Business Intelligence : Working Harder with a Smarter Edge

Published by MBA Skool Team, Published on March 07, 2011

Netflix, Inc., the world's largest online movie rental service (Nasdaq: NFLX - News), - delivers movies to your doorsteps if you reside in the United States of America. Reed Hastings (who was 37 years young then) started Netflix Inc. in Los Gatos, California (1997), with a business model that was ‘different’ and a marketing pitch that was risky. It was assumed that customers would order their movies online and wait for the U.S Postal Service to deliver the order and to top it all, assume that the customers will then use the snail mail to return the films! Today Netflix has crossed the 10 million subscriber base in 2008, with monthly rentals as low as $8.99, and that it had dispatched its two billionth DVD on April 2, 2009 is just old history.


Business Intelligence

Netflix’s reason for success is that it has positioned itself differently - is an analytical competitor. Netflix has adopted analytics to analyze its customers behavior as well as their buying patterns. Cinematch is a movie recommendation engine used to predict whether a customer can like a particular movie or not, based on the customer’s preferences, likes and dislikes and previously rented movies. It predicts whether someone will enjoy a movie based on how much they liked or disliked other movies they have/had issued out from Netflix thus making personal movie recommendations based on each customer’s unique tastes. And while Cinematch is doing pretty well, it can always be made better.


In 2006, Netflix thought of a new strategy to improve the accuracy of its movie recommendation algorithm – it launched an open competition which raked a flurry of activities among students, academicians as well as researchers, across domains to come up with a ‘near-perfect’ solution – as the prize was the main crowd puller – a neat $1 Million !! The competition saw 43,000 entries from over 5,100 teams, across 185 countries.


Netflix is not the only organization that is reaping benefits from its data store. We have organizations in retail (example Wal-Mart), services (example Taj Hotels Resorts and Palaces), telecommunications (example Airtel), and the airline industry to name a few that use analytics in their everyday operations. Today it is not only important to work hard, but it is essential to work smart – and thats where ‘Business Intelligence’ comes into our work-life. Business Intelligence (BI) involves the use of information technology to identify, collaborate, clean data from discrete, distributes and heterogeneous sources, to provide either historical / current insights or even future trends for the business operations. Information Technology (IT) thus helps decision making to be smarter, faster and quantified.


According to US Federal IT Market Forecast 2011-2015, the key areas technology segments like business intelligence, cloud computing, eDiscovery, health information technology, unified communications are a few toppers who will see double digit growth in the period 2011 – 2015. Total annual U.S. Federal IT market will surpass $116 billion by 2015. Likewise in India, with organizations cutting down on their IT spends, thrust is given to extraction of intelligence from the accumulated and growing volumes of data generated by every organizational activity.


The top five business intelligence vendors are SAP AG (key customers : Sara Lee, Government of Bermuda, Emergency Medical Associates, Valero Energy and StubHub), SAS (key customers : Southwest Airlines, Bombay Stock Exchange, Lego Systems, Vodafone and Blue Cross Blue Shield), Oracle (key customers : Facebook, Marvel Entertainment, Marriott Hotels and Visa), IBM (key customers : Edmonton Police Service,, Lufthansa Cargo, Martin’s Point Health Care, U.S. Coast Guard) and Microsoft (key customers : Pepsi, Community Health Network, Kelley Blue Book, Hyundai, Bank of America).

Still curious to know about the winners who were awarded the Netflix prize ?  Well then, please use the information technology platform NOW and get to know the answer !

Veena H Bhat is a professor of Information Technology at ICFAI University. Currently she is pursuing her doctoral studies in Data Mining. She can be contacted at veena.h.bhat[at]

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