Getting Your Money’s Worth with Analytics

Business analytics is increasingly being seen as a source of competitive advantage—but relatively few companies are using it effectively.

Research from the Accenture and SAS alliance looks at the current state of play, and analyzes what sets the front-runners apart.

The 21st century’s economic turbulence and technological advances have fostered a ripe environment for creating unique opportunities for all businesses. Technology and the seemingly unlimited amounts of data—on customers, competitors, suppliers, you name it—now provide the ability to understand and address business issues in unprecedented ways.

Research shows that companies that use business analytics strategically gain a competitive advantage, improve productivity and add more to the bottom line. Organizations have heard this message and have upped their games in the past several years. And it’s important that organizations leading the analytics charge continue forward because many others are eager to catch up. In fact, according to a 2011 study by Bloomberg Businessweek Research Services, the percentage of companies using some form of business analytics rose from 90 percent in 2009 to 97 percent in 2011.

In the fourth quarter of 2011, the Accenture SAS Analytics Group conducted online research among 258 US business professionals from a broad range of industries that further explores the effectiveness of business analytics. Sixty-three percent of the respondents work for organizations with 10,000 or more employees.

In addition to the survey results, we also interviewed respondents from eBay, Staples, and a major banking institution that were identified by the survey as “front-runners” (companies in the survey with measurable gains) to gain insights from their analytical successes.

• Forty-five percent of businesses increased their spending on analytics in 2011, and 65 percent plan to increase spending in 2012.

• Talent improvement is the No. 1 focus for investment in business analytics for 2012.

• Only one in four respondents indicated that the use of business analytics was “very effective” in aiding decision-making.

• Only one-third of respondents said they had achieved or exceeded the expected return on their investments in business analytics.

• Difficulties in accessing the data and collaborating effectively increase as organizations grow in size.

• One in four respondents does not know if their organizations received a return on their investments in business analytics.

• Front-runners increased their spending on analytics over the previous year by 20 percent.

• Given that so few companies are reaching the goals they set, it’s no surprise that talent improvement is such a high priority for upcoming investment in business analytics.

• The research indicated that the belief that intuition somehow trumps decisions based on facts continues to linger in some 39 percent of respondents. The reasons behind this are a lack of confidence in the data, and the idea that “the executive knows best.”

• Another factor holding companies back in their use of analytics is the lack of collaboration across the organization. Collaboration, particularly in the area of data management, is essential for an effective analytics strategy.

• Based on the research, Accenture and SAS categorized respondents as Front-Runners, Fast Followers, Dabblers and Trailers.

Analysis of the research shows that effective use of business analytics, including achieving a return on analytics investments, is driven by three key areas:

1. Right talent. Business analytics is more than technology. Organizations must upgrade their business and technical analytical skills to make full use of the available technology, to help ensure that the right infrastructure is in place, and to apply the results of analytics to the appropriate business issues. Talent upgrades can come by way of training current employees or hiring new analytical workers.

2. Data quality and access. Without a strong foundation of accurate and reliable data that is also accessible, the results of analytics are suspect and likely to be overridden by executives.

3. Culture. The less tangible component cranking up the effectiveness of business analytics and getting value for the investment is the culture. Support from executives from the outset helps address many of the challenges companies: Talent issues are more likely to be addressed, collaboration will improve, fact-based decision-making will be valued more highly, and data issues more readily solved. Grass-roots analytics efforts can be successful, but the research indicates that the path is shorter and smoother when the culture is ripe for fact-based decision-making.

The results of this research indicate that companies interested in improving the effectiveness of their analytics and getting more value for their money should consider these three key steps.