Synopsis of the article and summary chart from Pete Barlas at Investor’s Business Daily
Many companies still view the promise of analytics software as a glass half-empty.
One of the strongest sectors in enterprise software, business analytics has many doubters among companies skeptical it truly is helping improve the top and bottom lines.
So found a survey released last month by accounting and professional services firm Deloitte Touche Tohmatsu.
“What we are seeing in the analytics front is a real skepticism among business leaders about whether this works and how it can make a difference,” said Tim Phillipps, global leader of Deloitte’s analytics practice.
The findings, he admits, were a surprise.
Here is Stephen’s comment on this article:
I have worked in analytics for many years at over 100 companies (employee, consultant and leading teams.) It has always been easier to lean on costs savings as a clear measure of success with analytics and data warehouse investments. For example, as Director of Data Mining at Netflix, we would measure the “lift” from analytics, which is how much more effective our targeted marketing (based on analytics) was versus traditional marketing.
However, Netflix went well beyond the traditional mentality, Reed Hastings created the expectation that all significant investments would be monitored, measured and checked for effectiveness. This was not intended to stifle creativity and leadership, but rather to ensure that sound decisions were made, mid-course corrections were implemented and that we wouldn’t overspend in areas (respecting the law of diminishing returns.)
Just buying analytics tools and collecting data won’t make your organization more effective. Leadership must adopt a philosophy of objective evaluation of results, where making mistakes is not the issue but not correcting them is a big issue. Also, data should be considered prior to any large investment and used as a baseline for measuring new program and investment performance. This doesn’t just happen overnight, but smart companies want to empower their employees to make better, more confident choices. At most companies I work with, the gap is whether people can see what is happening and ask questions about their business.
So, while good analytic tools and data systems are a requirement, I would say that committed management and well-trained employees with access to the data and tools are the key to driving better expense management and improved top-line performance.
The biggest problem is that most employees haven’t been trained in effectively using data in the real-world. Check out our book to learn the core principles of being an effective data analyst, The Accidental Analyst: Show Your Data Who’s Boss. You can read about it at www.AccidentalAnalyst.com or find it on Amazon.
Principal Data Scientist
Practical Analytics for Better Decisions