Chris Mazzei ORIE '95 Describes How Businesses Like Ernst & Young Use Analytics
Chris Mazzei ORIE '95 characterizes strategy as a science and an art, one in which a paradigm change is underway in favor of a greater use of analytics. He quotes the recent book "Competing on Analytics" in defining analytics as "the extensive use of data, statistical and quantitative analysis, explanatory and predictive models and fact-based management to drive decisions and actions."
Mazzei recently addressed the Cornell's Enterprise Engineering Colloquium, a weekly series that is a required course for some Master of Engineering students, including those in ORIE.
As Director of Strategy for Ernst&Young's practice in North and South America, Mazzei is in a position to understand the change that is underway. In a study by IBM, analysts found that outperforming organizations recognize and pursue value from information to a much greater extent than underperformers, with many firms recognizing the need for analytics but just beginning to take advantage of new opportunities to take advantage of it.
Mazzei presented case studies of the use of analytics within E&Y. One looked at the professional services industry's structure of project fees in order better understand how fees vary with the characteristics of the client organizations. Using publically available data and a regression model, an E&Y team built a model to predict fees and compare them with those actually charged, showing that E&Y profitability might be increased by taking various factors more systematically into account in making pricing decisions.
"The study conclusions were not without controversy within E&Y," Mazzei said, but they triggered a much broader review of pricing and profitability in the company.
In another study, Mazzei's group was asked whether it would be good for E&Y business to focus more attention on building relationships with individuals who sit on multiple boards. Since E&Y is to some extent a relationship business, the brand and revenue impact that could result from having stronger relationships with these 'market makers' is worth studying, Mazzei said.
Using data on board membership and the graph at left, the group was able to assist management in visualizing the relationships involved with specific individuals, including "1st and 2nd degree" corporate relationships through the individuals (a majority) who sit on more than one board. They were also able to show that these relationships span multiple E&Y accounts and market segments, making them more difficult to manage organizationally.
What It Takes
At the end of his talk, Mazzei enumerated the key skills for applying analytics. He related the skills to quality, efficiency, relevance and action. He pointed out that mathematics and statistics skills (including proofs, optimization, probability, traditional and modern statistics, and data mining) assure the quality of the work. Computer science skills such as C++ and Java, SQL and familiarity with statistical software like S_Plus, R and SAS contribute to the efficiency of the work. Business skills across the full range of areas from strategy and finance to operations and marketing assure that the application is relevant, while communications skills - oral, written and visual - enable the analyst to bring results to action.
According to Professor Leslie Trotter, ORIE Associate Director for Undergraduate Studies, "Mazzei's list of skills is particularly consistent with ORIE's curriculum."