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The Origin of Analytics

(The title and the content do not match. Suggested titles –
The advent of analytics or
‘Analytics – The new weapon’ or
Analytics – The lethal weapon! or
Analytics – The precision weapon!)

“Measure what is measurable, and make measurable what is not so.”
It will come as a surprise that this quote is widely attributed to Galileo
Galilee and the mid 1600’s. Measurement which is at the heart of analysis
(and analytics) has thus been a strong part of our business culture and
scientific approach approach for centuries. decades if not for hundreds of
years.
(The above quote of Galileo and the inference that measurement is at the
heart of analysis of business culture do not gel. Hence suggest that the
reference to business culture be dropped.)
Analysis and interpretation, spreadsheets and the use of numerical data to
validate decisions and the resultant analytics is something that we have
taken for granted in everyday business. Hence the recent avalanche of
articles and news reports about a new era in business processes –
Analytics and the power of Big Data may come as a surprise.
Is it old wine in a new bottle or is it actually a whole new paradigm.
I would believe that it is the latter. Analytics, from being a support activity
is increasingly becoming the corner stone of a company’s competitive
strategy. There is now evidence of a new generation of companies which
are commonly referred to as “analytical warriors” where their source of
differentiation is because of the superior use of analytical techniques.
There are three factors which have contributed to analytics coming to the
forefront of business competencies.
a)

Measurement Devices

New sensors and electronics have resulted in a new found ability to
measure virtually every activity in real time. Smart access cards in
offices which have replaced the attendance register to the humble

Credit cards. smart cards. the new information technologies revolution has allowed massive amounts of data to be gathered from across the country. Ambiguous (VUCA) world. without which an organisation will not be competitive or worse still survive in today’s environment. Buried in all this data are behavioural patterns that can help managers redefine our business decisions. Uncertain. This means that there is Gigabytes of data being generated every hour. POS systems. transported in seconds to a central location and analysed. b) Computing Power Over the past decade computing costs have plummeted allowing a regular desktop machine to analyse what would have needed a mainframe in the past. The need to channelize the efforts in precise direction analyse vast amount of data thus has become a necessity. Gone are the days when a steady 10% was assured and there was always a profitable market or segment to be tapped. . We take this computing power for granted but only a few organisations have truly embraced data driven decision making and are using analytics as a competitive tool. A decade ago growth was a given as opposed to the current reality where the markets are cluttered. In such an era decisions have to be far more accurate. smart appliances to social media and the 100 billion apps that have been downloaded magnify the quantum of data that is available. every niche is taken and the consumer fickle. Couple this with the fact that businesses do not have the luxury of time and the cost of failure is a hundred times more than what it was in the past. Complex. nay it could be fatal to the business. they have to be based on data and trends rather than expert opinion or a superficial understanding of the consumer. c) Complexity We now live in a Volatile. loyalty cards. This fortuitous combination of new sensor technologies coupled with telecommunications and computing power has revolutionised the role of data in our lives. The way railroads and highways allowed goods to be transported across thousands of miles. No more can we rely on mere hunch to take business decisions.electricity meter where measurement was taken once a month and now may be possible every minute.

Crowd-sourcing. customers are exposing themselves as never before. Unfortunately most of the data capture is designed for control and audit. However the frontiers of analytics are enlarging every day. By mapping every transaction. content which will trigger a sale.Digital & Big Data As the consumer goes digital the biggest source of BIG data is the web. not necessarily to glean insights about the customer and as a result develop superior marketing strategies. Geo markers. retail and telecom are the early adopters of analytics. Companies are using analytics extensively for every activity ranging from segmenting customers to supply chain and even M&A decisions. Breadcrumbs. Usage statistics. And with such enablers at our disposal we do not need to depend only on hunch. Analytics to Drive Business Value Most large organisations have ERP systems and they collect a huge amount of data from the field. companies like HDFC . Companies in the financial sector. And this confluence of a real need to drive decisions based on hard data and the ability to have this data available instantly has led to the analytics revolution. eCom transactions. Blogs. Photos. Consumer reviews (social) on forums and portals is widely regarded as the future of advertising. Data which would help in the entire cycle from product design to managing the customer experience. Facebook.. Wattsapp. The list goes on and on. More often than not they have already decided what to buy before entering the store. Phone books . Intentionally as well as unintentionally people are uploading their life! So while the business is getting VUCA. Comments. Chats.. we have gargantuan volumes of consumer data coming in and we have got more and more cutting edge computing power in our hands. Dislikes. Rather it would be foolish to do so ! Analytics on the online portal can improve conversions and provide crucial insights on what content needs to be displayed to visitors. Page views. Forums. Twitter. Likes. Social Media analytics allows a company to sift thru millions of data points to see customer trends and comments. Consumers invariably research a product and feedback before a purchase. In this digital era.

For large appliances and engineering companies like Godrej. Appliances as a category also sees a large spend in consumer and trade promotions. Globally engineering and appliances companies have started using analytics extensively. At a retail level it will allow can help store clustering and segmentation to tailor stock holding norms. CEMEX was able to cut the average response time from 3 hours to 20 minutes creating a significant marketing advantage for CEMEX in market share and consumer loyalty. . Analytics can help create new customer segmentation and allow the marketing team to do sophisticated scoring to improve sales and profitability. John Deere is an analytical competitor which implemented a new way of optimising inventory and saved $1. a predictive role in imagining what is likely to happen and lastly the prescriptive role in figuring out what should be done about it. analytics has four of roles to play. These companies successfully cross sell products. diagnostic role in understanding why it happened.2 billion over a 5 year period. Unlocking Value At a broad level. A descriptive role in discovering what is happening. offers and promotions by store type as opposed to geography or the conventional methods modern trade versus traditional format. It can bring data and analytics to a direct sales programme and improve call efficiencies and overall productivity which in turn will can drive down costs.and Vodafone have created well defined segments. analytics can create real business value. It also improved fleet utilisation by 35%. Godrej would have substantial past purchase information for millions of its consumers as well as institutional customers. Trade discounts and promotions can account for 10 to 20% of the marketing spends. Analytics can thus help save money on marketing spends. CEMEX Mexico applied principles used by companies like FedEx and pizza delivery companies to create a “just in time” delivery solution for Ready Mix Concrete (RMC). Global research data has proved that the ROI on trade promotions can be very volatile ranging from a positive +15% to a negative -60%. manage attrition and dramatically improve profitability as is evident with HDFC bank.

The adoption of analytics will be faster than social creating visible impacts on the bottom line. . CEMEX. John Deere. Many companies have shied away from analytics after initial failures or a belief that their business position and complexity does not warrant the use of analytics. The future belongs to companies that Thomas Davenport calls the “Analytical Warriors”.Analytics can thus create real value across the business chain by increasing sales. Netflix. Three years ago there was we had a similar debate on social media and its and the utility of Social. The companies which have adopted Analytics as a competitive advantage are already seeing the benefits…Amazon. HDFC. Mars to name a few. Today the use of social media is ubiquitous. We have a similar debate raging on about analytics. managing costs and driving higher profits.