The Moneyball Effect on the Use of Analytics Software

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Business Analytics: Shifting Hindsight to Insight and Foresight

Highlights from a study conducted by Deloitte on business analytics usage.

Most baseball fans are familiar with one of the more successful applications of the principles of analytics and business intelligence (BI). Back in 2002 the Oakland A's were faced with a relatively small budget of $41 million. The general manager of the team, Billy Beane, who is played by Brad Pitt in the movie that was created based on the book called "Moneyball: The Art of Winning an Unfair Game," famously called on the analytics talents of Paul DePodesta to help build a team of players that could compete against teams with budgets that were three to four times the size of what the Oakland A's could afford.

DePodesta has pretty much disavowed the movie as a work of fiction, and former Oakland A's manager Tony La Russa says that not enough credit has been given to the players that the A's added to their roster in 2002 that were nurtured for years in their farm system. But the point remains that with the help of analytics, the A's were able to put together a team that could successfully compete on a comparatively modest budget. They didn't win the World Series, but they did make the playoffs in 2002 and 2003. Naturally, the rest of the teams took note and the Boston Red Sox borrowed many of the concepts developed by the A's to create a team that would, with the help of a much larger budget, win the World Series in 2004.

What's relevant about all this from a business perspective is theoretically the same concepts could be applied to almost any business. Arguably, most businesses today are not doing a very good job using the data they collect to improve the quality of the team they put on the field and the processes they use to compete.

According to Alteryx President and COO George Mathew, the reason this happens is that BI tools we put in front of the people who are the business equivalents of DePodesta don't easily allow them to discover patterns and trends within the context of an existing business application. Mathew argues that Alteryx Strategic Analytics software is one of the few tools specifically designed to allow the analysts to discover those patterns and trends in real time without having to invoke a separate application that has to first collect all the data and then employ cumbersome processes to model it. Mathew says by feeding raw data from sources such as social media networks using the new version 7.0 of the Alteryx Strategic Analytics platform, it's possible for an organization of any size to gain a competitive edge by gaining more insights into strategic business processes.

Of course, as the Oakland A's have proven since 2002, it's hard to sustain that edge. But in that same context, advanced analytics is rapidly becoming a base-level requirement just to compete. Every team in professional sports now uses the theories developed by DePodesta. If they didn't they would not be able to compete. The use of advanced analytics doesn't necessarily mean your organization will win every time. In fact, nobody knows that better than DePodesta, who now works for a New York Mets franchise that currently epitomizes frustration. But without analytics tools these days, it's only a matter of time before your organization loses to some other smaller, smarter organization.