May 2007
More than ever before, business decisions have multimillion-dollar impact and multiyear consequences. Which is why high-performance businesses are turning to analytics - the extenseive analysis and strategic use of data and other information - to drive key decisions and actions.
Indeed, this fact-based management model, which uses a wide array of quantitative techniques to analyze information, generate insight and optimize processes, is emerging as one of the last remaining forms of sustainable competitive differentiation. This is particularly important as many of the traditional bases of competition are rapidly disappearing; for example, the Internet has all but eliminated geographic barriers, while product innovations bestow only fleeting advantage as they are quickly imitated by competitors.
"Analytics enable organizations to stay one step ahead, to out-think and out-execute the competition," says Jeanne Harris, who wrote this issue's cover story on the subject. "While many companies use analytics in selective ways, what sets the leaders apart is their strategic use of this robust analysis across the entire enterprise. For these companies, analytics is the defining component of their distinctive capability, which is one of the three basic building blocks of high performance."
A frequent contributor to Outlook, Harris is the director of research at the Accenture Institute of High Performance Business, where she is also an executive research fellow. Her interest in analytics goes back to 1999, when she and colleague Tom Davenport, today the President's Distinguished Professor of Information Technology & Management at Babson College, began to study the use of business intelligence in companies. Their collaboration produced a number of articles and culminated in 2006 with a global survey of 371 companies across 19 industries in 34 countries.
"We found that analytics were a critical element in creating value from an organization's investment in enterprise systems," notes Harris. "And even if a company doesn't see analytics as a source of competitive advantage today, our research indicates a more analytical future for practically every firm." A fuller treat-ment of this topic can be found in Harris and Davenport's Competing on Analytics: The New Science of Winning, which was published in March by Harvard Business School Press.
In an environment where business judgment can make or break a company, there is less and less room for intuition and instinct—the proverbial "gut feeling"—in the decision-making process. As Harris' article shows, not only is fact-based decision making a superior management model; there is a clear link between the use of analytics and achieving and sustaining high performance.
David Cudaback
Editor-in-Chief, Outlook
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