The art of advanced analytics

For many years during the 20th century, the German military used the Nazi's Enigma "Cypher" machine to encrypt their secret massages. The Enigma machine had a second set of letters known as the 'lamp board'. This meant when a letter was pressed on the first keyboard, the lamp board would light up a corresponding cipher text letter to represent the original letter typed, creating "the encryption" for decrypting the message.

The science behind Enigma was a circuit board, made of three to four rotors, which could be changed to create +/-150 quadrillion encryption possibilities daily, with each letter that is typed. This presented an immense challenge for Allied code breakers before and during World War II (WWII).

From Cambridge University's overview of Alan M Turing's life, he was a mathematician, cryptologist, logician, and computer scientist who was a key component in cracking Germany's Enigma code, allowing the Allies to intercept key information about the next target, food delivery and overall intelligence of the German military, helping them win WWII.

Together with his team, who worked at Bletchley Park, they created the code-breaking machine named the British Bombe machine, using the principle of contradiction and extraordinary mathematical insights. They also came up with a system for deciding which cracked messages should be passed along to the British Army, Navy and RAF to eliminate suspicion by German forces that the code was cracked.

There have been numerous accounts of major events where the art of looking in the past, to identify trends and patterns to evaluate the present and predict the future, have been applied with great benefits. This 'art' uses analytical techniques based on complex learning algorithms to craft models used to predict future outcomes, all with a focus on establishing a mathematical equation as a model to represent the connections between the different variables in consideration.

Advanced analytics (AA) requires knowledge of past behaviour to generate profiles that would then be used to assess current behaviour and predict possible outcomes. Wayne Eckerson (as if he was describing the Bombe machine) put it into perspective: "An analytical model estimates or classifies data values by essentially drawing a line through data points. When applied to new data or records, a model can predict outcomes based on historical patterns." The Bombe machine required a short phrase (new data) that could be in the encrypted message to work out the Enigma's encryption configuration used to generate the code.

Further, these profiles or models could be interacted with to simulate interventions and potential future outcomes before deciding on the course of action(s). In the Enigma machine, it was understood that by merely using the rotors, one could change the encryption configuration, with over 150 quadrillion possibilities.

AA relies on sophisticated quantitative methods to produce insights that traditional approaches to business intelligence are unlikely to discover. These methods are built by statisticians, mathematicians or data scientists, similar to Turing and his team.

AA requires knowledge of past behaviour to generate profiles that would then be used to assess current behaviour and predict possible outcomes.

Predictive analytics, data mining, big data analytics, location intelligence and sentiment analysis are just some of the recent analytical tools that fall under the heading of AA. These might also include non-predictive tools such as clustering. Sentiment analysis is often associated with social media more than AA.

While these analytical practices focus on forecasting future events and behaviours as well as extracting complex opinions, it also allows businesses to conduct 'what-if' analyses to predict the effects of potential changes in business strategies as well as assess positive or negative connotation in any type of data available.

The Enigma and Bombe machines stand out as AA ambassadors. The Enigma led the Germans to many victories through the secure communication it offered, while the Allies snatched WWII by creating the Bombe to crack the communication encryption. It is believed that cracking the code saved up to two years of fighting between the Germans and the British forces. Both these machines were engraved from pure AA techniques, built by mathematicians, statisticians and/or data scientists.

Looking at these examples, what becomes important today is for businesses to be able to effectively derive value from AA - for future events to be predicted that are meaningful to the overall running of a business and its processes. AA has become an important part of the broader business intelligence process and a true bearer of opportunity to unlocking key competitive advantages - just as it was back then.