Survey Shows Business Analytics Priorities Not Yet Achieved

Two-thirds of large companies in the United States and United Kingdom believe they need to improve their analytical capabilities, according to a recent Accenture survey. Some of the reasons respondents give include:

• "We need to move from a mass-market approach to a more segmented, targeted approach which requires significantly more analysis.”
  
  
• "We’re in an industry where our service is now a commodity. It is important to find new ways to generate revenue.”
  
  
• "Improvement through analytics is a constantly moving target and requires a constant increase in analytics proficiency to just stay even with the competition.”
  
  
• "Companies can become mired in the past, i.e., ‘that’s the way we’ve always done business.’ Today’s marketplace and available technology requires the ability to revamp marketing and customer service strategies.”

There is a growing understanding that high performance requires more than gut decisions, but technology and staffing pose challenges to meeting analytics goals.

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In order to gauge business analytics plans and challenges, Accenture conducted a quantitative online survey in July 2008. Our participants were 254 US-based executives with the title of manager or higher at companies with reported revenue of more than $500 million in calendar year 2007. The companies were in a variety of industries, excluding government, education and non-profits.

A concurrent study of 257 executives based in the United Kingdom found many similar results.

The managers surveyed tell us that about 60 percent of business decisions are based on analytics, while 40 percent are still based on judgment. Institutional restrictions and human resources challenges are major inhibitors to increased usage of analytics.

There is a clear feeling among managers that this situation needs to change. Two-thirds believe that their companies still have to improve their analytical capabilities, and only half say that they are spending enough on analytics.

While only 43 percent of managers say that their companies have enterprise-wide analytics in place, more than 7 in 10 say they are working to increase their companies’ business analytics usage.

These findings show that business analytics prowess will be a high priority in the boardroom in the coming years. While executives understand that companies with enterprise-wide business analytics have an advantage over those still relying on nebulous sources to make decisions, they face institutional challenges to reforming their processes across the board.

The survey also addresses the balance between using analytics and using judgment to make important business decisions, and finds that in the United States 60 percent of major decisions are based on analytics and 40 percent are not; in the United Kingdom, the breakdown is 59 and 41 percent, respectively.

The reasons executives cite most often for basing decisions solely on judgment include: because good data is not available (US: 61 percent; UK: 59 percent); there is no past data for the decisions and innovation they are addressing (US: 61 percent; UK: 63 percent) and their decisions rely on qualitative and subjective factors (US: 55 percent; UK: 62 percent).

The challenge to moving from “gut decisions” to employing data goes beyond simple infrastructure investments. Large businesses also face a glaring human resources challenge. “Insufficient quantitative skills in employees” is cited as a main challenge by 23 percent of US respondents and 36 percent in the United Kingdom. “A shortage of analytical talent” faces 36 percent of US respondents and 40 percent of UK respondents.

There’s a strong concern over the future lack of analytical skilled resources. The shortage in new talent adept at business analytics is stark and will pose a growing challenge as businesses remain committed to honing their analytical capabilities to enable them to make more well-informed decisions. Our findings indicate that some businesses have neither the systems nor the personnel in place yet, although their goal is to achieve this soon.

The survey also finds that institutional hindrances need to be addressed to improve business analytics capabilities. For instance, many say that IT capabilities restrictions are a major challenge (US: 39 percent; UK: 45 percent), and many are not able to share information across organizations within their company (US: 27 percent; UK: 36 percent).

While the managers surveyed feel that they have a long way to go before they can meet their goals, there are signs of hope. Ninety-four percent tell us that their management teams are at least somewhat aware of analytics. Furthermore, only 17 percent of managers feel that their analytics capabilities are weaker than the competition. About 70 percent see themselves as stronger or at the same level. Still, 68 percent acknowledge the need to improve analytics in order to stay competitive.

Both market and business drivers make analytics a growing opportunity. Data analysis can provide a means of differentiation to both develop new propositions and seek out new trends and problem areas. Flexibility and agility require that organizations scale up their analytics activities, maturing beyond traditional reporting to embrace the drive for real-time demand.

Leading organizations are moving from a siloed approach to more inclusive information management programs that work across the entire company. Such enterprise-wide business analytics provide an advantage over competitors who still rely on gut feelings to make their decisions. Even “common” information that is available to everyone in the industry yields rewards to analytical competitors, who are able to collect and analyze it in new ways.

A winning strategy includes bringing in analytical talent and investing in further increasing business analytics usage. Effective analytics makes knowledge both valuable and timely and helps organizations on their journey to become high-performance businesses.

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