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AbsolutData and Alteryx 2013 Proprietary and Confidential

Transformation through Analytics: Need of the Hour


Businesses today are facing a volatile macro environment and a demanding customer base. Cash rich, time poor consumers are demanding more relevant offerings, experiences, communication and service delivery. This requires businesses to be agile and respond quickly to emerging opportunities and threats. Businesses need to achieve this by leveraging the large and growing volume of data stored. Every organization today recognizes that this exponential increase in the volume, velocity and variety of data represents a great opportunity. What they dont always fully grasp is how analytics should be applied to turn that data into the kind of insight that will enable them to develop analytics into a competitive advantage in todays dynamic marketplace. Advanced analytics will be a deciding factor that determines whether organizations succeed or fail. Those able to effectively extract information for first-hand top insights can capitalize on virtually endless opportunities. Those that cannot master the data may ultimately find themselves playing catch-up, or worse, simply cease to exist. Analytics is a transformational technology, and organizations are just beginning to realize its potential as its role shifts from: Initiative to imperative Enterprise data to Big Data Organizational focus to industry transformation

Realizing the transformative power of analytics requires a new, holistic approach that turns information into insight and insight into business impact. In this context, AbsolutData, a leading, consulting-oriented, analytics and research firm, in partnership with Alteryx, a leading analytics software provider, conducted a survey of thought leaders across multiple industries to understand the current status of analytics across their organizations. The findings were quite interesting.

AbsolutData and Alteryx 2013 Proprietary and Confidential

Companies collect many different types of customer data


Data captured from every customer interaction has the potential to provide deeper insight on customer behavior, attitudes, and opinions which can be leveraged to improve customer relationships and gain a competitive edge. The survey results show that traditional data sources still dominate, but several new areas of insights are emerging, such as social media data and recorded voice calls. Customer analytics data sources used by companies for making decisions
Customer demographics Primary/Research Data POS/transaction data Customer interaction data Social media Loyalty card data Complaint data Recorded voice calls Others

69% 69% 61% 49% 41% 31% 30% 17% 6%

The vast majority of companies use Customer Analytics today


Organizations are listening to what customers say through their data. Organizations use these insights to implement customer-driven marketing strategies that improve revenue. This is primarily driven by a better understanding of customer needs through the analysis of customer behavior. Companies using customer analytics for making business decisions

Yes

82%

No

18%

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Analytics contributes significant insight for strategic operations


Customer Analytics is being used primarily for customer-focused Sales and Marketing activities. In addition, many companies also use these insights to make product/service portfolio decisions and to determine the optimal distribution channels. Benefits companies get from customer analytics

Customer acquisition/retention

69% 63% 46% 62% 60% 49%

Enhanced customer satisfaction

Increased loyalty

Improve product/service design

Optimize marketing/channel

Design/improve channel strategy

But Three Major Challenges Inhibit Analytic Decision Making:


1. Organizations struggle with integrating large volumes of disparate data 2. Organizations lack industry leading skills to execute their analytics strategy 3. Organizations struggle with defining and calculating ROI for analytics

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CHALLENGE #1: Organizations struggle with integrating large volumes of disparate data
Challenges faced during implementation of analytics
Siloed departments, each with separate data resources Integrating massive amounts of data Integrating disparate customer data types Converting data into actionable insight Collecting relevant customer data 23% 43% 39% 38% 37%

Implications:
No single source of truth: Marketing, Product Management, Operations, and other departments use different data sources to answer similar questions. Lack of adequate tools: Time is wasted using tools that cannot process TBs (1000 GBs) of data. New Data sources are difficult to integrate: Unstructured, but valuable data such as social media and call center logs cannot be used.

Case Study
A building is only as good as its foundation; and insight is only as good as the data. Hence, before looking to build a strategy, before getting that actionable insight out, it is of prime importance to get all the right data. Clients face these challenges day in and day out and one recent instance is of a $4B retail giant who wanted to understand the impact of various marketing activities across various media TV, radio, print, direct mail, digital, emails, etc. Most of this data was available in silos across various internal departments, industry stakeholders as well as media vendors. A substantial amount of time was initially spent to educate the various stakeholders about the desired outcome from this exercise and hence get them on-board. After data collation and creation of a data-mart, predictive models were created which improved the ROI from their marketing spend.
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Getting a grasp on data is not that easy


Todays data comes from multiple channels. Knowing which data matters, but using them in an integrated way and acting upon them is not easy. Businesses dont have much choice when looking at the channel-agnostic, multi-screen and increasingly complex behavior of todays consumer.

IDCs Digital Universe Study (sponsored by EMC), December 2012 estimates that between 2010 and 2020, data stored is expected to grow by ~50X to 40K Exabytes

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CHALLENGE #2: Organizations lack industry leading skills to execute their analytics strategy
Current Skill-set to execute analytics strategy
1% 8% 12% Industry leading, with a mastery of advanced analytics and business domain knowledge Advanced, for creating workflows using all sorts of predictive and spatial analytics Basic, for reporting and modification of existing analytic workflows 38% Limited, for generating reports only None

42%

Implications:
Line-of-business users must do their analytics: Limited availability of IT staff/resources with specialized skill sets can cause delays. Users in the various departments must learn analytics tools in order to get the answers they need. Scaling up of analytics operations is difficult: Skilled resource shortages, access to data, and overly complex analytics remain a barrier to greater usage.

Case Study
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 separate professionals to provide each of the three above mentioned needs rather than trying to find people 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 organization decision making was created. This approach also allowed the analytics center to be scaled at wish, and is also considerably more cost-effective.

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The Struggle of finding the Scientists continues to haunt the organizations:


Building internal capabilities is difficult due to limited resources. McKinsey projects a potential shortfall of 1.5 Million data-savvy managers and analysts in the US alone. This is compelling companies to define the right operating model, which is a function of two elements: 1. Level of requirements 2. Current internal capabilities Analytics resourcing has evolved to meet the rising industry demand. From a centralized approach of hiring know-it-all professionals, organizations are now approaching a more disaggregated approach focusing on specific skills.

Past approach (Centralized)


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 difficulty in scaling up.

Current approach (Disaggregated)


Specialization and segregation of specific skills: Domain Expert, Project Manager and 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.

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CHALLENGE #3: Organizations struggle with defining and calculating ROI for analytics
Estimated Return on Investment

Return is less than investment

9% 10% 43% 38%

Return is equal to investment

Return is more than investment

Don't know

Implications:
Careful planning is required to maximize ROI: An organization needs to carefully plot its analytics journey to derive the maximum benefit. A customized approach is required based on the analytics maturity of the organization and its current analytics capabilities.

Case Study
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 sub-optimal. A recent example is of a client who went on a three-year analytics journey to identify the right analytics operating model for itself. The client started with ad-hoc analytics projects, gradually developed campaign execution capabilities (high volumes, and extremely sensitive to accuracy), and 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 depending on the current analytics maturity of the organization and the types of problems that analytics needs to solve.

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Measuring Return on Investment accurately


Companies that adopted data-driven decision making achieved 5-6% higher productivity (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 business intelligence and predictive analytics technologies, organizations get back an average of $10.66.

Analytics adds value to the most critical parts of your P&L


Predictive analytics has proven capabilities in adding value to each and every line item in a corporations Profit & Loss statement. With the advent of Big Data and better data processing technologies, the analytics community is leading the innovation curve on new methods and business processes.

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Analytics Success Drives Better Results!


Some of the worlds leading companies have leveraged analytics to process data and to achieve competitive differentiation again and again. For example, a leading e-commerce MNC reached $5B in revenue in only eight years by being an early adopter of analytics throughout its decision making processes, and analyzing customer data to drive repeat purchases. And, 38,000 P&G managers (30% of workforce) use analytics every day to understand What Happened, Why and What to do for their 300 brands across 180 countries. AbsolutDatas study of Analytics Shakers and the S&P 500 index revealed that companies that invested heavily in advanced analytical capabilities outperformed the S&P 500 index. They were also able to recover quicker from economic downturns faster than their peers. Analytics Shakers1 vs. S&P 500

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

Average Increase: 21%

4% 1%

Technology

95%
Average Decrease: 10% Average Increase: 25%

People

75%

12% 13%

Average Decrease: 11% Average Increase: 14%

External Resources

71%

22%

7%

Average Decrease: 12% Positive No change Negative

AbsolutData and Alteryx 2013 Proprietary and Confidential

Summary
There is no doubt in anyones mind (or databases) that there is access to more data than ever before, and this is on a rapidly increasing curve. Organizations are fighting hard to utilize this data in the best way possible to have an impact on their bottom line, but are facing big challenges in doing so. These challenges vary, from: struggling with volumes of data not having the right skill sets to devise and implement an effective analytics strategy not being able to measure the return-on-investment on analytics

However, the companies that have implemented analytics with moderate success and shown superior business performance continue to inspire others to transform through analytics. Successful implementation of analytics is now the holy-grail to management, and requires continued effort and investment to gain a competitive advantage. For more information, please visit:

www.absolutdata.com

www.alteryx.com

AbsolutData and Alteryx 2013 Proprietary and Confidential

Authors
Abhishek Bansal
Associate Director, Customer Analytics, AbsolutData Research and Analytics
Abhishek leads the customer analytics practice at AbsolutData, a team of 100+ marketing analytics professionals. Previously, he spent seven years with Citibank in consumer banking analytics, and two years with Accenture in financial services consulting. In his current role, he is responsible for analytics delivery, capability development and client management. Abhishek holds an MBA by education. He can be reached at abhishek.bansal@absolutdata.com.

Mohit Agarwal
Consultant, Solutions Team, AbsolutData Research and Analytics
Mohit is a part of AbsolutData solutions team which pioneers in assessing analytics prowess of leading organizations and devising the analytics roadmap ahead. He specializes in designing analytics solutions and processes that help deliver impact through analytics. Mohit has five years of experience in marketing research and marketing analytics, and he holds an MBA by education. He can be reached at mohit.agarwal@absolutdata.com.

Bob Laurent
Director of Industry Marketing, Alteryx
Bob has over 20 years of analytics, marketing, media relations, and engineering experience, including management positions at New York Telephone/NYNEX (now Verizon) and Fujitsu Network Communications. As Director of Industry Marketing at Alteryx, he is leading the development of strategic marketing and lead generation programs to expand the companys presence in current accounts, penetrate new markets, and build a loyal customer base. Bob holds a BSEE and an MBA by education. He can be reached at blaurent@alteryx.com.

AbsolutData and Alteryx 2013 Proprietary and Confidential

Appendix
Data was gathered from a diverse set of professionals across a range of industries:

Products/Services Offered

33%

25%

42%
Consumers Other businesses Both

Industry
Services Retail, wholesale Banking, Finance, Insurance Telecom CPG Hospitality Manufacturing Nonprofit Government Construction Transportation Other 6% 4% 3% 3% 3% 1% 1% 1% 24% 24% 16% 15%

AbsolutData and Alteryx 2013 Proprietary and Confidential

Number of Employees

Department 4% 6% 7% 9% 41%

25%

28%

15% 11% 21%

32%

1-100 1,001-5,000

101-500 5,000+

501-1,000

Research and Analytics IT Customer Care/Retention

Marketing Sales Other

Level of Involvement 8% 12% 37% 19%

23%

I develop customer analytics solutions for my company I do not develop applications, but I use their output I give directions to a team on how to use customer analytics I am not involved in customer analytics Other
AbsolutData and Alteryx 2013 Proprietary and Confidential