Business Analytics: Start small, get big results
How does your organization make business decisions? Do you go with a "gut feeling" because you lack accurate and complete data? Or do you have visibility into your processes, performance, offerings and customers to support smart, fact-based decisions?
With business data today growing at exponential rates, the need also is increasing to gather, analyze and use data wisely. In a highly instrumented, interconnected and intelligent world, business analytics can help your midsize organization achieve valuable insights and build competitive strengths.
Using business analytics, a smart organization can enhance opportunities for profitable growth, optimize the allocation and deployment of resources and capital, and proactively manage risk. A company using business analytics is not overwhelmed by today’s vast amounts of data and instead can turn that data into a business advantage. But where does a company begin?
Implement your solution appropriately
In business planning and operations, a common question is: "What should we be doing?" The same is true for business analytics. A company considering a business analytics implementation should ask early in the process what it should be doing with its data.
Usually, the answer is three-fold: create an information-driven business culture that collects and analyzes data, present information in a way that enhances insight, and empower actions that align resources with decisions. Some 81 percent of the most successful companies—20 to 25 percent more than average or underperforming companies—say they have a plan that makes these three goals possible.*
Once you've determined that business analytics can benefit your company, you'll need to identify the area where it will have the most impact.. Many companies find the greatest return on investment in business productivity and processes, with additional benefits in technology operations.
A recent study by Aberdeen Group found that among top-performing consumer products and retail companies who use business analytics, 57 percent employed it to improve operational relationships with their retail distributors, and 50 percent used it in working with partner companies. Forty-three percent used business analytics in working with logistics and transportation providers, and 35 percent used it in working with materials and parts suppliers. Significantly, only a small number of top-performing companies—21 percent—used it only for internal purposes.
The same study found that the greatest number of U.S. companies deploy business analytics in their finance and accounting departments. Other areas of significant use include: 49 percent in customer service and in the sales process; 41 percent in information technology; and 35 percent in product marketing.
"Always keep an eye on the business goal: analyzing data to achieve useful, actionable information."
Follow key steps for success with analytics
Wherever you deploy business analytics, however, there are key steps to follow. The first is to carefully examine your analytical needs—from data sources to data users, including how people use data, why they use it and how quickly they need analysis. This will lay the foundation for an analytics strategy that supports a data-driven company.
Early and sustained attention to data, quality and governance are important. So are regular and ongoing internal and external reviews of processes and metrics.
But always keep an eye on the business goal: analyzing data to achieve useful, actionable information. Your implementation should empower non-technical users with information delivery, reporting and visualization capabilities they can employ on a self-service basis.
Also keep an eye on your implementation rate. You don't need an extensive data warehouse to reap benefits. In fact, starting small is the best approach for the midsize business. While you should plan future ways to use your analyses and ways to expand into different areas of your business, you can, as the Aberdeen Group study found, achieve considerable success on the departmental or functional level.
An incremental strategy that builds on small successes lets you start with the types of reports, analysis or planning functions you need first. In finance, for example, business analytics can address cash flow, balance sheets, or profit and loss. For your workforce, it can address salary planning, project management or resource planning. In customer relations, it can address profitability, marketing effectiveness and customer churn.
Choose a solution with broad, easy-to-use capabilities
It's obvious that business analytics can produce a lot of results. To get those results, you'll need a solution with a comparable range of capabilities. You'll want a solution that takes you far beyond the limited capabilities of the spreadsheets that many companies use to analyze metrics.
Consider the following when choosing a solution:
Ultimately, the analytics that these capabilities make possible can drive an information agenda that fuels business optimization and drives growth. A modular approach can give you the functionality you need when you need it, and let you grow your analytics capabilities with the business.
* IBM Institute for Business Value, Business analytics and optimization for the intelligent enterprise (PDF, 393KB).
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