Looking for Analytics Payoffs? Focus, Focus, Focus
People continue to invest with big data analytics to better serve customers and gain the upper hand in their markets. But how can these investments pay off?
It’s not there isn’t enough money flowing into big data analytics. A recent survey of 417 companies, released by Gartner, finds that more than three-quarters of 437 companies are investing or planning to invest in big data in the next two years, a three percent increase over 2014. In a separate report, Gartner analysts urge analytics leaders to focus on mindsets and culture to kick start advanced analytics. The consultancy goes on to predict that 60% of big data projects will fail to go beyond piloting and experimentation, and will be abandoned.
It’s a matter of intense focus and commitment. Organizations that not only invest money in analytics, but also marshal top-level resources to make it work, are seeing the greatest payoffs.
A separate survey suggests big data is delivering value to a segment of companies that “get it.” In the survey conducted by Forbes Insights on behalf of Teradata and McKinsey, 316 senior executives, only one out of five (21%) said that data analytics was the single most important way for the company to gain a competitive advantage. The other four-fifths didn’t know, said the priorities weren’t clearly defined or said it was one of a number of priorities.
Among those companies that were leveraging analytics in a focused way, more than half say their top executives – CEOs – were heavily involved in the effort. The report’s authors note how at Time Inc., the company’s chief data officer participates in a weekly four-hour meeting with the CEO, CFO and a dozen other C-level executives. “We have one of the few CEOs in the media world who really understands the value of data, metrics and analytics,” says Time Inc.’s chief data officer, Dr. J.T. Kostman. “He knows what user data can do and became a tremendous internal advocate.”
In addition, analytics-focused organizations report that they’ve seen proof that big data analytics can transform the business. Three-quarters of those who say big data analytics is the most important path to competitive advantage also agree with the statement that “it has transformed the way we do business.”
These highly focused enterprises report they’ve seen proof that big data analytics can drive revenue growth. Over half of the committed executives say it has increased revenue by more than three percent. More than 90% say it has increased revenue by more than one percent.
Lower levels of commitment correspond to fewer people attributing revenue to big data.
The highly focused analytics users are likely to be enabling larger swaths of their workforces to use big data analytics. Even in organizations where big data analytics is viewed as the most important path to competitive advantage, less than half of respondents say that it is used by “many” (defined as more than 10 or more than 20%) functions in the company. Usage is still broader than it is at the organizations with less strategic focus.
“A successful advanced analytics strategy is about more than simply acquiring the right tools,” according to Gartner. “It’s also important to change mindsets and culture, and to be creative in search of success.” That mindset needs to come from the top levels of the organization.
(Disclosure: I am an occasional contributor to Forbes Insights, mentioned in this article.)