Transformation Through Analytics

Transformation through Analytics: Need of the Hour

Businesses today face a volatile macro environment and a demanding customer base. Consumers
demand more relevant offerings, consistently positive experiences, better communication, and
faster service delivery. To respond to this need and to deal with emerging threats businesses
need to be more agile. Agility is informed by leveraging the huge, ever-growing amount of data
your company processes and stores.
For many organizations, this exponential increase in the volume, type, and flow of data
represents a great opportunity. To take full advantage of it, however, requires making a
commitment to analytics. Its the information gleaned from analytics rather than the raw data
itself that will be a deciding factor in the success or failure of organizational changes.
Decision makers who effectively extract information for actionable insights can capitalize on
opportunities they may otherwise miss. Those that cannot may ultimately find themselves acting
on outdated information, failing to keep up with the fierce competition of the business world. In
time, this can result in an increasingly difficult and possibly failing business environment.
Organizations are just beginning to realize the potential of data analytics. Its in a transitional
stage, shifting from:

Initiative to imperative

Enterprise data to Big Data

Organizationally-focused to industry-transforming

A new, holistic approach is needed to realize the transformative power of analytics, a power that
turns information into insight and insight into business impact. To this end, AbsolutData, a
leading Analytics & Research firm, and Alteryx, a leading analytics software provider,
conducted a survey of thought leaders across multiple industries with the goal of understanding
the current status of analytics in their organizations.
The findings have been quite interesting.

Companies collect many different types of customer data

Every customer interaction creates data, and this data provides deeper insight on customer
behavior, attitudes, and opinions. This can be leveraged to improve customer relationships,
thereby gaining a competitive edge. The survey results show that traditional data sources still
dominate, but several new areas of insight are emerging.
Customer analytics data sources used by companies for making decisions

Customer demographics

69%

Primary/Research Data

69%

POS/transaction data

61%

Customer interaction data

49%

Social media

41%

Loyalty card data

31%

Complaint data

30%

Recorded voice calls

Others

17%
6%

The vast majority of companies use Customer Analytics today

Through the data they collect, organizations are listening to what customers have to say. They
then use these insights to implement customer-driven marketing strategies that increase profit
and improve customer loyalty.
Do companies use Customer Analytics when making business decisions?

Yes

No

82%

18%

Analytics contributes significant insight for strategic operations

Customer Analytics is used primarily for customer-focused Sales & Marketing activities, but
they arent limited to that realm. Many companies also use these insights to make product or
service portfolio decisions and to determine the optimal distribution channels.
How Customer Analytics Benefit Companies:

Be2er Customer Acquisi<on

69%

Enhanced customer sa<sfac<on

Increased loyalty

63%
46%

Improved product/service design

62%

Op<mized marke<ng/channel
Upgraded/improved channel strategy

60%
49%

Three Major Challenges Inhibit Analytic Decision Making

Despite the fact that analytics are being widely used, organizations still struggle will three main
areas the challenge of integrating large volumes of dissimilar data types; a lack of skilled
people to execute their customer analytics strategy; and the problem of defining and calculating
ROI for analytics strategies.
Well consider these challenges individually.

Challenge #1 - Integrating Large Volumes of Dissimilar Data Types

Why do companies face this challenge? According to the businesspeople surveyed, its a multifaceted issue, with the separation of resources and departments and the sheer amount of
information that needs to be processed leading the list.
Challenges faced during implementation of analytics

Siloed departments, each with separate

data resources

43%

Integra<ng massive amounts of data

39%

Integra<ng disparate customer data types

38%

Conver<ng data into ac<onable insight

37%

Collec<ng relevant customer data

23%

With the advance in computing and anayltics, why is the collection and analysis of data even
widely different types of data a problem? There are three primary causes:

There is no unified point of reference, no absolute source of truth. Marketing,

Product Management, Operations, and other departments use different data sources to
answer similar questions, thus creating fractured and unclear results.

Time is wasted thanks to inadequate data processing resources. Data processing

units that cannot handle at least 1 TB of information are usually too slow and
underpowered to produce the quick, comprehensive results needed.

New data sources are difficult to integrate. Unstructured but valuable data - such as
social media and call center logs may be lost if they do not work with the existing
analytics setup. This means that any reports arising from analysis in which this data in
not included is incomplete and possibly flawed.

Case Study Understanding Marketing Across Various Media Channels

A building is only as good as its foundation; and insight is only as good as the data that prompts
it. Hence, before looking to build a strategy - before tuning in to that actionable insight you
must get all the right data.
One recent instance of this is a 4-billion-dollar retail giant that wanted to understand the impact
of various marketing activities across different media channels: TV, radio, print, direct mail,
Internet, and email. This data was broadly distributed; some was within the company, among
several internal departments, and some was outside the company, in industry stakeholders and
media vendors.
A substantial amount of time was initially spent educating various stakeholders about the desired
outcome from this exercise. After data collation and the creation of a data-mart, predictive
models were created which improved the ROI from marketing expenses.
Getting a grasp on data is not that easy:

Todays data comes from multiple channels. Knowing which data matters, using each
group in an integrated way, and acting upon the congregated whole of the information
requires time and effort at nearly every stage of its creation and consumption.

Businesses dont have much choice when looking at the channel-agnostic, multi-screen
and increasingly complex behaviour of todays consumer.

Data flow will continue to increase. It is vital for companies to get a handle on the
situation sooner rather than later.

By 2020, Data is Forecasted
To Reach 40 Exabytes per person

Challenge #2 - A Lack Of Workers Skilled In Customer Analytics Strategy

Close to 90% of organizations lack industry-leading skills needed to execute their customer
analytics strategy.
Current Levels of Executive Analytics Strategy Skills
1%
8%

Industry leading, with a mastery of advanced analy<cs and

business domain knowledge

12%

Advanced, for crea<ng workows using all sorts of predic<ve and

spa<al analy<cs
Basic, for repor<ng and modica<on of exis<ng analy<c workows
42%

38%

Limited, for genera<ng reports only

None

Why is there such a lack of skilled analytics strategists?

Users in various departments do their own department-oriented analytics, learning only

the skills they need to perform this task. They get the answers they need, but there is a
lack of an overall strategist company-wide.

Limited availability of IT staff or resources with specialized skill sets can cause delays.

Scaling up of analytics operations is diffcult. Skilled resource shortages, access to data,

and overly complex analytics remain a barrier to greater usage.

Case Study Hiring Specialized Professionals Rather than A Single Analytics Expert
While setting up an Insights Hub at a worlds leading genealogy company, the analytics director
asked, Where do I get trained statisticians who understand my business and can make business
decisions? She soon realized that it was easier to find three individual professionals to provide
for each of those three needs rather than trying to find one person who would meet all three
needs at once.

With analytics tools in the hands of the subject matter experts in the individual departments, a
culture of rapid organizational decision making was created. This approach also allowed the
analytics center to be scaled virtually at will, which is considerably more cost-effective.

Why does the struggle to find one perfect expert hamper businesses?

There is a very limited number of available experts.

Due to limited personnel and financial resources, building internal capabilities is difficult.
McKinsey projects a potential shortfall of 1.5 million data-savvy managers and analysts
in the US alone.

Companies are compelled to define their operating model based on two functions the
level of requirements to be met and the organizations current internal capabilities.

Analytics resourcing has evolved to meet the rising industry demand. Instead of using a
centralized approach of hiring one all-knowing expert, organizations are now approaching a
more compartmentalized approach, focusing on recruiting several professional with unique and
specific skills.
The Centralized Approach of the Past:

Organizations hired highly-educated analysts with 10+ years of work experience and
techno-functional and domain knowledge.

This approach has failed due to a lack of adequate resources, high costs, and an
associated difficulty in scaling up to meet expanding business needs.

Todays Scalable, Dynamic Solution:

Specialization & segregation of specific skills: Domain Expert, Project Manager & Data
Scientist

This approach is succeeding due to the availability of sophisticated analytics tools that
are easier to learn, as well as the ability to deploy the right skills at the right stage of
the project.

Challenge #3 - Defining And Calculating ROI For Analytics Strategies

The fundamental truth of business is that you need to bring in more than you spend. Looking at
Return on Investment statistics can help you determine the efficacy of your marketing initatives;
poorly-performing ideas can be scrapped and substituted with something better.

Yet,

organizations struggle with defining and calculating ROI for analytics. According to our survey:

Return is less than investment

9%

Return is equal to investment

10%

Return is more than investment

Don't know

43%

38%

Why is this hard to quantify? Careful planning is required to maximize ROI. An organization
needs to painstakingly plot its analytics journey to reap its maximum benefit. A customized
approach is required, based on the analytics maturity of the organization and its current analytics
capabilities.
Case Study A 3-Year Analytics Journey Highlights Tailored Results
Organizations today have increasingly complex business models with unique value propositions,
strengths, and weaknesses. To apply a one size fits all approach to analytics is not wise. This is
exemplified in the story of a client who went on a 3-year-long analytics journey, with the goal of
identifying an ideal analytics operating model for their business.
The client started with ad-hoc analytics projects, gradually developed campaign execution
capabilities (primarily focusing on high volumes and great accuracy), and finally evolved to
managing complex strategic projects for a global audience.

Today, the organization considers analytics indispensable to its marketing and strategy functions.
Tailored approaches to analytics are required. What works for one company may not work for
another, since company size, organization, location, and purpose vary. The best strategy will
highlight the current analytics maturity of the organization and the types of problems that it
needs to solve.

Measuring Return on Investment Accurately

Companies that adopted data-driven decision making achieved 5 to 6 percent higher
productivity rates. (2011 study of 179 companies by professors at MIT and Wharton)
A 2011 Nucleus Research of 60 analytics-related ROI case studies found that for every dollar
invested in technologies such as Business Intelligence and predictive analytics, organizations get
back an average of $10.66.
Predictive analytics has proven capabilities in adding value to every line item in a corporations
profit & loss statement. With the advent of Big Data and enhanced data processing technologies,
the analytics community is leading the innovation curve on new, impactful methods and business
processes.

Analytics Success Drives Better Results!

Some of the worlds leading companies have repeatedly leveraged analytics to efficiently process
data and to achieve competitive differentiation. For example, a leading American e-commerce
corporation amassed nearly $5 billion in revenue in only eight years. They performed this feat
by being an early adopter of analytics throughout their decision making processes, particularly in
studying customer data to drive repeat purchases. And the power of analytics in is daily use for
other companies. Currently, about 38,000 Procter & Gamble managers use analytics every day
to understand What Happened, Why, and What to do for their 300 brands in 180 countries.
AbsolutDatas study of Analytics Shakers and S&P 500 index reveals that companies that
invested heavily in advanced analytical capabilities outperform the S&P 500 index. They were
also able to recover from economic downturns faster than their non-analytical peers.

Analytics Shakers1 vs. S&P 500

Transformation is a constant process of optimizing and refining data sources, learning from the
previous outcomes, and applying things learned, eventually leading to changing how the
organization achieves its goals. In an era of relentless competition, organizational leaders realize
that investment in analytics technology, employee training, and external resources must continue.

Analytics Investment Continues

Summary
No one will disagree that there is access to more data than ever before, and that this is
continually and rapidly increasing. Organizations are fighting hard to utilize this in the best way
possible, but are facing big challenges along the way. These challenges vary from struggling
with volumes of data to not having the right skillset to devise and implement an effective
analytics strategy. Not being able to measure the return-on-investment on analytics is also a
recurring problem.

However, companies who have implemented analytics with moderate

success have shown shown superior business performance. This will continue to motivate others
to transform their businesses thorough analytics. Successful implementation of analytics is now
one of the most desirable outcomes for business, but it requires continued effort and investment
to gain competitive advantage.

Appendix

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