One of the advantages of the information age is that there is no shortage of information: an estimated 15 petabytes of new data are generated globally every day. A distinct disadvantage is that this deluge of bits and bytes constrains organisations’ ability to extract valuable insights that could well improve their competitiveness.
In fact, a recent study shows that companies that have transformed themselves into data-oriented organisations are 3.4 times more likely to outperform their industry peers. The report, Analytics: The Widening Divide, was compiled by IBM’s Institute for Business Value in collaboration with the MIT Sloan Management Review. It sheds light on the benefits companies have derived from embedding analytics in more of their processes and operations, and from using analytics to define and achieve their future strategies.
“Analytics is so much more than the traditional business intelligence functions and tools that we’ve become accustomed to,” said Shane Radford, business development executive for IBM South Africa. “Whereas business intelligence has tended toward providing a view of what happened in the past, business analytics enable us to draw the right kind of insights in ways that shed new light on future business, the market and even customer perceptions and behaviours.”
He added: “Business intelligence is still an important part of any enterprise’s toolset; however, it’s typically restricted by the reliance on structured data. Business analytics, on the other hand, provides the means to mine and dissect large sets of structured and unstructured data and provide it in a format that can be further moulded to an organisation’s needs, and ultimately assist in optimising the business at all levels.”
The study provided some interesting insights, one of the issues being the widening gap between transformed organisations and the so-called aspirational ones. As many as 80% of respondents in the former group — transformed organisations — said analytics helped to create a competitive advantage, up from 65% last year. In contrast, 5% fewer respondents in the “aspirational” group saw any advantage.
Transformed organisations are defined as those with the ability to capture, aggregate and analyse data and that have a culture that is open to new ideas. This has produced organisations that have embedded analytics as a core part of their business strategy and operations and, importantly, that make these insights available to those who need them.
Aspirational organisations often focus on efficiency or automation of existing processes, and are looking for ways to cut costs. They therefore lack the people, processes or tools to take best advantage of analytic insights. The study defined a third group, the “experienced” organisations – those that have some analytics experience and that are developing better ways to collect, incorporate and act on analytics.
Radford said the biggest hurdle for companies wishing to move from aspirational to transformed is far less about the technology than about an organisation’s ability and willingness to change the way data is perceived and used. This process involves a significant culture change and one that requires old turf wars across organisational boundaries and between business executives and information technology executives to be set aside.
The reality of modern business is that a collaborative mind-set is required, not only internally but also with outside audiences such as suppliers and customers. The report supports this, pointing out that organisations that collaborate more than their siloed competitors are more likely to use analytics more broadly and effectively.
“The combined insights from all parts of the business enable it to be more effective, particularly in developing and refining the business strategy far quicker and with far less guesswork,” said Radford. “As much as this requires a culture change, it also promotes the change once the organisation develops an appetite for new ways of understanding value and competitive advantage.”
This business value increases exponentially if analytics is applied throughout the extended value chain, particularly across the unstructured, unowned data produced by social networks and user-generated content.
As much as the tremendous power that now lies in the hands of customers and consumers is a game-changer, Radford said analytics can turn that to an organisation’s advantage if applied properly. New, real-time and honest insights can be gained into market perceptions, sentiment and trends, providing executives with data they may not previously have been privy to.
“It’s through being sensitive to such market insights that the transformed organisations are able to change tack more quickly to take advantage of sentiment that could position them above their competitors,” he said.
So where should business executives be looking if they want to follow this path?
The report outlines three key steps for aspirational organisations to follow, starting with assessing present analytics tools and readiness. It suggests that business-unit leaders start by identifying business challenges that can be addressed analytically and then create dashboards and scorecards to monitor performance against set targets. Experienced organisations are encouraged to continue adapting their systems to gain additional analytic benefit, whereas transformed organisations should be refining their tools to explore new areas of opportunity.
The second step, for all organisations, is to improve analytics competencies by laying the foundation with sound information management tools and skills, and ensuring that the business has the right level of analytical talent for its needs. All the talent and skills in the world would be wasted, however, if the organisation ignores the need to engender a data-oriented culture in which everyone participates and derives benefit.
The final suggestion takes the data-oriented culture a step further if organisations adopt an “information agenda” to align their information technology with their analytics strategy. This plan should be used to guide the integration of business strategies, objectives, operations and information infrastructure in such a way that analytics is central to decision-making.
“The challenge posed by big data is not one that organisations can ignore,” said Radford.
“At some time or other, companies are going to have to pay serious attention to their strategy around analytics and how to avoid being left behind by those already on this path.
“However, there are many tools and services available to help organisations of all sizes gain the upper hand by properly applying analytics in their processes and strategy.”
This article originally appeared in the Mail & Guardian newspaper as a sponsored feature