Embedded Analytics

Chapter 2. Analytics and Decision Making

As we consider the role of embedded analytics in business, it’s useful to loop back to the question of what we’re using analytics for.

One answer is that analytics helps us keep in touch with our business, providing a sort of broad situational awareness for managers and planners. That’s a sensible goal, but there is a more practical and direct reason why we need analytic insights: to make better decisions.

To make better business decisions, we need better business information. This has been understood since the first methodical research into decision making at the Carnegie Institute of Technology in the 1950s and 1960s. Even before that, when people first started to create basic financial reports or management reports, the intention to provide better information was implicit. In those days, this process wasn’t called analytics, it was called decision support. In truth, that’s still a good name for the practice, because our purpose is indeed to support better decisions.

What Is a Decision?

As is so often the case, a word we use every day can be a little tricky to define. In a business context, we like the definition given by James Taylor and Neil Raden in their 2007 book Smart Enough Systems (Prentice Hall):

A decision...is the act of determining a course of action.

We like this because it so clearly links the act of deciding to the act of doing. Of course, sometimes we may decide not to act, but in business even inaction is a choice ...