Data and analytics are not new to most of us. Large enterprises have always invested in data and analytics to improve understanding of customers and markets, and enable better decision-making. What’s different now? Well, the stakes are higher. And in this era of disruption, leaders aren’t using advanced analytics to simply improve existing activities. Strategic use of data is transforming traditional process-driven organizations to help them become more competitive, increase revenues and profits, reduce risk, and guide them to new initiatives.
What about organizations that are less mature in their use of analytics? They risk getting disrupted by the “2.0 organizations” of the information age that use data as a strategic asset. Companies have moved from pilot projects that originated in business units or countries to using data and advanced analytics at an enterprise-level to rethink and reimagine their entire business to identify new opportunities.
In new research by EY and Forbes Insights, more than 1500 C-suite executives were surveyed from Asia-Pacific; Europe Middle East India and Africa (EMEIA); and the Americas in August and September 2016. The respondents’ companies had at least US$500 million in annual revenues and 21% had revenues greater than $50 billion. Represented industries included technology, energy, pharmaceuticals, health care, financial services, manufacturing, consumer products, and government.
What drives success with analytics?
- Boosting investment doesn’t always translate to success: Findings from the survey show that simply boosting investment doesn’t necessarily lead to better outcomes. In fact, many large enterprises throughout the world still struggle to achieve the promise of today’s analytics capabilities. In between organizations moving from identifying new business opportunities, acting on insights and measuring the outcomes of their data-driven strategies, fundamental problems crop up. We’ve split this analytics journey into the five synapses that are represented below:
- Advanced analytics drives double digit growth: The flow of information between these synapses isn’t always smooth. And the way global enterprises handle these junctures can translate into business success and help define clear stratifications in analytics maturity. In fact, nearly two-thirds of companies with well-established advanced analytics strategies report operating margins and revenues of 15% or more, as well as improved risk profiles.
- Other benefits of leveraging advanced analytics: Sophisticated users of advanced analytics also experience additional benefits. Seventy percent of top performers have used advanced analytics to overhaul business strategies and update how they compete in their respective markets. Seventy-five percent operate a full range of enterprise, departmental and line-of-business analytics groups within a well-aligned framework.
These sophisticated users can capitalize on robotic process automation, artificial intelligence and other forms of predictive and prescriptive modeling for insights about possible future outcomes and ways to address them. Because advanced users of analytics incorporate them early in the business development processes, they can deliver better outcomes by shaping initiatives based on actual data rather than gut instinct. Leaders can more accurately measure business value to demonstrate the impact – and validity – of their investments in advanced analytics.
Download the survey here.
Becoming a leader in advanced analytics
So, what can you do to better leverage advanced analytics to drive business benefits? Here are a few recommendations :
- Understand the opportunities and risks associated with the synapses listed earlier. Also understand how each threat is impacting your own organizations. This requires a detailed assessment of the processes used when formulating data-driven strategies, an honest review of key analytics capability maturity and a plan for closing any gaps.
- Pay particular attention to overarching themes that emerged in the survey results. For example, a common pain point is the lack of collaboration among business units and analytics specialists when defining desired outcomes, designing operational models and measuring the results. Without this cross-department cooperation, the goal of turning analytical insights into action can break down at any stage of the process. This was particularly apparent at the synapse stage of Initiative Design (defining the specific activities and projects that will achieve desired business outcomes). For example, while 71% of CIOs/CTOs and 67% of CEOs/Presidents/COOs believe there is a high level of effectiveness among business users and technical people, department managers aren’t nearly as upbeat. Just 46% of chief financial officers, 43% of chief analytics officers and 37% of chief risk officers agree with that assessment. The divergence in rankings below the CEO level illustrates the difference between vision and reality – while everyone may share a desire to use data and advanced analytics effectively, people who actually tap the resource to do their jobs develop a keener awareness of where the gaps lie. These results also suggest that those who are frustrated by the level of effectiveness could do a better job of communicating this, and proposing solutions, to top leaders.
- Apply best practices specific to each synapse. This is to avoid common stumbling blocks and set a clear path to deriving immediate and long-term value from data initiatives. We dissect survey findings to reveal important distinctions between best-in-class companies and their emerging peers across industry sectors, geographical regions, and functional departments.
The survey results have also been used to create a four-stage maturity rankings to show trends among respondents that are leaders, challengers, developing companies and lagging organizations. These rankings highlight success factors in each of the five synapse categories and pinpoint what it takes to become an analytics leader. We hope you find the report insightful.
In a world of technology disruption, , leaders in advanced analytics are not merely trying to improve current processes; they are also trying to address what to sell, how to sell, who to sell to and how to outsmart competition. That requires using data and analytics at each step of the maturity cycle and ensuring that the process continually evolves and improves over time. Those that are not making progress quickly enough are at an increased risk of falling behind both current competitors and emerging players that were “born” digital with data and analytics at the center of their strategy.
Legal disclaimer: The views expressed are those of the author only and do not represent the views of any of the member firms of Ernst & Young Global Limited.