Analytics is an old-hat approach to improving business operations. But recently, it has become a kingpin of organizational performance. Why? Call it traditional business intelligence (BI) meets real-time predictive modeling. Or structured and unstructured data converge to form a single, shining truth.
Accolades for the promise of analytics abound. The wake-up call for every organization is this: a renaissance in analytics is raising the competitive bar in the global marketplace by helping companies become more limber, responsive and swift. The gap is growing between those who use analytics and those who don’t.
Accenture’s research shows that high-performance businesses are five times more likely to use analytics.1 Nearly 70 percent of high-performance businesses consider analytics significant for decision support and analytical capabilities, while only 23 percent of low performers do. In other words, high performers gain valuable ground by knowing exactly what goes on in their organizations and why.
It’s no wonder that analytics has become the darling of high performers. Analytics is the force that pushes enterprises to the next level of sophistication and improvement in operating models.
Knowing what’s going on in each corner of the enterprise - particularly with customers - makes it easier to make smart decisions. With analytics integrated into every level of activity, managers can steadily improve planning and implementation of business processes, accurately measure results and make precise adjustments. Such gradual and continuous improvements are the golden eggs of analytics, and those golden eggs abound.
How High Performers Use Analytics
The term “analytics” has an imposing ring for some who may be unfamiliar with its merits, but it deals with workday realities that have concerned businesses since antiquity. It’s the analysis of sales and other data to answer important business questions including: Which customers are buying what, why and when? What will clients want next? How satisfied are customers when they ask for assistance?
The renaissance of analytics is partly because it’s now easier than ever to answer such questions accurately. We have potent software and computing speed to extract and sort data, intricate data-gathering tentacles reaching into all corners of the enterprise and vast quantities of potentially valuable data to mine.
The power of analytics is limited only by the scope of organizations themselves. California’s Pickberry Vineyard, for example, uses an embedded wireless sensor solution to monitor 30 acres for humidity, wind, water, soil and air temperature. Applying sophisticated analytics to the data from these sensors, Pickberry can make calculated viniculture decisions - almost vine-by-vine - in near real time.
Companies can employ analytics to examine voluminous sales transactions, spot the most profitable customers and offer each customer the right price. Governments can mine millions of bits of information to deliver more value for the tax dollar and identify waste and fraud that may have otherwise gone undetected for years - or forever.
Analytics does much more than find and attack problem areas. It allows enterprises to accelerate innovation, optimize supply chains and reveal financial performance drivers. It helps organizations peer into a potential goldmine of new trends and propositions to differentiate themselves in the marketplace and continuously open new revenue streams.
Joining the Analytics Renaissance
Analytics has grown in the past three years as organizations attempt to better manage the convergence of structured and unstructured data. Structured data, such as the record of a sale, is easier to record and analyze as raw data than unstructured data, such as an email note from a customer. Both pieces of information are potentially invaluable to doing business.
Businesses realized that if they connected structured and unstructured data and analyzed them together, they could understand whole new layers of activity, both within the organization and among partners and customers. Analytics capabilities have the potential to bring powerful insights to light. Accenture has identified five main analytics capabilities:
- Real-time decision-making: Instant feedback lets organizations capitalize on opportunities earlier and in a more targeted fashion.
- Predictive modeling: Organizations can combine structured and unstructured data in the same model for a clearer view of customer preferences, existing and future maintenance of corporate assets and future buying patterns.
- Text mining:Regulators and executives increasingly view email as a major source of evidence and facts. Free-form text analysis can highlight sentiments in feedback such as customer comments, helping to track changes in a company’s brand image. A language analyzer can rate opinions expressed on Internet bulletin boards and Web sites as positive, negative or neutral, providing a picture of prevailing opinion. This can save organizations time and perhaps uncover issues that never would have come to light through traditional market research.
- Voice mining: Organizations can use analytics to train call-center staff to better field customer questions and concerns. Emotion detection senses heightened stress levels during interactions, helping to pinpoint underlying problems like poor service, product or training. Talk analysis tracks patterns affecting customer experiences - periods of silence, overlaps or who’s dominating a conversation.
- Video analysis: Approximately 25 million surveillance cameras now operate worldwide, and much footage is available to be mined for business applications like product placement or promotion compliance.
When employing analytics, an organization might start by asking key questions about returns on sales and marketing investments, and embedding more analytics into those processes. The Yankee Group, an independent technology research and consulting firm, estimates organizations can realize up to 20 percent profit improvement just by using price management and profit optimization solutions.2
Consider the many ways analytics can help your organization achieve competitive differentiation. An online clothing store might automatically display a customer’s preferred color range, identified through a combination of analytic data on past purchases, questions the customer asked over the phone and predictive insight.
The days of the old analytics, with senior executives poring over quarterly reports - seeing too little, too late - are over. Today, savvy managers are seamlessly embedding sophisticated analytics into their daily processes across their organizations.
Knowing technology alone can’t transform organizations into analytical competitors, high performers put abundant time and effort into developing their information-driven organizations. Eventually, every decision-maker throughout the organization will use analytics everyday to make critical assessments and act correctly.
Given the competitive edge that high performers already gain by being a part of the analytics renaissance, it’s clear that the time to start is now.
- Thomas H. Davenport and Jeanne G. Harris. “Competing on Analytics: The New Science of Winning, ”Harvard Business School Press, Accenture,March 2007.
- Thomas H. Davenport and Jeanne G. Harris.
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