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Read the radio station case study (ATTACHED) in Chapter 1 of the textbook, then write a three-page paper that proposes how the results would change if the radio station also had information on the locations and occupations of their listeners. Also, discuss how each piece of information in this case study information could be collected.

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Laursen, G.H. N., & Thorlund, J. (2016). Business Analytics for Managers: Taking Business Intelligence Beyond Reporting (2nd Edition). Wiley Professional Development (P&T). https://ambassadored.vitalsource.com/books/9781119302537

Case Study: How to Make an Information Strategy for a Radio Station

Now that we’ve introduced our theoretical model, let’s apply this information to a concrete

example in order to understand it better. This case study features the BA initiative of a large

radio station that broadcasts nationwide. The case study is a simplified and somewhat creative

version of real events, and its objective is merely to outline a BA process. Its focus is on the

helicopter perspective, an improved conceptual tool, and the first important insights. The case

study relates to the BA model in Exhibit 1.1.

Overall Strategic Targets of the Business

The radio station’s vision is that there is a demand for radio entertainment in the shape of good

music, entertaining talk, and news. Its mission is to become a leading player in the national

market. The station’s specified business goal is a market share of 25 percent and an ROE of 15

percent. The executive management cockpit or dashboard of the radio station with KPIs for

monitoring business performance in relation to strategic objectives is illustrated in Exhibit 1.2.

Exhibit 1.2 Executive Management Cockpit of Radio Station with KPIs Prior to BA Initiative

The current status, which can be read from the instruments in the executive management cockpit,

is an actual ROE of 9 percent and an actual market share of 17 percent. So the station has a way

to go in order to achieve its targets of an ROE of 15 percent and a market share of 25 percent.

The business strategy and objectives are thus presented by means of the following metrics

(measures) or KPIs. Note that success and good performance are derived from the actual values

of these measures in relation to the objectives.

The two KPIs are used to control and manage the radio station. Return on equity (KPI 1) is the

most important KPI, and it is affected by the market share (KPI 2). The thinking is that a bigger

market share (KPI 2) will mean more concurrent listeners and increased advertising revenue,

which means a bigger ROE for a given level of cost. A new BA initiative is planned and

implemented in the business. The process is outlined in the following section using the BA

model.

Functional Strategy and Business Case

BA activities must always be based on the business‐driven environment, with the management

specifying or creating one single information strategy that must be subject to the company’s

overall business strategy (vision, mission, and objectives).

The program manager of the radio station has come up with a strategic initiative to increase the

business’s market share from the current 17 percent to 25 percent. The radio station must hold on

to its listeners longer. The program manager specifies this strategy as: “From our current record

of holding on to our listeners for 15 minutes, before he or she changes channel, we must in the

future hold on to our average listener for 30 minutes.” The program manager introduces the

performance target: average listening time as a new measure or KPI for the production department. The target is that the average listener must be kept on the broadcasting frequency for

30 minutes. The average listening time thus takes its place as a new KPI on the management

dashboard.https://jigsaw.vitalsource.com/books/9781119302537/epub/OPS/c01.xhtml?brand=vitalsource&create=true&favre=brett#c01-fig-0001https://jigsaw.vitalsource.com/books/9781119302537/epub/OPS/c01.xhtml?brand=vitalsource&create=true&favre=brett#c01-fig-0002https://jigsaw.vitalsource.com/books/9781119302537/epub/OPS/c01.xhtml?brand=vitalsource&create=true&favre=brett#c01-fig-anc-0002

Note that this strategic target penetrates right into the core business of the radio station. If the

target—to hold on to the average listener for 30 minutes—is achieved, it will mean a bigger

market share, increased advertising revenue, and, ultimately, an improved ROE. So, it is

expected that an increase in KPI 3 will affect both KPI 2 and KPI 1 positively.

Before launching the BA initiative, the program manager prepares a business case for the project.

He expects a larger market share (KPI 2) of up to 25 percent as a result of the increase in average

listening time (KPI 3) of 30 minutes. This is expected to improve the pricing of advertising slots,

so that the advertising revenues of the radio station increase by $4 million per year. Based on

these expectations, he calculates that return on equity (KPI 1) will increase from 9 percent to 13

percent. In addition, he expects that the BA initiative will incur a resource consumption of three

employees in four months as well as necessitate purchasing software and consultancy services

for $250,000.

Total costs are estimated to be $1 million. The business case speaks in favor of carrying out the

project. The reason is an expected growth in the annual cash flow of $4 million from increased

advertising revenue, and that the project will cost only $1 million to implement.

Moreover, the payback period is only one quarter, and the project is not considered to entail any

risk. Note that if the business case shows a negative result (or if the project looks risky), the BA

initiative should not be implemented. Business cases are a good way of evaluating and

prioritizing BA projects. We’ll cover more about business cases in Chapter 8.

The management of the radio station now has the first elements of its information strategy in

place, and it’s directly related to the overall strategic objectives of the business.

Business Processes and Actions

The business processes of the production department must now be adjusted in such a way that

they actively show a behavior that secures the average listener for longer, thereby increasing the

value of KPI 3.

There is an acknowledgment among the staff that they need more information and knowledge

about their listeners’ characteristics and preferences at different times and in connection with the

different programs. In other words, the processes must be adapted to a listener profile to enable

the DJs and newsreaders of the radio station to continuously deliver content that is to the current

listeners’ tastes. In the future, the radio production must be based on factual knowledge about the

current listeners’ characteristics and preferences. This means that whatever is broadcast must be

customized to suit current listeners’ interests, and results must be measurable on an ongoing basis

and readable on the management dashboard—now with the three measures or KPIs: KPI 1:

return on equity, KPI 2: market share, and KPI 3: average listening time.

Analytical Processes and Front Ends

In the analytical environment, it is the task of the analyst to create information and knowledge to

drive business processes in the direction of delivering content that, to a greater extent, falls into

the listeners’ tastes. The main questions for the analyst are:

• Who are our listeners?

• What do they like to listen to?

• Who listens to what and when?https://jigsaw.vitalsource.com/books/9781119302537/epub/OPS/c08.xhtml

The analyst quickly realizes that he does not possess sufficient data about the listeners to be able

to work out listener profiles. If he did have this data, it could be merged with the program

database of the radio station in the data warehouse, and subsequently constitute the basis of the

creation of knowledge about listener profiles at different times and for the different programs of

the radio station.

Data Warehouse

The analyst needs the data warehouse to provide him with data on the listeners’ ages, genders,

and tastes and preferences 24/7. He needs this information for the profiles. The database

specialist does not have this data stored, and it cannot be obtained from an external supplier.

Therefore, the database specialist asks the IT department to create a new operational data source

to collect data on listener profiles at different times of the day.

Data Sources: IT Operations and Development

IT operations and development decide to collect data on the listeners’ ages, genders, tastes,

moods, and listening times via a questionnaire. They develop an electronic questionnaire that

listeners can complete on the radio station’s website. The survey is announced and promoted on

air, and sponsor prizes are given out via a prize drawing for the participating listeners. The data‐

collection process enables the creation of new operational data sources in the technically oriented

environment, and the process is controlled and managed by developers and operational staff from

IT operations and development. Using ETL tools, the database specialist or the ETL developer

now continuously transfers the new data source into the data warehouse. Here it is merged with

the other databases of the radio station (for instance, the database on past aired radio programs).

After having been merged, the data is moved out into a data mart area so that the analyst can

access it.

In the analytical environment, the analyst now has access to data and starts to transform the

collected and merged data from the data warehouse into information and knowledge. The result

of his analytical processes using statistical methods and tools such as data mining shows that the

typical listener in the early hours of the morning is a fun‐loving 30‐year‐old woman.

The analyst also has report‐developing competencies and has prepared a front‐end report with

the results from his BA tool, which could be Microsoft Excel. The report contains information

and knowledge about listener profiles for different times of the day and for the different

programs. The report is released weekly with new numbers to the business’s intranet, where it

can be accessed and used by business users in the production department. Note that the analytical

environment is positioned in the border area between the technically oriented environment and

the business‐driven environment, and we find people with competencies in both areas. The front‐

end solution and the report could also be delivered by a report developer from the technically

oriented environment, based on results from the analytical processes.

The radio station’s operational decision makers, DJs, and newsreaders must now change their

daily business processes and actions in such a way that their actions provide better support for

the achievement of the strategic targets of the business. As mentioned, the strategic target for the

production department is to hold on to listeners for longer with a view to increase market share

and ultimately improve ROE. In the morning, they all read the released front‐end report to make

use of the information and knowledge from the controller’s analytical processes.

Before each DJ puts on a song, he looks at the BA report and asks himself the question: “Is a

fun‐loving 30‐year‐old woman going to like this music?” If he’s about to play a heavy metal CD,

it’ll probably go back on the shelf. Instead, “Material Girl” by Madonna still might stand a good

chance.

Equally, all news will be sorted through by the newsreader. Before reading any news, he now

asks himself the question: “Is a fun‐loving 30‐year‐old woman going to find this piece of news

interesting?” If the news is about motoring, it’ll probably end up in the paper bin, whereas news

about either the current economic crises or the latest cinema film is likely to be broadcasted.

What is happening on this radio station is BA: decision support delivered to operational decision

makers based on data analysis (creation of knowledge). The purpose of the exercise is to direct

the decision makers’ daily business processes toward achieving strategic targets.

Today, automatic digitalized decision making, based on analytics, is increasingly used to control

and optimize operational processes at Internet radio stations. Data collected from users (e.g., IP

addresses, how many people are turned in, the media player they are using, how long they

listened, and their computer’s operating system) can be used by an robot/algorithm to decide, for

example, which shows/tracks to repeat (or skip), the required bandwidth (to support a good user‐

experience), and advertising content.

Evaluation of the Business Analytics Process

Over the next six months, the radio station succeeds in holding on to its average listener for 9

minutes longer than before, and all three KPIs are improved. (See Exhibit 1.3.)

Exhibit 1.3 The Radio Station’s Dashboard with KPIs after BA Initiative

Following the BA initiative, the radio station’s average listener stayed tuned in for an average of

24 minutes (KPI 3). The radio station’s market share (KPI 2) went up to 20 percent, and ROE

(KPI 1) increased to 12 percent. The business is on its way to achieving its overall strategic

targets, and the production department’s BA initiative must be said to have been successful. It

could not have been done without BA—from strategy to data sources.

SUMMARY

The purpose of the case study was, as mentioned, to provide a quick overview and to show how

BA can be deployed successfully to support and influence the behavior of operational decision

makers with a view to achieving overall business targets.

The 12 most important conclusions to draw from the case study in terms of the establishment of

successful BA are:

• The BA initiative of a business area or a department must support and promote the

department’s overall strategic targets, which equally must support and promote the

overall strategic targets of the business as a whole. We will take a closer look at the

relationship between business strategies and the BA function in Chapter 2.

• The strategic targets of the BA activities of a given business area must be measurable

with one or more KPIs to ensure that performance and progress can be followed on an

ongoing basis. The chosen KPI or KPIs must be able to influence the overall KPIs of the

company. We will discuss more about KPIs in Chapter 3.https://jigsaw.vitalsource.com/books/9781119302537/epub/OPS/c01.xhtml?brand=vitalsource&create=true&favre=brett#c01-fig-0003https://jigsaw.vitalsource.com/books/9781119302537/epub/OPS/c01.xhtml?brand=vitalsource&create=true&favre=brett#c01-fig-anc-0003https://jigsaw.vitalsource.com/books/9781119302537/epub/OPS/c02.xhtmlhttps://jigsaw.vitalsource.com/books/9781119302537/epub/OPS/c03.xhtml

• A planned BA activity must stand up to an evaluation based on business case principles.

In other words, a BA initiative must create value for the company just like any other

investment. Increased revenue or savings must justify the investment. Read more about

business cases and the prioritization of BA projects in Chapter 8.

• It must be specified what kind of information and knowledge are required for the

operational decision makers and digital processes, and how they are to act on this

information. This part needs to be taken very seriously. It’s important to understand that it

is here, and only here in the process‐changing area, that BA creates value for the

company. In all other contexts, BA is just a cost. We will say more about this subject

in Chapter 3.

• The analyst/controller must be able to decode business users correctly, specify the

requirement for relevant data, and use the right methods so that useful information and

knowledge are presented for decision support. Front‐end applications and reports

conveying knowledge must have correct functionality and be simple and intuitive

for business users. More about analyses and reporting methods will be seen in Chapter 4.

• The data specialist or the ETL developer in the data warehouse must be able to merge and

enrich data with useful dimensions and perspectives. Data quality must be very high to

ensure credibility from the business side. More about data warehouse and data quality

in Chapter 5.

• IT operations and development must be able to establish an infrastructure for new data

sources and secure valid retrieval of source data. Further information on data sources will

be presented in Chapter 6.

• The achievement of BA in large organizations is a process that involves contributions

from many functions and people. The BA model provides a helpful overview of structure,

people, and activities, so it’s necessary to use it in the planning stages of BA initiatives. It

may help to create an organizational function to handle BA activities across the functions

of the organization to ensure the necessary coordination. More about the organization of

BA will be discussed in Chapter 7.

• The analyst/controller will typically be a key person in BA activities and represent a kind

of cross‐functional person holding all the strings together. This is because of his or her

presence in both the business‐driven environment and the technically oriented

environment (refer to the BA model). The analyst will usually have the necessary insight

into processes and strategies in the business‐driven environment as well as the necessary

technical insight to be able to enter into a constructive dialogue with the data warehouse

and IT department.

• BA is a holistic and hierarchical discipline, stretching from business strategies to

sourcing from operational data sources. The business‐driven environment must assume

full ownership and manage the process. The technically oriented environment must

support the process with infrastructure, data delivery, and the necessary application

functionality.

• BA is a support process. It can be seen as a chain that is only as strong as its weakest link.

If, for instance, the analyst cannot derive the right information from data, then all other

activities are of no use. The same is true if we do not deliver the right data to the analysts,

or if the business users chooses not to act based on the new knowledge. In Chapter 8, we

take a closer look at what to be aware of as project manager of a BA project.https://jigsaw.vitalsource.com/books/9781119302537/epub/OPS/c08.xhtmlhttps://jigsaw.vitalsource.com/books/9781119302537/epub/OPS/c03.xhtmlhttps://jigsaw.vitalsource.com/books/9781119302537/epub/OPS/c04.xhtmlhttps://jigsaw.vitalsource.com/books/9781119302537/epub/OPS/c05.xhtmlhttps://jigsaw.vitalsource.com/books/9781119302537/epub/OPS/c06.xhtmlhttps://jigsaw.vitalsource.com/books/9781119302537/epub/OPS/c07.xhtmlhttps://jigsaw.vitalsource.com/books/9781119302537/epub/OPS/c08.xhtml

• Successful BA processes should have a fixed structure that always begins with the

specification of the information strategy, which is derived from the objectives of the

business strategy. Sketching an information strategy of the radio station using the BA

model is visualized in Exhibit 1.4.

Who What to Do Radio Station Example

Executive management

function CEOs

Executive management sets

overall strategic targets for

the business.

Executive management sets

overall business targets:

Return on equity (KPI 1) = 15%

Market share (KPI 2) = 25%

Business function

Functional

managers/directors and

operational decision makers

in HR, sales, production,

marketing, finance, etc.

Functional

managers/directors set

strategic target at the

functional level.

Program Manager sets target;

Average listening time (KPI 3) =

30 minutes

Operational decision makers

improve upon business

processes using information

created by the BA function.

DJs and newsreaders improve

their processes by broadcasting

music and news in accordance

with listeners’ tastes at different

times of the day.

Operational decision makers

demand and use information.

DJs and newsreaders demand

information about listeners’

tastes/profiles at different times of

the day

BA function

Analyst, controller, data

manager, and report

developer

Identify business

requirements and create

information using analytical

methodology.

Analyst identifies listeners’

profiles at different times of the

day by using data mining

methodology, and report

developer creates reports.

Data warehouse function

ETL developer and database

specialist

Gather, enrich, and supply

data for business use, based

on requirements from

analyst.

ETL developer and database

specialist gather, enrich, store and

deliver data on the listeners’ age,

gender, tastes, moods, and

listening times, based on

requirements from analyst.

Data source and IT

infrastructure function

IT professionals

Maintain and develop IT

infrastructure for data to be

created.

IT professional creates new source

data by developing an electronic

questionnaire on the Web site to

be completed by radio station

listeners, based on requirements

from the data warehouse team.

Exhibit 1.4 Sketching an Information Strategyhttps://jigsaw.vitalsource.com/books/9781119302537/epub/OPS/c01.xhtml?brand=vitalsource&create=true&favre=brett#c01-fig-0004https://jigsaw.vitalsource.com/books/9781119302537/epub/OPS/c01.xhtml?brand=vitalsource&create=true&favre=brett#c01-fig-anc-0004

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