Sep/Oct 2010

The use of advanced analytics has become an essential component of modern business management. Whether you are just starting to explore what analytics can do for you or have long established analytics processes, at some point you may require external analytics software and services. There is an active community of software companies and consulting firms that can help you maximize the value that analytics can bring to your organization. This article is quick guide to finding and working with these analytics vendors.

• Brian Lewis

People love all sorts of “one click” applications because they are easy to handle, but they are like an analog radio that’s pre-tuned to a single station; you won’t find it too useful unless this single station happens to be the only station that you will ever listen to. To allow you to listen to different stations, the radio must come with a knob. But the added flexibility must come with a cost; you must turn this knob carefully – otherwise you will hear nothing but static noise. If you are thinking about delving into predictive analytics or data mining, this common-sense principle is one that you must grasp.

• Mu Zhu

Risk types overlap noticeably, and since the different categories of risk now converge more readily than before, it is more and more difficult – and expensive – to continue the isolated treatment of single risk types in various risk silos. A good example of convergence is a credit default swap (CDS). A CDS is created and valued based on a company’s debt, but the price fluctuates during a single trading day so the market risk and credit risk intersect. This example illustrates the fact that financial institutions are no longer simply originating deals and holding assets.

• Lutz Schiermeyer

The current trend in value chains is toward more lever-aged, nimble networks that typically utilize outsourced business models following lean principles. The end result is value chains that are more global and require effective collaboration with multiple business partners. While providing an excellent method for balancing inventory, capacity and demand, today’s value chains are thus often much more susceptible to disruptions. Global value chains that span a variety of business partners also present a challenge for an organization to effectively manage this increase in risk, which is increasingly becoming a requirement for success in today’s global market.

• Lance Solomon

Adm. Mike Mullen, Chairman of the Joint Chiefs of Staff, earned a master’s degree in operations research from the Naval Postgraduate School in Monterey, Calif.

• Peter Horner

Frontline Systems Inc. (www.solver.com), headquartered in Incline Village, Nev., on the north shore of Lake Tahoe, develops and markets software products for optimization, Monte Carlo simulation and related analytic methods. The firm is best known for having developed the Solver in Microsoft Excel. Its mission is to make advanced analytic methods from operations research and management science (OR/MS) more accessible to the wide world of users who don’t have degrees or special training in either discipline.

• Daniel Fylstra