A May 2011 report by McKinsey Global Institute provides compelling arguments that “big data” is the next frontier for innovation, competition, and productivity. It’s a long read, so if you’re time-constrained I’d suggest you read the 13-page Executive Summary. If you’ve been around business intelligence for any length of time, you’ll probably recognize many of the value propositions set forth in the report because they are the same value propositions that best practices, business-driven BI has been about for years now. What is great about the McKinsey report is that it adds further weight with business audiences – the people who decide whether and how much to invest in BI.
Big data and business intelligence – are companies ready?
The McKinsey report recognizes that the definition of “big data” is subjective and will vary by industry. With that said, key value propositions for leveraging big data include:
- Improved business performance management through improved performance measurement/transparency, variance detection, and ability to test corrective strategies and see the results before implementing improvement strategies more broadly.
- Improved customer segmentation for a variety of marketing purposes, such as customizing offers, better targeting campaigns, and rewarding valuable customers to retain them.
- Improved business analysis, forecasting, and simulation for a variety of business purposes, ranging from management processes such as budgeting and financial forecasting to marketing processes to operating processes.
- Innovative business models, products, and services made possible by delivering business insights as a core business service or adding information content to products and services or using data-driven insights during product/service design.
- Improved productivity and operational performance made possible by leveraging data to improve core operating and supply chain processes, reduce inventory, and improve customer service.
The report goes on to evaluate the extent of these opportunities across various industries, taking into account such factors as the ease of capturing the opportunities, whether the skills exist in the industry to leverage BI, the IT-intensity of the industry, whether companies in the industry have a data-driven mindset, and whether useful data is available. This kind of analysis is key to determining the appropriate BI Mission for a given company and is a huge service to companies that have been on the fence or late to the game with respect to BI. That being said, many companies may not be ready to capitalize on these opportunities for a variety of reasons.
Our experience as business intelligence consultants and business performance management analysts suggests that companies readiness to leverage bid data still comes down to fundamental BI Readiness factors. These are:
- Company readiness to align and govern an enterprise BI initiative, which includes the ability to align a BI initiative with business strategies, the ability to create an effective partnership between the business users and IT; and the ability to manage a portfolio of BI projects over time; and
- Company readiness to successfully execute the technical tasks required to deliver BI applications to business users; and
- Business unit readiness to leverage the BI applications that IT delivers on their behalf, which includes the creation of culture that favors data-driven analysis, the ability to use business process improvement techniques to change business processes to leverage BI, and a willingness to inject analysis into structured decision-making processes.
For more on BI Readiness, please download our new whitepaper, Seven Key Readiness Factors for BI Success.
Let’s Do It!
The McKinsey report adds an important voice to those of Accenture, IBM, and others who have recently been proclaiming the value and importance of business analytics and the big data that informs those analytics. For years CIO surveys have reported that business intelligence is a top priority, and yet surveys of executives have consistently reported that they don’t have the information they need to guide their organizations. The more that well-regarded firms like McKinsey add their voice to the conversation, the more likely it is that business leaders will come to understand the profit impact of business intelligence and then make the investments needed to capitalize on the many big data opportunities.
By Steve Williams, President
© DecisionPath Consulting, 2011