• by Bob Slapin , November 12, 2007

While the digital revolution is applying tremendous pressure to certain industries--forcing changes in the processes of print media organizations, for example--it is also contributing to the rise of others, analytics being a prime example.

An application historically used by financial institutions and the military, analytics has recently expanded to a growing number of fields. According to IDC, analytics software sales reached $19.3 billion worldwide in 2006. Businesses are realizing that digital information, whether collected via mouse clicks, from ATM machines, or carrier phone data, reveals critical information that can be used for data-driven decision making.

The Evolution of Analytics

In economics, when an industry is flourishing, clusters of related industries begin to form. Qualcomm, for example, spawned a telecom hub in the San Diego area over the past decade. Presently, the analytics market is mirroring the telecom industry roadmap in this region and making an impact nationwide.

In 1956, San Diego-based Fair Isaac was founded on the belief that data, if analyzed in a systematic way, can assist with business decisions. Within two years, engineer Bill Fair and mathematician Earl Isaac had developed their first credit scoring system for a financial services client.

During the second wave of the analytics during the 80s and 90s, the size of computers became radically smaller as the rise of applications could handle more structured information and perform sophisticated reporting and analysis. There was an emergence of new phenomena, notably online applications like social networking, Web analytics, sophisticated search strategies, and new models of commerce.

Today, analytics have been widely adopted across industries that best leverage analytics are increasingly leading their industries. Capital One (consumer finance), Harrah's (casinos), and The Boston Red Sox (baseball team) are all recognized leaders in their respective industries and who cite their use of analytics as a principal component of their competitive strategy.

The Analytics Cluster Forms in San Diego

With a variety of analytics companies in various sectors of the field - video content, Web analytics, contextual routing, credit and identity security, etc. - concentrated in San Diego, the region's growing knowledge base has been a driving force in the rising popularity of analytics and has created a group of analytics organizations, made up of every part of the chain. With this eclectic mix of large, established analytics companies alongside a constellation of niche-focused companies that are pushing back the boundaries of analytics applications, San Diego has taken the lead as the nation's most active analytics cluster and is proving to be more competitive and profitable with higher rates of innovation, greater productivity and help to foster a stronger regional economy. In addition, the region has an unmatched academic resource with UCSD's Jacobs School of Engineering and an experienced professional services community to support the community's growth.

Seen as an effective decision-support tool primarily for the military and financial services just 20 years ago, analytics is now attracting the attention of a growing range of client companies that see the field as a way to gain a competitive edge through strategic mining and analysis of stockpiled data. As an integral part of their business strategy, analytics is improving relationships with customers, employees and partners through real-time, interactive decision flow. Analytics is employed by companies as diverse as professional sport teams, hospitality companies, manufacturers, consumer brands and many more.

To mark the growing importance of the analytics field, the nation's first Forum on Analytics event, which covers a broad spectrum of analytics sectors, is taking place this week in none other than San Diego. The event features leading analytic companies nationwide addressing the critical need for businesses to leverage analytics in order to make smart, data-driven business decisions. Companies including Fair Isaac, Visual Sciences, SEMDirector, ID Analytics, Real Age, Island Data, Teradata, Salford Systems are backing this effort along with the UCSD academic community and financial firms such as Mission Ventures, Morgan Stanley and JMI Equity.

"In order to maintain a competitive edge, businesses today rely on state-of-the-art analytic technologies to support their decision-making process," says Joseph Milana, chief scientist of Fair Isaac. "With its academic resources, broad range of analytics companies and an analytics-savvy community, San Diego is in a great position to lead this field by continuing to create the most effective methodologies for helping companies worldwide make smarter business decisions."

Robert Slapin is the executive director of the San Diego Software Industry Council. He is an experienced attorney, information technology executive and entrepreneur. This experience, together with his expertise in creating strategic business alliances around technology resources, has given Bob a unique perspective on policies and issues shaping the software and information technology industry.