Analytics are the Keys that Unlock Value in Big Data

“The topic of big data has pre-occupied businesses for the past few years,” writes Michael van Hove, a partner at Strategos, “and many see it as an under-leveraged source of value. In a recent CEO survey by the Economist Intelligence Unit 23% of CEOs believed Big Data is going to revolutionize businesses and 42% believe generating customer insights is priority number one.” [“Big Data Is Not the Same As Big Insight,” Business 2 Community (B2C), 22 March 2015] Van Hove argues that there is value locked up in big data but that many firms don’t understand what the real value is or how to unlock it. He explains:

analytics key“We believe companies can leverage Big Data by using it to drive discovery activities around customer and consumer behaviours. If the patterns in Big Data reveal ‘the what’, discovery focuses on revealing ‘the why’. What you are providing, a product or service may address a need or solve a problem that you were unfamiliar with when you first launched the product. But because circumstances change this problem may have emerged without you being aware other than noticing the spike in the dataset. Understanding the nature of the problem will help you potentially identify other consumer groups who are faced with the same or similar challenges. Or you may find that this learning would drive the development of a product or service that would even meet the consumer need even better and in a differentiated way. You may have to change your value proposition to accommodate specific circumstances but in the end you stand a much better chance to create a lasting impact. Learning is what counts, wanting to know the why behind ‘the what’ drives deeper discovery. It takes time but the learning is valuable.”

Companies have been using data to improve their businesses for a long time. But, as van Hove suggests, basic statistical analytics have not allowed them to go beyond “the what,” meaning that real understanding has been elusive. I agree with van Hove that getting to “the why” is critical and that, to be successful, companies need to go beyond “the why” to obtain actionable insights that decision makers can use to guide their companies into the future. With so many vendors, including mine (Enterra Solutions®), offering big data analytic solutions, there has never been more opportunity for companies to have access to world-class analysis. In fact, Peter C. Bell, a professor of management science at Ivey Business School at Western University, asserts that data analysis has become so commonplace that, in most industries, it is a given that companies are using analytics. “The use of analytics is increasingly commonplace in business,” he writes, “and as a result, it’s hard to gain a lasting competitive advantage from analytics. Nonetheless, there are companies that have done just that over time.” [“Sustaining an Analytics Advantage,” MIT Sloan Management Review, 3 March 2015] Thor Olavsrud () reports that Deloitte analysts agree with Bell’s position. He writes, “Business analytics are becoming ‘the air companies breathe and the oceans in which they swim,’ according to Deloitte Analytics.” [“8 Analytics Trends to Watch in 2015,” CIO, 9 February 2015]

Most people are aware that big data has value in the marketing arena, but visionary analysts understand how analytics can create opportunities in every area of business. Lora Cecere (@lcecere), founder of Supply Chain Insights, insists that companies would do well to heed the words of a classic Bob Dylan song. They go like this:

Come gather ’round people
Wherever you roam
And admit that the waters
Around you have grown
And accept it that soon
You’ll be drenched to the bone
If your time to you
Is worth savin’
Then you better start swimmin’
Or you’ll sink like a stone
For the times they are a-changing.

If you are drowning in data, the only way to swim to safety is through the use of analytics. Cecere writes, “The terms supply chain and analytics mean very different things to different constituents within the organization, but my point of view is that investment in analytics can make the difference in supply chain performance. I think that it will define leaders. I also believe supply chain analytics is defined too narrowly by most IT and supply chain professionals. We are at an inflection point: a tipping point of change that I think is significant.” [“Supply Chain Analytics: The Times They Are A-Changin’,” Supply Chain Shaman, 5 February 2015] Cecere is convinced that analytics are a game changer and predicts, “We are five years away from supply chains that can learn and adapt while we sleep. Decision support technologies are changing. It is a combination of optimization and artificial intelligence. I feel that it will redefine master data management, supply chain visibility, and value chain workflows.”

Bain analysts, Michael C. Mankins and Lori Sherer (), agree with Cecere’s position that companies need to take a more holistic approach to applying analytics. “It’s easy for tech-savvy executives to get excited about Big Data and advanced analytics these days,” they write. “Newly available tools allow companies to do things they couldn’t do before, like recommending specific products to online buyers or mining workers’ compensation claims data to recommend better treatment options for injured employees. But whiz-bang capabilities don’t create real value unless an organization incorporates these new techniques into its day-to-day operations.” [“Creating value through advanced analytics,” Bain Brief, 11 February 2015] They continue:

“What does that mean in practice? The best way to understand any company’s operations is to view them as a series of decisions. People in organizations make thousands of decisions every day. The decisions range from big, one-off strategic choices (such as where to locate the next multibillion-dollar plant) to everyday frontline decisions that add up to a lot of value over time (such as whether to suggest another purchase to a customer). In between those extremes are all the decisions that marketers, finance people, operations specialists and so on must make as they carry out their jobs week in and week out. We know from extensive research that decisions matter — a lot. Companies that make better decisions, make them faster and execute them more effectively than rivals nearly always turn in better financial performance. Not surprisingly, companies that employ advanced analytics to improve decision making and execution have the results to show for it.”

If business leaders would adopt Mankins’ and Sherer’s view (i.e., that operations are basically a series of decisions), they would be better positioned to understand how analytics could help them unlock value throughout their company. Mankins and Sherer add:

“Think for a moment about how an organization makes a significant decision. First come the facts, the data that will inform the decision. Using these facts, someone formulates alternative courses of action and evaluates them according to agreed-on criteria. The decision maker then chooses the best alternative, and the organization commits itself to action. Advanced analytics can automate parts of this sequence; it offers the prospect of faster, better-informed decisions and substantially lower costs. But unless you’re prepared to transform how people work together throughout the decision-making process, you’re likely to be disappointed.”

Mark van Rijmenam (@VanRijmenam), founder of Datafloq, agrees that great decisions require great analytics. “Great insights,” he writes, “are achieved when you combine different data sources. … Such insights will enable manager to make better decisions and improve an organization’s performance.” [“Why Big Decisions Require Big Data Analytics,” Datafloq, 8 January 2015] Hopefully, I’ve convinced you that advanced analytics don’t apply to one or two departments. The value contained in big data can be unlocked across an organization through the proper and creativity use of advanced analytics.

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