3 elements that enable data and analytics investments to achieve business value

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Data and analytics are at the center of every competitive business and are most effective when they are properly integrated into new or existing business processes. Data and analytics must become strategic to organizations as they digitally transform.

Analytics is among the top areas where most CIOs are increasing their investments in 2020, according to Gartner. Yet most organizations don’t have a systematic way to assess and optimize their data and analytics (including AI) investment options. That is an unfortunate place to be considering that by 2023, organizations that have made data and analytics a core part of their business and operating models will outperform their industries on most financial metrics.

Data and analytics investments often only weakly relate to business priorities and the organization’s strategic focus and typically tie only to IT benefits. To fill this void, Gartner developed the Return Opportunity Appetite Risk (ROAR) Portfolio Optimization Model as a framework to help CDOs, CIOs and data and analytics leaders across the organization along with business stakeholders to identify, prioritize, and select data and analytics investments that deliver measurable business value.

Build Data and Analytics Value Propositions

To create data and analytics value propositions, the ROAR model relies on 3 elements: mission critical priorities (MCPs), strategic business focus target, and data and analytics value initiatives.

Identify your Mission Critical Business Priorities

Mission critical priorities are established by senior management and serve as the organization’s most important business goals and objectives. They are often found in your strategic plan or your annual report.

Effective mission critical priorities are a function of the organization’s goals within a specific market that can be translated into concrete business priorities. Ideally, too, they will be associated with specific success measures to track value through execution and a time frame to realize business impact. Mission critical priorities typically fall into designated categories, like Customer, Innovation and Organization.

Identify your Strategic Focus Target

This element is one of the optimization inputs for the ROAR model. The strategic focus target enables the organization to think about how it can survive and thrive in its given industry and competitive environment. Alignment of the strategic focus is vital to optimizing the data and analytics portfolio and the resulting business value achieved. Strategic business focus is a function of three considerations: the extent of industry disruption, the organization’s competitive strategy within that industry and overall macroeconomic conditions. It answers the questions such as: to what extent does the organization need to invest in more innovative, but possibly less mature technologies where the organization may lack skills in order to achieve the differentiation, growth and transformation to succeed or is the basis of competition focused on achieving cost optimization and efficiencies.

In a high growth industry experiencing digital disruption, such as retail or insurance, a company may have mission critical priorities and a strategic business focus on revenue growth, technology and business model transformation, new ways to deliver customer value, and new product introductions for differentiation. In a lower growth industry, such as basic chemicals or steel production, the mission critical priorities will lean towards risk mitigation, process improvement, efficiencies, and cost optimization.

Map Data and Analytics Initiatives To Your Mission Critical Priorities

Data and Analytics value propositions are data and analytics initiatives that directly contribute to achieving specific mission critical business priorities. They take on the perspective of an internal or external stakeholder to ensure the organization delivers the most value to them.

For example, if the mission critical priority is to gain 15% of revenue growth from new products annually, the associated data and analytics initiative would be to use data and analytics conduct targeted marketing initiatives to build new a new product brand and customer base.

To put these three elements together, create value propositions by identifying your mission critical business priorities and ideal strategic business focus target, and subsequently map them to data and analytics investment options.

Assess Net Business Value

The ROAR model provides a framework for assessing the value of each Data and Analytics initiative and your capabilities gaps and risks inhibitors to success. These are your ability to deliver the data, analytics and technology, organizational, cost and go-to-market capabilities necessary for success.

Build Portfolios

The model then proposes the optimal set of investments that deliver the highest net business value per dollar invested for your specific strategic business focus target. By going through this process, the user of the ROAR model will have developed a deep understanding of the drivers of business value and what capabilities gaps need to be closed in order to be successful. This insight can be communicated with other business leaders and forms the basis of designing an effective strategy and operating model optimized for delivering business value.

Recommendations for CIO, CDOs and Any Data and Analytics Leader Across the Business:

To optimize data and analytics strategies for investments that target mission critical priorities:

  • Assess and rank net business value for each MCP-mapped data and analytics value propositions by weighing business and financial benefits against your ability to deliver the data, analytics and technology, organizational, cost and go-to-market capabilities necessary for success.
  • Identify the optimal data and analytics portfolio of data and analytics initiative investments that align to mission critical priorities and deliver the highest net business impact per dollar spent for your strategic focus target.
  • Formulate a strategy, operating model, roadmap and communications plan that together target the desired business value, fill any capabilities gaps and articulate the value story to engage other business leaders.
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