Can Organizations Get Analytics Strategy Right?
In a new report released by Gartner last week, the most salient finding was that more than 70% of BI initiatives will consist of analytics metrics that lack synchronicity with overarching business strategy. According to the report: “Organizations often develop and deploy hindsight-oriented reports and/or query applications focusing on metrics that users may find interesting, but they don’t represent the operational or strategic controls used to facilitate business performance.” The report’s author, Andreas Bitterer, goes on to say “The immediate future of the BI landscape is one of a disconnect between marketing hype about pressing challenges on the one hand and reality on the other.”
I’m not as quick to castigate the marketing function of major BI vendors for building the hype around BI technology; some might argue that many analysts have been equally enamored with what’s next on the horizon for BI technology rather than on the business problems BI can help solve.
The Real Disconnect is Between Business Analytics and Business Process
The disconnect Gartner talks about is something we’ve seen with our clients for years. What’s interesting is that the report predicts that this disconnect will be widespread (over 70%) for the foreseeable future. We’ve been evangelists and advocates for making the connection between business analytics and business for bottom-line impact for close to a decade, yet the issue persists.
The real disconnect comes from the perception that analytics is primarily a technology tool from business users. Our own research shows that many business users think they understand and have adequate analytics to support their core business processes; while nearly three-quarters of business users we surveyed indicate that they use traditional reporting, only 40% report using advanced or predictive analytics. Another example of this disconnect is the fact that these business users prioritize other business initiatives over analytics. In other words, they aren’t able to connect BI with true business value.
Making the Business Analytics to Business Process Connection
I suppose the good news for any organization looking to leverage analytics to improve business performance is that most of their peers aren’t doing it…yet. But making the connection doesn’t happen overnight. It takes an assessment of the organization’s state of readiness to leverage business analytics. Is there a culture around process improvement and analytically driven decision making? Is there a partnership between IT and business (e.g. is the CIO business savvy, and are departmental executives – CFO, COO, etc… – technically savvy)? Is the IT and analytics infrastructure in place to allow the organization to leverage analytics.
If the answer is no for any of the above, then some remediation has to occur to even have a chance to move out of Gartner’s “misaligned” 70%. To then move into the ranks of the minority of companies that use analytics for competitive advantage, an organization must then look at analytics from the top down, knowing the answers to some basic business questions:
- What competitive and external factors influence my business?
- What business strategy do I employ to compete in this environment?
- What business processes drive this business strategy?
- How do I measure the success of these business processes?
With the answers to these questions in place, an organization’s analytics team (and by team, I mean a collaboration between IT and line of business leadership) can then start to look at opportunities where analytics can improve how these business processes are measured. This in turn allows one to do things like provide better root cause analysis and predictive analytics.
So…Can Organizations Get Analytics Strategy Right?
While I agree with Bitterer’s observation about where companies are right now in terms of business and analytics alignment, I’m not sure that I’d agree that the majority wouldn’t be able to get there by 2014. Organizations just need to take the time to establish the process of understanding their readiness to leverage analytics, and then determine the opportunities that business analytics can offer.
By Adrian Alleyne, Director of Market Research
© DecisionPath Consulting, 2012