Johannesburg, 25 Oct 2012
"Big data, business intelligence, advanced analytics, social network analysis." We are swamped by articles on the Internet, newsletters from IT vendors and even from the likes of Harvard Business Review, on the merits of using our data, together with advanced analytical techniques, to gain the competitive advantage.
There are myriad case studies discussing the impressive results achieved by organisations that have targeted fraudulent transactions in real-time, reduced marketing spend by running targeted, cross-channel campaigns and those that have optimised inventory through accurate forecasting. Despite the availability of data and the technology capable of distilling insight, only a few organisations have been brave enough to walk the path. Why could this be? asks Dr Tracy Dunbar, director of BITanium Analytic.
Having specialised in the advanced analytics area for the past six years, I have most definitely seen an awakening to the possibilities of analysing data. Most people are comfortable with the concept of analysing what happened yesterday and displaying graphs and dials on dashboards, while a number are moving to the concept of mobility, which enables access to reports and dashboards on tablets and smartphones. (These days, there is really no excuse not to know what is happening with your department figures, at any given moment!) However, when it comes to predicting what might happen tomorrow, people are fascinated and excited by the possibilities, but often find a reason as to why it is not appropriate now!
Advanced analytics empowers business to become focused on the customer and to answer questions such as:
1. Who are my most valuable customers and how do I attract more like them?
2. What personalised offers should I make to my customers to provide them with an appropriate offer at the most opportune time?
3. How do I know when my customers are considering leaving me for my competition, and do I care (is this a valuable customer?), and if so, what should I do about it?
4. Which transactions are suspicious and require further investigation?
We used to make these kind of decisions based on "gut feel", which was possible when the amount and type of data available about the customer was limited. With the variety and volume of data that is now available and the speed at which it is accumulating, gut feel and simple analytical tools (like Microsoft Excel) are no longer acceptable. By leveraging off advanced analytical platforms, leading organisations have made a strategic move away from basing their decisions on "what we believe" to be true, to making data-driven decisions on "what we know" to be true based on what our data tells us.
I believe there is a fear and apprehension within some organisations to change their philosophy from gut-based decisions to evidence-based decisions. Perhaps there is an intimidation around the complexity of the mathematical and statistical techniques used to analyse the data, or is it a hesitation to learn a new software package, or is it simply a resistance to change?
Organisations which I have worked with to embark on the advanced analytics journey and which have reaped the benefits have a number of common traits, namely:
* There is a requirement from the top to adopt an evidence-based approach to formulating strategies and making decisions.
* It is expected that evidence-based decisions are made by those in the "front line", not only by those sitting in boardrooms in head office.
* Company resources are allocated to the analytics journey in terms of people, money and time.
* Cross-functional teams participate in identifying projects, the associated priorities and the business value of acquiring such insight.
* The results from the completed projects are deployed into the field, where they directly impact the customer.
We at BITanium recommend that the advanced analytics journey is plotted and then navigated through small steps, whereby the value is demonstrated with each milestone. We believe it is vital to start the journey sooner rather than later, as the rules of the game have changed... Where will your organisation be in five years from now if you continue operating on "gut feel" alone?
I look forward to presenting a series of articles, where I will detail the steps involved, expected returns and best practices of the predictive life cycle.
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