Time to Restore Data Analytics’ Competitive Edge
Data analytics is giving organizations the edge in their markets, right? Maybe not as much as before, if some MIT researchers are right.
Many organization are now attempting to achieve competitive advantage through data analytics, opening new frontiers for gaining insights and building relationships with customers and markets. However, the data analytics movement – at least in the initial stages now seen – may now be so ubiquitous that everyone is benefiting from its early returns – and therefore the playing field has leveled.
That’s the word from Sam Ransbotham, David Kiron, and Pamela Kirk Prentice, who designed and published the study to cut through the noise and hype and see where organizations stand on data analytics. The study, based on the responses of 2,000 executives, was hosted by MIT Sloan Management Review in partnership with SAS.
The key to data analytics success and differentiation going forward, they suggest, is to go deeper into enterprises – to do the back-end work needed to link data to corporate performance at all levels – or, as they put it, the “unsexy side” of analytics. “The hype surrounding the promise of analytics glosses over the hard work necessary to fulfill that promise,” they suggest. “It is hard work to understand what data a company has, to monitor the many processes necessary to make data sufficient — accurate, timely, complete, accessible, reliable, consistent, relevant, and detailed — and to improve managers’ ability to use data.”
With so many organizations now jumping aboard with the early stages of data analytics, competitive advantage with analytics may be waning, Ransbotham, Kiron, and Prentice also caution. “The percentage of companies that report obtaining a competitive advantage with analytics has declined significantly over the past two years,” they state. “Increased market adoption of analytics levels the playing field and makes it more difficult for companies to keep their edge.” However, they add, optimism about the potential of analytics remains strong, as success stories keep coming to the fore.
The next wave of analytics demands deeper insights that dig deeper into the back-end processes that run enterprises. A separate study from Forbes Insights, also supported by SAS, connects the dots between data analytics and the processes behind customer experience (CX). (I helped design the report and wrote up the final analysis.)
The Forbes Insights survey measured organizations’ data-driven CX progress based on three key pillars—organization (people), openness (data) and orchestration (process). These represent the key components on the journey to deliver more compelling and rewarding customer experiences.
In terms of organization, the survey affirmed that delivering a superior customer experience doesn’t happen overnight—it requires a mix of activities and competencies, from data integration to technology implementations to training to rethinking processes. For three in 10 enterprises, however, data-driven CX is already delivering a significant shift in elevating customer experiences. Many more executives who are still in the early stages of development anticipate results over the next two years. Data-driven customer experience delivers just as much of a positive experience to organizations as it does to customers. For a majority of enterprises, their data-driven CX efforts are already delivering benefits in two key areas: decision making, and stepped-up insights and engagement with customers.
For openness, overall, data integration remains a challenge. Only 36% of executives say they have attained real-time, highly integrated capabilities across all the customer channels within their enterprises. At this point, just half of even the most highly data-driven CX organizations consider themselves to be highly integrated. Information is managed centrally, and only 14% of executives are able to report that their data is structured on a cross-functional, synchronized basis. There’s a prevailing understanding that opening up data and sharing it with customers will go a long way to advancing the customer experience. The ability to extend real-time offers as customers browse a site or to show the real-time status of order shipping are powerful examples. Visibility into customer activity itself is low, with only a handful of enterprises (6%) currently capable of seeing the entire breadth of their customers’ experiences.
In terms of orchestration, executives in the Forbes Insights survey report they have made progress in linking back-end processes with front-end services or interfaces. However, data from these processes is not highly integrated or delivered in real time. Delivering superior customer experience isn’t just about machines and systems—the success of such efforts relies on the people who build and manage these systems, and on their ability to help design key business processes. There is a close alignment between staff managers and professionals involved in back-end systems and customer experience delivery. However, there is a need to draw them even closer.
The MIT Sloan report notes that moving past the data analytics hype “takes a measure of resolve that few companies demonstrate.” Unfortunately, they add, “most companies are not prepared for the robust investment and cultural change that are required.” The key, Ransbotham, Kiron, and Prentice assert, is a “sustained commitment to changing the role of data in decision making. “This commitment touches many aspects of organizational behavior, from revamping information management to adapting cultural norms.”
In other words, plenty of work ahead.