TORONTO – Organizations are struggling to move from a departmental view of their data to an enterprise-wide view, according to speakers at a SAS-sponsored event yesterday. But turning data into business intelligence takes more than hardware and software; success lies in people, processes and corporate culture.
“Anything we create today will likely be replicated in months,” said Jim Davis, vice-president and chief marketing officer with SAS Inc. in Cary, N.C. Companies have to innovate faster than their competitors, which means making sense of data and putting it into the context of their business.
Companies don’t want to be at the first level, where they’re dependent on an “information maverick” – typically associated with a nerd who works in the bowels of the organization – that identifies relationships with metadata in their brain. A level-two organization has a departmental focus, but this creates problems because information is not consistent or accessible across the organization. The next step up is a level-three organization, which has an enterprise focus where data is brought together across the organization.
But 70-80 per cent of companies are stuck between level two and three, said Davis, and haven’t been able to bridge that gap. Why? “Because it’s much more than technology,” he said. Aside from infrastructure, success lies in human capital, knowledge processes and corporate culture. “Do we have a culture that accepts change or looks for change and embraces it?” he said. “Are we committed to fact-based decisions or gut instinct?”
Level four is the “tipping point,” he said, where companies optimize their bottom line by putting programs in place for fact-based decision-making. And level five expands the top line by using this data to come up with new business applications.
Getting executive management support is crucial, so he recommends that CIOs show the value of a small analytics application and promote that to get executive buy-in.
Analytics has been around for a long time, but it’s always been marginal, said Thomas Davenport, professor of information technology and management at Babson College and director of research for the School of Executive Education in Babson Park, Mass.
That’s starting to change as analytics moves to centre stage, he said, though there’s still not a huge number of companies at this point using analytics to compete.
According to Accenture, between 2002-2005 there was a huge jump in the number of companies that said analytics is strategic to their business. Some 15 per cent of the top-performing companies surveyed by Accenture said their strategy is heavily based on analytics, while only three per cent of low-performing companies have a focus on analytics.
“Business intelligence has really come of age,” said Davenport. Marriott Hotels, for example, uses analytics to pinpoint the maximum amount that customers will pay for hotel rooms and related services. By using analytics in a revenue management system, the company has seen an eight per cent revenue advantage over its competitors, said Davenport.
But companies must have a distinctive capability that analytics will support. The Royal Bank of Canada has targeted customer value as its focus, for example, while Wal-Mart has targeted its supply chain.
“Unless everyone gets mobilized, it’s not going to do anything,” he added. Procter & Gamble has all the pieces in place, he said, except the will to make analytics its primary focus.
“People think of BI in terms of tangible factors,” he said, but a key success factor is changing corporate culture. “It’s much easier to write a cheque than to change your organization.”