The fact that we live in a complex business environment due to the vast proliferation of data is well-known. The fact that organizations are being encouraged to change their game plan to factor business outcomes from the vastness and deluge of this data is also well known.
Every organization is talking about implementing an analytics and Big Data strategy. A recent IDC forecasts the Big Data technology and services market to grow at >25% compound annual growth rate through 2018, or about six times the growth rate of the overall information technology market.
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But the journey from being good to great on analytics requires much more thinking within organizations…and this article focusses on a couple of big themes to help navigate this journey.
Democratize data-led decision making
Great organizations start by laying a foundation that gives data scientists a seat at the table and have them contribute to important business decisions.
Chief Data Officers have been called the hottest role in the 21st century. However, great companies are embedding data scientists within every key enterprise process. A supply chain leader of a large multinational that I used to work with would insist on every sales forecast to be reviewed by his analytics leader. While the initial -motivation was to avoid surprises, it also forced the regional sales executives to become scientific in their forecasts and appreciate the role of data scientists in making business decisions.
Great organizations also reward data-led decision making and encourage teams to move away from intuitive decision making. In an analytics forum I attended, I interacted with a CFO of a top IT company. In course of the conversation, he told me that he insisted that the travel expenses of executives of various business units must be projected six months out using forecasting models. The finance team also awards business units who are accurate in their predictions. While it may look like a simple idea, the key is to encourage teams to move towards adoption of analytics. The democratization of decision making brings consistency with respect to adoption of analytics. Leaders will be able to see the larger picture that an integrated analytics team can bring to the table.
Drive a culture that promotes decisions based on business outcomes
According to an analytics survey by Bain, 56% of the companies didn’t have the right means to capture the data they needed or weren’t collecting useful data, and 66% lacked the right technology to store and access data. One of the reasons, I realized, was that management of these organizations has invested on infrastructure but not the right rigor for implementation of analytics.
Great companies evaluate analytics as an important element of an organization. It has to result in a substantial tangible return on investment for the organization just like any other investment. Great companies link analytics to results to ensure gains. A case in point- a previous client of mine always insisted on 4 X returns on analytics investment, while another client of mine would ask for cash neutrality in the financial year. The client monitored analytics investments with the same enthusiasm as any other investments.
Treat technology and business as two sides of the same coin
Successful analytics organizations build capabilities by blending data, technical and business talent. Let’s face it; analytics is an emerging capability. Every sale or consulting executive who walks into a client’s office wants to showcase and sell their analytics capabilities and every delivery organization is keen to create one. However, if the business teams are not aware of how their analytics teams can be leveraged or what their analytics products can do for the customer they will miss the bus. Similarly, analytics folks need to understand business processes and more importantly the intricacies of executing upon an analytics output.
Conventionally, organizations have invested a lot on technology enhancement – infrastructures are created, licenses for tools are bought and people trained. However, very little time is spent on understanding the potential benefits or use of this investment. In great organizations, CIOs and business leaders work collaboratively. I have witnessed a senior client of mine create a sandbox environment that allows business stakeholders play around with new technologies that proliferate in the market. In return, the business stakeholders and the CIO do a yearly world trip to breathe and evaluate new analytic tools and technologies in the market. Clearly, both the parties, the CIO and the business stakeholders know they have a joint and shared responsibility of defining the analytics charter that will shape the future of their business in the next few years.
The key to implementing analytics well is implementing it right! In my opinion, these are the few tenets of analytics that has differentiated great analytics organizations from just good analytics organizations.