When it comes to data analytics investments, this is the year to put up, or shut up.
That is the take of analysts at Forrester Research, who collectively expect organizations to take a hard look at their data analytics investments so far, and see some very real returns on those investments. If strong ROI can’t be shown, some data initiatives may see the plug pulled on those projects.
These sober warnings emerge from Forrester’s top business trends forecast for 2016. Rather than a single study or survey on top trends, the Forrester forecast combines the results of 35 separate studies. Carrie Johnson, senior vice president of research at Forrester, discussed the highlights with Information Management, including the growing impatience at many organizations that big data produce big results, and where organizations truly are on the digital transformation journey.
“I think one of the key surprises is that folks in the industry assume that everyone is farther along than they are,” Johnson explains. “Whether it’s with digital transformation, or a transformation to become a customer-obsessed firm, there are very few companies pulling off those initiatives at a wholesale level very well. Worse, many companies in the year ahead will continue to flail a bit with one-off projects and bold-on strategies, versus true differentiation through transformation.”
Asked why this misconception exists, Johnson notes that “Vendors do tend to paint a rosier picture of adoption in general because it behooves them. Also, every leader in an organization sees their problems, and then sees an article or sees the use of an app by a competitor and thinks, ‘my gosh, these companies are so far ahead of where we are.’ The reality may be that that app may have been an experiment by a really savvy team in the organization, but it’s not necessarily representative of a larger commitment by the organization, both financially and through resources.”
In terms of top technology and business trends for 2016 that IT leaders need to be most aware of, Johnson says “There are a lot. Forrester believes strongly that it’s crucial that IT leaders are working with their business counterparts to craft a business technology agenda that helps win, serve and retain customers -- and that element of their jobs is crucial to growth.”
It is also crucial that IT leaders get better control of the overall investments in data analytics within the organization, which is many cases, serves many masters with very different agendas.
“We’ve seen a lot of investment in big data without a lot of insight as a result,” Johnson says. The problem: business units forming their own analytics teams, and making their own analytics investments, without a coordinated overall data strategy for the business.
“We’ve also seen a lot of investment in new models based on data that are half-baked,” Johnson notes. But the pendulum appears to be swinging the other way, with many organizations expecting to see bigger data analytics payoffs.
“We’re expecting in 2016 that firms do make this transition away from big data and analytics to insight and action,” Johnson explains. “We’ve made the call that this is the year that leaders actually do use analytics as a competitive asset, versus just having just general knowledge and awareness of customers. That was step one, I guess.”
What is causing this change in mindset? Several adjectives could apply: impatience, frustration, disappointment.
“In some cases the investment has been so large and so miserable on an ROI front that we actually do expect to see some efforts shut down,” Johnson says of some data analytics initiatives. “There is urgency for ROI because of these massive investments, which we think will be essentially turned into personalization projects. It’s actually more possible and more necessary than ever, and we believe personalization is a point at which individuals that have sold big data projects will hopefully get some internal steam behind them, because there is a direct correlation to increased revenue.”
But as the saying goes, ‘be careful what you ask for, you just might get it.’
“A personalization strategy really means a pretty massive restructuring of systems and assets,” Johnson observes. “The traditional IT architectures and systems do not allow for the agility that personalization demands. This is an area where we expect to see a pretty massive change in how IT leaders are structuring both their teams and their systems. It will be a massive year of investment because of that.”
Finally, Johnson was asked about the perceived disconnect by many in terms of how the business side of the house and IT regard data analytics and its capabilities.
“We’ve seen the business run in its own direction when it comes to analytics in terms of marketing automation and customer analytics, and develop some pretty sophisticated systems for reaching out to customers,” Johnson says.
“Yes, there has been a disconnect. Those systems were bought to supplement and to sit on top of data warehouses that resulted in a massive spaghetti structure of many systems in the same company that could technically do the same thing,” Johnson concludes. “I think that has created a rift with IT because the IT department assumed that the marketing folks ran in their own direction and did so irresponsibly.”
“I think that is solvable and I think that as companies embrace the business technology agenda they’ll see the way to best invest in analytics to win, server and retain customers. But it will require some investment reconciliation,” Johnson says.
The good news: “We believe that this is the year that IT leaders -- and CIOs in particular -- step up, stand beside their business leaders, and embrace a new way of investing in and running technology that is customer-centric. This makes the CIO and the IT leadership teams a much more important factor in the growth of the company.”