If data analytics is not on your business’ radar, it should be. Today’s businesses are heavily reliant on data science and analytics in all facets of organizational process, delivery and customer service.
Big business is already seeing the results in marketing, customer retention rates and internal planning. Most large companies have dedicated analytics functions. Midsize and small companies are taking advantage of outsourcing, automation and project-based options.
Why? What are the benefits of tying data science into your business model, and what results can it actually achieve?
In a 2012 4i report1, Fractal Analytics President and CEO, Eugene Roytburg, produced a long list of persuasive analytics benefits, including forecasting, predicting sales from promotions, out-of-stock minimization, market trend preparation, product life cycle monitoring, consumer preference mapping and simulating future scenarios to navigate decisions, among others.
Roytburg noted existing stumbling blocks for achieving effective data-based insights along integrated viewpoints from separate business functions. “Depending on the user’s vantage point, generated recommendations are seen as trivial, unclear from an action standpoint and/or scary,” said Roytburg.
As analytics projects or teams are implemented in an organization, it is critical to ensure that they are aligned, in their insights and goals, and that decisions are made based on business-focused data requirements that tie into overall strategy. This requires management teams to have a deep understanding of operations and issues before they implement analytics solutions. Without this foundation, the analytics groundwork could be fruitless and insights rendered invaluable in the face of an unidentified goal.
A 2016 Deloitte Netherlands report2 expands on Roytburg’s ideas and promotes the idea of an Insight Driven Organization (“IDO”). An IDO operates on the premise that, while there are key foundational items to address before you start using analytical insights, you do not need to wait until all of your functions and data are perfectly structured before you get data working for you. The report encourages companies to set themselves up as an IDO by, “Starting small, failing fast and building capability as you go.”
Five Building Blocks for Using Analytics
Deloitte outlines five key building blocks to setting up a business for effective use of analytics:
- Strategy – your leadership team has to get strategy right from the top down. Understanding where you are heading as a company will let you define what you want from your analytics strategy and how you can inject insights into your road map.
- People – training and culture is key. Of course you need the right technical people to get you the analytical results, but, then what? Your management team and staff must implement them in support of your strategy. Think about who will oversee and be accountable for the implementation of analytics insights, and whether your teams have the appropriate training to carry out that implementation.
- Process – once you have the data, you have to figure out what to do with it and how. This ties back to ensuring your people are prepared to implement any gleaned insights. In addition, you need a forward-thinking framework and agile operating environment. You cannot go into a data project with a pre-planned outcome and look for data to support it. In the same vein, you should expand reporting beyond backward looking information. Understand opportunities and potential scenarios in addition to what has happened in the past. Be prepared to let the data show you the best decision to a problem. This mindset should carry through to your people and the ability for your processes and operations to adapt as needed based on insights.
- Data – obviously you cannot analyze data that doesn’t exist. But what data should you be capturing? Do you even know all of the data you currently have access to? Going a level beyond that, what about data that your company is not capturing? You could be utilizing weather patterns, stock information, economic and consumer trends that are being captured outside of your business. This is where your strategy comes in – look at your priorities to narrow down the data sets that are useful to helping you answer the tough questions that will bring you closer to your goals.
- Technology – map out the end-to-end technology solution, no matter the size of your operations. In a multinational company, this may look like multiple IT teams spread out across business functions. In a smaller environment, it could be one IT staff person or just technology partners and external vendors. You will need the solutions to deliver the analytics, the ability to test outcomes and play with your data, the right analytics people handling the process and the proper delivery model to turn insights into results.
These building blocks can be implemented no matter your size. Following Deloitte’s advice to “start small, fail fast and build capability as you go” will protect you from the risk of large investments and failures. You can take on a small project in a sandbox environment and learn from its successes or failures before scaling up. Start today because data analytics has become a common business tool and is a key step in achieving your goals.