Previously used as a tool for explaining the past, analytics is now being used to predict the future and “can yield enormous returns,” according our expert Glenn Ytterdal from Accenture Digital.
VALUABLE DATA: “You need to understand the type of data you have at your disposal and how it can be used to create added value,” explains Glenn Ytterdal. He warns businesses to be on their guard for new companies capable of using analytics to outcompete them.
“Analytics is about using technology and tools to shape meaning out of data,” explains Glenn Ytterdal of Accenture.
He believes that many Nordic businesses continue to underestimate the value of investing in good analysis.
“Investing in analysis gives far greater returns than most imagine.”
More data has been produced in the last two years than in all previous years combined. This represents enormous opportunities for business, but Ytterdal warns against companies believing it is easy for them to create value from the data they collect.
“Data quality remains vitally important. If companies don’t understand the data they’re collecting, they’ll make decisions on a false basis. It’s about having the correct understanding of the correct data in the correct form.
“It’s especially important now that the amount of data is growing so quickly and the need to apply it in real time—in other words, the moment it’s available—increases.”
PROFITABLE: “It’s no longer simply a matter of reporting. Present-day analytics encompasses, among other things, analyses of customers, production figures and logistics, which are used to predict future development,” says Glenn Ytterdal of Accenture.
Predicting what the customer wants
A few years ago, analytics went under the name of “business intelligence”. It was typically used to give senior and middle management information about the status of matters such as sales or production figures.
“It’s no longer simply a matter of reporting. Present-day analytics encompasses, among other things, analyses of customers, production figures and logistics, which are used to predict future development,” says Ytterdal.
“If, for example, a company is considering reducing the price of a product by two per cent, we are able to say how this will effect sales figures and, consequently, the return.”
According to Ytterdal, Amazon is a company that has embraced the use of analytics and was among the first to individually tailor its website to each of its customers.
“By analysing data from its customers, it can work out their buying patterns and thereby give reliable recommendations when they’re searching for or browsing particular products. This has yielded enormous returns, thanks to Amazon being at the forefront and daring to make the investment.
GOOD EXAMPLE: Uber is put forward as a good example of how businesses use analytics to gain an advantage and simplify the way things are done. “The taxi firms didn’t understand that the way taxis are ordered, i.e. through a telephone exchange, was outdated. Uber changed the rules of the game for the whole industry. We’ll see more of this sort of thing in future,” predicts Glenn Ytterdal.
And it’s not just the private sector that has made use of analytics.
“The police are a good example. They face the daily challenge of optimising the deployment of their patrol staff to ensure they’re in the right place at the right time. By using analytics, they can see which areas are most at risk and at what time of the day and night.
Three specific recommendations
Ytterdal believes that we have barely seen the start of new forms of analytics being employed and that within a few years we will see completely new areas of application.
“Soon we’ll see computers that can make strategic decisions regarding the choice of products we should be selling or the parts we should be ordering, and they’ll be driven by analytics.”
Ytterdal has three recommendations for today’s business leaders hoping to adapt to the new reality.
“Firstly, they need to understand what sort of data they have at their disposal and how it can be used to add value. Secondly, they need to understand how to build competence and organise themselves in order to exploit this new capacity.
“Thirdly, they must be on their guard for new companies capable of using analytics to outcompete them.
He believes Uber to be a good example of how companies use analytics to gain an advantage and simplify the way things are done.
“The taxi firms didn’t understand that the way taxis are ordered, i.e. through a telephone exchange, was outdated. Uber changed the rules of the game for the whole industry. We’ll see more of this sort of thing in the future,” he concludes.