Working smarter, rather than simply investing more, is the key to gaining value from Big Data and analytics in business, according to a new report.
The report, Broken Links: Why analytics investments have yet to pay off, from the Economist Intelligence Unit (EIU) and global sales and marketing firm ZS, found that although 70% of business executives rated sales and marketing analytics as “very” or “extremely important”, just 2% are ready to say they have achieved “broad, positive impact.”
I had the chance to speak to the study’s leader, Dan Wetherill, ahead of its publication today. Wetherill, an associate principal at ZS, told me “This is the kind of metric which we would hope to have seen much higher. But many companies are just starting down this journey – it isn’t just that they haven’t hit the bar – they are moving towards that destination.”
The report surveyed nearly 450 senior executives from US companies across sectors including IT and telecoms, pharmaceuticals, medical devices, financial services, and travel and hospitality.
The sample was split evenly between professionals working directly with data analytics, and those responsible for business performance.
Interestingly, the results seem to suggest, according to Wetherill, that many of the obstacles stopping companies from achieving real value are caused by communications difficulties between these groups.
While many reported that their organizations had invested heavily in creating data science capabilities, “We didn’t necessarily see this as something separating the leaders and the runners-up.
“The distinction was actually in how executives collaborate – between the business and the analytics function leads.”
Indeed, the survey found that just 41% of participants thought that this collaborative relationship between data and business executives exists at their company. Diving deeper into the figures, among “leading” companies, this figure rose to 55%. And among companies not rated by the respondent as “leading”, it fell to 37%. This clearly backs Wetherill’s belief that this is an important metric.
Another common problem facing companies attempting to adopt a data-driven strategy is the lack of the right data at the right time.
“It’s partly a problem of availability”, says Wetherill. “What that leads to is being faced with difficult decisions at times when they might not have access to the information that they’d like.
“That forces them to rely on gut instinct more typically than they would like.”
Broadly the survey identified three areas where businesses are running into difficulties in extracting value from analytics. These are all areas which analytically-inclined companies can benefit from re-examining from the ground up and implementing changes where deficiencies are found, it suggests.
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The first is organizational – where improving communications between business and analytics leaders could be a possible solution.
The second is procedural, and changes here could involve examining how analytics is implemented throughout the business’s operations, to ensure an end-to-end approach to adopting an analytical culture. The biggest challenges companies face are at the front and back ends of the analytics value chain, according to the report.
The third area highlighted is the platform dimension. Of this, Wetherill says “What we saw there is a lot of action in cloud based Big Data infrastructure. But while over 90% have made the decision to move down this path to augmented, cloud based infrastructure, only 8% have connected the pipes with the analytic capabilities.
“This is a shocking gap – it really highlights how we’ve been building the plumbing but haven’t yet turned on the water to pull it through to the parts of the business where it can have the most impact.”
The report is not all doom and gloom. It also found that while 70% of respondents say sales and marketing analytics was at least “very” important, 89% thought that this would be the case in two years’ time. This seems to back up the EIU’s view that the low rates of success reflect the early stage that most companies are still at, regarding adopting an analytic culture.
Another heartening statistic appears to be the growing confidence in analytic decision making among top performing businesses. 76% of respondents reported that senior leaders in their organization based decisions on data, rather than gut instinct.
Wetherill told me “We called the study Broken Links because it really comes down to what we saw as a couple of areas where there are broken connections.
“There’re lots of connectors which we saw as not quite there, so a big part of the insight for us was really digesting where those areas were.
“And the broader insight is that this is a journey – it’s taking many years to put in place the plumbing and infrastructure, and to connect it and ultimately to bring it to the customer.”
