A tricky question to answer directly…So we will answer by example:

• UPS, route optimization (2003), $600MM annual cost savings

• Netflix, Cinematch algorithm: company offered $1MM to anyone who could improve its performance by 10%

• American Airlines, yield management: $1.2B in value over three years

• Deere & Company, inventory optimization: $1.2B in inventory cost savings between 2000 and 2005

• Procter & Gamble, OR in sourcing and distribution: $200MM in mid 1990’s

• BostonCoach, fleet optimization: 20% increase in asset utilization

• Harrah’s Entertainment, customer loyalty analytics, market share increase from 36 to 43% between 1998 and 2004

• Barclay’s Bank, data-driven customer management strategy, 25% increase in revenue per customer

• Capital One, credit card analysis, retention increase of 87%, cost of acquiring new account lowered by 83%

• Marriott, hotel system optimization, 8% increase in “revenue opportunity”

• Progressive Insurance, web analytics, market capitalization doubled in four years to $23B

• JCPenney, price optimization, 5% increase in gross margin, 10% increase in inventory turns, double-digit growth in operating profit over four years, 2001 to 2004

Source: Competing on Analytics, Thomas Copeland and Jeanne Harris, Harvard Business School Press, 2007