Analytics promises so much to organizations that embrace it as a vital business discipline. Above all, it gives them the insights they need to make faster and smarter decisions – in a business environment where the pace of change has never been so rapid.
But is that promise being realized? Are companies seeing significant returns on their investments in analytics projects?
The reality is that it’s still the early days for data analytics in many organizations. An Accenture study of senior analytics practitioners in the U.S. and the U.K. reveals that businesses are at very different stages on their journey to ROI driven by analytics.
Nevertheless, the roadmap is becoming clearer. It’s a four-step pathway that organizations need to follow to progress from issues to business outcomes.
Obviously, the first step for companies moving toward realizing the potential of analytics is to harness the power of data. Currently, only 39 percent of executives say the data their organizations generate is relevant to their business strategies. But progress is being made. Contrasting results from 2009 when equivalent research on the development of analytics was last conducted, fewer participants in this recent survey say they are hindered by a lack of data, technology, analytical skills or senior management support.
Data is also an increasingly prominent executive responsibility. Two-thirds of companies have appointed a senior figure such as a “chief data officer” in the last 18 months, and of those that haven’t done so yet, 71 percent expect to designate this role in the near future.
With the right data flowing in, the second step is to build the organizations’ analytical capabilities and embed those capabilities across the business. Our research suggests that, so far, most analytics projects have been tactically focused. Only 21 percent of organizations routinely use analytics as part of an integrated enterprise-wide approach, whereas more than half are using analytics in specific functional areas.
Sourcing the right talent is one of the biggest challenges in building and implementing these capabilities. A U.S. financial services analytics specialist commented, “Finding the right tools and the right skills and people has always and will always be a challenge as the tools are getting better every day and we need people who can understand this.”
Step three on the path to business outcomes is to recognize that the discipline of analytics is at its most valuable when it generates insights about the future rather than equipping business with an – albeit sophisticated – rearview mirror. We are beginning to see a surge in predictive analysis: some 33 percent of companies now say their analytics work is primarily predictive, up from 12 percent in 2009.
However, this figure needs to continue to increase – almost twice as many respondents (60 percent) say internal customers want them to predict future trends. “The customer base has become more educated and tech savvy, which requires us to be much more flexible and nimble,” an executive at one leading retailer said. “We need to have analytics at our fingertips that can make decisions very quickly.”
And this is why the final step, making insights actionable, is crucial for achieving the desired returns on investments in analytics. There is good news here, for 85 percent of survey respondents say their senior management team is engaged with and committed to analytics and fact-based decision-making.
Still, there is much more work to be done: 58 percent of respondents identify “outcome from data” as a key analytics challenge. Collecting the data and analyzing it is one thing, but proceeding to actions and outcomes is another, more difficult, progression.
To get here, organizations and their leaders need to keep their eyes on the prize. Our research suggests there is cautious optimism among companies working toward analytics capabilities that yield a measurable return on investment. Some 57 percent of respondents say they are “quite” or “very” satisfied with what their analytics investments have delivered. That leaves a sizeable minority of companies that are yet to be convinced – 34 percent say they are “not yet” satisfied or “not at all” satisfied with the outcome.
For many organizations, the jury clearly remains out. “We are well aware that the implementation and use of relevant skills and technology will take its time,” commented a financial services business development executive. “Only when everything gets streamlined can we expect significant return on investment – everything is at a nascent stage now.”
The journey, in other words, is far from complete, with companies still in the process of figuring out how to build effective analytics programs.
The key is to establish much more disciplined processes. The ideal is a virtuous feedback loop in which the company collects data, analyses that data, harvests insights from it and makes decisions on the basis of those insights. Once the sequence is completed – including measurement of its outcomes – it is repeated, with data collection and analysis continually adjusted on the basis of previously realized results and the changing business environment.
To achieve that ideal, companies need specialists who are capable both of embedding analytics into all their everyday business processes and of linking the insights garnered with the actions taken by senior management and other key decision-makers. That skill set may be built, acquired or obtained from partners, but it will need to be continually updated. So, too, will the organization’s technology, the key to ensuring that data is reliable, high quality and accessible. Getting there will require perseverance, but the rewards include revenue growth, profitability, return on capital and customer value.
Said one participant in the study: “There has been a sizeable investment and I believe that the early signs are extremely positive. I think probably over the next six to 12 months, if we have a similar conversation, you will be speaking to a very happy person.” I’m looking forward to having this conversation.
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