DATA

SCIENCE
ANALYTICS METHODOLOGY
A general framework for data mining and
analytics

Steps in the analytics methodology

• Problem Identification
• Solution Design
• Solution Implementation
• Solution Monitoring

Best Practices in Analytics

 Analytics Methodology

Problem Solution Solution Solution

Definition Design Implementation Monitoring
 Analytics Methodology

Problem Solution Solution Solution

Definition Design Implementation Monitoring

The “best” solution based on theory may not be the “best” solution
in practice
 Analytics Methodology

Problem Solution Solution Solution

Definition Design Implementation Monitoring

The “best” solution based on theory may not be the “best” solution
in practice

1. Lack of good data or specific variables

 Analytics Methodology

Problem Solution Solution Solution

Definition Design Implementation Monitoring

The “best” solution based on theory may not be the “best” solution
in practice

1. Lack of good data or specific variables

2. Solution implementation constraints
 Analytics Methodology

Problem Solution Solution Solution

Definition Design Implementation Monitoring

The “best” solution based on theory may not be the “best” solution
in practice

1. Lack of good data or specific variables

2. Solution implementation constraints
3. Other business constraints
 Analytics Methodology

Problem Solution Solution Solution

Definition Design Implementation Monitoring

The “best” solution based on theory may not be the “best” solution
in practice

1. Lack of good data or specific variables

2. Solution implementation constraints
3. Other business constraints

Need to understand how solution will be implemented to finalize best

solution
 Solution Design
There are multiple approaches to business problems - is an analytics
solution always the best approach?
 Solution Design
There are multiple approaches to business problems - is an analytics
solution always the best approach?

 To use data to drive decisions, you need to ensure you have the right
data
 Solution Design
There are multiple approaches to business problems - is an analytics
solution always the best approach?

 To use data to drive decisions, you need to ensure you have the right
data

 For example: you want to predict the potential trial rate of an ultra-
luxury brand that you want to launch, but you have so far launched
brands that are more value conscious – no data for an analytical
approach.
 Solution Design
There are multiple approaches to business problems - is an analytics
solution always the best approach?

 To use data to drive decisions, you need to ensure you have the right
data

 For example: you want to predict the potential trial rate of an ultra-
luxury brand that you want to launch, but you have so far launched
brands that are more value conscious – no data for an analytical
approach.

 You could try to obtain data on competitor launches or run some

qualitative research in this case, but it is not a good idea to develop
a trial % based on a different segment of population
 Solution Design
Solution design may depend on end use:

1. Reporting for insights : Use historical data to understand

performance and identify patterns in data and use as basis
for future planning

2. Forecasting : Use past data collected over time for actual

forecasts of future performance

3. Predictive Analytics : Similar to forecasting, but not just

time related

4. Optimization : Develop strategies to derive optimal use of

resources given constraints
 Solution Design
Solution design may depend on end use:

1. Reporting for insights : Use historical data to understand

performance and identify patterns in data and use as basis
for future planning

2. Forecasting : Use past data collected over time for actual

forecasts of future performance

3. Predictive Analytics : Similar to forecasting, but not just

time related

4. Optimization : Develop strategies to derive optimal use of

resources given constraints
 Solution Design
Solution design may depend on end use:

1. Reporting for insights : Use historical data to understand

performance and identify patterns in data and use as basis
for future planning

2. Forecasting : Use past data collected over time for actual

forecasts of future performance

3. Predictive Analytics : Similar to forecasting, but not just

time related

4. Optimization : Develop strategies to derive optimal use of

resources given constraints
 Solution Design
Solution design may depend on end use:

1. Reporting for insights : Use historical data to understand

performance and identify patterns in data and use as basis
for future planning

2. Forecasting : Use past data collected over time for actual

forecasts of future performance

3. Predictive Analytics : Similar to forecasting, but not just

time related

4. Optimization : Develop strategies to derive optimal use of

resources given constraints
 Solution Design
Solution design may depend on end use:

1. Reporting for insights : Use historical data to understand

performance and identify patterns in data and use as basis
for future planning

2. Forecasting : Use past data collected over time for actual

forecasts of future performance

3. Predictive Analytics : Similar to forecasting, but not just

time related

4. Optimization : Develop strategies to derive optimal use of

resources given constraints
 Solution Design
Solution design may depend on end use:

1. Reporting for insights : Use historical data to understand

performance and identify patterns in data and use as basis
for future planning

2. Forecasting : Use past data collected over time for actual

forecasts of future performance

3. Predictive Analytics : Similar to forecasting, but not just

time related

4. Optimization : Develop strategies to derive optimal use of

resources given constraints
 Solution Design
Solution design may depend on end use:

1. Reporting for insights : Use historical data to understand

performance and identify patterns in data and use as basis
for future planning

2. Forecasting : Use past data collected over time for actual

forecasts of future performance

3. Predictive Analytics : Similar to forecasting, but not just

time related

4. Optimization : Develop strategies to derive optimal use of

resources given constraints
 Solution Design
Solution design may depend on end use:

1. Reporting for insights : Use historical data to understand

performance and identify patterns in data and use as basis
for future planning

2. Forecasting : Use past data collected over time for actual

forecasts of future performance

3. Predictive Analytics : Similar to forecasting, but not just

time related

4. Optimization : Develop strategies to derive optimal use of

resources given constraints
 Solution Design
Solution design may depend on end use:

1. Reporting for insights : Use historical data to understand

performance and identify patterns in data and use as basis
for future planning

2. Forecasting : Use past data collected over time for actual

forecasts of future performance

3. Predictive Analytics : Similar to forecasting, but not just

time related

4. Optimization : Develop strategies to derive optimal use of

resources given constraints
ANALYTICS METHODOLOGY
A general framework for data mining and
analytics

Steps in the analytics methodology

• Problem Identification
• Solution Design
• Solution Implementation
• Solution Monitoring

Best Practices in Analytics

 Analytics Methodology

Problem Solution Solution Solution

Definition Design Implementation Monitoring

Solution Implementation
 Analytics Methodology

Problem Solution Solution Solution

Definition Design Implementation Monitoring

Solution Implementation

1. Typically is the longest phase

 Analytics Methodology

Problem Solution Solution Solution

Definition Design Implementation Monitoring

Solution Implementation

1. Typically is the longest phase

2. Starts with data collection

 Analytics Methodology

Problem Solution Solution Solution

Definition Design Implementation Monitoring

Solution Implementation

1. Typically is the longest phase

2. Starts with data collection

3. Data Preparation and Exploratory Data Analysis will typically

form a significant part of total project effort and time
 Analytics Methodology

Problem Solution Solution Solution

Definition Design Implementation Monitoring

Solution Implementation

4. Initial modeling results and calibration

 Analytics Methodology

Problem Solution Solution Solution

Definition Design Implementation Monitoring

Solution Implementation

4. Initial modeling results and calibration

5. Finalization of models post calibrations

 Analytics Methodology

Problem Solution Solution Solution

Definition Design Implementation Monitoring

Solution Implementation

4. Initial modeling results and calibration

5. Finalization of models post calibrations

6. Interpretation and framing of results in business context

 Solution Implementation
Once the best solution approach has been identified, the
actual solution building and implementation phase starts

This phase includes:

1. all the data exploration and preparation phases,

2. the analytical techniques application, and
3. the final implementation of the derived solution

This phase typically accounts for 60 – 80% of total project time

 Solution Implementation
Typical Steps within Solution Implementation

1. Data Exploration
2. Data Preparation
3. Data Partitioning
4. Model Building – Test Data Set
5. Initial Model
6. Model Iterations and Tweaking
7. Final Model
8. Validation Model
9. More Iterations If required based on Validation Model Results
10. Interpretation of results into business friendly context
11. Solution implementation
ANALYTICS METHODOLOGY
A general framework for data mining and
analytics

Steps in the analytics methodology

• Problem Identification
• Solution Design
• Solution Implementation
• Solution Monitoring

Best Practices in Analytics

 Analytics Methodology

Problem Solution Solution Solution

Definition Design Implementation Monitoring

Solution Monitoring
 Analytics Methodology

Problem Solution Solution Solution

Definition Design Implementation Monitoring

Solution Monitoring

1. Very important phase that is sometimes ignored

 Analytics Methodology

Problem Solution Solution Solution

Definition Design Implementation Monitoring

Solution Monitoring

1. Very important phase that is sometimes ignored

2. Once solution is implemented, need to ensure that original

assumptions / constraints still hold
 Analytics Methodology

Problem Solution Solution Solution

Definition Design Implementation Monitoring

Solution Monitoring

1. Very important phase that is sometimes ignored

2. Once solution is implemented, need to ensure that original

assumptions / constraints still hold

3. Constant monitoring of solution to ensure changes are

accurately captured and assessed
 Analytics Methodology

Problem Solution Solution Solution

Definition Design Implementation Monitoring

Solution Monitoring

1. Very important phase that is sometimes ignored

2. Once solution is implemented, need to ensure that original

assumptions / constraints still hold

3. Constant monitoring of solution to ensure changes are

accurately captured and assessed

4. Solutions age – need to track reliability over time

 Solution Monitoring
Solution monitoring is required to ensure that solution
supplied is continuously providing expected results

For example:

We have devised a model to predict probability of default -

if the characteristics of the underlying applicant pool changes, or there
are other external factors affecting population behavior,

you will need to modify the solution or potentially come up with a

new one
ANALYTICS METHODOLOGY
A general framework for data mining and
analytics

Steps in the analytics methodology

• Problem Identification
• Solution Design
• Solution Implementation
• Solution Monitoring

Best Practices in Analytics

 Analytics Best Practices
1. Models should be as simple as possible
• Example : Impact of Age on Sales
• Ages 20-30 v/s Ages 50-60
 Analytics Best Practices
1. Models should be as simple as possible
 Analytics Best Practices
1. Models should be as simple as possible

2. Model results and recommendations need to be actionable

 Analytics Best Practices
1. Models should be as simple as possible

2. Model results and recommendations need to be actionable

3. Models need to be rigorously validated on multiple sample sets

if possible
 Analytics Best Practices
1. Models should be as simple as possible

2. Model results and recommendations need to be actionable

3. Models need to be rigorously validated on multiple sample sets

if possible

4. The most critical three things to remember:

 Analytics Best Practices
1. Models should be as simple as possible

2. Model results and recommendations need to be actionable

3. Models need to be rigorously validated on multiple sample sets

if possible

4. The most critical three things to remember:

– Business Knowledge, Business Knowledge,

Business Knowledge!
THANK YOU