The Pareto principle says that you achieve 80 % of the desired effect with 20 % effort - most times, anyway. Let DeltaMaster check if the theory holds true for your open questions.

Concentration analysis (also known as ABC analysis or Pareto analysis) is a textbook analysis method which we automated in DeltaMaster. Just recently, we were reminded why that is so valuable. We received a copy of a book that makes reference to our SparkMaker. The book, which explains how you can use Excel in sales and marketing, describes how you can run a concentration analysis on pages 11 - 51. That's 40 pages.

In DeltaMaster that's so much easier:

Creating a concentration analysis in DeltaMaster (click to enlarge)

When you automatically create a concentration analysis in DeltaMaster, you get a clearly structured table with a recommended classification and, if desired, a Lorenz curve to visualize the concentration. Of course, you can interactively change the class borders. It doesn't matter in which database the data are stored - this analysis works with Microsoft Analysis Services, SAP BW, Oracle OLAP and any other database that DeltaMaster supports.

Professor Peter Mertens explains why Pareto analysis is so important:

"You don't run an ABC analysis just to create a ranking of objects based on their profit contribution. A list sorting the objects in descending order would suffice. [The purpose] is to classify the objects based on criteria that are not normally used. If the products were divided into product groups based on their usability from a customer point of view, an ABC classification could identify objects across different product groups that play a similarly existential role for the company's survival. The analysis view, therefore, shifts from individual objects to groups or classes. If the most important class - the "class A" products - is extremely sparse, you can clearly recognize a high concentration on a just a few success factors. That means an extremely high business risk. If problems occur with one of the "class A" products, this will have a strong effect on business success."

This quote was taken and translated from Mertens' book*, which in its 10th edition is a German classic in the field of business information systems.

* Mertens, P., Meier, M.: Integrierte Informationsverarbeitung 2, Planungs- und Kontrollsysteme in der Industrie, 10th edition, Wiesbaden 2009, p. 76.

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