Prof C Sudhakar CEO Raskey Software Solutions Data Analytics Prof C Sudhakar CEO Raskey Software Solutions 9/20/2018 Prof C Sudhakar CEO Rakey Software Solutions

Agenda Discussion on Data What is Analytics and Its Need Road Map Auditors perspective Types of Analytics Job Potential The Major discussion will be introduction to topic and the role of auditor 9/20/2018 Prof C Sudhakar CEO Rakey Software Solutions

Data Raw data Knowledge insights Wisdom Information 9/20/2018 Prof C Sudhakar CEO Rakey Software Solutions

Analytics The extensive use of data, statistical and quantitative analysis, explanatory and predictive models, and fact-based management to drive decisions and actions --Prof Davenport 9/20/2018 Prof C Sudhakar CEO Rakey Software Solutions

Four pillars of Data Analytics Distinctive capability: The organization views analytics as something significant that sets it apart from competitors. Enterprise wide approach: Analytics are managed and made widely available across the whole organization, not just to one department or a hodgepodge of employees. Senior management commitment: Changes in culture, process, behavior and skills and a passion for fact-based decision-making must be led by the CEO. Large-scale ambition: Analytical competitors bet their future business success on analytics-based strategies. 9/20/2018 Prof C Sudhakar CEO Rakey Software Solutions

5 levels of Analytical Capability Stage 5 Analytical Competitors Stage 4 g Analytical Companies Stage 3 Analytical Aspirations Stage 2 Localized Analytics Stage 1 Analytically Impaired 9/20/2018 Prof C Sudhakar CEO Rakey Software Solutions

Road Map to becoming an analytical competitor Analytically impaired Management Support: Prove It Path Stage 1 Localized Analytics Stage 2 Top Management Support Full steam Ahead path Functional Management builds Analytics Momentum and executives interest through application of basic analytics Stage 3 Analytical Aspirations Terminal Stage Some Companies analytics efforts never receive management support and stall here as a result 9/20/2018 Prof C Sudhakar CEO Rakey Software Solutions

Road Map Stage 3 Stage 4 Analytical Companies Analytical Aspirations Analytical competitors Enterprise-wide analytics capability under development: Top executives view analytic capability as a corporate priority Executives Commit to Analytics by Aligning resources and setting a time table to build a broad analytical capability Organizations Routinely reaping the benefits of its enterprise –wide analytics capability and focusing on continuous analytics renewal 9/20/2018 Prof C Sudhakar CEO Rakey Software Solutions

The Key elements in an analytical capability for assessment (For Audit) Organization Insight into performance drivers Choosing a distinctive capabilities Performance management and strategy execution Process redesign and integration Human Leadership and senior executive commitment Establishing a fact-based culture Securing and building skills Managing analytical people Technology Quality Data Analytical Technologies 9/20/2018 Prof C Sudhakar CEO Rakey Software Solutions

Choosing a Strategic Focus Organizations Initially focus on one or two areas for analytics Harrah’s : Loyalty Plus Service New England Patriots: Player Selection Plus Fan experience Dreyfus Corporation: Equity analysis plus asset attrition UPS: Operation plus Customer data Wall Mart: Supply Chain Plus Marketing 9/20/2018 Prof C Sudhakar CEO Rakey Software Solutions

Maturity of analytical capability by stage Analytically impaired : Organization Analytical Objective : Limited insight into customers, Markets, Competitors Analytical Process: Does Not Exist Human Skills: None Sponsorship: None Culture: Knowledge allergic- Pride on gut based decisions Technology Missing /Poor Quality Data, Multiple defines, un-integrated Systems 9/20/2018 Prof C Sudhakar CEO Rakey Software Solutions

Analytical Process: Disconnected, Very Narrow focus Human Localized Analytics: Organization Analytical Objective : Autonomous activity builds experience and confidence using analytics: creates new analytically based insights Analytical Process: Disconnected, Very Narrow focus Human Skills: Pockets of isolated analysts Sponsorship: Functional and tactical Culture: Desire for more objective data, successes from point use of analytics start to get attention Technology Recent transaction data un-integrated, missing important information. Isolated BI/analytic efforts 9/20/2018 Prof C Sudhakar CEO Rakey Software Solutions

Analytical aspirations : Organization Analytical Objective : Coordinated; establish enterprise performance metrics, build analytically based insights. Analytical Process: Mostly separate analytic processes. Building Enterprise level plan Human Skills: Analysts in multiple areas of business but with limited interaction. Sponsorship: Executive- early stages of awareness of competitive possibilities Culture: Executive Support for fact based culture- may meet considerable resistance Technology Proliferation of BI tools. Data Marts, Data warehouse established/ expands. 9/20/2018 Prof C Sudhakar CEO Rakey Software Solutions

Analytical Companies : Organization Analytical Objective : Change program to develop integrated analytical processes and applications and build analytical capabilities. Analytical Process: Some embedded analytical processes Human Skills: Skills exists, but often not aligned to right level/ right role. Sponsorship: Broad C Suite support Culture: Change Management to build a fact based culture Technology High Quality Data, Have an enterprise BI plan/ strategy, IT processes, and governance principles in place. 9/20/2018 Prof C Sudhakar CEO Rakey Software Solutions

Analytical Competitors : Organization Analytical Objective : Deep, Strategic insights, continuous renewal and improvement Analytical Process: fully embedded and much more highly integrated Human Skills: Highly skilled, leveraged, mobilized, centralized outsourced grunt work Sponsorship: CEO passion, Broad based Management Commitment Culture: Broadly supported fact based culture testing and learning culture Technology Enterprise wide BI/BA architecture largely implemented. 9/20/2018 Prof C Sudhakar CEO Rakey Software Solutions

9/20/2018 Prof C Sudhakar CEO Rakey Software Solutions

Questions to ask when evaluating new analytical initiatives How will this investment make us more competitive? How does the initiative improve our enterprise-wide analytical capabilities? What complementary changes need to be made in order to take full advantage of new capabilities such as developing new enhanced skills; improving IT training and processes or redesigning jobs? Does the right data exists? If not, can we get it? Is the data timely, consistent, accurate, and complete? Is the technology reliable? Is it cost effective? Is it scalable? Is this the right approach or tool for the right job? 9/20/2018 Prof C Sudhakar CEO Rakey Software Solutions

Key people in Implementation of Analytics CEO CIO CFO 9/20/2018 Prof C Sudhakar CEO Rakey Software Solutions

Key requirements for analytical capabilities Hard to duplicate Unique Adaptable to many situations Better than competition renewable 9/20/2018 Prof C Sudhakar CEO Rakey Software Solutions

Types of Analytics Descriptive analytics Inquisitive/Diagnostic Analytics Predictive analytics Prescriptive analytics 9/20/2018 Prof C Sudhakar CEO Rakey Software Solutions

When Analytics Fail Assumptions are not properly done Improper identification of variables Wrong selection of statistical tool Non Involvement of Top Management Proper data not available Immediate decision required 9/20/2018 Prof C Sudhakar CEO Rakey Software Solutions

Descriptive Analytics answers the question, "What happened in the business?" It looks at data and information to describe the current business situation in a way that trends, patterns and exceptions become apparent. This takes the form of reports, dashboards, MIS, etc. 9/20/2018 Prof C Sudhakar CEO Rakey Software Solutions

Inquisitive Analytics answers the question, "Why is something happening in the business?" It is the study of data to validate / reject business hypotheses. This includes analytical drill downs into data, statistical analysis, factor Analysis, Cluster Analysis etc., 9/20/2018 Prof C Sudhakar CEO Rakey Software Solutions

Prescriptive Analytics Prescriptive analytics automatically synthesizes big data, multiple disciplines of mathematical sciences and computational sciences, and business rules, to make predictions and then suggests decision options to take advantage of the predictions is the combination of the above to provide answers to the "So what?" and the "Now what?" For example, what should a business do to retain key customers? How can businesses improve their supply chain to enhance service levels while reducing costs? 9/20/2018 Prof C Sudhakar CEO Rakey Software Solutions

Predictive Analytics answers the question, "What is likely to happen in the future?" Here data modeling and forecasting are used to determine future possibilities 9/20/2018 Prof C Sudhakar CEO Rakey Software Solutions

Descriptive analytics and predictive analytics 9/20/2018 Prof C Sudhakar CEO Rakey Software Solutions

Prescriptive Analytics Prescriptive Analytics extends beyond predictive analytics by specifying both the actions necessary to achieve predicted outcomes, and the interrelated effects of each decision 9/20/2018 Prof C Sudhakar CEO Rakey Software Solutions

9/20/2018 Prof C Sudhakar CEO Rakey Software Solutions

Right Mix of Analytics Counter to conventional thinking that organizations evolve from Descriptive to Inquisitive/Diagnostic to Predictive to Prescriptive analytics, all four kinds of analytics need to be done in the right mix to enable the holistic creation of insights. Different business problems will need different levels of all four kinds of analytics. 9/20/2018 Prof C Sudhakar CEO Rakey Software Solutions

Some categories of financial applications External reporting to regulatory bodies and stake holders Enterprise Performance Management and Score Card Selecting Profitable New Markets to enter Attracting and selecting the right customers Driving pricing in accordance with risk Reducing the severity of claims Cost Management Merger and acquisition Analytics 9/20/2018 Prof C Sudhakar CEO Rakey Software Solutions

Difference between Credit Analysis and Financial Analytics Credit analysts have the general responsibility of assessing a loan applicant’s credit-worthiness. In the scope of their position, they are required to gather relevant data and, based on the data, recommend a course of action for the credit application... Financial analysts conduct research on a larger scale. They research the macroeconomic and microeconomic conditions that surround potential business, industry, and sector decisions. A decision is typically made based on the research findings. An example is the decision to purchase or sell a company’s stock. Financial analysts must remain aware of the conditions in the area in which he or she specializes, and they sometimes are required to build financial models to predict future conditions under a given scenario. 9/20/2018 Prof C Sudhakar CEO Rakey Software Solutions

Job potential Types of Job How CAS Fit Into Financial Analysts Armature Analysts Analysts Analytical Executives How CAS Fit Into Financial Analysts System Auditors Correct identification of Assumptions and variables (Confounding Variables) 9/20/2018 Prof C Sudhakar CEO Rakey Software Solutions

Q&A PL 9/20/2018 Prof C Sudhakar CEO Rakey Software Solutions

9/20/2018 Prof C Sudhakar CEO Rakey Software Solutions