don’t, Kulkarni said.

Companies are also seeing the value of defining customer segments at finer and finer levels, enabling them to tailor products and prices to different customers. Insurance companies, for example, can use analytics to go beyond the traditional factors of age, gender and marital status and price policies using more precise data on risk. Online retailers can develop profiles to figure out what entices a shopper to hit the “submit” button. These ideas are already being put into practice, but now companies are looking to do them faster and at the optimum level of detail — not too much data, not too little.

“Companies really want to understand the present — why is this happening right now? And they want to be able to predict what’s going to happen next so they can position themselves well,” Brooks said. “That’s what we hope these graduates will play key roles in — they’ll be able to answer the ‘why,’ and they’ll be able to answer the ‘what’s next,’ even for things with a very high rate of change.”

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