Top performers are analytics-driven

Does your organization take advantage of data analytics?  A study from the MIT Sloan Management School and IBM’s Institute for Business Value late last year found top-performing companies are three times more likely to be capitalizing on data analytics.

The study based on a sample of nearly 3,000 executives and business analysts from 108 countries and 30 industries found a clear connection between users of analytics technology and the ability to achieve competitive differentiation and performance. For example, top performers are five times more likely to apply analytics rather than intuition across the widest possible range of decisions. In financial and budgeting, top performers were nearly four times more likely than others to apply analytics. So much for making decisions based on what your gut says.

A more recent study released this March,  again by the IBM Institute for Business Value, surveyed several hundred leading banks on banking success factors and also found data analytics to be critically important. Specifically, 90% of bankers believe they need to transform from the status quo for future profitability, and the successful banks will be the ones that invest in building sophisticated insights based on powerful analytics. Top performers, the researchers found, will use insights gained through analytics to focus their operations.

These studies hit at a time when organizations are being inundated with data, often at a rate faster than their people and even their systems and processes can effectively capture, assess, and act. And it is not just the volume of data but the speed at which it is pouring in and the variety of the information that makes analytics so difficult yet so important.

IT people excel at capturing data, processing it, and reporting it. More recently IT latched onto business intelligence (BI) to extract value from data and has deployed an array of BI tools, such as Cognos or Business Objects. IT, however, has been slower to put sophisticated, automated high speed analytics at the disposal of the organization’s line of business managers.

Many organizations pretty much give up, rarely moving beyond, say, some multi-dimensional data arrays that they can dice-and-splice in a handful of different ways. Even BI as it is currently deployed does not help companies become true top performers.

According to the MIT-IBM study, top performers are two times more likely to shape future business strategies as well as guide day to day operations based on analytics. The study found that despite popular complaints about the overwhelming amount of information, organizations today are far less concerned about data deluge issues, instead feeling hindered by traditional management practices.

Those management practices fall into three areas:

  1. Lack of understanding about how to apply analytics to improve their business
  2. Lack of bandwidth due to competing priorities
  3. Lack of skills in the lines of business

This becomes most apparent when organizations attempt some analysis but can’t translate the resulting insights into effective action. The MIT-IBM study, however, suggests how to get past these initial hurdles:

Tackle biggest challenges first: Don’t wait for complete data or perfect skills before you try to apply analytics to high-value opportunities.

Flip the data to insights equation: Instead of data before insights, recognize the specific insights needed and focus on getting only the data required for answers.

Adopt techniques and tools best suited to your management: New tools like data visualization and simulation techniques can help executives and managers alike anticipate the consequences of their decisions, explore alternative approaches, and confront the tradeoffs. These do not require unusual skills to use and can be applied by business leaders at anywhere in the organization.

IT is perfectly positioned to work with forward thinking business managers deliver the data and tools they need to turn their companies into top performers. IBM, which funded both these studies, has also taken the lead in delivering the necessary tools with its Smart Analytics toolset. Oracle, HP, and others are scrambling to get into this space.



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  1. #1 by cpapenfuss on April 1, 2011 - 2:01 pm

    Excellent summary of the study!

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