Creating an internal analytics center of excellence is part of building a world-class organizational capability in analytics. These are the essentials:
Multidisciplinary leadership. The leading body of a center of excellence should be composed of business, information-technology, and analytics leaders. The center will need someone to work with business units to identify and articulate problems, as well as someone who can work with modelers to find the right approaches. Today, a few insurers have hired people with titles such as chief decision scientist and chief data officer to head new departments of digitally savvy experts. These roles will become more common, but finding individuals with the desired combination of technical skills and business-leadership experience will not be easy (by 2018, global demand for technical and managerial talent will exceed supply by 50 to 60 percent).
Technology oversight. Companies usually start this journey without user controls for data quality and with a limited technology infrastructure. An internal center of excellence can help to identify the data elements and technology requirements, addressing questions such as these: What technology infrastructure is required to source and store data? What kinds of analytical and visualization tools are needed?
External partnerships. The “data ecosystem” is best sourced by those with direct experience in external relations and partner development. The designated individual or team would be responsible for scanning the landscape of third-party data and analytics vendors, evaluating offerings, and identifying opportunities to lock in high-value proprietary relationships.
Culture change. A fully developed data-driven or analytics culture can be defined as one where science-based, rigorous data-driven decision making is the norm throughout the organization. Achieving such a culture involves education and the introduction of different performance metrics. Insurance companies beginning their analytics journey might start by asking whether they should create one center of excellence or embed multiple centers in the businesses.
This article was originally published in McKinsey Quarterly. Copyright (c) 2014 McKinsey & Company. All rights reserved. Reprinted by permission.