Organizations are progressing in the adoption of analytics for decision making, according to new research from Accenture (NYSE: ACN).
However, there is still a prevalent disconnect between analytics capabilities organizations have built and how successfully they put them to use for business decision-making.
The survey of 600 executives in the United Kingdom and the United States revealed that 66 percent of responding companies have appointed senior figures (e.g. chief data officers) in the last 18 months to lead data-management strategies and policies, as well as to support business growth.
Use as predictive tool triples
The use of analytics as a primarily predictive tool almost tripled to 33 percent from 12 percent in 2009 when Accentureresearch revealed that weak analytics capabilities hindered organizations’ decision-making abilities.
Today, twice as many organizations feel that they are generating new ideas and opportunities from company data “to a great extent” (25 percent versus 12 percent in 2009).
On the other hand, just over one fifth of respondents (22 percent) said they are “very satisfied” with business outcomes driven by their analytics investments to date.
Still the “new kid” on the block
Furthermore, only 39 percent of organizations state that the data they generate is relevant to their business strategies, and only 50 percent say that their data is consistent, accurate, formatted and complete.
“Analytics remains the new kid on the block, but is clearly moving on the C-suite agenda,” said Narendra Mulani, senior managing director, Accenture Analytics.
“However, although companies are investing in senior resources and advanced technologies, analytics is not yet deeply ingrained into the fabric of most companies as an integrated, enterprise-wide approach. For many organizations the journey to achieving true return on investment still lies ahead.”
In need of improvement
A combined 45 percent of respondents described their analytical capabilities as either in need of improvement, limited, lacking senior management support or piecemeal.
Another 20 percent of organizations stated they have the required technical and human resources to apply analytics regularly with some success, but that the focus tends to be tactical rather than strategic. Only 21 percent of respondents said they routinely use analytics very successfully as part of an integrated enterprise wide approach.
According to the research, getting the full returns on investments in analytics is a journey that leads from issues, to insight, to decisions, to action and ultimately to outcome.
How to build effective analytics programs
But the Accenture Analytics experts also state that incremental value is to be gained at every step of this journey, and that organizations should set clear goals for each step they climb, for example focusing on near-term value so their analytics efforts are self-funded within the first twelve months.
“Effective analytics programs are built on a three-part foundation,” said Mulani.
“The first is to establish disciplined processes that ensure valuable insights and recommendations are being generated, acted on, and measured for effectiveness.
Next, companies should use a ‘build, buy and partner’ strategy to source skills, given the supply constraints. Finally, they must apply technology that ensures data integrity, quality and accessibility. Organizations can drive true ROI with analytics on this foundation.”
Other results from the survey include the following:
Significance Organizations Place on Analytics
- 68 percent of organizations say their senior management is “highly” or “totally” committed to analytics and fact-based decision-making. Demonstrating this commitment, 66 percent lead by example and demand fact-based decisions, even though this was significantly different in the US (74 percent) compared to the UK (57 percent).
- Nearly 50 percent of organizations state that their C-suites have asked for a data-strategy plan that can be shared across the business.
- 71 percent of the organizations that have not yet appointed a senior figure responsible for data-management strategies and policies expect to do so soon.
- While only 21 percent of respondents said they routinely use analytics very successfully as part of an integrated enterprise wide approach, this is a 50 percent increase from 2009 when only 14 percent claimed an integrated enterprise wide approach for analytics.
Where and How Analytics is Applied
- Respondents see the greatest value in using analytics to help tailoring products and services to customers. 69 percent use analytics to drive decision-making in customer acquisition and retention; 66 percent in the development of new products and services; 60 percent to improve the customer experience.
- Respondents from all surveyed industries except Financial Services believe the finance department has the most sophisticated use of analytics.
- Communications & High-tech firms are first among those applying analytics to analyze their competitors’ activities and performance (68 percent), and almost half of these firms (42 percent) use analytics for customer acquisition and retention.
- Sales and marketing are the departments which most frequently set targets based on analytics, with 33 percent of sales and 30 percent of marketing teams setting targets “all the time.” Retail companies are front-runners when it comes to setting targets based on analytics for their sales and marketing functions (63 percent).
Further Challenges Remain
- Despite progress in building analytics capabilities, senior executives still rank intuition and experience over facts and complex data analysis in the decision-making process.
- More than half (58 percent) of organizations state that outcome from data is their key challenge; 50 percent state data integration and 49 percent state identifying the insights needed from data.
- Investment in business analytics and talent will rise in 2012
- Good data management plans strongly associated with success
- Media and entertainment execs ill-prepared to seize digital tech opportunities
- What do companies want from Big Data and analytics?
- Execs see unstructured data as important, but firms not handling it well
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