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Analytics

IBM AnalyticsIn the old days, companies recorded their sales on punched cards and then sorted the cards to analyze sales by customer number, date, state, and department. It was rudimentary but amazing compared to what could be done by sorting paper invoices. Today, the more advanced companies utilize “analytics” to dig deep into the voluminous data that they capture about each sale and the relationship they have with their customers. If you buy a bag of Frito Lay chips at a local 7 Eleven store, the home office in Dallas knows about the chips purchase instantly — and that is the trivial case.

Savvy retailers, using analytics, know when an online buyer makes a purchase and if they have been a customer for more than 24 months and if they have spent more than $1,000 year-to-date and their cumulative purchase returns have been less than $100 and the returns have been 85% due to an ordering error and they tend to buy premium brands and they use Prime shipping and they live in 12345 zip code and their likely income is more than $xx,xxx and they have written more than X product reviews, and they recently made an email inquiry about a certain product feature. The analytics results in them getting on a special list of customers who get special attention. In the case of a financial services company using analytics, they look at the number of visits you make to the web site and how many times you have a complaint about something and what the bottom line profitability of your relationship with them has been over the past xx months and that customer may end up on a list of “high maintenance” customers and not be eligible for certain offerings. 

Some customers would prefer that such granularity of data not be available but most are delighted with the enhanced and personalized service that analytics makes possible.

I don’t normally write much about political or geopolitical issues. Like all of us, I do have opinions but it has been my practice to stick to technology, music, Mozart, and motorcycles in the blog. However, I can not resist saying something about the attempted aviation attack of a few days ago. Should the government use analytics? It seems so basic. If an airline passenger who is on a watch list purchases a $2,800 one-way ticket with cash, is making an international flight and has no checked baggage, requests a window seat above the main fuel tank, and has been reported by a creditable source to an embassy as a possible radical, should that passenger show up on someones radar screen as a person deserving of special attention?

From an information technology perspective this would be a trivial utilization of analytics. Proposals to utilize analytics have been made in the past. Each time, the political process has stopped the proposal. Civil liberty concerns have prevailed. If the bomber had been successful would things have changed? History would say no. Businesses are getting smarter and smarter. Our government is spending more and more money. Is it getting smarter?

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