The finalists for the competition, sponsored by the Institute for Operations Research and the Management Sciences (INFORMS®), include:
IBM for “Analytics-Driven Solutions for Increased Sales Force Productivity.”
The Problem: Improving sales force productivity can be an effective operational strategy for companies seeking to drive top-line revenue growth and manage bottom-line expenses in today’s challenging economic climate. At one level, driving top-line “organic” growth requires that front-line sales professionals be provided with leading-edge tools to identify better leads and hence close more deals. At a higher level, given that highly productive sales people are a constrained resource, sales executives need to optimally deploy the available sales force against the best revenue-generating accounts.
The O.R. Solution: In 2004, IBM initiated a broad, analytics-based initiative to improve sales productivity at both levels. The first solution, known as OnTARGET, provides a set of analytical models designed to target new sales opportunities at existing IBM accounts as well as non-customer (“whitespace”) companies. The objective of the second stage of the initiative, the Market Alignment Program (MAP), is to optimally allocate sales resources based on field-validated analytical estimates of future revenue opportunity in each operational market segment. The analytical models and initial internal websites for both stages were developed by IBM Research. OnTARGET was implemented by the IBM Software Group (SWG), which creates, markets, and sells IBM software. MAP was deployed by the IBM Sales and Distribution (S&D) organization, which markets and sells IBM software, servers, and services.
The analytical models in OnTARGET and MAP are built using a large volume of historical IBM customer transactions, joined with “firmographic” information (e.g. industry, annual revenue) for each customer account. IBM developed a data model that reflects the correct alignment between the IBM-internal representation of an account, and the view provided by an external provider (e.g. Dun &Bradstreet) of firmographic data. From a business perspective, the greatest modeling challenge was to map the respective underlying business objectives to solvable machine-learning problems. For OnTARGET, this led to a classification method to estimate probability of new purchase, while for MAP, it led to a novel regression-based method to estimate the unobservable “wallet” of any potential customer in a specific product group.
The Value: As of October 2008, OnTARGET has been made available to 13,170 IBM sales professionals in 22 different countries. Based on user logging capabilities built into the OnTARGET web site, IBM has been able to generate evidence that sales leads identified though the use of OnTARGET close at a much higher rate than background. The MAP wallet models are displayed in a separate web-based tool which is used to conduct extensive workshops with sales leadership teams to elicit objective views of forward-looking revenue opportunity at each IBM account. Based on these interviews, a subset of sales resources have been redeployed to accounts with higher expected future revenue. The MAP process has been integrated since 2006 within the IBM annual Sales and Distribution planning cycle.
The six 2009 Franz Edelman finalists are:
- CSX Transportation for “CSX Railway Cashes in on Optimized Equipment Distribution.”
- HP for “Analytics for Product Portfolio Management.”
- IBM
- Marriott International for “Group Pricing Optimizer.”
- Norske Skog for “Norske Skog Benefits as Operations Research Plays a 'Pivotal' Role in the Battle for Improved Profitability.”
- Zara for “Zara Uses Operations Research to Reengineer Its Global Distribution Process.”
This is the 38th year of the prestigious Franz Edelman competition. The winner will be announced at a special awards banquet on April 27 at Applying Science to the Art of Business: the 2008 INFORMS Conference on OR/MS Practice.
Additional information about the 2009 Edelman Competition can be found online here. Additional information about the INFORMS Phoenix conference is here.
About INFORMS
The Institute for Operations Research and the Management Sciences (INFORMS®) is an international scientific society with 10,000 members, including Nobel Prize laureates, dedicated to applying scientific methods to help improve decision-making, management, and operations. Members of INFORMS work in business, government, and academia. They are represented in fields as diverse as airlines, health care, law enforcement, the military, financial engineering, and telecommunications. The INFORMS website is www.informs.org. More information about operations research is at www.scienceofbetter.org.
###